author: Mr. Justice Hebel Mr. Justice Hebel

text:
    Melvin L. Straus, Appellee, v. Clarence A. Anderson et al., Defendants. Appeal of Harold Factor, Appellant, v. Melvin L. Straus, Complainant, and George W. Rossetter et al., Appellees.
    Gen. No. 37,949.

      Opinion filed December 27, 1935.
    Rehearing denied and opinion amended January 7, 1936.
    Additional opinion filed February 5, 1936.
    Shulman, Shulman & Abrams, of Chicago, for appellant ; Meyer Abrams, of counsel.
    SoNNENSCHEIN, BeRKSON, LiAUTMANN, LiEVINSON & Morse, Judah, Reichmann, Trumbull, Cos & Stern and Gottlieb & Schwartz, all of Chicago, for appellees.
   Mr. Justice Hebel

delivered the opinion of the court.

This is an appeal by Harold Factor from an order entered in the circuit court of Cook county refusing leave to file his intervening petition, and also overruling his objections filed to the master’s report of sale and distribution and the plan of reorganization offered by the so-called First Mortgage Bondholders’ Committee.

On January 18, 1932, Melvin L. Straus, as trustee, under a certain trust deed, notified the mortgagor, Clarence A. Anderson and Harriett Smulsld and Marion Koscinsld, named therein, the then owners of the equity, of the existence of certain defaults in the payment of the monthly deposits on account of the principal and interest of bonds due April 1, 1932, and of the defaults in the payment of the balance of 1928 and 1929 general taxes, and advised them that pursuant to the provisions of the trust deed, they had 30 days within which to cure these defaults.

It appears from the record that on April 19, 1932, the defaults not having been cured, the trustee, in accordance with the provisions of the trust deed, accelerated the unpaid balance of the bonds secured by the trust deed in the principal amount of $230,000, and filed his bill for foreclosure. After negotiations with the owners of the equity, and in accordance with the provisions of the trust deed, actual possession of the property was surrendered to the trustee by an instrument in writing dated March 30, 1932.

It also appears as a part of the record that the trustee went into possession, and that all income from the property since April 1, 1932, has been accumulated by the trustee for- the benefit of all bondholders. On December 1, 1932, the court entered a decree of foreclosure and sale, based upon the master’s report theretofore rendered. The decree provided that the master should report the result of the sale to the court for its approval.

The parties to this litigation are the complainant, who is the trustee and who filed the bill of complaint in a representative capacity pursuant to the provision of the trust deed that all right of action to institute and prosecute foreclosure proceedings is vested in the trustee; the defendants, Marion Koseinski and Harriett Smulski, who were the owners of the equity; the defendant Clarance A. Anderson, the mortgagor who had theretofore divested himself of title to the property, and other defendants were various parties having interests in the second and third mortgages in the amounts, respectively, of $100,000 and $60,000. ' The bondholders under the first mortgage trust deed were not named as parties defendant for the reason that the provisions of the trust deed provided that in foreclosure proceedings the trustee should act as their representative.

It also appears from the record that on June 23, 1934, a motion for leave to file an intervening petition on behalf of Harold Factor was presented to the court and continued until the September term of court; that on August 23,1934, the master advertised the premises for sale, and the property was bid in by Irving Feldinger, who was the nominee of the Dellashore Apartments First Mortgage Bondholders’ Committee, a voluntary organization of bondholders, for $35,000, subject to unpaid taxes in the approximate amount of $25,000, exclusive of the 1933 and 1934 taxes, which had not been billed.

The record also shows that on August 31, 1934, the committee asked leave to file its petition setting forth that it represented at that time the holders of $173,200 principal amount of the outstanding bonds and that it had caused Irving Feldinger to bid at the master’s sale as its nominee; that it had promulgated a plan of reorganization for the property known as the “Della-shore Apartments,” and that it desired the court to consider the plan of reorganization, a notice of adoption and summary of which had previously been sent to all known bondholders on July 18, 1934; that it desired to accord to all bondholders who had previously deposited their bonds, an opportunity to participate in the plan of reorganization upon such terms as the court might direct, and that it desired that the court supervise the consummation of the plan of reorganization.

The court entered an order allowing the committee to file its petition, and directing the master to notify all bondholders who had not theretofore deposited their bonds with the committee and whose names were to be furnished to the master by the committee, that a hearing would be had on September 12, 1934, at which time the court would pass upon the master’s report of sale and distribution and the plan of reorganization, and at which time any bondholder might present objections to the report of sale and distribution and to the plan.

The master, pursuant to the direction of the court, sent a notice to all nondepositing bondholders on August 31, 1934, in which he advised them, among other things, that their pro rata share of the foreclosure sale price would be approximately 11 cents on the dollar, and that any bondholder might file objections to the confirmation of the sale and the approval of the plan.

Objections were filed on behalf of Harold Factor, the appellant, and included in the objections were the facts set forth in the intervening petition filed by this petitioner, and which is now pending before the court on his motion to intervene.

At the hearing on the confirmation of the master’s report of sale and the plan of reorganization, no bondholder other than the objector filed objections or appeared in person or by counsel to object to the sale or the plan.

After a hearing on the report of sale and distribution and on the plan.of reorganization and the objections thereto filed, the chancellor denied leave to file the intervening petition and entered an order approving the report of sale and distribution and the plan of reorganization submitted by the committee. This order further found that Clarence A. Anderson was liable for the deficiency in the amount of $243,115.67. The order further provided that all bondholders who had not theretofore deposited their bonds with the depositary of the committee might have 120 days from the date of the entry of the order in which to deposit their bonds and participate in the plan of reorganization. At the time of the entry of the order, there had been deposited with the committee additional bonds in the amount of $7,100, making the total amount of bonds on deposit $180,300, or approximately 78 per cent.

We will refer to Harold Factor in this opinion as the objector for the purpose of brevity.

This objector contends that it was improper to allow intervention to one class of bond owners, designated as the committee, and at the same time to deny intervention to a bondholder who presented his intervening petition in person; that the pretended sale which disposed of the property at $35,000 would yield to the nondepositing bondholders only 11 cents on the dollar, which was not a proper sale price for the property in question.

The master in chancery filed his report of sale and distribution, which was dated August 31, 1934. The master reported that he sold the property on August 23, 1934, pursuant to the decree, to Irving Feldinger for $35,000 in cash and unpaid bonds and coupons and distributed as follows: $1,276.05 in payment of master’s fees and expenses; $53.90 for costs; $7,262.55 balance of trustee’s prior lien in the amount of $11,924.63, including trustee’s fees, solicitors’ fees and court reporter’s fees (paid on account as per decree of December 1, 1932, $4,662.08); a total of prior liens paid $8,592.50, leaving a balance for distribution of $26,407.50. This bid of $35,000 for the real estate, together with the improvement is rather startling when we consider that the improvement on this property is a nine-story fireproof apartment building consisting of nine apartments, which had an incumbrance of $300,000 first mortgage, $100,000 second mortgage and $60,000 third mortgage. While the court in the approval of a bid offered for property sold by a master under a decree of court is vested with a broad discretion, the fact that the bid of itself is inadequate is not always to be considered as an abuse of the court’s discretion in approving such sale.

The objector in this proceeding contends that the whole proceeding, so far as it is material upon this question, was collusive and fraudulent, and part of a scheme to deprive the bondholders of the value of their securities; that the sale was fictitious and ought not to receive the stamp of approval of a court of equity; that if there were a redemption for $35,000 by a proper person coming within the terms of the statute of this State, it would present a situation that would perhaps result in the loss to the bondholders of their invested money, except as to the proportionate share of each dollar invested from the balance of the bid after the allowance of proper deductions.

The approval of a master’s report of sale and distribution should be carefully considered by the court, and the sale should not be approved when it is apparent to the court that the sale is so inadequate as to be unreasonable and sufficient to excite suspicion. The bid reported by the master was so grossly inadequate as to be inequitable.

