text:
    Herman R. Paulick, Appellant, v. National Bank of Republic et al., Appellees.
    Gen. No. 37,371.

      Opinion filed February 13, 1935.
    Schofield & Wood, of Chicago, for appellant; Frank Schofield and David H. Kraft, of Chicago, of counsel.
    Arthur J. Hughes, of Chicago, for appellees; R. A. Bullinger, of Chicago, of counsel.
   Mr. Presiding Justice Hebel

delivered the opinion of the court.

The plaintiff is here on appeal from a judgment in favor of the defendant and against the plaintiff for costs entered by the court upon the verdict of a jury. The action is in assumpsit and was filed in the municipal court of Chicago by the plaintiff, seeking to recover from the defendants the sum of $3,614.10, based upon the rescission by the plaintiff of a sale to him of stock of the National Bank of Republic, a corporation, upon the ground that the plaintiff was induced to enter into the transaction with the defendants by fraud and misrepresentation.

The plaintiff alleges in his statement of claim that on November 24,1930, and for many years prior thereto, he and the Dearborn Class Company were customers and depositors of the National Bank of Republie; that the plaintiff frequently consulted the officials of the bank with reference to financial and banking advice, and reposed implicit confidence in the defendant and its officers.

It is further alleged in the statement of claim that on November 24, 1930, plaintiff was extended a special invitation by the defendant bank to purchase its shares of stock; that the defendants then and there represented to him that (1) the National Bank of Republic was then negotiating for a large merger; (2) that the National Bank of Republic was offering a limited number of its shares, in advance of said merger, to a few only of its select customers so as to demonstrate its appreciation for their past business, and that plaintiff was being regarded as one of such customers; (3) that the then actual book value of said stock was over $200 per share; (4) that the stock was earning in excess of $15 per share; and that after the merger had' been completed, the value of the same stock would be about $500 per share; that by reason of said representations and confidence, plaintiff was induced to and did purchase from defendants, 50 shares of stock for $4,950; that, thereafter, about July 15, 1932, he discovered for the first time that all the foregoing representations were false and untrue, notified defendants of his election to rescind and demanded the return to him of $3,614.10, which he had paid on account of the said purchase price.

Each of the defendants filed a separate affidavit of merits. The defendant National Bank of Republic admitted that plaintiff had been a customer of the bank, but denied that it made through its officer Mentz any false statements relative to the value of the stock bought by the plaintiff from Otte & Company, a corporation, and further denied that it received any money from the plaintiff; and denied that it made through any of its officers or agents any statements to the plaintiff. Otte & Company, a corporation, one of the defondants, admitted that the plaintiff had contracted with it for the purchase of the shares of stock in question, but denied that it made any statements to the plaintiff relative to the value of the stock. All the defendants denied that there was a privity of contract between the parties, and denied that any false statements were made to the plaintiff, and that Otte & Company, one of the defendants, admitted that it received money from the plaintiff.

Upon the trial of this cause, the plaintiff and Robert R. Mentz, an officer of the defendant bank, were the only witnesses who appeared and testified. The plaintiff testified that when he appeared at the bank on November 24, 1930, upon invitation, Mentz stated to him the book value of the stock was $200 per share; its earnings in excess of $15 per share, a merger was pending, and the sale was open to only a few good customers of the bank. Plaintiff’s Exhibit 1, which is in evidence, shows the book value at the time and the earnings of the stock at the date of the sale, to be $37 and $4.50 per share, respectively. The plaintiff also testified that he purchased the stock from Otte & Company, and what money he paid for the stock was paid when he purchased the same through Otte & Company.

Mentz, when called as a witness, testified he was employed by the National Bank of Republic, of Chicago, and that he told the plaintiff the market price of the stock at the time was approximately $100 a share, the book value approximately $40 a share, the earnings $4 to $5 a share, and the dividends $3.20 per share, but denied that he told the plaintiff the National Bank of Republic of Chicago was then negotiating a large merger, and the then book value of the stock was $200 per share, or that the stock was earning in excess of $15 per share, and denied he stated to him that after the contemplated merger the stock would be worth about $500 per share.

The jury were instructed orally by the court at the close of the hearing, and returned a verdict for the defendants. The court entered judgment on the verdict after denying the motion for a new trial entered by the plaintiff.

The plaintiff contends that there was manifest and prejudicial error in the charge by the court to the jury that the burden was upon the plaintiff to prove the fraud alleged against the defendants by such clear and convincing evidence that the minds of the jury were well satisfied, beyond doubt, that the fraud in issue was true. In support of his contention he states the rule of law that controls in actions of fraud and misrepresentation, whether at law or in equity which is, where the plaintiff proves that the contract in question was executed during the period of a fiduciary or confidential relationship, such transaction is prima facie voidable. The burden of proof thereupon rests upon the defendant in whom confidence has been reposed, to show by clear and convincing evidence that the contract in question was fair, equitable, beneficial to the plaintiff, and was not against good conscience. Citing a number of cases.

The defendant, however, in reply, contends that where no special objections were made to the instructions, or any part thereof at the time they were given, complaint cannot be made that the trial court erred in its oral instructions, and that no objection having been made by the plaintiff to the giving of the instruction before the jury retired for the purpose of considering a verdict, the plaintiff is not now in a position to complain.

Defendants raise the point that objections should have been made to the instructions of the court by the plaintiff before the jury retired to consider its verdict, as required by the rule of the municipal court, which provides that objections must be made in order that the court may make corrections or modify the instructions already given. The plaintiff contends however that this rule is not before this court, for the reason that it is not incorporated in the record, and before this court can consider such rule it must be a part of the record. Plaintiff’s contention is well founded, unless the Appellate Court can properly take judicial notice of the rules of a court of inferior jurisdiction upon an appeal or writ of error, provided for by statutory rule. From an examination of the statute of this State, we find the Legislature in 1931 amended par. 58, ch. 51 (Cahill’s Ill. Rev. St. 1933) of an act entitled “Judicial Notice” which is as follows:

“Upon the review by any court of appellate jurisdiction by appeal, writ of error or otherwise, of a judgment, order or decree of an inferior court such court of appellate jurisdiction shall take judicial notice of all matters of which such inferior court was required to take judicial notice, including all rules of practice adopted by such inferior court, or in case of the review by the Supreme Court of a judgment, order or decree of an Appellate Court, the Supreme Court shall take judicial notice as well of all matters of which the court of original jurisdiction was required to take judicial notice as of the rules of practice adopted by the court of original jurisdiction, the judgment, order or decree of which has been reviewed by such Appellate Court. ’ ’ This section was amended to meet the objection made in the opinion of the Supreme Court in the case of Sixby v. Chicago City Ry. Co., 260 Ill. 478. Under the amended section this court takes judicial notice of the rules adopted and in force that apply to the practice of all courts of inferior jurisdiction. The rule adopted by the municipal court of Chicago applicable to the question in the record, which requires that objections be made to instructions before the jury retires to consider their verdict, is as follows:

“Rule 171. Objections to the charge must be made before the jury retire and must specifically point out wherein the part objected to is erroneous and the party objecting must indicate clearly the correction therein desired to be made, and upon the objections being made the judge may make such corrections as he may deem proper. ’ ’

The purpose of the rule is to enable the trial court to make necessary corrections if proper objections are made, and unless the party complaining makes objections and the same appear in the record, he waives his right to complain. It does not appear from the record that the plaintiff tendered to the trial judge requests in writing for specific instructions to the jury as to matters of law, which is required by Rule 170, adopted by the municipal court of Chicago, and these requests are to be presented before the commencement of argument of counsel, or within such time as the court may permit.

Plaintiff, however, contends that where the errors go to the very foundation of plaintiff’s recovery and wholly control the verdict, such errors should, in the interests of substantial justice, be reviewed by this court, with or without exceptions to the ruling of the trial court.

While the position of the plaintiff is true, in part, failure to except may not always deprive a litigant of the right to be heard where objection is made at the proper time to the alleged improper ruling of the trial court. But to say that where no objection or exception is taken to an improper ruling this court should consider such ruling on appeal, would tend to confusion rather than to an orderly disposition of litigation. A litigant cannot stand by and permit improper evidence or ruling of the court to take place during the course of a trial without making known his objections, and unless he does this he cannot for £he first time in tfiig court question the ruling of the trial court because he is not satisfied with the judgment. There are numerous authorities of courts of appellate jurisdiction upon the failure of a party litigant to request instructions, and the rule generally supported by the authorities is that a party cannot complain that an instruction was not given where he does not show that the court was requested to give the instruction and refused to do so. City of Chicago v. Hogan, 80 Ill. App. 344; Chicago & Alton Ry. Co. v. Hatfield, 109 Ill. App. 556; Treptow v. Montgomery Ward & Co., 153 Ill. App. 422; Forte v. Cohen, 199 Ill. App. 462; Grier v. Barkley, 182 Ill. App. 541.

