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    State Life Insurance Company, Appellee, v. Victor L. Freeman et al., Defendants. William Byrnes et al., Impleaded as “Unknown Owners,” Appellants.
    Gen. No. 41,409.

      Opinion filed January 22, 1941.
    Rehearing denied and opinion slightly modified February 6, 1941.
    Charles A. Churan, of Chicago, for appellants.
    George H. Batchelor, of Indianapolis, Ind., and Poppenhusen, Johnston, Thompson & Raymond, of Chicago, for appellee.
   Mr. Presiding Justice Hebel

delivered the opinion of the court.

This is an appeal from a decree of foreclosure entered in the circuit court of Cook county, Illinois, on February 16, 1940, by certain defendants who are appellants here, and who were made parties by an amendment to the complaint. The original complaint was filed on August 1,1938, by the plaintiff, the State Life Insurance Company, a corporation of Indiana, against Victor L. Freeman and others to foreclose a certain trust deed dated June 10, 1927, from Emma W. Meschke and her husband, August F. Meschke, to Chicago Title and Trust Company, trustee. The trust deed was made to secure an original indebtedness of $7,500, evidenced by 3 principal notes, A, B and C. Notes A and B were subrogated to Note C which was for $7,000 and of which the plaintiff was the legal holder. This note was for 5 years.

The premises mortgages are located at 6239 Evans avenue, Chicago, on the south side of the city in what is commonly known as the Washington Park Restricted Area, or Washington Park Subdivision. Note C not having been paid, an extension agreement in writing was entered into on June 9,1932, between one Virginia V. Freeman, the then-owner of the premises as party of the first part and the plaintiff as party of the second part, extending the payment of the unpaid balance of principal note C for the term of 5 years from June 9, 1932. Said extension agreement contained the following provision:

“And Whereas, this extension agreement may be declared void by the party of the second part within ninety days after date of recording if subsequent investigation shows that the title to the above described property is not as herein set forth, or that there are any liens that affect the validity of this trust deed as extended.”

On June 10, 1937, another extension agreement in writing was executed between the defendant, Victor L. Freeman, the then-owner of said premises, as party of the first part and the plaintiff as party of the second part, extending the time of payment of the unpaid balance (then $5,000) of said principal note C, to June 1,1942. Both of said extension agreements were recorded. The second extension contained the following clause;

“And Whereas, this extension agreement may be declared void by the second party without notice to the first party within ninety days after date of recording if subsequent investigation shows that there are any liens that affect the validity of this trust deed as extended, or that the title to the above described property is not as herein set forth.”

On March 9,1939, by leave of court the plaintiff filed an amendment to its complaint, alleging that subsequent to the making of the trust deed and on or about September 30, 1927, said Emma Meschke and August F. Meschke, her husband, together with certain of the owners of adjoining and adjacent property entered into agreements or covenants prohibiting the use of or sale of the premises involved to negroes, said agreements or covenants being dated September 30, 1927, and recorded February 1, 1928, in the office of the recorder of deeds of Cook county as Documents Ños. 9914711 to 9914714, both inclusive.

The amendment further alleges that the rights and interests of the parties to said covenants were at the time of the signing thereof and now are subordinate, subject, junior and inferior to the lien of the trust deed being foreclosed; states that the parties to said agreements and covenants are more than 250 in number; that it is impracticable to make all the owners and persons interested. in the properties covered by said agreements parties to the complaint; that it is necessary that the signers and parties interested in said restrictive agreement be brought into court either in person or by representation so that all the parties interested or claiming any interest may be bound by each and every determination made by the court with respect to the matters presented to the court in connection with said foreclosure. The amendment then names ten property owners in the Washington Park Subdivision, being either parties who signed said restrictive agreement or their successors in title, as parties defendant as representative of and for all signers of said agreements and covenants and all other persons who do or may claim some interest in or lien upon the real estate therein described as signers of said agreements or covenants restricting the use or sale of the premises described in said agreements or covenants to negroes, as parties under the name and description of “Unknown Owners.” Publication was had against “Unknown Owners” having or claiming to have an interest or lien upon the real estate described in said complaint by reason of said agree ments.