Questions upon the adequacy of the sale price of real property by a master who was directed by a decree in a foreclosure proceeding have been before this court a number of times, and the general rule is well stated in the case of Slack v. Cooper, 219 Ill. 138, where the court uses this language:

“The master is a ministerial officer for the purpose of carrying into effect the decree of the court, and his acts are binding only when approved by the court. If the chancellor finds, upon the coming in of the report of a master, that the sale as made is not to the best interest of all concerned and is inequitable, or that any fraud or misconduct has been practiced npon the master or the court or any irregularities in the proceedings, it is his duty to set aside the sale as made and order another sale of the premises. The chancellor has a broad discretion in passing upon the acts of the master and approving or disapproving his acts in reference to sales and entering its own decrees. ’ ’

Complaint is made that a representative of some of the bondholders bid at the sale of the real property on the date of the sale by the master. The law is well settled that a mortgagee may bid at a foreclosure sale made for his benefit and for his protection. By such means he may be able to obtain payment of his debt. If the mortgagee has the right to bid in person, he may also offer a bid by his agent. By direction of the bondholders, a representative may bid to satisfy the amounts due on their several bonds. This court upon this very question, in the case of Chillicothe Paper Co. v. Wheeler, 68 Ill. App. 343, said:

“It is contended that the sale to Gilliam, one of the bondholders, was void, and should have been set aside because the decree did not give bondholders a right to purchase and because the purchase was made for all the bondholders. This is the first time we have ever heard it urged in this State that a mortgagee cannot purchase at a foreclosure sale made for his benefit. For the mortgagee to so purchase is a matter of daily occurrence. Frequently it is the only way in which a mortgagee can protect himself and obtain payment of his debt. He is not bidding at his own sale but at one made by an officer of the court and under the order of the court. Gilliam had the right to bid either for himself or for himself and other bondholders jointly.”

There can be no question that several bondholders may enter into an agreement to protect their several interests and provide by the agreement that a bid may be offered on behalf of the bondholders at a master’s sale in a foreclosure proceeding in which the bondholders are interested. If the bid of the bondholders offered at such sale is approved and a deed to the property issued in due course, the title to this property will be held in the manner provided for in the contract of the bondholders, but, in the instant case, the serious question is: Has the court in a foreclosure proceeding-jurisdiction to permit representatives of a bondholders’ committee to intervene after a decree for a sale of the property is entered, and in their petition pray that the court pass upon the advisability and fairness of the contract which had been entered into by individual bondholders not parties to this litigation, other than through the trustee, the representative of the bondholders in the foreclosure proceeding? The purpose of a foreclosure suit is to satisfy the indebtedness secured by a mortgage or trust deed, by the entry of a decree so that the equity of redemption of the owners of the title to the real property may be foreclosed. In this case the court permitted an intervening petition to be filed, and upon notice and after a hearing, approved the master’s report of sale and the plan of reorganization submitted by the bondholders’ committee. It is to be noted that under the plan of reorganization the court is to supervise the consummation of the plan. This plan submitted to the court for its approval is but a declaratory decree and in our opinion is not germane to the issues involved, nor does it settle the rights of the parties in interest.

The nondepositing bondholders who are not parties to this plan of reorganization contract are not before the court, and it is doubtful whether such bondholders would be properly before the court by the service of a notice to appear and object. It is to be noted that those bondholders who have not joined in the reorganization plan are given 120 days from the entry of the order in which to make up their minds as to whether they will submit their bonds to the control of the bondholders ’ committee.

The plan of reorganization was already approved by the court, so that it would seem from the order itself that it would be futile for the nondepositing bondholders who filed subsequent to the approval of the court of the contract to object.

The only objections filed were those by Harold Factor, who objected to the sale and the proposed plan of the committee for reorganization. He indulges in severe criticism of the object of the plan and the means by which control of the property is provided for. However, we do not deem it necessary to consider these criticisms, for the reason stated in our opinion that the question is as to the jurisdiction of the court, under the pleadings in the instant case, to pass upon the advisability of the plan of reorganization. As we have already indicated, we do not think it decides any of the issues involved in a foreclosure proceeding-. The decretal order entered upon the request of the interveners is not one that can be enforced.

A rather significant statement by the Supreme Court appears in its opinion in the case of Lonergan v. Goodman, 241 Ill. 200, where the court says:

“Whether the complainant will ever acquire any title to the lot depends upon his payment of the purchase price within the time agreed upon, and the only possible effect of a decision of the question discussed by counsel would be to have this court certify what title Harry Goodman now has and what title the complainant will acquire if he chooses to avail himself of the option. The bill states all the facts upon which the question of title depends and the plea merely reiterates the same facts with immaterial additions, so that there appears to be no real controversy between the parties, and a court cannot properly be used, for mere business reasons, to decide whether the complainant will get an absolute estate in fee on complying with the terms of the option, or a limited estate.” This statement is applicable to the facts in the instant case, where- the interveners, the First Mortgage Bondholders’ Committee, seek to use the equity powers of a court of chancery for purely business reasons; in other words, to have the court approve a contract entered into by a group of bondholders to induce nondepositing bondholders to join in this contract.

The basis of this litigation is the trust deed and the • bonds constituting the contract between the holder of the equity of redemption, the trustee named in the trust deed and the several bondholders. This contract is controlling and whatever rights the several parties have are by reason of the express provisions of the contract. The well established rule of law is that the court is not vested with the power to add to or subtract from the contract. The contract, by its terms, cannot be construed to grant to a group of bondholders the right by an intervening petition to ask for the court’s approval of their plan of reorganization which is based upon a bid at the sale of the property and the anticipated title to the property. The court in its exercise of jurisdiction should consider and protect the rights of all the bondholders. The trust deed does not provide that the plan of reorganization presented to the court may be approved and have a binding effect on any of the bondholders. As we have already stated in our opinion, the plan submitted is outside the purpose and terms of the trust deed involved in the foreclosure proceeding, and it should not have been considered by the trial court.

The Supreme Court of this State, in a late authority, Chicago Title & Trust Co. v. Robin, 361 Ill. 261, passed upon the question of the binding effect of the provisions of the trust deed, and we believe the court’s decision is controlling upon the several questions involved in the present litigation. The court there said:

‘‘ The trust deed and bonds constitute a contract between the bondholders themselves, between them as a class and the Robins and the trustee, for they were made at approximately the same time as a part of one transaction. The general rule is that they should be construed together as a single instrument. (Oswianza v. Wengler & Mandell, 358 Ill. 302; Crandall v. Sorg, 198 id. 48.) An express statement is not found in the contract between the parties that the trustee shall foreclose on the trust estate and bid at the sale thereof in behalf of the owners and holders of the bonds. The language of the contract, by implication, does not clothe the trustee with power, under the guise of a right, duty or obligation, to bid, as a necessary or incidental act, in order that it may carry out the express objects of the contracts. The powers granted to a trustee in a deed of trust are not liberally construed and their exercise must be consonant with the terms of that instrument. (Iowa Light, Heat and Power Co. v. First Nat. Bank of Boston, 250 Mass. 353, 145 N. E. 433.) These powers, furthermore, exist only in the terms creating the trust and no others. (2 Perry on Trust and Trustees, (7th ed.) sec. 602g, p. 1027.) Since the contract was carefully drawn and made provision for many contingencies, it may safely be presumed that none of the parties intended that something in addition to its provisions should govern the trustee. This court does not have the power to import into a contract other or additional provisions. To do so would be making a new contract for the parties. (Burt v. Garden City Sand Co., 237 Ill. 473.) We cannot construe a contract along the line of what we might believe would be a better contract for the parties to make, as equity vests no wide discretion in the chancellor such as would permit him to disturb contract rights of property. (Merchants Loan and Trust Co. v. Chicago Railways Co., 158 Fed. 923, C. C. A. 7th, 1907.) A contract right is a property right. (Kneeland v. American Loan and Trust Co., 136 U. S. 89, 34 L. Ed. 379.) Since the rights, duties and obligations of the trustee were contained and defined solely in the trust deed, its duty as trustee was simply to sell the property to satisfy the debt. Darst v. Bates, 95 Ill. 493.”