Upon a somewhat analogous question, the Supreme Court in the case of Illinois Cent. R. Co. v. Atwell, 198 Ill. 200, upon the failure of a party litigant to act, or to present instructions to obviate certain objections, said:

“Defendant might have prevented such evidence going to the jury, but made no objection to it and did not prepare or ask for any instruction with respect to it. It was not the duty of the court, of its own motion, to instruct the jury specially for the purpose of obviating the effect of evidence admitted without objection. Defendant might have asked and obtained such proper instructions concerning the evidence, or its proper relation to the question of damages, as it saw fit.”

This court in the case of Kleet v. Southern Illinois Coal & Coke Co., 197 Ill. App. 243, held that a party desiring that the jury be instructed as to the evidence required to prove any disputed question of fact must ask for an instruction, and if he fails to do so cannot complain that none was given.

The plaintiff also objects to certain evidence admitted by the court, upon the ground that it was repetition when given in rebuttal, and that the court should have excluded the evidence offered to prove a conceded fact. We have considered the objection to the evidence and are of the opinion that there was no reversible error in the ruling of the trial court upon the admissi- • bility of evidence.

From the whole record as we have it before us, we find no error such as would justify a reversal of the judgment in this case. . Accordingly, the judgment is affirmed.

Judgment affirmed.

Wilson and Hall, J J., concur.


source: Caselaw Access Project

author: Mr. Justice Hall

license: Public Domain

text:
    In re Estate of Anna Gunderson, Deceased. Selmer G. Olsen et al., Defendants in Error, v. Nels P. Peterson, Individually and as Executor of the Last Will and Testament of Anna Gunderson, Deceased, Plaintiff in Error.
    Gen. No. 37,305.
    Opinion filed February 13, 1935.
    Oscar M. Lumby, of Chicago, for plaintiff in error.
    Harmon & George, of Chicago, for defendants in error ; Rot M. Harmon, of counsel.
   Mr. Justice Hall

delivered the opinion of the court.

On February 10, 1920, Neis P. Peterson was appointed executor without bond of the last will and testament of Anna Gunderson, deceased. Subsequently, on September 27, 1930, without any order from the probate court, he deposited with the Builders and Merchants Bank and Trust Company the sum of $7,315, and on February 7, 1931, the sum of $21,367, both deposits being funds belonging to the estate of which he was and is such executor. For the first deposit Peterson received a certificate from the bank, which provided that the funds were payable to him by the bank in three months after its date, with interest until paid. For the second deposit he received a certificate reciting that the funds should be payable to him on demand, without interest. The certificates were both issued to him as an individual, and not as executor of the estate, although he testified that when he made the deposits he notified the cashier of the bank that they were trust funds. The total of these deposits amounted to $28,682. About April llr 1931, the bank was closed by the auditor of public accounts, and a receiver appointed. By the order of the circuit court entered in this cause, we are informed that since the bank closed, the executor has collected from the receiver on account of these deposits the sum of $8,405.20, which has been paid to the legatees under the will. The balance remaining unpaid by the bank amounts to $20,275.80: The executor filed in the probate court of Cook county a final account of receipts and distributions, and among other things set forth the facts regarding these deposits and prayed that he might be credited with the amount remaining unpaid by the bank. To this account objections were filed by certain of the legatees under the will of Anna Gunderson. It is the claim of these objectors that inasmuch as this executor made these deposits without the order of the probate court, that the deposits were made by him as an individual and not as executor of the estate of Anna Gunderson, and that the certificates of deposit were issued to him as an individual, he is personally liable, and the prayer of these petitioners and objectors is that he be ordered to account to these legatees for the amounts of these deposits. The objections were overruled by the probate court. On appeal to the circuit court, that court, after a hearing, ordered that the amount of the deposits, less the sum of $8,405.20, paid to the executor by the receiver and distributed by him, as hereinbefore set forth, be accounted for and paid by the executor to the estate of Anna Gunderson, and that Peterson, the executor, pay the costs of the appeal from the probate court to the circuit court. It is this order that the executor, by the writ of error herein, seeks to have reviewed.

It is the claim of the executor that when a deposit of funds belonging to an estate is made by an executor in a bank and in conformity with the universal usage, and with care in the selection of such depositary, and the bank becomes insolvent so that the funds are lost, such executor does not thereby become personally liable to account therefor. This is true as far as it goes, but there is another rule in addition to the one stated, which seems to be decisive of this case. This rule is that when an administrator or executor deposits trust funds held by him in his own name and to his individual account, and the funds are lost, such.administrator or executor becomes and is personally liable to account to the estate therefor.

In Webster & Baxter v. Pierce & Barber, 35 Ill. 158, the Supreme Court said:

“An agent has no right to mix the funds of his principal with his own, and then hold his principal liable. . . . If he seeks to make his principal liable for losses on bank failures, or other losses on moneys of his principal, the agent must keep the moneys of his principal separate and distinct from his own.”

In Harward v. Robinson, 14 Ill. App. 560, an administrator, without an order from the court, deposited funds of the estate with a bank. He did not mingle the deposits with his own funds, but mingled them with other trust funds also in his custody. A portion of the funds was lost by the failure of the bank. The court in that case held that the administrator was liable to account to the estate for the funds lost, and said:

“Where an administrator deposits, in his own individual name, funds of the estate in a bank which fails while holding such deposit, the loss is his own and not that of the estate; and this though he had no other funds in such bank, and informed its officers at the time of making* the deposit that the funds were held by him in trust. . . . The test is the loss of the identity of the trust fund, the placing it in such condition as that it has no ear-marks, the having it in such shape as that it has impressed upon it no sign or indication of the specific trust to which it belongs.”

See also 1 Perry on Trusts (7th Ed.) par. 443, 24 C. J. page 50, and 3 Schouler on Wills (12th Ed.) par. 2271, page 2133.

We are of the opinion that in view of the fact that these deposits were made by the executor in his individual name, and not as trustee, that he is liable to account to the estate for them. The judgment of the circuit court is affirmed.

Affirmed.

Hebel, P. J., and Wilson, J., concur.


text:
    Thomas Stasel and Verona Stasel, Appellees, v. American Home Security Corporation, Appellant. Arthur Goodwillie et al., Appellees.
    Gen. No. 37,347.
    Opinion filed February 13, 1935.
    Rehearing denied February 25, 1935.
    Claude J. Dalenberg, of Chicago, for appellant.
    Frank E. Dingle, of Chicago, for certain appellees.
   Mr. Justice Hall

delivered the opinion of the court.

This is an appeal from a decree of the circuit court of Cook county in favor of complainants, Thomas and Verona Stasel. The complainants filed a bill in the nature of a bill of review, seeking to remove a cloud upon real estate, and to quiet title thereto. In this bill, it is alleged inter alia that complainants are the owners of certain described real estate; that on or about July 19, 1927, the defendant, in the instant case filed a bill to foreclose a mortgage for $1,115.93 on such real estate, alleged to have been made and executed by Thomas and Yerona Stasel; that after the return of the summons issued in the foreclosure proceeding, upon which service was not had, an alias summons was issued against Thomas and Yerona Stasel, and that by the return on such alias summons, it is shown that service thereof was had upon Yerona Stasel by delivering a copy thereof to her, and upon Thomas Stasel by delivering a copy thereof to Yerona Stasel, his wife, on October 24, 1927. It is alleged in complainants’ bill that the summons in the foreclosure proceeding was not served upon either of said parties, as shown by the return thereon; that they, the complainants in the instant case, received no notice of the foreclosure proceeding until about April 1, 1928, about four months after a decree had been entered in the foreclosure suit; that the alleged trust deed upon which the foreclosure proceeding was predicated was recorded in the office of the registrar of titles of Cook county about April 30, 1927, and that on July 22, 1927, an order was entered in that proceeding appointing the Pullman Trust & Savings Bank receiver of the premises; that on November 29, 1927, an order of default was entered in the foreclosure case against the defendants, but that neither Thomas or Yerona Stasel, complainants herein, had any knowledge of the presentation of any motion for such default, nor any knowledge that they had been made parties defendant in that suit, until after a sale of the premises had been ordered, and that thereafter on January 5,1928, the premises were sold by the master in chancery, and a deficiency decree for the sum of $206.14 was entered against Thomas and Yerona Stasel. It is alleged therein that the signatures upon the trust deed and note upon which the foreclosure proceeding was predicated were not signed by Thomas or Verona Stasel, but that their signatures on such documents were forged, and that neither of them received any consideration for such documents; that Verona Stasel is unlearned and uneducated and wholly unable to write her name in the English or any other language, and that neither of them ever saw the trust deed nor the note which the trust deed was alleged to have been given to secure, until shortly after the filing of this bill for review.