On June 3, 1939, appearance, answer and counterclaim were filed by Charles A. Chur an on behalf of defendants (appellants), William Byrnes, Margaret Byrnes, his wife, Ethel W. Olson, Henry Mailman, William Fahsbender, Henrietta Fahsbender, Della L. Fanselow, William Turner, Robert N. Griffin, Mayme Griffin, Charles Sorge, Mary Sorge, Charles Will, Emily Will and Rose Davis, impleaded herein as “Unknown Owners,” and on July 13, 1939, an order was entered which provided that the answer and counterclaim of these defendants impleaded herein as “Unknown Owners” on behalf of themselves and on behalf of all other signers of said restrictive agreement dated September 30, 1927 (describing same) should be included within those defendants heretofore. impleaded as representatives of the class, and the court finds that these defendants (appellants here) naming them are representatives of and sufficient to implead as a class all the signers of said agreements and covenants, and of all parties having or claiming any interest in any of the properties described.

In substance, the defendants admitted the execution of the restrictive agreement pleaded by the plaintiff’s amendment and recorded February 1, 1928, but say that more than 500 white persons owners of real estate in the area known as Washington Park Subdivision between Cottage Grove avenue on the east, South Park avenue on the west, Sixtieth street on the north and Sixty-third street on the south executed and acknowledged said restrictive agreement, which was a covenant running with the land for the benefit of the land; that the defendant Emma W. Meschlce, and her husband executed said agreement and that said covenant provides that it should remain in full force and effect until January 1, 1948, and thereafter until abrogated by a written recorded agreement of the owners of 75 per cent of the frontage, and assert that said restrictive agreement is now in full force and effect and binding upon them and the plaintiff, and on the premises being foreclosed and deny that it is subject, junior and inferior to the lien of the trust deed. They pray that the restrictive agreement be found by the court to be in full force and effect and binding on the premises being foreclosed and whatever relief the plaintiff is found to be entitled to should be subject to the covenants and restrictions contained in said restrictive agreement.

By their counterclaim these defendants pray that the decree of foreclosure and any sale thereunder should be made subject to the restrictions and covenants contained in said restrictive agreement. The cause was referred to a master in chancery who filed his report finding against the contentions of these defendants and counter claimants over objections filed, which were made exceptions in the circuit court, and decree of foreclosure was entered on February 16, 1940, by the circuit court sustaining the master’s report and finding and decreeing among other things that the rights and interests of all the signers of said agreement and persons taking through or under them and all parties interested in said agreement or covenant are junior, inferior, subject and subordinate to the lien of the plaintiff. The decree further orders the sale of the premises and if no redemption be made from the sale that “the grantee or grantees in such Master’s deed of conveyance . . . take the premises free and clear of all liens, encumbrances, covenants and obstructions created or appearing of record from and after the recording of the trust deed foreclosed herein, etc.” A sale of said premises to the plaintiff reported by the master for the full amount of the decree, and master’s certificate was issued. Sale was approved by the court by order entered April 29, 1940.

The counterclaimants filed a counterclaim asking for affirmative relief. It set up the restrictive agreement and the covenants against sale, use or occupancy by negroes and other pertinent provisions. It was alleged that in the agreement the signers thereof agreed, that “said covenants and restrictions should be appurtenant to and running with the land, and might be enforced by any of the parties thereto by any permissible legal or equitable proceedings including proceedings to enjoin violation and for specific performance.” The counterclaim further alleges that said agreement was signed by more than 500 white persons, owners of land on Evans, Langley, Champlain, St. Lawrence, Rhodes, Eberhart, Vernon and South Park avenues between 60th and 63rd streets and on 60th, 61st and 62nd streets between South Park and Cottage Grove avenues in the city of Chicago; that it was signed, sealed and acknowledged and thereafter duly filed for record on February 1, 1928, and recorded; that the area included in said restrictive agreement, except on parts of 62nd street, is improved by valuable apartment buildings of from 2 to 36 apartments of great value; that about 80 per cent of the improvements are two-story apartment buildings, one apartment of which is occupied by the signers as their homes and the other apartments rented by whites. The counterclaim further alleged that the defendants are the owners of real estate on Evans avenue within the restricted area; that there are no negroes residing on or owning any real estate on either side of Evans avenue between 61st street and 63rd street; that on the date of the execution of said restrictive agreement, Emma W. Meschke, mortgagor, was the owner of the premises described in the plaintiff’s complaint; that said Emma W. Meschke executed said restrictive agreement, and that up to date no negro has owned, occupied or leased any part or portion of said premises.