The Supreme Court quoted from the case of Detroit Trust Co. v. Stormfeltz-Lovely Co., 257 Mich. 655, 242 N. W. 227, as follows:

‘ ‘ A bondholder has the right to insist upon his contract, even if eventually he should fare worse by insisting upon his share of a sale for cash, together with the right to look to the responsibility of the mortgagor for a proportionate share of the deficiency. He is not bound to become the owner in common of a beneficial interest in a trust which may run on for many years and from which he may realize cash, stocks, bonds or other securities that eventually may net him more or less than the amount he would have received had the property been sold for cash.” The Supreme Court also said in the case of Chicago Title & Trust Co. v. Robin, supra:

‘ ‘ The latest case cited by appellants is from Colorado and was decided in December, 1934. (Cosmopolitan Hotel Co. v. Colorado Nat. Bank of Denver, 40 P. (2d) 245.) There a foreclosure sale was held under a deed of trust securing a bond issue. Over protest of the holder of some of the bonds the trial court authorized the trustee to bid at the sale; if the bid were accepted the trustee was to use the foreclosure judgment in payment. It was contended that the trust deed required the sale to be for cash, consequently the court was without power to strip the bondholders of their contract rights without their consent and throw them into a joint ownership venture. It was decided that the lower court could not so authorize the trustee because of two provisions in the trust deed, the first creating an equality of rights for the bondholders, the essence of which was freedom from domination by any or all other bondholders, and the second conferring upon the bondholders the right to be paid the principal and interest in a ratable manner and in the' event of default to enjoy the benefits of foreclosure in accordance with the terms of the trust deed. In an exhaustive and well-reasoned opinion, in which the cases we have heretofore cited were thoroughly examined, the court there held that the trustee had only the specific power to sell and to sell for cash only. ’ ’

For the reasons appearing in this opinion the orders appealed from are reversed and the 'cause remanded with directions that a resale of the property be had in compliance with the terms of the decree.

Orders reversed and cause remanded with directions.

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

Additional Opinion.

Mr. Justice Hebel

delivered the additional opinion of the court.

Subsequent to the filing of the opinion of the court in this case and upon denial of a petition for rehearing, a petition and suggestions were presented to this court by Messrs. Don Kenneth Jones and Vincent O’Brien, attorneys and members of the Chicago Bar, for leave to appear as amicus curiae, and that the court take into consideration the suggestions filed, which the court allowed.

The suggestions are in relation to questions involving the sale of real estate based upon a decree in a foreclosure proceeding, and the approval of the bid and the approval of contracts presented in such foreclosure proceeding for what is called a reorganization plan, and are in support of the theories advanced and so graciously submitted by counsel as an aid to the court.

By the suggestion upon the question of the approval of the bid offered at the sale provided for in the decree of foreclosure, the court is reminded that unless the trial court can find that the grossly inadequate price offered at a sale provided for in a foreclosure decree is coupled with fraud, mistake or a violation by the officer conducting the sale, the duty of the court is to approve such sale, for the reason that gross inadequacy in price alone would not justify the trial court in refusing to stamp with approval such sale.

In the consideration of this question of gross inadequacy it is well to have in mind the words of the Supreme Court in the case of Davis v. Chicago Dock Co., 129 Ill. 180:

“However this may be, the authorities are uniform that where property has been sold, upon execution or at judicial sale, at a grossly inadequate price, even slight circumstances indicating unfairness or fraud, either upon the part of the officer, the purchaser, or the party to the record benefited by the sale, will furnish sufficient ground for equitable interposition. The conscience of the chancellor, quickened by proof of circumstances indicating that an unfair advantage was sought or taken, will seize upon the gross inadequacy as additional and strong evidence of fraud, and, by decree, prevent the purchaser from reaping an unconscionable advantage. Thus, in Hamilton v. Quimby, supra, it was said, that if the execution had been properly issued, and the officer had performed his duty by giving the defendant notice of the writ, and a sale had been made of a large amount of property for a very small sum of money, ‘the sale ought not to have been set aside for mere inadequacy of price; but even then, where there is such gross inadequacy, the .court will seize upon anything indicating unfairness in the plaintiff, to afford relief. ’ See also Comstock v. Purple, supra; Hinney v. Knoebel, 51 Ill. 112; Berry v. Lovi, 107 id. 612; Howell v. Baker, 4 Johns. Ch. 122; Kloepping v. Stellmacher, 21 N. J. Eq. 328; American Wine Co. v. Scholer, 85 Mo. 496; Johnson v. Craul, 55 Texas 571; Seaman v. Riggins, 1 Green’s Ch. 214; Bixby v. Mead, 18 Wend. 611; Roberts v. Roberts, 13 Gratt. 639; Bod v. Ellis, 11 Iowa 97, and cases supra.

“It will not be necessary to extend this opinion by quotation from the cases. Upon examination it will be found that various incidents have been seized upon by the courts to grant relief where there has been a gross inadequacy of price; and the additional circumstances need not be sufficient, in themselves, to authorize the sale to be set aside, if they tend to show that an unfair advantage was taken, or that the sale was conducted in a manner prejudicial to the rights or interest of the parties interested, for while gross inadequacy of price will not, of itself, be sufficient, yet, when coupled with other circumstances tending to prove fraud, it becomes controlling and conclusive evidence, and justifies the interference by a court of equity to prevent the consummation of an inequitable result.”

In the case of Miller v. McAlister, 197 Ill. 72, citing with approval Davis v. Chicago Dock Co., supra, the court said:

“Where property has been sold upon execution, or at a judicial sale, at a grossly inadequate price, even slight circumstances, indicating unfairness or fraud, either upon the part of the officer, the purchaser, or the party to the record benefited by the sale, will furnish sufficient ground for equitable interposition. Where the inadequacy is gross, the purchaser can retain his advantage only by showing that he acquired title by proceedings free from fraud or irregularity. (Parker v. Shannon, 137 Ill. 376, and cases cited on p. 372; Davis v. Chicago Dock Co., 129 id. 180; Hebson v. McCambridge, 130 id. 367.) ”

The sale in the instant case was the result of a decree of foreclosure. The bid of $35,000 was offered by a nominee for a group of bondholders and subsequently approved by the court. This bid was offered, as we have already stated in our opinion, for a 10-story fireproof building, containing 9 apartments, all occupied by tenants. On this property there was an original incumbrance of $300,000, which is the subject of this foreclosure proceeding, a subsequent incumbrance of $100,000, and a third of $60,000.

What we would like to stress is that the income at the time of the sale and which was collected in gross, was $23,384.51, and there was paid in operating expenses $11,460.94, leaving an operating income of $11,923.57.

It follows that in the course of time if this bid stands approved, a deed will issue to the bidders and the property will be free and clear of the mortgage liens, and subject only, as far as we can determine from the record, to unpaid taxes.

An unfair advantage was taken by this group of bondholders in seeking to obtain this property for the amount of the bid. The. property at the time of sale was earning a net income of approximately $11,923.57. This sum is nearly one-third of the purchase price, and we are of the opinion that there is such a gross inadequacy of price that an unfair advantage has been taken by the bidder, not alone in the price, but when coupled with the income, such an unconscionable advantage that the court erred in approving the sale.

The court, constituting the third division of the Appellate Court of this District, is of the opinion, and rightly so from the record, that in a foreclosure proceeding such as this, an agreement by a number of bondholders to bid and then to request the court to approve a contract that was entered into by a group of bondholders for the purchase, operation, sale and the interest of each bondholder, is not germane to a foreclosure proceeding.

To what extent a court of chancery in a foreclosure litigation may consider questions independent of the foreclosure of the equity of redemption of the mortgagor, has been considered by courts of appeal of this State. In the case of Baker v. Updike, 155 Ill. 54, the court in the course of its discussion involving litigation, said:

“The execution of a mortgage on the land sold, thereby creating an express lien thereon, is inconsistent with and excludes the theory of an implied lien. So here, the bill, by alleging a mortgage, alleges, in effect, a waiver of an implied or vendor’s lien, and excludes the possibility of the existence of such lien; and the complainant cannot, on failing- to prove his allegations as to a mortgage, abandon them and treat the case as though such allegations had not been made, and seek to obtain a decree upon a theory which his bill, as drawn, expressly excludes.” Again, in the case of Parlin & Orendorff Co. v. Galloway, 95 Ill. App. 60, the court held that a party cannot, by a cross-bill on a mere bill.to foreclose a mortgage, compel the complainant to litigate an adverse title.