Defendant here, the complainant in the foreclosure proceeding, in its answer, denies that the summons in that suit was not served, as shown by the return of the sheriff, insists that service thereof was properly made, denies that the signatures to the note and mortgage are forgeries, and asserts that no fraud was practiced on the Stasels, and that they had full knowledge of the proceedings in that case. In the foreclosure suit, the Stasels were defaulted for want of an appearance and answer, and the other steps were taken by complainant as alleged in this bill for review. The cause here was referred to a master, and evidence was received by him on the issues made by the bill and answer. After a hearing, the master made a report to the court of the matters before him, and as to the evidence taken, and found that the Stasels were duly and legally served with summons in the foreclosure suit, that they were defaulted for want of an answer, as alleged, that the note and mortgage upon which the foreclosure proceeding was predicated were not signed, executed or acknowledged by the Stasels, that their alleged signatures thereto were forged, that no consideration of any kind or amount was paid to the Stasels therefor, that the note and trust deed are void, and that a valid decree in foreclosure cannot be based thereon. The master further found that the Stasels used due diligence in bringing this bill for review, that the equities are with them in this cause, that they should be granted the relief prayed, and that a decree be entered in accordance with the master’s findings. Upon exceptions filed by defendant, American Home Security Corporation, after a hearing, the court approved the master’s report, and decreed that all the decrees and orders in the foreclosure proceeding, and the registry of the title with the registrar of titles of Cook county, constituting a cloud upon the title to the Stasels’ land, be expunged, that the receiver appointed in the foreclosure proceeding be discharged, and the premises turned back to the Stasels. The court further ordered that any further steps in the foreclosure proceeding be enjoined.

The officer who served the summons in the foreclosure proceeding was produced as a witness before the master and testified that he served the summons in the foreclosure suit by delivering a copy to the wife of the defendant at their place of residence as service upon her, and also left a copy of such summons with her at the same time for her husband, as shown by the return on the summons. Thomas Stasel testified that he did not receive the summons from the sheriff, but that it was given to him later by another person. Verona Stasel testified that her husband gave her some papers, which she had laid away. We are of the opinion that the master and the court, upon the showing made, were correct in finding that the Stasels were properly and legally served with the summons.

In Marnik v. Cusack, 317 Ill. 362, a condition similar to that presented here was before the court, as to the question of the service of summons, and as to the right of a person duly and properly served, as shown by the officer making such service, to have a judgment upon such service reviewed in another proceeding. On the question of service and the return of the officer, the Supreme Court said:

“The stability of judicial proceedings, however, requires that the return of an officer made in the due course of his official duty and under the sanction of his official oath should not be set aside merely upon the uncorroborated testimony of the person on whom the process has been served but only upon clear and satisfactory evidence. Davis v. Dresback, 81 Ill. 393; Kochman v. O’Neill, 202 Ill. 110.”

The question left for us to determine is whether or not, in view of the fact that, after being served with summons, the Stasels failed to enter an appearance and present their undoubted legal defense in the foreclosure suit, they are precluded from asserting their alleged rights by this bill for review. There is no question but that the note and mortgage were forged, and the entire case of defendant is based upon the theory that the complainants failed to exercise due diligence in the foreclosure proceeding, in that they did not appear and make their defense when served with summons; that having failed in this regard, they cannot now have the relief prayed.

In Karsten v. Winkelman, 126 Ill. App. 418, by a bill for review, it was sought to void a decree entered in a former proceeding. There it was sought to set aside the decree upon the ground that a witness had testified falsely in the proceeding in which the decree was entered, and in determining the question as to whether the bill for review should prevail, this court said:

“Admitting that Wilhelmina Sauer testified falsely, it is not sufficient to sustain a bill of review. The Supreme Court of the United States in U. S. v. Throckmorton, 98 U. S. 61, says: ‘We think these decisions establish the doctrine on which we decide the present ease, namely, that the acts for which a court of equity will, on account of fraud, set aside or annul a judgment or decree between the same parties, rendered by a court of competent jurisdiction, have relation to frauds, extrinsic or collateral to the matter tried by the first court, and not to a fraud in the matter on which the decree was rendered; that the mischief of retrying every case in which the judgment or decree rendered on false testimony, given by perjured witnesses, or on contracts or documents whose genuineness or validity was in issue, and which are afterward ascertained to be forged or fraudulent, would be greater, by reason of the endless nature of the strife, than any compensation arising* from doing* justice in individual cases.’ ”

In 21 Corpus Juris, page 778, it is said:

“It is generally held that an original bill to vacate a decree will not lie on the ground that the decree was obtained by perjured testimony, or forged or fraudulent instruments, . . . This rule is based on the ground that the credibility of the testimony on which the decree was based is intrinsic and has been already adjudicated, and also on the absurd extent to which litigation could be protracted in the absence of such a rule.”

In Marnik v. Cusack, 317 Ill. 362, already cited, after disposing of the question of the service of summons and its effect, the Supreme Court said:

“It is unnecessary to discuss the existence of a defense. After the plaintiff in error was served it was his duty to present his defense in the action at law, and he cannot be relieved against his own neglect to do so. ”

In Vannatta v. Lindley, 198 Ill. 40, a bill in equity was filed seeking* to have a promissory note and power of attorney to confess judgment thereon decreed null and void and delivered up to be canceled, and to enjoin the holder from entering judgment thereon, because such note and mortgage were forged. An answer was filed and issues were joined on the bill, answer and replication. The trial court held that the bill in equity was not well founded, because the complainants in that bill, the alleged makers of the note, had a complete remedy at law, and the bill was dismissed for want of equity. On appeal to the Appellate Court, the decree of the trial court was affirmed, and on appeal to the Supreme Court, the Appellate Court was affirmed.

Having been duly served with summons in the foreclosure proceeding, and having failed to present the defense, which they undoubtedly had, we are of the opinion that the complainants herein cannot have the relief prayed by the bill in this cause. (Boyden v. Reed, 55 Ill. 458; Griggs v. Gear, 8 Ill. 2; Weinberg v. Larson, 275 Ill. App. 475.)

Therefore, the decree of the circuit court setting aside the decree in the foreclosure proceeding is reversed.

Reversed.

Hebel, P. J., and Wilson, J., concur.


text:
    Joanna Byczek and Mark J. McNamara, Appellees, v. Jozefa Sokolowski, Appellant.
    Gen. No. 37,374.

      Opinion filed February 13, 1935.
    Trude & Kahane and S. Geo. Jacobzak, all of Chicago, for appellant; Martin Piepenburg, of Chicago, of counsel.
    Harry A. Fleck, of Chicago, for appellees.
   Mr. Justice Hall

delivered the opinion of the court.

This is an appeal from a decree of the circuit court of Cook county entered in a proceeding brought to foreclose a mortgage trust deed on certain real estate. The bill filed in the case recites inter alia that on October 6, 1922, Andrew Byezek, Jr., and his wife, being-indebted in the sum of $6,000, executed a principal note for that amount, bearing* interest at the rate of six per cent per annum, together with 10 interest coupons of the same date, the principal note maturing- in five years after this date. The interest coupons were made payable every six months and were for $180 each. The principal and interest coupons were made payable to the order of the makers and were indorsed by them. A trust deed was given by Andrew Byezek, Jr., and his wife, on certain real estate conveyed to Mark J. McNamara, trustee, to secure the payment of the principal and interest notes, and it is alleged that subsequent to the execution of the note, coupons and trust deed, the title to the real estate was conveyed to Jozefa Sokolowski, the defendant. It is further alleged that on October 6, 1927, Jozefa Sokolowski and the trustee entered into an agreement for the extension of the payment of the loan for five years from October 7, 1927, and that at the same time she executed 10 interest notes payable biannually, as in the case of the first interest coupons. It is alleged that Andrew Byezek, Sr., was, at the time of the making of the original loan and the extension agreement, the owner of the principal note and the trust deed given to secure its payment, and that at the time of the making of such extension agreement, Andrew Byezek, Sr., delivered to Jozefa Sokolowski certain papers, and that by mistake and inadvertence, the principal note, marked “Paid,” came into the possession of the defendant. It is also alleged that in the interim between the making of the extension agreement and the filing of the bill, Andrew Byezek, Sr., died, and that Joanna Byezek, complainant, is now the legal owner of the unpaid principal note and the indebtedness represented thereby. It is further alleged in the bill that the defendant has continued the payment of the interest notes, and that after a search for the principal note, and being unable to find the same, complainant learned that such note was in the possession of the defendant; that demand was made upon defendant for the return thereof, and that she frequently promised to return the same to the complainant, but that up to the time of the filing of the bill, she had neglected and refused so to do. In her answer, defendant denies that the principal note was marked “Paid” and delivered to defendant by mistake and inadvertence, and that the defendant is in default in the payment of the sum of $6,000 represented by the said note, but on the contrary, insists that the note sued on has been paid. On the issues made, the matter was referred to a master in chancery, who examined a'number of witnesses and reported his finding.