The counterclaim then alleges the execution of the extension agreements, and that the plaintiff had actual notice when said extension agreements were entered into that the premises were restricted by said restrictive agreement, and that it was a covenant running with the land; that by entering into said extension agreements the plaintiff became bound by covenants of said restrictive agreement. The counterclaim prays judgment that said restrictive agreement recorded February 1, 1928, be declared in full force and effect against the premises foreclosed herein, and that any decree of foreclosure entered in this cause and any sale of said premises under said decree be made subject thereto, and for such other and further relief as to the court shall seem meet.

The plaintiff’s answer to the counterclaim in substance is that the lien of the trust deed and the right, title and interest of purchaser at a sale pursuant to any decree of foreclosure is prior and superior to any and all rights and interests of the defendants under said agreement, say that even if plaintiff had knowledge of the execution or recording of the restrictive agreements at the time the extension agreements were made, such knowledge would not subject the prior lien of the plaintiff to any right or interest of the defendants under the restrictive agreements.'

The plaintiff’s answer denies that the actions mentioned were class or representative suits, or that plaintiff was a party thereto in person or by class representation; that the counterclaim is insufficient at law, that the court is without jurisdiction of the subject matter and that the matters set forth in counterclaim are not germane to the matters and things set forth in the complaint, nor do they arise out of the same transaction or subject matter, and prays that the counterclaim be dismissed.

The defendants (counterclaimants) filed a reply to plaintiff’s answer in which they alleged that the restrictive agreement is a covenant running with the land and for the benefit of each and every property thereby restricted against negroes; is in full force and effect and should be protected as an enhancement of the value of all the properties covered by said restrictive agreement; that by the execution of the extension agreements the plaintiff acknowledged that the premises were subject to the restrictive agreement. Defendants further deny that the prior actions pleaded in the counterclaim as res judicata were not class or representative suits, but state that each and every one of said actions was brought by the plaintiffs therein on behalf of themselves and on behalf of all other property owners in said restricted area who might be similarly affected by a violation of said restrictive agreement.

As stated in the appellants’ (defendants) statement of the case, the appellants were made parties as representatives of 500 white property owners who had signed an agreement or covenant not to sell or lease to negroes within the restricted area. Plaintiff’s amendment that was filed prayed that the court find that the trust deed was a first and superior lien and that the restrictive agreement was subject to the trust deed, and that the premises be sold free and clear of the restrictive agreement. The master and the court sustained the plaintiff’s contentions and the decree provided that the rights and interests of all the signers of said agreement and persons taking through or under them and all parties interested in said agreement or covenant are junior, inferior, subject and subordinate to the lien of the plaintiff. The premises in question were sold and the sale approved by the court.

By the counterclaim of the defendants, affirmative relief was sought, and it was prayed that said restrictive agreement, as a “covenant running with the land, ’ ’ should be protected, and that the decree should provide that the sale should be subject to the covenant. The plaintiff brought these defendants in, and the burden of showing that the restrictive agreement was subject to the trust deed was on it. The restrictive agreement covers the territory as described here-inbefore. The property foreclosed is at 6239 Evans avenue and Evans avenue is the first street west of Cottage G-rove avenue.

The defendants urged three propositionsFirst, that the restrictive agreement, being a matter of record, is a covenant running with the land, or as some courts have called it, a negative easement which cannot be wiped out by a foreclosure, and is binding on the holder of the mortgage even though the restrictive agreement was subsequent to the mortgage ; Second, that the plaintiff in this case as the holder of the mortgage is particularly bound by and to the restrictive agreement because subsequent to the execution of the agreement Emma W. Meschke (who executed the mortgage and the restrictive agreement) conveyed the premises to Virginia V. Freeman, and that more than 4 years after the restrictive agreement was recorded,, the plaintiff in the case as the legal holder of the incumbrance entered into an extension agreement which (among* other things) provided that the extension agreement may be declared void by the plaintiff within ninety (90) days after date of recording if subsequent investigation shows that the title to the premises is not as therein set forth, or that there are any liens that affect the validity of the trust deed as extended,- — that later, more than -7 years after the restrictive agreement was recorded, the mortgage was again extended, and an extension agreement executed between the plaintiff and defendant Victor L. Freeman, which again made the extension agreement subject to be made void by the plaintiff within 90 days after recording, “if subsequent investigation shows that there are any liens that affect the validity of the trust deed as extended, or that the title” to the property was not as therein set forth; and Third, that the restrictive agreement has been found by the decree of the superior court entered in the case of Burke v. Kleiman, October 2, 1933, and by decree of the same court in Penoyer v. Cohn, on.May 5, 1936, both of which cases were class actions, to be in full force and effect, and that all conditions precedent to the enforceability of said agreement had been complied with prior to the recordation thereof; that the Appellate Court in Burke v. Kleiman, 277 Ill. App. 519 and in Lee v. Hansberry, 291 Ill. App. 517, and the Supreme Court in Lee v. Hansberry, 372 Ill. 369, construed this very agreement and held it to be in full force and effect. However, the Lee v. Hansberry case {supra) was in the Supreme Court of the United States upon the allowance of certiorari, and the opinion in that case reverses the Supreme Court of Illinois. More will be said by this court in this opinion regarding the Lee v. Hansberry case.