In the case of Smith v. Kenny, 89 Ill. App. 293, the court held that a court of equity has no jurisdiction to adjudicate upon an adverse legal title held by a party defendant in a foreclosure suit, but the court should dismiss the suit as to such defendant.

On the question of the right of the court in a foreclosure proceeding to establish and divide the line between the land covered by the trust deed and the land added by accretions, the court held in the case of Murray v. Gordon, 182 Ill. App. 460, that a cross-bill is properly demurrable. The court likewise in the case of Holinger v. Dickinson, 183 Ill. App. 122, an abstract opinion, where a purchaser from the mortgagor filed a cross-bill for an accounting, held that on a bill to foreclose a trust deed, a person made a party defendant and claiming an interest in the property as a purchaser thereof from the mortgagor subsequent to the execution of the trust deed, was not entitled to file & cross-bill praying for an accounting with the mortgagor, since to permit him to do so would delay the foreclosure proceeding and incumber the record with questions not necessary or properly involved in such proceeding.

The purpose of having the court approve the so-called reorganization plan, which we believe is a misnomer, is to continue the litigation so that the court may supervise the plan and enforce its provisions. By the contract of the mortgagor, the only relief the holder of the security has is" by virtue of the trust deed, and in the instant case the trustee, upon default after notice to perform, instituted foreclosure proceedings for the purpose of foreclosing the mortgagor’s equity of redemption. By the entry of the decree the rights of all parties were merged in the decree; — Lightcap v. Bradley, 186 Ill. 510 — and upon a sale of the property and approval by the court of such sale, the litigation is at an end, except that during the redemption period the income, if any, is either to be paid to the owner of the equity or will be applied upon the amount due by the terms of the deficiency decree.

At this point it might be well to consider the agreement submitted to the court by the three men who acted as the Bondholders’ Committee. The plan of reorganization provides:

“ (a) A new corporation called ‘New Company’ will be organized under the laws of the State of Illinois, having a capital stock of 2300 shares without par value. The nominee of the committee, if title will be acquired in the foreclosure, will convey the property to the New Company.

“(b) The capital stock will be issued to Trustees, the number of shares corresponding with the numbers of the bonds deposited, who will receive trust certificates in lieu of their bonds.

“(c) The capital stock will be deposited under a voting trust for 10 years unless sooner terminated by 51%.

“(d) The trustee shall not vote for a sale if one third of the beneficial owners will object.”

The Bondholders’ Committee, which consisted of George W. Rossetter, Jay C. McCord and Sidney H. Kahn, was selected as the voting trustees. Sidney H. Kahn was associated with Straus Securities Corporation, and was an officer and director of Securities Service Corporation, and was formerly an officer and director of S. W. Straus & Co., which originally underwrote the bond issue. The trust agreement as proposed will be in form satisfactory to counsel for the committee, and in the event of a resignation of any of the trustees, the remainder of the trustees may designate their successor. The trustees shall not be liable for any error of judgment or for any act done or step taken or omitted or for any mistakes of fact or law.

From the contract it further appears that it might be advisable in order to pay taxes, expenses of foreclosure and reorganization to place a first mortgage and to utilize the proceeds for such purposes and the new company may place such mortgage.

As to the distribution of the new securities, it is provided that one certificate of deposit in said trust shall be issued to the owner of each $100 bond.

The contract also provides that the management of the property will be under the supervision of the board of directors of the new company and will be elected by the trustees. Dividends will be declared by the board of directors as ■ the financial condition of the company will warrant. The' active management of the property will be placed in the hands of such persons or firm as are regarded as capable by the trustees.

Then follows what we regard as a rather significant provision by which it is provided that bondholders who have previously deposited need take no action to approve the plan. Dissenters must within 30 days file (1) a written notice of dissent ; (2) pay the committee for expenses and compensation on the basis of three per cent of the face amount of the bonds.

The contract then provides what the nondepositing bondholders would be entitled to if they fail to take advantage of the offer provided for by the contract.

The court by its order approved the sale, as well as the plan of reorganization, and ordered that new securities be issued in conformity with the plan, and that all persons, firms and corporations are restrained and enjoined from interfering with the carrying out of the provisions thereof, and the court reserves the jurisdiction for the purpose of supervising and carrying out said plan of reorganization and orders the committee to file its report of the consummation of the plan. Upon what theory the court ordered that new securities be issued in accordance with the plan, does not appear, so far as we have been able to find from the record, and as we have indicated, the court by reservation of jurisdiction to carry out said plan of reorganization, continues this litigation for at least 10 years, the time in which the trustees have control of this corporation, and the only evidence of an interest in this so-called plan is a certificate of deposit in the trust to be issued to the owner for each $100 bond, etc. The suggestion that new securities may be issued is made only to make it feasible for the committee to present the plan for the issuance of new securities to the Federal Trade Commission for its approval. The purpose is self-evident, when we consider the suggestions of the amicus curiae, in which they state:

“If an equity court in cases of this type is without power to pass upon the fairness of the plan under which parties in interest have combined to bid in property at a foreclosure sale at which the court knows there are no intending or available bidders, then bondholders and other parties in interest are put to the extreme expense, liability, and delay of registering with the Federal Trade Commission and are deprived of the benefits of the exemption provided by that Commission in those cases in which the fairness of the plan has been determined by a court. ’ ’

This is rather unusual procedure. The court in a foreclosure proceeding is not interested in the fact that a group of bondholders entered into a contract and bid for the property and in time received a deed ; nor is the court called upon to approve the issuance of new securities under the terms of the contract. This is wholly foreign to the purpose of a foreclosure proceeding.

In the petition presented to the court there appears the following with reference to the parties taking possession of the premises in question:

“It is expected that the court will shortly fix the date for the sale of the property — in order to effect a readjustment promptly and to avoid the necessity of awaiting the expiration of the 15 month period of redemption — the committee has made arrangements to acquire for the benefit of depositing bondholders title to the property, the second mortgage of $100,000, and the third mortgage of $60,000 from the various holders thereof for the aggregate sum of $3500.00— when the provisions of the escrow have been complied with title to the property will be held by a nominee of the committee for the benefit of the depositing first mortgage bondholders.”

From this statement it is to be observed that the nominee of the bondholders is to take title when it is acquired, and we are familiar with the rule that during the period of redemption the bidder at a foreclosure sale is not entitled to possession of the real estate, for the reason that the bidder has no legal title which would justify the court’s directing that possession be given to this bidder. In the case of Lightcap v. Bradley, 186 Ill. 510, the court said upon this question:

“A certificate of purchase does not purport to convey title, but on its face shows the contrary, by stating the amount of the bid and when the holder will be entitled to title if the premises are not redeemed. A purchaser is not entitled to possession by showing that he bid off the land at a sale. (Johnson v. Baker, 38 Ill. 98.) The purchaser of land under an execution of the foreclosure of a mortgage has no legal title, or right to be invested with a legal title, until the time allowed for redemption has expired. (Rockwell v. Servant, 63 Ill. 424.) The certificate of purchase confers on the holder no title in the land. (Huftalin v. Misner, 70 Ill. 55; Hays v. Cassell, 70 Ill. 669.) ”

So, we find that under the petition filed in the instant case the bondholders’ committee will attempt to avoid the provision of the statute for redemption by the statement that it seeks to obtain title for that purpose. The obstacle, however, to this plan as we view it, is that there is a deficiency decree entered against Clarence Anderson in the sum of $243,115.67. The income from this property should be applied toward the reduction of this deficiency decree during the redemption period, and whatever is applied in partial payment of this deficiency inures to the benefit of all the bondholders. For that reason any agreement among this group of bondholders cannot avoid the redemption period by any agreement which may be entered into between the parties who may have some interest in the title to these premises. The approval of this so-called plan of reorganization by the court would not justify delivery of possession to the nominee of these bondholders.

In view of the suggestions offered by the attorneys in support of their position, it has been necessary for this court to amplify its opinion. We are still of the opinion that the conclusion reached by this court was a proper one, and we adhere to what was stated in our former opinion.