Andrew Byezek, Jr., maker of the original note and trust deed, who was the owner of the premises conveyed, at that time, and who had since conveyed the premises to the defendant, testified in substance that at the time the principal note, coupons, and trust deed were made, they were turned over to his father. He stated that his father died on June 20, 1928, and that a week after his death, he and his mother looked through a box containing the extension agreement and other documents, including the interest notes, and found that the principal note was missing; that he made a search for the principal note, but was unable to find it; that he then called upon the defendant and asked her if she had the principal note, and that she said she had it and showed it to him, and that defendant told the witness she would not give the note to the witness until she had consulted her lawyer, but that she would return it. This witness testified that defendant subsequently paid all of the interest notes executed at the time the extension agreement was made. He further testified that at the time the defendant paid the last of the interest notes, the witness was present, and that defendant told his mother, one of the complainants, that she would return the principal note. He further testified that at this time the defendant requested of his mother that the loan be extended, and that the principal note was still due and unpaid.

Elsie Byezek testified in substance that in August, following the death of Andrew Byezek, Sr., she went to the home of the defendant with the complainant, Joanna Byezek, and asked her if she had the note, meaning the principal note, and defendant answered that she did, but that the parties would have to come back because she, defendant, would have to see if the note was in the bank or not; that subsequently the witness heard a conversation between the parties at the home of the complainant, Joanna Byezek, and that defendant said to Joanna Byezek that she would return the principal note when the five years was up, if they would renew the mortgage.

Eva Byezek testified that she was a sister-in-law of Joanna Byezek; that about August, 1928, she, together with the complainant, visited the defendant and asked her to return the $6,000 principal note, and that defendant said that if she gave it up, she would have to pay $12,000 instead of $6,000.

Joanna Byezek, complainant, testified that defendant paid her the interest up to and including October 6, 1932, when the last coupon became due, but that the $6,000 was never paid either to her or to her husband in his lifetime; that she and her husband were the owners of the property in question, and that they had conveyed it to their son, who gave the original note and mortgage trust deed; that she called on defendant and asked her for this principal note, and defendant said she would give it back if they gave her security and- assured her she would not have to pay $12,000. This witness further testified that at no time did defendant claim that she had paid the amount of the principal note, or anything on account thereof.

Steve Adamowski, a witness produced by complainant, testified in substance that he is an attorney-at-law; that he knows all the parties to the transaction; that he had a conversation with the defendant with reference to the $6,000 note at her home in the latter part of September or the first part of October, 1928, which was one of the series of conferences about the note in question; that defendant told the witness that she wanted to be certain- that if she surrendered the $6,000 note, that would be all she would have to pay, other than the interest, and the witness told the defendant that he would prepare and give her a bond to protect her against any such contingency, if she would deliver the note to the complainant; that subsequent to this conversation, he prepared such a bond and surrendered it to the solicitor for defendant, but that it was never executed or accepted by the defendant, and that in the transaction, he was acting for the complainant.

Jozefa Sokolowski testified that in October, 1927, at the time the extension agreements were made, Andrew Byezek, Sr., told the witness that if she would pay him $75, he would mark the principal note “Paid” and that thereupon he wrote the word “Paid” on it, and that she paid him $75 therefor.

The master found that the note in question had not been paid, that it is the property of complainant, that the amount alleged to be due thereon is due, and that complainant’s right of action is well founded. Pursuant to this report, a decree of sale was entered, and it is from this decree that this appeal is being prosecuted.

There is nothing in the record to indicate that prior to the filing of the bill herein, defendant ever claimed that this principal note was paid, and that Andrew Byezek, Sr., the owner of the note until his death, marked it “Paid” in consideration of the payment to him by defendant of the sum of $75, or for any other reason. While possession of the note by defendant marked “Paid” raises a presumption that it was paid, and that defendant was in the rightful possession of it, we are of the opinion that the evidence shows clearly that defendant obtained possession of such note under the circumstances charged in the bill. It appears from the evidence that Andrew Byezek, Sr., was not familiar with the English language, and that he had no person to advise him at the time the extension agreement was made. Defendant’s story concerning the release of her liability on the note for the alleged payment to her of $75, is, to say the least, improbable. However, the master heard and saw the witnesses, and we are of the opinion that his findings and conclusions are justified.

In Siegel v. Andrews & Co., 181 Ill. 350, the Supreme Court said:

‘ ‘ The first contention raises a question of fact, which has been passed upon adversely to appellants by the master. This finding has been approved by the chancellor, and, after a careful reading and consideration of the evidence, we cannot say that its weight is manifestly and clearly against the finding, and that being so, we should not and will not disturb it. Miltimore v. Ferry, 171 Ill. 219.”

Also, in Hogg v. Eckhardt, 343 Ill. 246, in commenting upon the weight to be given to the testimony of a witness contained in the master’s report, the Supreme Court said:

“The testimony of this witness has been subjected to a severe attack by counsel for appellee. The master heard the witness and had an opportunity to study him while he was on the witness stand.”

Upon the record before us, we are of the opinion that the master was entirely justified in rendering the report he did, and that the action of the court in affirming this report and entering the decree was proper. The decree of the circuit court is affirmed.

Affirmed.

Hebel, P.. J., and Wilson, J., concur.


text:
    The People of the State of Illinois, Defendant in Error, v. Carl M. White and William C. Lund, Plaintiffs in Error.
    Gen. No. 37,617.
    Opinion filed February 13, 1935.
    Benedict J. Short, of Chicago, for plaintiffs in error. '
    Thomas J. Courtney, State’s Attorney, for defendant in error; Edward E. Wilson, Henry E. Seyfarth, John T. Gallagher and Marshall V. Kearney, Assistant State’s Attorneys, of counsel.
   Mr. Justice Hall

delivered the opinion of the court.

Defendants were indicted on a charge of conspiracy, tried before a jury in the criminal court of Cook county and found guilty. Defendant White was fined $1,000 and Lund was sentenced to six months in the county jail and in addition, a fine of $100 was imposed upon him.

The indictment upon which they were tried consisted of two counts. One count charges in substance that on the 15th day of March, 1933, defendants, without having applied for and obtained a license from the State of Illinois to make loans under the Small Loans Act (Cahill’s Revised Statutes 1933, ch. 74, 1127) did unlawfully conspire with each other and with other unknown persons to make loans in the amount of $300 and for less amounts and contracted for and charged a greater rate of interest than seven per cent per annum. The other count is similar to the one referred to, except that it charges that the persons mentioned conspired to make loans at a greater rate of interest than 42 per cent per annum. Defendant White has operated a loan office in the City of Chicago for a number of years, and formerly had obtained a license under the statute to conduct a small loans business, but there is no claim that he had a license to conduct such a business at the times mentioned in the indictment. The statute referred to in the indictment, and which it alleged defendants conspired to violate, provides that a higher rate of interest than seven per cent per annum may be charged by persons making loans of not more than $300, but that persons engaging in the business of making such loans shall obtain a license from the State of Illinois before conducting any such business. Paragraph 31, section 5 of the act, provides:

“Any person, co-partnership or corporation and all the several officers, directors, agents and employees thereof who shall, directly or indirectly, on behalf of themselves or others, violate or participate in or further any violation of the provisions of this Act shall be guilty of a misdemeanor and upon conviction thereof shall be punishable by a fine of not more than five hundred dollars ($500) or, in the case of any such natural person, who acts on behalf of himself or others as aforesaid by imprisonment of not more than six (6) months, or by both such fine and imprisonment, in the discretion of the court.”

Defendant Lund testified in substance as follows: “I work for White part of the time, four or five hours a day. I am paid $10 a week. Have been working for White since May, 1931. I have other employment. I am connected with the firm of Clark & Clark as investigator. First started to work for White in 1925. I was on a salary then. I have never had any financial interest in this business. White’s business is collections. He does the money loaning end of the business himself. I have nothing to do with and have no connection with White’s loaning money to people. I never did have anything to do with it. I don’t have anything to do with the fixing of the rates of interest or paying money. White does that.”

Various persons were produced as witnesses for the State who had made loans from White. Will Smith, a witness, testified that he had made such a loan, and that he met Lund at the time he borrowed the money. Freeman Barnes testified that he borrowed money from this institution, and that he met Lund at a certain room at 35 South Dearborn street, where White conducted his business, and his testimony in regard thereto was as follows: “I met Lund in room 505 at 35 South Dearborn street. I goes into his office and asked bim for a loan. He said, ‘O. K.,’ I could get $15 and pay $18 back within six weeks. I told bim, ‘O. K.’ I got the money and paid it all back within six weeks. ’ ’ This witness testified as to making other loans, but all of his conversations and contacts, other than the one mentioned, .were with White or some other person in the office other than Lund. Emanuel Fivek testified in substance that he went to the White office to make a loan, and that he spoke to Lund; that he told him he wanted $25, and that Lund said, “All right, fill out an application.” White said to Lund, “Did you look up this fellow?” Lund said, “Yes, I got all the dope on him, he is O. K.” White replied, “All right, we will make him a loan.” This witness testified that they went into White’s office and the loan was made. “Lund led me into White’s office, ’ ’ -he said. This witness testified to the fact that he had made other loans from White, but there is nothing in his evidence to indicate that Lund had anything to do with them, except that he testified that Lund was present when White made the loans. Henry F. Hobein testified that he had made various loans from the defendant White, and that he had filled out a form of application, that he first spoke to Lund about the loan and Lund asked him various questions, including inquiry as to how much he wanted to borrow; that Lund sent him to a woman in the office who made out a note, and that he was taken to White’s office and received the money. This witness testified to nothing which indicates that Lund had anything further to do with the making of the loans, except'as stated. A number of other witnesses testified to the fact that they had borrowed money from White, and that Lund participated in and had knowledge of the transactions, and the evidence shows that in all the cases interest charges were made in violation of the statute, but in so far as Lund’s connections with the transactions were concerned, the testimony was substantially the same as in the cases mentioned. The notes in each case were made payable to White, the money borrowed was received from White, and White made the loans.