The plaintiff’s reply in this action to defendants’ contentions calls our attention to defendants’ assertion that the restrictive agreement having been recorded (though admittedly after the execution and recording of the mortgage) is a covenant running with the land or “negative easement,” binding the holder of the prior mortgage (even though such holder never signed or consented to it), and following the real estate into the hands of a purchaser at sale under the decree foreclosing the mortgage. Plaintiff suggests that there is no authority cited in support of this rather unique proposition, and contends that there is no support, in fact, either in the reported decisions or under general rules of law, and that it is contrary to every established rule on the subject. Plaintiff calls our attention to 2 Jones on Mortgages, 8th Ed., pp. 138,139, sec. 836, contending that the general rule is there stated, with which the decisions of the Illinois courts are, and always have been, in harmony. It is ' there stated;

“Of course the mortgagee is not affected by any act of the mortgagor in passing any right of his in the premises to third persons, whether by deed, or by confession of judgment, or otherwise. He cannot bind the mortgagee by any contract or deed prejudicial to his title. He cannot create an easement in the land to the prejudice of the rights of the mortgagee. Any rights in the mortgaged property which are acquired through the mortgagor are subject to the lien of the mortgage. ’ ’ Plaintiff again calls attention to the same section, in which the text writer states:
“Neither can the mortgagor and his grantee, by any subsequent arrangement between themselves, affect the mortgagee’s lien, nor prevent its operating to the full extent conferred by the mortgage,” and calls attention to the citations given by the text writer in support of this section. Then again in 3 Jones on Mortgages, 8th Ed., pp. 621-627, it is said:
“§ 2122 (1654). Title conveyed — intervening LIENS AND INCUMBRANCES EXTINGUISHED.-As the title of the purchaser relates back to the time of the' execution of the mortgage, it does not matter to him what disposition the mortgagor may afterward have made of the property if the foreclosure is perfect. All conditions and reservations and easements, all claims of creditors, as well as all junior liens, mortgages or other incumbrances, afterward imposed upon the property are extinguished, and the purchaser under foreclosure of the senior mortgage takes the property free therefrom. In this respect the purchaser’s rights are the same whether the sale be under a decree of a court of equity, under a judgment in scire facias, or under a power in the mortgage or trust deed. The title takes effect hy virtue of the original deed; the sale carries that title, and cuts off all liens and interests created subsequent to the mortgage. . . .
“Title acquired by foreclosure relates back to the date of the mortgage, so as to cut off intervening equities and rights. If all subsequent purchasers and incumbrancers are made parties to the bill, the title under the mortgage foreclosed is perfected to an absolute one. In such case the purchaser at foreclosure sale acquires all the right, title and interest of the mortgagor at the time of the making of the mortgage; including his rights as landlord under a lease; together with any after-acquired right. ... ” In support of the foregoing the following cases are cited; McMahill v. Torrence, 163 Ill. 277, 45 N. E. 269; Ballinger v. Bourland, 87 Ill. 513; Taylor v. Kearn, 68 Ill. 339. Further, it has been called to our attention in 2 Eeeve, Illinois Law of Mortgages and Foreclosures, p. 808, sec. 718, that “in a foreclosure proceeding to which all proper and necessary parties have been brought in, the purchaser acquires all the rights in the mortgaged premises which the mortgagor had at the time of the execution of the mortgage, entirely unaffected by the title or lien of purchasers or incumbrancers subsequent to the recording of the mortgage, or with notice. ’ ’ Further, in sec. 719, the same writer says:
“The title acquired by the grantee in a master’s deed relates back to the execution of the mortgage, and the purchaser takes the title as then existing in the mortgagor, divested of sales, liens, or leases subsequently made by.the mortgagor or by persons claiming under him,” and in support thereof cites Cooper v. Corbin, 105 Ill. 224, 234; Taylor v. Kearn, 68 Ill. 339, 344; Bartlett v. Hitchcock, 10 Ill. App. 87, 89.