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


source: Caselaw Access Project

author: Mr. Presiding Justice

license: Public Domain

text:
    W. L. Friend, Administrator of the Estate of Jessie May Friend, Deceased, Appellant, v. The Alton Railroad Company, Appellee.
    Gen. No. 8,918.
    Opinion filed January 17, 1936.

      A. B. Johnson, of Boodhouse, for appellant.
    Coyle & McDonald, of Carrollton, for appellee.
   Mr. Presiding Justice

Davis delivered the opinion of the court.

William L. Friend and Frank Friend, Frances Friend, Erastus Friend, Harvey Friend, William Friend and Bussell Friend, minors, by W. L. Friend, their next friend, brought suit against the Alton Bail-road Company, a corporation, to the September term, A. D. 1932, of the circuit court of Greene county, in an action on the case to recover damages resulting from the death of Jessie May Friend, alleged to have been caused by the negligence of appellee.

The declaration alleged that Jessie May Friend was the wife of W. L. Friend, and mother of Frank Friend, Frances Friend, Erastus Friend, Harvey Friend, William Friend and Bussell Friend, and that she was killed on May 23,1932, by reason of the negligent operation of one of the trains of appellee. On January 9, 1934, the circuit court sustained a general demurrer to the declaration of plaintiff, and on July 2, 1934, an amended complaint was filed in said cause by leave of the court by W. L. Friend, administrator of the estate of Jessie May Friend, deceased, he being substituted as party plaintiff, the allegations of which complaint were substantially the same as those contained in the original declaration filed in said cause. On October 11, 1934, appellee filed its answer to said amended complaint, in which it is alleged, in substance, that the action was not commenced within one year of the death of Jessie May Friend. Appellant filed his motion to strike the answer of defendant for the reason that said answer was insufficient in law to bar a recovery by the plaintiff. The court denied the motion of appellant and he elected to stand upon his motion and refused to plead over or proceed further in said action, and judgment was entered in favor of appellee and in bar of the action and for costs.

Appellant contends that the court erred in entering judgment in bar of his action.

The position of appellant is that the original declaration stated a cause of action, but stated it defectively, and that under the provisions of section 46 of the Civil Practice Act, Ill. State Bar Stats. 1935, ch. 110, H174, amendments may be allowed at any time before final judgment and any amendment of any pleading shall be held to relate back to the date of the filing of the original pleading.

We are of the opinion that the original declaration did not state a cause of action or, in other words, it did not aver facts sufficient to justify a court in rendering-judgment. It is apparent that it did not for the reason that even though the facts stated might warrant a recovery under the Injuries Act, Ill. State Bar Stats. 1935, ch. 70, in a suit by the personal representative of the deceased yet, in the common law action brought by the husband and children of deceased, no right of action existed for the recovery of damages for the injury resulting in the death of deceased. No cause of action was stated until the amended complaint was filed and W. L. Friend, administrator of the estate of Jessie May Friend, deceased, was substituted as plaintiff.

The Injuries Act of 1853 gave a new cause of action when the injury resulted in death. In cases where the injury resulted in death the common law action was abated, hut under the Act of 1853, the right of action was continued in the name of the legal representatives of the deceased fop the benefit of the widow and next of kin. This continued action is a new suit unknown to the common law and is purely statutory. Wilcox v. Bierd, 330 Ill. 571. The act, having created new liabilities and rights unknown to the common law, conferred jurisdiction which can be exercised only in the manner and within the limitations prescribed by the statute and the plaintiff must bring himself within the conditions of the act. Welch v. City of Chicago, 323 Ill. 498; Bishop v. Chicago Rys. Co., 303 Ill. 273.

The action must be brought by and in the name of the personal representative of the deceased and shall be commenced within one year after the death of such person. The period of one year is not a statute of limitations but is a condition of the liability itself.

We are of opinion that section 46 (2) of the Civil Practice Act has no application to actions when the period of time within which a suit shall be commenced is a condition of the liability itself and the person authorized fails to bring the action within the time limited, but after the lapse of the period such personal representative is substituted by amendment as party plaintiff in a suit commenced by persons not authorized to sue by the statute creating the liability.

The bringing of the suit in the name of the personal representative of deceased, and the commencement of the suit within one year after the death of such person by his personal representative are conditions precedent to the right to recover damages under the Injuries Act for injuries resulting in the death of a person caused by the wrongful act of another. •

So much of said section 46 (2) as is necessary to be considered in the determination of the question as to whether an amendment shall relate back to the date of the filing of the pleading amended, provides: that a cause of action shall not be barred by lapse of time under any statute limiting the time within which a right may be asserted, if the time had not expired when the original pleading was filed, and it shall appear from the original and amended pleadings that the cause of action asserted grew out of the same transaction or occurrence set up in the original pleading, even though it was defective in that it failed to allege the performance of some act or the existence of some fact or some other matter which is a necessary condition precedent to the right of recovery, when such condition precedent has in fact been performed, and for the purpose of preserving as aforesaid such cause of action, any such amendment shall be held to relate back to the filing of the original pleading so amended.

It will be seen that an amendment to .a declaration will be held to relate back to the date of the filing of the pleading amended and thus prevent the action from being barred by lapse of time when such pleading was defective in that it failed to allege the performance of some act or the existence of some fact or some other matter which is a necessary condition precedent to the right of recovery, when such condition precedent has in fact been performed.

From the record in this case it appears that two conditions precedent necessary to a right of recovery were not in fact performed within the time required, namely, the bringing of the suit by the personal representative of the deceased and the commencement of the suit within one year after the death of such person by such personal representative.

To give to this section 46 (2) of the Civil Practice Act the construction contended for by appellant would be to eliminate the provisions and limitations contained in the Injuries Act wherein it is provided that the action must be brought by and in the name of the personal representative of the deceased, and shall be commenced within one year after the death of such person, and no such intention can be attributed to the legislature by the language used.

We are of opinion that the judgment of the circuit court of Greene county should be affirmed.

Affirmed.


author: Mr. Presiding Justice Davis

text:
    Annabel Thompson, Administratrix of the Estate of Cyril A. Thompson, Deceased, Appellee, v. David Riemer and Fred Steigerwald, Appellants.
    Gen. No. 8,921.
    Opinion filed January 17, 1936.
    Londrigan & Londrigan, of Springfield, for appellants.
    Trapp & Trapp, of Lincoln, for appellee.
   Mr. Presiding Justice Davis

delivered the opinion of the court.

This is an appeal from a judgment recovered byappellee in the circuit court of Logan county against appellants, David Riemer, the owner, and Fred Steigerwald, the driver of a motor tractor with trailer attached. The complaint alleges that plaintiff’s intestate, Cyril A. Thompson, was riding as a passenger in the rear seat of an automobile owned by Walter C. Bower and being driven by Fred C." Dehner.

It charges appellants with carelessly and negligently operating a motor tractor with trailer attached at an excessive rate of speed; that the pavement was divided into two traffic lanes and the motor vehicle in which plaintiff’s intestate was being carried was driven on the east traffic lane, northward, towards the city of Lincoln, and defendants carelessly and in violation of a statute drove and operated said motor tractor southward, in whole or in part upon the east traffic lane and by reason thereof the same was brought into collision with and ran against a motor vehicle in which plaintiff’s intestate was being carried and thereby caused the death of said Cyril A. Thompson. Other charges of negligence were contained in the complaint but no question is raised as to its sufficiency.

■ Defendants answered denying that plaintiff’s intestate was in the exercise of due care for his own safety, and further denied that the death of said Cyril A. Thompson was caused by the negligence of the defendants. The cause was submitted to a jury. A verdict was returned finding defendants guilty and assessing plaintiff’s damages at $1,000 and the court entered a judgment upon the verdict.

From the testimony it appears that Walter C. Bower who was the owner of a 1932 Ford sedan met Fred C. Dehner and Cyril A. Thompson at a soft ball game on the playgrounds across from the high school in Lincoln on the evening of August 16, 1935. Thompson umpired the first game and Dehner played in one of the games. After the game they all went to the K. C. barbecue at Springfield, Illinois, in Bower’s car. They arrived there about 11:30 p. m., and about 2:00 a. m. they left the barbecue and started for Lincoln. Dehner was driving the car and Bower was in the seat beside him, and Thompson was in the back seat and had lain down and was asleep before they arrived at the city limits of Springfield. It is about 30 miles from Springfield to Lincoln. They stopped at Elkhart, which is about 10 miles from Lincoln, and Dehner and Bower got out of the car and Dehner got something to éat. Thompson was still sleeping in the car. After leaving Elkhart, Dehner continued to drive and Bower sat beside him. Bower went to sleep after leaving Elkhart and was not awake so as to observe anything that occurred from that time on until he regained consciousness in the hospital in Lincoln.