The grounds relied upon for reversal are that there is no sufficient evidence of the conspiracy, that the State’s case is founded on information contained in certain books which were illegally seized, and that the court erred in giving to the jury certain instructions offered by the State and refusing to give certain instructions offered by defendant. It must be borne in mind that the charge in the indictment is conspiracy between these defendants to make loans in violation of the Small Loans Act, and not that either of these defendants by violating the statute regarding the making of small loans became liable to the penalties imposed by the statute for such violation. There is no charge that Lund was an accessory of White’s in the transactions. It is not denied by the State that White owned and operated the business, and that Lund was his employee, and it is not denied by the defendants that White, during the period in question, made many loans in violation of the law and was liable to the penalties imposed by the statute for such violation. Under these circumstances, and in view of the charge and the evidence adduced, the jury should have been carefully and properly instructed. Instruction No. 28, given on behalf of the State, is as follows:

“The jury is instructed that the burden is not on the State to prove that the defendants had no license as charged in the indictment and that the charge is to be taken by you as true unless you find from the evidence that the defendant has established his possession of such license.” This instruction assumes that both defendants were required to have a license, and is, therefore, misleading and confusing in view of the fact that there is no suggestion that defendant Lund, being a mere employee of White, was required to have a license. The cases cited by the State in support of this instruction are not in point as they might be if this were a direct charge of the violation of the statute by these defendants. We are of the opinion that on the record before us, the judgment should be reversed and the cause remanded for a new trial.

Reversed and remanded.

Rebel, P. J., and Wilsoh, J., concur.


author: Mr. Justice Wilsoh

text:
    E. Ray Grant, Appellant, v. West End Pine Building Corporation et al. Dr. William H. Leffler, Appellee.
    Gen. No. 37,425.
    Opinion filed February 13, 1935.
    Arthur Abraham, of Chicago, for appellant.
    No appearance for appellee.
   Mr. Justice Wilsoh

delivered the opinion of the court.

. This is an appeal by E. Ray Grant, as .trustee, from an order of the chancellor of the superior court directing him to buy in certain property at the foreclosure sale, for the benefit of the bondholders. The foreclosure proceeding was originally brought by Russell Firebaugh, as trustee, under the trust deed in question. Firebaugh subsequently resigned and the complainant Grant succeeded him as trustee under said trust deed and carried on the foreclosure proceedings to the decree of sale. At the time of the entry of this order directing the sale of the property or shortly thereafter, the chancellor entered an order directing Grant, as trustee or successor trustee, to bid at the sale on the premises described in the trust deed for the benefit of the bondholders. The amount to be paid as a purchase price to be the amount due under the decree plus interest, less the sum of $25,000, the probable income from the property during the period of redemption. The order also provided that the trustee should hold title subject to the further order of the court. This appeal is by the successor trustee from the order directing him to purchase. We are not benefited by briefs on behalf of any other party to the litigation, but counsel for the trustee has fully presented both sides of this question for our consideration.

The trust deed provides that in case of default in principal or interest the trustee in his discretion and without any action on the part of the bondholder or bondholders may declare the principal to be due and immediately payable; that he may institute such suit in equity or at law to enforce or protect his rights or the rights of his bondholders as he may deem proper; that he may institute proceedings to foreclose the trust deed and to obtain a sale of the premises under order of court; at any such sale any bondholder or the trustee may bid for or purchase said premises or any part thereof and in making settlement or payment for the property purchased, may use and apply any bonds and any matured and unpaid coupons secured by the trust agreement, and such bonds or coupons shall be credited upon the sum applicable to the payment for the property out of the net proceeds of such sale; that all powers and rights of action in this trust deed may be exercised by the trustee, at his election, without the possession or production of any of said bonds or coupons, or proof of ownership thereof, and the trustee shall not be personally liable for any debts contracted by him; that the trustee shall be deemed the representative of the bondholders and that any action taken by the trustee shall be conclusive and binding upon any bondholder claiming under this trust deed; that any successor in trust shall have identically the same title to said premises and the same rights, powers and duties as are imposed upon the trustee.

It is the position of the successor in trust, Grant, that he does not feel secure in carrying out the order of the chancellor in directing him to purchase the property as outlined in the order hereinbefore set forth and for that reason has appealed to this court. The precise question has already been passed upon by the Appellate Court in this district in the case of Straus v. Chicago Title & Trust Co., 273 Ill. App. 63, in which the trust deed contained almost verbatim the provisions already referred to in the instrument under consideration here. In that case the question came up on the appeal of an intervening petition by one of the bondholders, praying that the chancellor direct the trustee to purchase for the benefit of bondholders up to and including an amount not in excess of the amount of the bonds and accrued interest. The court in its opinion said:

“It is a universal rule of law that a trustee is in duty bound to see that the property intrusted to his care is not lost to the beneficiaries. Courts will take judicial notice that property sold under foreclosure seldom, if ever, brings a figure at all commensurate with its value, and that under the present financial condition of the country there is great depreciation in the values of real estate, and that a foreclosure sale of property will bring far less now than in normal times. Atchison, T. & S. F. Ry. Co. v. United States, 284 U. S. 248; Morris Plan Bank of Richmond v. Henderson, 57 F. (2d) 326. In these circumstances we think the property in question ought not to be sold at a price which will result in great loss to the bondholders, if this can be avoided by having the property bid in for the amount of the indebtedness, by the trustee, for their use and benefit. Of course it may be said that any sale made by the master must first be approved by the court before it is binding and in this way the bondholders are protected. But since the decree expressly provides that the property is to be sold at once, we think the trustee ought to be directed to bid the amount of the indebtedness unless a cash bid is received equal to the upset price established by the court.

“The trust deed provides that in case of default the trustee may, without any action on the part of. any bondholder, declare all bonds immediately due and payable, and may proceed to protect the trust by any means which he may deem most effectual; that in case of a foreclosure sale of the property, any bondholder or the trustee may bid and purchase the property and apply the amount due on the bonds in payment of his bid; that the powers, duties and rights of the trustee may be exercised by him ‘without the possession or production of any of such bonds or coupons or proof of ownership thereof’; that in all suits or transactions relating to the trust deed or the mortgaged property the trustee is deemed to be the representative of the bondholders, and that in no case shall it be necessary for him to notify any bondholder or make any bondholder a party to any suit or proceeding. Under these provisions we think the trustee may -foreclose the trust deed, purchase the property at the sale for the benefit of the bondholders, and apply the amount' due on the bonds, as found by the decree, in payment of his bid without the production of the bonds, all of which, of course, will be subject to the approval of the chancellor, who will protect the rights of each and every bondholder. Hoffman v. First Bond & Mortgage Co. of Hartford, Inc., 116 Conn. 320; Nay Aug Lumber Co. v. Scranton Trust Co., 240 Pa. St. 500; First Nat. Bank of Wichita v. Neil, 137 Kan. 436; Silver v. Wickfield Farms, 209 Iowa 856; Sturges v. Knapp, 31 Vt. 1; Werner, Harris & Buck v. Equitable Trust Co., 35 F. (2d) 513 (C. C. A.).” The court in its opinion fully set forth and analyzed the cases in support of its position and since its rendition, that case has been referred to and quoted at length with approval in the ease of Kitchen Bros. Hotel Co. v. Omaha Safe Deposit Co., 126 Neb. 744, 254 N. W. 507.

It is insisted in the proceeding here for consideration that in the event the trustee should purchase the property, a condition of great confusion would arise inasmuch as the bondholders, by reason of the purchase by the trustee, would become the beneficial holders of an interest in real estate; that dower interests in favor of the wives and husbands of the bondholders would attach to this interest; that the property would be subject to partition by every bondholder; would be subject to a lien for judgment and the title could be divested only by a partition suit including unusual complications. The same objections were made and considered in Straus v. Chicago Title & Trust Co., supra. Evidently the court in that case did not consider the question of future contingencies as controlling in the consideration of the immediate question before it.

In the case at bar we are unable to see why the trustee should be concerned with what may or may not arise in the future. These matters can be taken care of by the chancellor as they arise, if they should, and the trustee purchasing the property at the direction of the court will, be fully protected.