Plaintiff cites in support of its position the case of Dorff v. Bornstein, 277 N. Y. 236, 14 N. E. (2d) 51, 53, where the rule is stated as follows:

“In situations such as arose in this case there are fundamental principles which we are hound to recognize and which equity cannot set aside. A bona fide purchaser (other than the owner) on an unconditional sale of real property pursuant to a regular foreclosure acquires a clear and absolute title as against all parties to the suit and their privies which relates back to the date of the mortgage so as to cut off all intervening rights and equities. 3 Jones on Mortgages, 8th Ed., §§2121, 2122 (1653, 1654); Chicago, D. & Vincennes R. R. Co. v. Fosdick, 106 U. S. 47, 27 L. Ed. 47; Smith v. Gardner, 42 Barb. 356, 366; Pardee v. Steward, 37 Hun 259, 262; Jaycox v. Smith, 17 App. Div. 146, 45 N. Y. S. 299; Rector, etc., of Christ Protestant Episcopal Church v. Mack, 93 N. Y. 488, 492, 45 Am. Rep. 260; Sautter v. Frick, 229 App. Div. 345, 242 N. Y. S. 369, affirmed, 256 N. Y. 535, 536, 177 N. E. 129; Civil Practice Act, § 1085.” Also, in the case of Norfolk Building & Loan Ass’n v. Stern, 113 N. J. Eq. 385 (cited by plaintiff), the principal defendant in 1922 mortgaged the property to plaintiff. Thereafter, by several mesne conveyances, the mortgaged premises were conveyed to Stanley-Fabian Company. In 1929, it conveyed the property to City Investment Company, subject to plaintiff’s mortgage, and also to a covenant created by Stanley-Fabian Company subsequent to the execution and delivery of the plaintiff’s mortgage, restricting the use of the property by prohibiting its use for theater purposes. In the opinion of the court, it is said:

“Complainant’s mortgage covered the entire property, and its bill prayed for sale of all that the mortgage covered. The conveyance to Stanley-Fabian Company was of the interest the mortgagor had remaining after his mortgage to complainant, and that interest Stanley-Fabian Company conveyed away, attempting, however, to charge such interest with a restrictive covenant for the benefit of other property in which it was and is concerned. When complainant filed its bill, it was required to bring into court every subsequent mortgagee and incumbrancer in order that their rights might be established, disposed of by decree, and their liens transferred from the property to the proceeds of sale. This is the universal practice. Upon such Bill a decree is entered and a sale made which vests in the purchaser all rights and equities of the parties complainant and defendant” (citing a number of cases). The court further said: “The complainant herein followed the proper procedure by making Stanley-Fabian Company a defendant because of its interest in the restrictive covenant, and in the regular course of procedure the restriction would be cut off and the purchaser at foreclosure sale would take title unincumbered by it, but Stanley-Fabian Company would reverse the orderly procedure and give the covenant priority over the purchaser’s title. . . . To sell property subject to any restriction as to its use usually affects its sale price. On the mortgaged land is a theater building, and the restriction with which we are concerned provides, in effect, that the mortgaged premises shall never be used for the exhibition of motion pictures, nor, after the present building is demolished or substantially altered, for theatrical performances, without the consent of Stanley-Fabian Company. To decree that property adapted for theater purposes shall be sold with a prohibition against such use would, under the facts of this case, be not only contrary to established foreclosure practice, but would seriously affect the rights and liabilities of parties to this suit.” Upon appeal to the court of last resort of New Jersey, this decision was affirmed, 115 N. J. 282.

Defendants cite a number of Illinois appeal cases on the question as to the relative rights of a prior mortgagee and subsequent signers of restrictive covenants, and as to whether a restrictive agreement is binding upon the mortgagee where it is executed subsequent to the date of the execution and delivery of the mortgage. The cases of Willoughby v. Lawrence, 116 Ill. 11, 21; Metcoff v. Dahlquist, 252 Ill. App. 222; Atwood v. Chicago, M. St. P. Ry. Co., 229 Ill. App. 71 and Richmond v. Bennett, 205 Pa. 470, are cited.