The accident in which Cyril A. Thompson lost his life happened on U. S. Route No. 66, a short distance south of Lincoln. There is a bridge over the old channel of Salt Creek, and just north of the bridge is a hill and from the foot of the hill the highway extends northeast and southwest parallel to the Alton Railroad. South of the bridge over the main channel of Salt Creek, and about two-tenths of a mile, there is another bridge over a drainage channel. From the south end of the Salt Creek bridge to the turn, which is a distance of about 1,000 feet, the road is straight, then it curves to the left and, after a short distance, curves to the right again. Bailey’s Tourist’s Camp is located at this curve, and from the foot of the hill to this camp is about 2,000 feet and the road is straight. About 7:00 o ’clock p. m., Chicago time, the defendant, Fred Steigerwald, left Chicago driving a truck. He was accompanied by his brother, Casper, a stepson of David Riemer, one of the defendants. About 3:30 they were coming to the bridge over the old Salt Creek channel. The defendant, Fred Steigerwald, was driving and his brother, Casper, sat next to him.

There is very little conflict in the evidence. The only persons who testified as to what took place were the driver of Bower’s car, Fred C. Dekner, Casper Steigerwald and Othello Carroll, the driver of a truck that was following the truck driven by Fred Steigerwald.

Dehner testified that as he drove north around the curve near Bailey’s camp he was driving about 45 miles per hour and made a wide turn and was on the left-hand side of the road and he saw the truck coming and was pulling over to the right side of the road, and he then saw the truck pulling over to his side of the road and so he jerked his car back to the left again and the collision occurred. He testified that the truck was on his side of the black line when the collision occurred. The right front of the car drove into the right front of the truck. When his car came to a stop Cyril A. Thompson was lying parallel with the car on the ground with his head towards the front and Walter C. Bower was lying over Cyril Thompson with his feet in the car.

Othello Carroll, driver of the truck following the truck of defendants, testified that he saw the car coming around the curve at the tourists ’ camp on the west side of the road, and the truck in front of him was on the west side of the road. When the car made the curve it straightened up and was on the east side of the line and then crossed back to the west side again, and the next thing he saw the truck do was to turn left, and immediately after that there was a crash.

Casper Steigerwald, brother of Fred, testified he saw a car coming from the south, taking the corner wide, on the west side of the line. After making the curve he straightened out into his right lane and then pulled right out again. When he got too close our truck swung left into the east lane. The car struck between the fender and the front door on the right side of the tractor. It is apparent that both the car and the truck were on the wrong side of the road at the time of the collision.

Appellants say there is no evidence tending to prove them guilty of any negligence which could have been one of the contributing causes of the accident.

It was the province of the jury to determine all ques- n tions of fact in the case including the question as to whether appellants were guilty of negligence which contributed to the accident, and from the evidence we are of opinion that the jury was warranted in finding appellants guilty of such negligence.

Appellants contend that there was no evidence of the use of due care and caution on the part of plaintiff’s intestate; that there was no question of fact to be submitted to the jury upon the question of whether or not the deceased was in the exercise of due care and caution for his own safety, and the court should have directed a verdict for the defendants at the close of plaintiff’s evidence; that there was no direct testimony and no inference of the use of due care and caution can be drawn from the evidence; that whether there is evidence tending* to show due care and caution is a question of law.

It is true that it was incumbent upon plaintiff to prove that her intestate was, immediately prior to and at the time of the accident, in the exercise of due care and caution for his own safety. That is a question of fact which must be determined by the circumstances attending and surrounding his death. Whether the evidence tends to prove such care is a question of law. Ordinarily the question of contributory negligence is one of fact for the jury. Pienta v. Chicago City Ry. Co., 284 Ill. 246. It is not indispensable that the question as to whether plaintiff’s intestate was in the exercise of due care and caution for his own safety should be established by direct proof. “It may be shown by circumstantial evidence, or, as has been sometimes said, it may be inferred by the jury from circumstances appearing in the proof.” Chicago & E. I. R. Co. v. Beaver, 199 Ill. 34.

“There is no rule of law which prescribes any particular act to be done or omitted by a person who finds himself in a place of danger. In the variety of circum„stances which constantly arise, it is impossible to announce such a rule. The only requirement of the law is that the conduct of the person involved shall be consistent with what a man of ordinary prudence would do under like circumstances.” Stack v. East St. Louis 3 Suburban Ry. Co., 245 Ill. 308.

The evidence shows that Dehner had driven a car for 12 years and Bower had driven one for 14 or 15 years; that Dehner, Bower and Thompson were well acquainted and that it was customary for them to go around together. Dehner had driven Bower’s car lots of times and almost every time they went anywhere together. Dehner was acquainted with this highway and the three of them earlier in the evening had passed over it in going to Springfield. There is no evidence that in any way tends to prove that there was anything in the conditions of the traffic, the roadway itself, or the weather conditions that could reasonably cause anyone to anticipate that there might be- danger or any dangerous condition to be avoided. Both on the trip to Springfield and on the return, Bower, the owner of the car, sat in the front seat beside Dehner. This trip was being made late at night over a concrete public highway in the country.

We are of the opinion that the conduct of plaintiff’s intestate was consistent with what a man of ordinary prudence would do under like circumstances. You cannot single out the fact that he was asleep in the rear seat of the automobile and from that fact alone determine as a matter of law that there was no evidence tending to prove due care on his part.

This case is clearly distinguishable from those cases holding that it is the duty of a passenger in a vehicle to be on the lookout for danger at places where it is known that danger is likely to exist. The court properly submitted the question of contributory negligence to the jury. In the case of Smith v. Courtney, 281 Ill. App. 530, where the facts were somewhat similar, it was held that the question of contributory negligence was a question for the jury.

From the evidence in this case we cannot say that plaintiff’s intestate was not in the exercise of ordinary care for his own safety or that his conduct was not consistent with that of an ordinarily prudent man under like circumstances.

The Court of Appeals of New York in the case of Nelson v. Nygren, 259 N. Y. 71, 181 N. E. 52, held that the conduct of a guest in voluntarily going to sleep with the consent of the driver, while riding in an automobile, did not constitute contributory negligence as a matter of law, so as to preclude recovery against the driver who was found guilty of negligence.

In this case Nelson, the plaintiff, and Nygren, the defendant, left Olean at 12:30 p. m. in the defendant’s car to drive to Maple Springs, a distance of about 75 miles. As they left Olean the plaintiff told the defendant he would drive when they reached Randolph, that being about the halfway point, and to awaken him. Nygren assented and Nelson went to sleep. Before reaching Randolph and while Nelson was asleep, the car left the highway and Nelson was injured.

After reviewing a number of cases decided by the courts of last resort in different States, the court said: “In the last analysis, the rule governing a guest riding in an automobile is that he should conduct himself as an ordinarily prudent person would, under like circumstances. If he does, he cannot be held negligent as a matter of law. ’ ’

Finding no reversible error the judgment of the circuit court is affirmed.

Affirmed.


text:
    The People of the State of Illinois ex rel. Sidney H. Dilks, State’s Attorney, and George F. Onken, Appellees, v. The Board of Education of the Paxton Community High School District No. 117, in Ford County, Appellant.
    Gen. No. 8,939.

      Opinion filed January 17, 1936.
    Lindley, Pacey & Johnson, of Paxton, for appellant.

      Sidney H. Dilks, State’s Attorney, Middleton & Middleton, of Gibson City, and Dobbins & Dobbins, of Champaign, for' appellees.
   Mr. Presiding Justice Davis

delivered the opinion of the court.

This is an appeal taken by the board of education of the Paxton Community High School District No. 117, in the county of Ford and State of Illinois, from a judgment of ouster entered by the circuit court of Ford county.