The question as to the right vested in the trustee to purchase the property in his discretion was also considered in the case of Straus v. Chicago Title & Trust Co., supra. In its opinion, the court said:

“We think it further appears that the discretion of the trustee as to whether he will purchase the property at the sale is not conclusive upon the chancellor. Corkery v. Dorsey, 223 Mass. 97.”

We do not feel called upon to give an anticipatory opinion or to pass upon or decide the rights of others in the interests of the respective bondholders, nor do we see any reason for departing from the opinion already expressed on this subject as outlined by the court, of which this division is a part, and for the reasons stated, the order of the chancellor of the superior court directing the trustee to purchase the property for the benefit of the bondholders is affirmed.

Order affirmed.

Hebel, P. J., and Hall, J., concur.


author: Mr. Justice Wilson

text:
    R. H. Perry and Lucius B. Phelps, Appellants, v. Western Motor Car Company, Appellee.
    Gen. No. 37,584.

      Opinion filed February 13, 1935.
    Rehearing denied February 25, 1935.

      Defrees, Buckingham, Jones & Hoffman, of Chicago, for appellant R. H. Perry; Kenneth M. Fiske and Alfred E. Williston, both of Chicago, of counsel.
    Arthur A. Basse, of Chicago, for appellant Lucius B. Phelps.
    Lederer, Livingston, Kahn & Adler, of Chicago, for appellee; Sigmund Livingston and Leo H. Arnstein, both of Chicago, of counsel.
   Mr. Justice Wilson

delivered the opinion of the court.

The plaintiffs, E. H. Perry and Lucius B. Phelps, brought their action in the circuit court against the defendant, Western Motor Car Company, a corporation, to recover rent for the months of January to October, 1931, inclusive, for the premises situated at the corner of Twenty-fifth street and Michigan avenue, Chicago, Illinois. A jury was waived and the cause heard by the court. At the end of plaintiff’s case, on motion of defendant, the court made its finding and entered judgment thereon in favor of the defendant. From this judgment plaintiffs have appealed' to this court.

From the record it appears that on November 6, 1919, one Arthur T. Aldis and others, as trustees, and owners of the premises in question, entered into a written lease with Robert H. Perry and Harry Newman, as lessees to the premises in question. The lease provided for a monthly rental of $900 and was to run until 1940. February 17, 1920, Robert H. Perry and Harry Newman subleased the premises in question to the Kelly-Springfield Motor Truck Company, an Ohio corporation, to begin June 1, 1920 and end May 27, 1940. The rental was to be $1,300 per month. At the time this sublease was entered into between Robert H, Perry and Harry Newman and the Kelly-Springfield Motor Truck Company, a deposit was made by the sublessees in the amount of $15,600 to secure the per- • formance of the terms of the lease and was to be considered as the rental for the last year of the term.

July 23, 1920, the Kelly-Springfield Motor Truck Company subleased the premises in question to the Western Motor Car Company, an Illinois corporation, and defendant to this suit. This sublease was for a term commencing on the first day of October, 1920 and ending on the 26th day of May, 1940, at a rental of $1,300 per month.

The Kelly-Springfield Motor Truck Company had qualified to do business in the State of Illinois as a foreign corporation on the 28th day of July, 1913, and on November 15, 1926, its license to do business in Illinois was canceled and the certificate of cancellation recorded in the office of the recorder of deeds of Cook county.

In the year 1926, Harry Newman, one of the sub-lessees from the owner of the fee and one of the sub-lessors to the Kelly-Springfield Motor Truck Company, assigned all his interest in and to said lease to Robert H. Perry and Lucius B. Phelps. At the time the Kelly-Springfield Motor Truck Company subleased to the defendant, Western Motor Car Company, it instructed the defendant to pay all rents under the lease to Hall & Ellis, a rental agency located in Chicago, and from that time on the rent was so paid by the defendant and Hall & Ellis in turn paid the owner of the fee under the ground lease the amount called for by the original lease, and the balance was paid to Perry and Newman, and after the assignment of Newman’s interest to Perry and Phelps. No rent was paid by the defendant to any person after December, 1930.

In December, 1922, certain proceedings were brought by the Bankers Trust Company of New York against the Kelly-Springfield Motor Truck Company, in the Court of Common Pleas of Clark county, Ohio, and one Pearl A. Lewis was appointed receiver of the company. Said receiver did not take possession of the leased premises and paid no rent for them. The corporation was found to be insolvent and on February 15, 1927, was dissolved. In November, 1927, the receiver filed his final report and on December 23 of that year the report was approved and the receiver discharged. In the meantime there had been some litigation in the superior court of Cook county involving the original deposit made by the Kelly-Springfield Motor Truck Company in payment of rent for the last year of the term of its lease from the plaintiffs. This litigation was settled by the payment to the receiver of $17,000 and the order approving the settlement, upon receipt of the fund by the receiver, was entered September 12, 1925, in the Court of Common Pleas of Clark county, Ohio.

May 21, 1931, Pearl A. Lewis, as receiver, pursuant to an order entered by the Court of Common Pleas of Clark county, assigned to R. H. Perry and Lucius B. Phelps, plaintiffs herein, all the interest of the Kelly-Springfield Motor Truck Company, as sublessor in and to the sublease of the defendant, Western Motor Car Company,' together with all the rents which had accrued thereunder.

From the record it appears that after the discharge of the receiver in 1927, the same person was again appointed receiver for the purpose of making and executing the assignment under which the plaintiffs claim. It is to this order of the Common Pleas Court of Ohio that the defendant is strenuously objecting in this proceeding" :

First, because it is claimed that the Ohio court was without jurisdiction to make the appointment of the receiver on the second occasion;

Second, that the receiver even though rightfully appointed could not sue in Illinois;

. Third, that the Kelly-Springfield Motor Truck Company by reason of its being the lessee of the property in question was doing business in the State of Illinois without a license and, therefore, its assignee could have no better right to maintain an action than could the company;

Fourth, that the assignment was procured by fraud; and

Fifth, that the statute of the .State of Illinois limits the right of a dissolved corporation to maintain an action to the period of two years after dissolution.

Plaintiffs contend that under the Practice Act, Ca-hill’s St. eh. 110, ¶ 163, the defendant, by its failure to file a verified plea, admits the validity of the instrument sued on and that, therefore, the defendant is precluded from denying the validity of the assignment. The failure to file such a verified plea, however, only dispenses with the necessary proof requisite to show the execution of the instrument. Consequently, the execution is admitted and the instrument is admissible in evidence without proof. Its validity, however, may still be assailed. Gould v. Magnolia Metal Co., 207 Ill. 172.

The Kelly-Springfield Motor Truck Company was organized under the laws of the State of Ohio and, consequently, the proceedings for its dissolution were required to comply with the laws of that state. Section 8623-80 of the Ohio General Code provides as follows:

“Any corporation which shall be dissolved and any corporation whose articles have been cancelled shall cease to carry on its business and shall be without authority so to do, but it shall continue for the sole purpose of paying, satisfying and discharging any existing liabilities and obligations, collecting and distributing its assets and doing all other acts required to adjust, settle and wind up its business and affairs, and it may do all such acts and may sue and be sued in its corporate name.” Under the provisions of the Ohio Code there is nothing limiting the time within which a dissolved corporation can sue or be sued. It shall be continued after dissolution for the purpose of satisfying and discharging any liabilities and obligations. The payment of the debts constitutes an obligation which it cannot evade and this whether the claim is liquidated or unliquidated and whether it was due at the time of the dissolution of the corporation, or became due thereafter. Roberts v. Krug, 24 Ohio Nisi Prius Reports 490, affirmed by the Court of Appeals of Ohio on review. The fact that a receiver appointed to wind up its affairs had been discharged would not relieve the dissolved corporation of its liability, and the court having jurisdiction of the cause had the right to reopen the case for the purpose of protecting’ rights of creditors against the assets of the corporation, wherever found.

There is no force in the argument that the receiver could not sue in the State of Illinois. Courts of this State recognize the right of a dissolved corporation, through its receiver or trustees, to bring suit in this State or to defend in case it is being sued. This is not a case of a receiver attempting to obtain property in order to administer as receiver. In such a latter case ancillary receivers are appointed. Eau Claire Canning Co. v. Western Brokerage Co., 213 Ill. 561.

The Kelly-Springfield Motor Truck Company had obligated itself to pay rent under a lease. It had in turn assigned this lease to the defendant. It had taken out a license to do business in this State at the time it entered into this lease and was properly qualified to carry on its business. For that purpose it was necessary to have a location in this State. Its right to collect rent after it ceased to do business had nothing to do with its restrictions under the Foreign Corporation Act. This act is intended to permit business of the character such as that conducted by the corporation. It had a right to wind up its affairs and this would include the assignment or conveyance of the leasehold upon which it was obligated. It has the same rights in so far as this rule is concerned as a domestic corporation. Life Ass’n of America v. Fassett, 102 Ill. 315; McCullough v. Judson, 327 Ill. 381.