The plaintiff’s reply to the suggestion that the extension agreements that were entered into in the instant case have any binding force upon the question that this restrictive covenant runs with the land and is binding upon the mortgagee — refers to defendants’ assertion that the plaintiff in some way became estopped to assert that the restrictive agreement is not binding upon it, as a mortgagee who did not sign the agreement or consent thereto, because after the recording of the agreement, the plaintiff, as the legal holder of the mortgage twice entered into agreements extending the time of payment of the mortgage debt.

Plaintiff then goes on to state that just what detriment the defendants have suffered by reason of the plaintiff’s omission to act is not clear; but that it is clear, however, that in the absence of such detriment suffered by one who has relied upon the alleged omission to act, there can be no estoppel. There is not one word in the record about anything the defendants have done or failed to do in reliance upon the plaintiff’s omission to foreclose in 1932 or 1936, or in reliance upon its having become by some implication a party to the restrictive agreement.

Plaintiff further suggests that the extension agreements were exactly what the term implies — simple agreements whereby the time of payment of the mortgage debt was extended upon the original security without any release of the original mortgage, taking of a new one, or renewal of the mortgage notes. The extension of the time of payment of a mortgage in no way impairs the mortgage lien as against subsequent incumbrancers or as against any other parties subsequently dealing with the. title. (2 Jones on Mortgages, 8th Ed., pp. 675, 676, sec. 1202, citing the following cases: Roberts v. Doan, 180 Ill. 187; Campbell v. Trotter, 100 Ill. 281; Shaver v. Williams, 87 Ill. 469; Christie v. Hale, 46 Ill. 117; McChesney v. Ernst, 89 Ill. App. 164, aff’d 186 Ill. 617; Roberts v. McNeal, 80 Ill. App. 536.)

The defendants’ theory seems to be that having extended payment of the mortgage on terms which permitted plaintiff to declare the mortgage still in default if there turned out to be any flaws in the title (in the sense of liens affecting the lien of the mortgage) the plaintiff is in the position it would have been in had it made a new mortgage on property already subject to the restriction. If the plaintiff had made a new mortgage and taken for the mortgage debt new notes secured by a totally new mortgage, such new mortgage still would have been prior to the restrictive agreement, or to any other lien, incumbrance or servitude put on the property subsequent to the recordation of the mortgage securing the debt so renewed. Plaintiff cites the case of First Trust Joint Stock Land Bank of Chicago v. Hickok, 288 Ill. App. 131, in which the court said:

“It is a general rule that the cancellation of a mortgage on the record is not conclusive as to its discharge, or as to the payment of the indebtedness secured thereby, and where the holder of a senior mortgage discharges it of record, and contemporaneously therewith takes a new mortgage, he will not, in the absence of paramount equities, be held to have subordinated his security to an intervening lien unless such intention upon his part is indicated by the circumstances of the transaction, or shown by extrinsic evidence. Roberts v. Doan, 180 Ill. 187; Campbell v. Trotter, 100 Ill. 281; Christie v. Hale, 46 Ill. 117; Shaver v. Williams, 87 Ill. 469; 33 A. L. R; 149; 98 A. L. R. 843. ...”

Having considered the defendants’ contention, and the authorities cited in support thereof, we cannot agree with the defendants’ assertion that the restrictive agreement, which was executed and recorded subsequent to the execution and recording of the mortgage, does by that fact make the land subject to the restrictive agreement which defendants claim to run with the land — or, in other words, a negative easement. A bona fide purchaser, other than the owner, on an unconditional sale of real property pursuant to a sale of foreclosure, acquires a clear title which relates back to the date of the mortgage so as to cut off all intervening rights. As we have indicated, the fact that the extension agreements were executed and recorded subsequent to the date of the restrictive agreement in the instant case, does not have a binding force upon the mortgagee, nor estop the mortgagee to assert that the restrictive agreement is not binding upon it, as the mortgagee did not sign the agreement nor assent thereto. For the reason given, the court did not err in this respect.