Sidney H. Dilks, State’s attorney of Ford county, by leave of court filed an information in the circuit court of said county in the nature of a quo warranto. The information alleged that the same was filed at the relation of him, the State’s attorney, and George F. Onken according to the form of the statute in such case made and provided, and gave the court to understand and be informed that the, board of education of the Paxton Community High School District No. 117, in the county of Ford and State of Illinois, for the space of one year and more last past unlawfully usurped and exercised, and still does usurp and exercise without any warrant, charter, grant, right or authority of law whatsoever, the governmental functions and franchises, powers and privileges of paying out of funds belonging to said Community High School District to pupils attending the high school conducted by defendant, and which pupils resided in a non-high school district territory in said county of Ford and other counties in the State of Illinois, sums of money to reimburse said pupils for the cost of their transportation and for amounts expended by them for transportation in attending said high school, all of which governmental functions, franchises, powers and privileges the said defendant during the time aforesaid in the county aforesaid upon said inhabitants and people has usurped, and still does usurp, to the damage and prejudice of said people and against the peace and dignity of the People of the State of Illinois.

The petition prayed the consideration of the court in the premises, and due process of law in that behalf, to make the said board of education of Paxton Community High School District No. 117, in the county of Ford and State of Illinois, answer to the said People of the State of Illinois by what warrant or authority it claims to have, use and exercise said governmental functions, franchises, privileges and powers as aforesaid in, upon and over the inhabitants of said county of Ford and State of Illinois.

To said information for amended plea defendant says that it has been, for more than 10 years last past, organized under the laws of the State of Illinois as a Community High School District; and that defendant’s district has now, and has had for more than 10 years last past a population of 1,000 or more, and not exceeding 100,000 inhabitants, and that the territory belonging to defendant’s district is composed of (here follows description of lands embraced within said district), all situated in the county of Ford and State of Illinois; and that this defendant has for over three years last past and is now conducting in said district a recognized four-year high school; that the Armstrong Township High School District No. 225 of Vermilion County, Illinois, is located about 10 miles southeast of defendant’s said district in the county of Vermilion and State of Illinois; that the Loda Township High School District No. 239, of Iroquois and Ford Counties, Illinois, adjoins the defendant’s said school district on the north; that defendant’s district, except on the north, is completely surrounded by a large territory containing a large number of high school pupils residing in non-high school territory; that the per capita cost of maintaining defendant’s high school district for the school year of 1933 and 1934 and tuition charged to nonresident pupils was $101.67; that there were 79 pupils, part of them attending part time and part of them all the time, that attended said defendant’s high school for said year who resided in non-high school territory and that the amount already collected and to be collected as tuition from pupils residing in non-high school territory for said year by this defendant is the sum of $7,501.17.

That on or about January 1, 1933, said Armstrong High School District started running buses in and to said non-high school territory surrounding defendant’s school district and hauling pupils to and from its high school free of charge, and during all of the time, from January 1, 1933, up to and including the present time, the said Armstrong High School District has been making overtures to pupils residing in non-high school territory, including the non-high school territory surrounding defendant’s district, and offering to transport all such pupils who would attend its high school to and from its high school free of charge; and during all such time have transported such pupils, who would attend its said school, to and from their respective homes free of charg-e to said pupils.

That defendant’s high school is located in the city of Paxton, and that the village of Clarence is located in non-high school territory east of Paxton, about six miles; and defendant avers that the said Armstrong High School District ran free buses up to said village of Clarence, within a mile of the boundaries of this defendant’s school district, and offered to transport the pupils residing in said non-high school territory, who would attend its school district, free of charge to and from said school to their respective homes; and solicited and endeavored to obtain pupils who were already attending this defendant’s school to attend said Armstrong school, offering free transportation to such pupils who would attend its school in Armstrong, Illinois.

This defendant further avers that within the last three years the said Loda Township High School District No. 239 of Iroquois and Ford counties, Illinois, have offered to pay, and did pay, to a large number of high school pupils residing in non-high school territory, adjoining defendant’s school district, who would . attend its said high school, their respective gasoline bills which were necessitated by driving to and from their respective homes to the high school belonging to the said Loda High School District. '

Defendant further avers that on account of the said Armstrong High School District furnishing free transportation to and from its said school to pupils residing in the non-high school territory surrounding this defendant’s said school district and the said Loda High School District of paying the gasoline expenses of pupils who would attend its said school, who resided in non-high school territory adjoining this defendant’s school district, this defendant did, during the school year of 1933 and 1934, give to the pupils who attended its said school, who resided in the said non-high school territory adjoining this defendant’s school district, the sum of $30 per pupil, as it had a lawful right to do, under clause 18 of the 3rd amendment of 1927 of section 115 of chapter 122 of the Revised Statutes of the State of Illinois, to take care of the gasoline expended by them in transporting themselves to and from the said high school belonging to the defendant.

Defendant further avers that none of the money raised by taxation was ever used toward the payment of such gasoline bills, but such gasoline bills were paid out of money collected by it for the tuition of such pupils; and defendant further avers that on account of the actions of the said Armstrong High School District continuing to maintain its free transportation for such pupils in said territory who attended its said high school and of the payment of the gasoline bills of such pupils by the said Loda High School District, it is still offering and agreeing* to pay, as it has a lawful right to do, under clause 18 of" the 3rd amendment of 1927 of section 115 of chapter 122 of the Revised Statutes of the State of Illinois, to pupils residing in non-high school territory surrounding defendant’s said district who attended defendant’s said school the sum of $30 out of tuition money collected by said defendant, for the school year of 1934 and 1935, for each of said pupils to pay his gasoline expense for the transportation expense of such pupils from and to this defendant’s said school.

The plaintiff, the People of the State of Illinois ex rel. Sidney H. Dilks, State’s attorney, and George F. Onlcen, by their attorneys, filed a demurrer to the said amended plea and moved to strike the same from the files.

The following are among the grounds of demurrer and motion to strike:

1. Because said plea does not show any legal power on the part of said defendant paying to pupils attending the said high school, and residing in non-high school territory, any sums to reimburse them for their cost of transportation.

3. Because said amended plea is not sufficient in law to constitute any defense to the usurpation charged in the information.

Said motion to strike and demurrer to the amended plea came on for hearing before the court, and the following order and judgment of the court was entered:

And now on this 13th day of June, A. D. 1935, the same being one of the regular judicial days of the April term, A. D. 1935, of said circuit court and said court being in regular open session pursuant to law, come the People of the State of Illinois on relation of Sidney H. Dilks, State’s attorney, and George F. Onlcen, and having filed their Motion to Strike and Demurrer to the Amended Plea heretofore filed in the said cause, and the court having* treated the said Motion to Strike as a demurrer to the said amended plea, does sustain the same upon the first and third grounds set forth in said motion to which decision the defendant then and there excepted, and holds that said amended plea is not sufficient in law to constitute any defense to the usurpation charged in said information to which holding* the defendant then and there excepted and because of the insufficiency of said plea to constitute any such defense to the said usurpation charged in said Information, the said motion and demurrer is hereby sustained, to which holding the defendant then and there excepted.

And the said defendant having announced their election to abide by their said plea and to plead no further in said cause, the court does therefore adjudge the said defendant guilty as charged in said information, to which judgment the defendant then and there excepted, and judgment of ouster is hereby entered against the said defendant, the board of education of the Paxton Community High School District No. 117 in the county of Ford and State of Illinois from hereafter claiming or exercising the function, franchise, power or privilege of paying* out of' funds belonging to said Community High School District to pupils attending the high school conducted by said defendant and residing in non-high school territory in the county of Ford or other counties in the State of Illinois, any sum of money to reimburse such pupil or pupils for the cost of their transportation or for amounts expended by them for transportation in attending the high school conducted, by said defendant in said Community High School District, to which judgment the defendant then and there excepted.

. And it is further ordered and adjudged that the relators have and recover of the defendant all costs of the prosecution of this cause to be taxed by the clerk of this court and that judgment be entered ag’ainst the said defendant for said costs in favor of the relators herein and that execution issue therefor, to which order and judgments the defendant then and there excepted and prays an appeal to the Appellate Court for the Third District of the State of Illinois which appeal is hereby granted the defendant without the defendant giving bond, and that this appeal shall operate as a supersedeas.