There is no evidence of fraud in the procuring of the assignment from the receiver. The instrument recites that the $17,000 received by the receiver of the Kelly-Springfield Motor Truck Company was the consideration for the assignment. It also recites that the Kelly-Springfield Company shall be released from any further liability under its lease. The receiver under order of court had a right to assign its sublease with the defendant to the plaintiffs here. It would be a sufficient consideration if it was thereby released from any further obligation on the lease originally entered into with the plaintiffs. We cannot see in what way the defendant is interested in the consideration for the assignment, as this is a matter between the parties to that agreement.

Lastly, it is insisted that under the statutes of the State of Illinois, which limits the right of a domestic corporation to maintain an action within two years after dissolution, the plaintiffs, as assignees of the Kelly-Springfield Company, are barred. This is based on the argument that a foreign corporation has no greater right than a domestic corporation. The weight of authority clearly holds otherwise. A well considered case on this question is Illinois Power & Light Corp. v. Hurley, 49 F. (2d) 681. See also Forcite Powder Co. v. Herdien, 162 Ill. App. 425.

All corporations derive their life and right to transact business from the State in which they are incorporated. The manner of doing business in a foreign jurisdiction may be controlled by the statutes of that jurisdiction, but its organization and the manner of its dissolution and its obligations thereunder are subject to the control of the State which gave it birth. Under the rule of comity existing between the various States, the rights of the State creating the corporation are recognized in so far as they deal with its corporate life and existence. Washington-Alaska Bank v. Dexter Horton Nat. Bank, 263 Fed. 304; Sinnott v. Hanan, 214 N. Y. 454, 108 N. E. 858; Forcite Powder Co. v. Herdien, 162 Ill. App. 425.

There is nothing in the Ohio statutes continuing the life of a corporation after dissolution for the purpose of collecting or distributing assets repugnant to the laws of this State, because of the fact that that right or obligation exists for a longer time than the limitation provided by the laws of Illinois. It gives the Ohio corporation no greater powers than a company incorporated under the laws of this State. It is not repugnant to the laws of the State of Illinois inasmuch as its purpose is identical after dissolution of the corporation with the purpose of the statute of this State. The fact that the limitation extends over and beyond two years only adds to that corporation an increased liability, if anything. We are of the opinion that the statutory period of two years, applicable to domestic corporations upon dissolution, is unavailing to the defendant to this action.

For the reasons stated in this opinion the judgment of the circuit court is reversed and the cause is remanded for a new trial.

Judgment reversed and cause remanded.

Hebel, P. J., and Hall, J., concur.


text:
    Josephine Slansek, Appellee, v. Slovene National Benefit Society, Appellant.
    Gen. No. 37,602.
    Opinion filed February 13, 1935.
    Donald T. Winder, of Chicago, for appellant; Fulton, Fulton & Sheen, of Chicago, of counsel.

      Richard J. Zavertnik, of Chicago, for appellee; Miles Cunat, of Chicago, of counsel.
   Mr. Justice Wilson

delivered the opinion of the court.

Plaintiff, Josephine Slansek, started her action on November 25, 1933, against the defendant, Slovene National Benefit Society, a corporation, in a justice court in Cook county and recovered a judgment by default against the defendant in the sum of $300 and costs, December 2, 1933. Execution issued and was served upon the defendant December 26, 1933. December 30, 1933, the defendant appeared before the justice of the peace and made a motion to set aside the judgment on the ground that the justice of the peace was without jurisdiction to enter the judgment inasmuch as section 7 of the Practice Act, Cahill’s Illinois Revised Statutes, 1931, ch. 110, provides:

“7. The courts of record of the county wherein the plaintiff or complainant may reside shall have jurisdiction of all actions hereafter to be commenced by any individual against any insurance company, either incorporated by any law of this State or doing business in this State. ...”

The motion was denied by the justice of the peace and a petition for a writ of certiorari was filed January 5,1934, in the circuit court, setting up facts already referred to and charging that the judgment was not the result of negligence on the part of the defendant; that no process was served upon any duly authorized officer or employee of the defendant; that at the time of the commencement of the action and for more than 20 days after the rendition of the judgment, the defendant had no knowledge of the suit or the judgment rendered thereon and that, therefore, it was not in a position to appeal from said judgment in accordance with the statutes.

The petition further sets out that the defendant, Slovene National Benefit Society, is a fraternal beneficiary society and that it had already paid the amount of the benefit certificate, which was the subject matter of the suit. The petition recites that the principal office of the defendant was in Chicago, Cook county, Illinois.

The transcript of the justice of the peace shows a summons was served by leaving a copy with one Matt Marentich, president of Sos. No. 707, an agent of said corporation in the territory of Cook county outside of the City of Chicago, its president, secretary, superintendent, etc., not being found in the county.

The matter was heard by the circuit court on a motion by the plaintiff to dismiss the writ of certiorari and this motion was allowed and the writ quashed. It is from this order that the appeal is prosecuted. The recitals in the petition for the writ must, therefore, be resolved in favor of the petitioner. Under this rule the, allegations in the petition must be taken as true.

We are confronted in the first place with the proposition as to whether or not under the various statutes a justice of the peace had jurisdiction of a case of this kind and character. This necessarily involves the question as' to whether or not a fraternal benefit society, incorporated under the laws of this State, is an insurance company within the meaning of section 7 of the Practice Act already referred to. Outside of the social provisions generally provided in the by-laws, the only business transacted by such an organization is the issuance of benefit certificates to its members, which are payable upon death and amount to an insurance on the life of the member for the benefit of the one named in the policy as beneficiary. It is to all intents and purposes an insurance company, but by other statutes it is relieved from the onerous conditions and rules applicable to straight life insurance companies. Railway Passenger & Freight Conductors’ Mut. Aid & Benefit Ass’n v. Robinson, 147 Ill. 138. It is insisted, however, that under paragraph 488, chapter 73, Cahill’s Illinois Revised Statutes, 1931, such beneficiary societies are exempt from all laws with reference to insurance companies. This section provided, among other things, as follows: “All such societies shall be governed by this Act, and shall be exempt from the provisions of all insurance laws of this State, and no law hereafter passed shall apply to them unless they be expressly designated therein.”

In the case of Railway Passenger & Freight Conductors’ Mut. Aid & Benefit Ass’n v. Robinson, supra, the Supreme Court in its opinion says:

“We therefore think it clear that, when these provisions are considered and construed in the light of the history of our legislation on the subject of insurance and insurance companies, that the legislative intention was merely to exempt Mutual Benefit Societies from the duty of complying with the General Insurance Law, and to substitute therefor a code of rules specifically applicable' to that class of associations. This construction in our opinion does no violence to the language of these statutes, but merely limits it to the subject matter which was manifestly in the legislative mind when the statutes were passed. There is nothing in the statutes themselves, nor in the circumstances attending their enactment furnishing ground for the supposition that the Legislature had in mind the statutes regulating the jurisdiction of the courts, or the course of judicial procedure in suits brought against these societies. These are matters with which the Legislature was not then attempting to deal, and the language used, by fair construction, should be so limited as to have no application to those subjects.” To the same effect see Traders’ Mut. Life Ins. Co. v. Humphrey, 109 Ill. App. 246.

The section of the Insurance Act referred to in Railway Passenger & Freight Conductors’ Mut. Aid & Benefit Ass’n v. Robinson, supra, has reference to the laws passed regulating the manner of doing business of insurance companies and has no application to the provision of the Practice Act with reference to process. To hold otherwise would create a hardship on beneficiaries who would be required to sue in the county where the defendant resided and thus incur a considerable loss and expense in following the defendant into its home county. If then, the defendant is an insurance company within the meaning of the term as used in the Practice Act providing that “the courts of record of the county wherein the plaintiff or complainant may reside shall have jurisdiction of all actions hereafter to be commenced” the question arises as to whether or not this provision deprives a justice of the peace, which is not a court of record, of jurisdiction of the cause. If it does, then the proceeding before the justice of the peace was a nullity and the question could be properly raised by certiorari, the time for appeal having expired.

The only case to which we are referred on this question is Supreme Hive Ladies of Maccabees of World v. Harrington, 227 Ill. 511. In that case the action was commenced in the city court of Chicago Heights, which is a court of record in Cook county, but whose jurisdiction is confined to the boundaries of the municipality and are not coextensive with the county in which it is located. A reading of the opinion, however, clearly discloses that it was the consensus of the opinions of the judges of the Supreme Court that, by virtue of the section of the Practice Act referred to, all cases against insurance companies, including the defendant in that case which was a. Benevolent Association, should be commenced in a court of record of the county. In its opinion, the Supreme Court said:

“Section 3 of the Practice Act (Hurd’s Stat. 1905, p. 1531,) is as follows: ‘The courts of record of the county wherein the plaintiff or complainant may reside shall have jurisdiction of all actions hereafter to be commenced by any individual against any insurance company, either incorporated by any law of this State or doing business in this State. And all process issued in any cause commenced in the county wherein the plaintiff may reside wherein an individual may be plaintiff or complainant and any such company defendant may be directed to any county of this State for service and return.’

“It is by virtue of the foregoing section that the courts of record of the county wherein the plaintiff or complainant may reside are given jurisdiction of all actions wherein an individual is plaintiff or complainant and an insurance company is defendant, and are authorized to direct their process to any county of the State for service and return. It will be noted that the foregoing section of the Practice Act places foreign and domestic insurance companies on the same footing.

It is clear from a reading of this opinion that the legislature intended to confer upon courts of record jurisdiction of such causes of action. It was the evident purpose of the legislature to confer upon these organizations a right to have such proceedings heard in a court of record and not compel them to follow litigation to outlying districts of the various counties of the State. There is no denial in the record nor in the briefs presented here of the fact that the defendant is a beneficiary organization and that the action in the justice’s court was upon a policy of insurance issued by the defendant.

There remains, therefore, only a question of law and in our opinion the justice of the peace was without jurisdiction to enter the judgment or take any action in the proceeding between the parties.

The order of the circuit court quashing the writ of certiorari is reversed and the cause is remanded to the circuit court with directions to sustain the writ and to take such other or further steps as are necessary in accordance with the views expressed in this opinion.

Order reversed cmd cause remanded with directions.

Hebel, P. J., and Hall, J., concur.


text:
    Richard F. Lynn, Appellant, v. Helen Multhauf et al., Appellees.
    Gen. No. 37,620.

      Opinion filed February 13, 1935.
    Richard F. Lynn, of Chicago, for appellant.
    Thomas W. Reilly, of Chicago, for appellees.
   Mr. Justice Wilson

delivered the opinion of the court.

The plaintiff brought his action on a certain promissory note against the defendants, under section 15, chapter 59 of Cahill’s Illinois Revised Statutes, 1933. That section provides as follows:

“15. No Administration Within Tear — Liability.] § 15. If no person shall administer on the goods and chattels of a deceased person for the space of one year after his death, a separate suit or action may be maintained against the heirs or devisees, on all the contracts and undertakings of such deceased persons.”

The note upon which the action was brought was signed by Mary Ryan who died and for whose estate no administrator was appointed within the space of one year. Summons was served upon each and all of the defendants, but no appearance was entered and no answer filed and judgment was entered as in default, March 21,1934. The term of the circuit court at which this judgment was entered expired and, on May 1,1934 thereafter, a motion was made by the defendants to set aside the order of default and to stay execution. The term having expired this motion can only be

treated as one under chapter 110, paragraph 200, section 72, Cahill’s Illinois Revised Statutes, 1933, which provides that the writ of error coram nolis having been abolished, errors in fact committed in the proceedings may be corrected by motion, if made within five years after the rendition of the final judgment.

At the hearing upon this motion on May 12,1934, an order was entered opening the judgment in the original cause and granting leave to the defendants to enter their appearance and answer the complaint. From this order an appeal was prayed and allowed to this court.

Defendants have made their motion here to dismiss the appeal on the ground that it is not an appealable order. The rule, however, is otherwise.

The Supreme Court of this State in the case of Central Bond & Mortgage Co. v. Roeser, 323 Ill. 90, says: "The court necessarily has the power, in each instance, to pass upon the question whether the motion so made on its face discloses any such error. If it decides that the motion shows such error in fact, it is not deprived of its jurisdiction in the particular case because it erred in its conclusion. The error, if any, in holding the motion sufficient can only be corrected by appeal or writ of error to review the order upon proper assignments of error in the appellate tribunal. (Harris v. Chicago House Wrecking Co., supra; Domitski v. American Linseed Co., supra.) ” See also People v. Green, 355 Ill. 468.

The motion to dismiss the appeal will, therefore, be denied.

The motion to set aside the judgment charges that the plaintiff filed two suits in the circuit court of Cook county against the said defendants, one being for the foreclosure of a certain trust deed and the other- suit being a suit at law upon the same trust deed note involved in the foreclosure suit; charges that on or about February 18, 1934, defendants were notified in writing by the plaintiff that he would appear in court and apply for the appointment of a receiver in the foreclosure proceedings; charges that on or about February 26, 1934, defendants received several summonses in both cases at the same time and that by reason of the similarity of the names of the parties, plaintiff and defendant in the two suits, defendants mistakenly believed that all of said summonses related to the foreclosure suit; charges that the defendants had no defense to the foreclosure and no objections to the appointment of a receiver and, therefore, considered it unnecessary to employ counsel; that the failure of defendants to enter their appearances in this action and to answer was not due to negligence on their part or on the part of their attorney; charges that they have a meritorious defense to the suit at law and that if these facts were known to the court it would have precluded the judgment as rendered.

The question is solely one based upon the allegations in the petition, namely, as to whether or not the errors of fact were such as could be made the basis of a motion in the nature of a writ of error coram nobis. These errors of fact have been enumerated and discussed in the case of Marabia v. Thompson Hospital, 309 Ill. 147. The rule enunciated in that case and the' distinction made has been uniformly followed by the courts of this State. In its opinion in that case the court said: “The errors of fact which could be made the basis of such a writ and can now be made the basis of a motion were not errors upon such questions of fact as arose upon the pleadings in the original case, or questions of fact averred in the pleadings upon which issue might have been taken, or such questions of fact as constitute the basis of the cause of action or defense upon the merits of the case or might have been pleaded as a defense to the merits. They were questions of the character mentioned in the cases or by the text-writers where the writ has been discussed as a means of correcting errors in the same court, and referred to the disability of parties, the incapacity of the plaintiffs to sue or the disability of the defendants to defend, such as infancy, coverture, death of one or more of the parties, death of a joint party, insanity. Any of these facts, if known to the court, would prevent the entry of a judgment, and it is to error arising out of lack of knowledge by the court of such facts that the writ of error coram nobis, or the motion which is its substitute, applies, and not to lack of knowledge on the part of the court of facts constituting a cause of action or a defense to it.”

In the case before us there was no error of fact, which if known to the court would have precluded the judgment. It was the duty of the defendants to answer and set forth their defense. It was not the duty of the court to investigate for the purpose of finding out whether or not they had a valid defense to the action.

The motion before us contains no allegation in denial of the fact that they were the heirs of Mary Ryan, deceased ; that she had died over a year previous to the institution of the suit; that no administrator had been appointed; neither is it alleged that she left no property.

In the absence of answers by the defendants, the court was correct in entering1 a judgment by default. We have nothing before us to show what, if any, proof was made at that hearing. It is insisted also that the declaration in the original suit was not on its face sufficient to support the judgment. We are not concerned, however, with this question in our consideration of the matter as it now-stands before us. Defects in the pleadings will not be considered on a motion to vacate the judgment. If there were any errors in the pleadings they were apparent to the court who entered the judgment. Such errors cannot be questioned collaterally. 15 Ruling Case Law, 339; Harris v. Chicago House Wrecking Co., 314 Ill. 500.

The original proceeding is not before us for consideration, and, therefore, this court is not concerned with the pleadings therein. Mitchell v. King, 187 Ill. 452.

Where a party has been served with summons, but has neglected to appear and defend, he cannot be relieved against his own negligence so to do. Marnik v. Cusack, 317 Ill. 362.

The entry of the judgment may have created a hardship against the defendants but they were given an opportunity to present their defense and neglected so to dp. A proceeding of this kind is not addressed to the equitable powers of the court and is not intended to relieve a party from the consequences of his own negligence, neither is it intended for the purpose of reviewing errors of law or fact constituting a defense to the action. It can be based only upon errors of fact which, if known to the court, would have prevented the entry of the judgment.

We do not believe that the facts set out in the petition are such facts as constitute a sufficient basis for a motion in the nature of a writ of error coram nobis.

The Supreme Court of this State in the case of Loew v. Krauspe, 320 Ill. 244, said: “The motion is not addressed to the equitable powers of the court, and it is not intended to relieve the party from the consequences of his own negligence. (Consolidated Coal Co. v. Oeltjen, 189 Ill. 85; Cramer v. Commercial Men’s Ass’n, 260 id. 516.) The object and purpose of the motion under section 89 have been frequently discussed in decisions of this court, and it has always been held that errors of fact which could be made the basis of the motion are facts which, if known to the court, would have prevented the entry of the judgment, and not the lack of knowledge on the part of the court of facts constituting a cause of action or a defense to it. Marabia v. Thompson Hospital, 309 Ill. 147; Village of Downers Grove v. Glos, 316 id. 563.”

Defendants may have some relief, but it is not by a proceeding such as this. Moreover, the plaintiff is entitled to but one satisfaction of its debt and if it should have been satisfied in the foreclosure proceeding, the defendants should have the benefit of that satisfaction. But, so far as the matter before us is concerned, we are of the opinion that the court erred in vacating the judgment and for that reason and in conformity with the views expressed in this opinion, the judgment of the circuit court is reversed.

Judgment reversed.

Hebel, P. J., and Hall, J., concur.