A notice of appeal was filed by defendant on June 25, 1935, and a praecipe for record on the same day.

On September 28, 1935, a supplemental record was filed in said cause, by the permission of this court, from which it appears that on the first day of July, 1935, the plaintiff-appellee filed in the office of the clerk of the circuit court of Ford county a motion, which was as follows:

And now comes the plaintiff in the above entitled cause and moves this honorable court to amend and modify the judgment entered in the above entitled cause on the 13th day of June, A. D. 1935, the same being within 30 days of the filing of this motion, by striking* from said order and judgment the words, ‘1 and that execution issue therefor, ’ ’ notice of this motion having* been given to the defendant in said cause on the 29th day of June, A. D. 1935.

And it further appears that on the 15th day of July the circuit court upon a hearing* on said motion entered the following judgment:

And now, on this 15th day of July, A. D. 1935, came ’ the plaintiffs in the above entitled cause and presented their motion that the order and judgment entered in this cause on the 13th day of June, A. D. 1935, be amended and modified by striking* therefrom the words, “and that execution issue therefor,” and it being shown to the court that notice of this motion was duly given to the attorneys for the defendant in said cause and that the same would be presented to this court on this date, and the court having duly considered said motion, It Is Ordered that there be stricken from said order and judgment entered on the 13th day of June, A. D. 1935, the said words, “and that execution issue therefor.”

It is contended by appellant that the court erred in sustaining the demurrer of plaintiff to the amended plea of defendant and in entering a judgment of ouster and for costs and in awarding an execution.

It is further contended that the circuit court of Ford county was without jurisdiction to enter the order on July 15, 1935, amending the judgment in said cause and that the supplemental record filed is no part of the record in this court because notice of appeal had • been served on June 24, 1935, and had been filed on June 25, 1935, and the record in the case had been made up and certified by the clerk of the circuit court on July 1, 1935, and this court had obtained jurisdiction of said case.

It is argued by the defendant that because the Armstrong High School was running a bus in the non-high school territory adjoining defendant’s district and transporting* pupils free of charge to and from its said school and the Loda High School was paying the gasoline bills of pupils in such non-high school territory who would attend its high school, that the court can readily see it was a question for appellant to either do something or lose practically all of the $7,501.77 which it collected as tuition from non-high school pupils; that there was only one thing to do to meet the competition, and, as averred in its plea, it paid the pupils who resided in non-high school territory the sum of $30 of the tuition money received for such pupils for gasoline bills.

It is said that clause 18 of section 115 of chapter 122 of the Revised Statutes of Illinois expressly grants the power to provide free transportation for pupils, and that there is no restriction placed on the power. Reference is made to one of the four amendments made to said section 115 by the Legislature in 1927, and passed on June 29 and in force July 1, 1927. Ill. State Bar Stats. 1935, ch. 122, fl 123, Laws 1927, p. 819, sec. 115.

“Eighteen. To provide free transportation for pupils, — and where, in the judgment of such board of directors the interest of the district and of the pupil therein will be best subserved by so doing such board of directors may permit pupils in such district or in any particular grade to attend schools of other districts, and such board of directors may provide free transportation for such pupils and shall pay the tuition of such pupil to such schools attended: Provided, that such board of directors, subject to the approval of the county superintendent of schools may determine what schools outside of their district such pupil shall attend; and provided, further, that nothing herein contained shall be construed as requiring the board of directors or board of education of any district to admit pupils to another district.”

A board of directors is an agency of the State having existence for the sole purpose of performing certain duties deemed necessary to the maintenance of an “efficient system of free schools” within the particular locality in its jurisdiction. Kinnare v. City of Chicago, 171 Ill. 332. School districts derive their existence and all their powers from the legislature and have no inherent power. City of Chicago v. M. & M. Hotel Co., 248 Ill. 264, 269. They have only such powers as are conferred expressly or by necessary implication. Linche v. Moline Board of Education, 245 Ill. App. 459. Boards of Education of Community High School Districts possess all the powers conferred by statute upon boards of school directors.

The power conferred by the above quoted provision is to provide free transportation for pupils residing within the district and to provide free transportation and pay tuition for such pupils of the district as are permitted to attend the schools of other districts. Neither by the language used nor by necessary implication is the board of directors authorized to provide free transportation for pupils residing outside of their district. Only the directors of the school districts in which the pupils reside are authorized to provide free transportation to those who may be permitted to attend schools in other districts.

The circuit court did not err in sustaining the demurrer of the plaintiff to the amended plea of the defendant as it failed to set forth facts sufficient to justify its action in providing free transportation for pupils attending its school who are residents of non-high school territory.

We are of opinion that the contention of appellant that the circuit court erred in entering judgment for costs is without merit. It is true that at common law costs are not recoverable and can only be imposed and recovered when authorized by statute. Wintersteen v. National Cooperage & Woodenware Co., 361 Ill. 95.

It is provided, however, by sec. 10, ch. 33, HI. State Bar Stats. 1935, that if judgment is given for plaintiff upon demurrer directed against an answer of the defendant that plaintiff shall recover costs against the defendant. And it is also provided by sec. 6, ch. 112, Ill. State Bar Stats. 1935, that any corporation against whom an information in the nature of a quo warranto is filed is adjudged guilty as charged in the information and a judgment, of ouster is given, judgment shall also be given in favor of the relator for costs.

It is urged that under the provisions of par. 391, sec. 267, ch. 122, Ill. State Bar Stats. 1935, judgment for costs could not be given against appellant. We are of opinion that the provisions of this section have no application to suits of this character. Illinois Cent. R. Co. v. Trustees of Schools, 212 Ill. 406.

An appeal is deemed perfected when the notice of appeal is filed in the lower court, and constitutes a continuation of the proceeding in the court of review. An appeal under the provisions of the Civil Practice Act, unlike an appeal under the Practice Act of 1907, does not suspend the operation of the judgment appealed from unless the appellant shall, after notice duly served, give and file a bond within 30 days after entry of such judgment or within such further time as the trial court may allow within such 30 days.

When an appeal is prosecuted by a public, municipal, governmental or quasi-public corporation the trial or review court may without requiring any bond to be given order that the appeal shall operate as a supersedeas. The record in this case fails to show that appellant gave any notice of its intention to ask to have the notice of appeal made a supersedeas by the giving and filing of a bond or for an order of the trial ' court that the appeal operate as a supersedeas without requiring it to give any bond.

It is just as necessary to give notice and have an order entered by the trial court that the appeal shall operate as a supersedeas without requiring any bond to be given as it is to give notice and give and file a bond and have the same approved by an order of the trial court in order that the notice of appeal shall operate as a supersedeas. The word “may” as used in subsection (3) of section 82 of the Civil Practice Act makes the waiving of a bond discretionary with the court.

The judgment entered contains a prayer and order granting an appeal to the Appellate Court of the Third District without the defendant giving bond, the appeal to operate as a supersedeas. There being no authority under the provisions of the Civil Practice Act for the entry of such an order, it neither perfected an appeal nor had the effect of making any notice of appeal that might be given operate as a supersedeas without the giving of a bond. The right of appeal is purely statutory and the statute granting such right must be strictly complied with. Hall v. First Nat. Bank of Pittsfield, 330 Ill. 234; Davison v. Heinrich, 340 Ill. 349.

The appeal did not operate as a supersedeas and the circuit court had jurisdiction of the cause at the time the amendment complained of was made and the order entered modifying the judgment by striking therefrom the words, “and that execution issue therefor,” in pursuance of a motion made within 30 days of the rendition of said judgment, the time within which a judgment may be vacated, set aside or modified, as provided by sec. 269, ch. 110, Ill. State Bar Stats. 1935, and for that reason the contention of appellant that the circuit court was without jurisdiction to amend the judgment is without merit.

The amended and supplemental record, was filed in the cause and became a part of the record. The appeal taken from the judgment was still pending in this court and it was not error to permit a supplemental record of the proceeding in the circuit court amending such judgment to be filed.

We are of opinion that there is no reversible error in the record in this cause and the judgment of the circuit court of Ford county, as amended, is affirmed.

Affirmed.