In the Hansberry v. Lee case, 61 S. Ct. 115, the Supreme Court of the United States calls attention that it there considered the question whether the Supreme Court of Illinois, by its adjudication that petitioners in this case are bound by a judgment rendered in an earlier litigation to which they were not parties, has deprived them of the due process of law guarantied by the fourteenth amendment to the Constitution of the United States. The respondents brought this suit in the circuit court of Cook county, Illinois, to enjoin the breach by petitioners of an agreement restricting the use of land within a described area of the city of Chicago, which was alleged to have been entered into by some 500 of the land owners. The agreement stipulated that for a specified period no part of the land should be “sold, leased to or permitted to be occupied by any person of the colored race,” and provided that it should not be effective unless signed by the “owners of 95 per centum of the frontage” within the described area. The bill of complaint set up that the owners of 95 per cent of the frontage had signed; that respondents are owners of land within the restricted area who have either signed the agreement or acquired their land from others who did sign and that petitioners Hans-berry, who are negroes, have with the alleged aid of the other petitioners and with knowledge of the agreement, acquired and are occupying land in the restricted area formerly belonging to an owner who had signed the agreement. The court in that case said:

“The Supreme Court of Illinois, upon an examination of the record in Burhe v. Kleiman, 277 Ill. App. 519, found that that suit, in the Superior Court of Cook County, was brought by a landowner in the restricted area to enforce the agreement which had been signed by her predecessor in title, in behalf of herself and other property owners in like situation, against four named individuals who had acquired or asserted an interest in a plot- of land formerly owned by another signer of the agreement; that upon stipulation of the parties in that suit that the agreement had been signed by 95 per cent of all the frontage owners, the court had adjudged that the agreement was in force, that it was a covenant running with the land and binding all the land within the described area in the hands of the parties to the agreement and those claiming under them including defendants, and had entered its decree restraining the breach of the agreement by the defendants and those claiming under them, and that the appellate court had affirmed the decree. It found that the stipulation was untrue but held, contrary to the trial court, that it was not fraudulent or collusive. It also appears from the record in Burhe v. Kleiman that the case was tried on an ¿greed statement of facts which raised only a single issue, whether by reason of changes in the restricted area, the agreement had ceased to be enforceable in equity.
“From this the Supreme Court of Illinois concluded in the present case that Burke v. Kleiman was a ‘class’ or ‘representative’ suit and that in such a suit ‘where the remedy is pursued by a plaintiff who has the right to represent the class to which he belongs, other members of the class are bound by the results in the case unless it is reversed or set aside on direct proceedings’; [372 Ill. 369, 24 N. E. (2d) 39], that petitioners in the present suit were members of the class represented by the plaintiffs in the earlier suit and consequently were bound by its decree which had rendered the issue of performance .of the condition precedent to the restrictive agreement res judi-cata,, so far as petitioners are concerned. The court thought that the circumstance that the stipulation in the earlier suit that 95 per cent of the frontage owners had signed the agreement was contrary to the fact as found in the present suit did not militate against this conclusion since the court in the earlier suit had jurisdiction to determine the fact as between the parties before it and that its determination, because of the representative character of the suit, even though erroneous, was binding on petitioners until set aside by a direct attack on the first judgment.”

Further, the court said:

“The restrictive agreement did not purport to create a joint obligation or liability. If valid and effective its promises were the several obligations of the signers and those claiming under them. The promises ran severally to every other signer. It is plain that in such circumstances all those alleged to be bound by the agreement would not constitute a single class in any litigation brought to enforce it. Those who sought to secure its benefits by enforcing it could not be said to be in the same class with or represent those whose interest was in resisting perform-anee, for the agreement by its terms imposes obligations and confers rights on the owner of each plot of land who signs it. If those who thus seek to secure the benefits of the agreement were rightly regarded by the state Supreme Court as constituting a class, it is evident that those signers or their successors who are interested in challenging the validity of the agreement and resisting its performance are not of the same class in the sense that their interests are identical so that any group who had elected to enforce rights conferred by the agreement could be said to be acting in the interest of any others who were free to deny its obligation.
“Because of the dual and potentially conflicting interests of those who are putative parties • to the agreement in compelling or resisting its performance, it is impossible to say, solely because they are parties to it, that any two of them are of the same class. Nor without more, and with the due regard for the protection of the rights of absent parties which due process exacts, can some be permitted to stand in judgment for all.”

And further the court then said:

“It is one thing to say that some members of a class may represent other members in a litigation where the sole and common interest of the class in the litigation, is either to assert a common right or to challenge an asserted obligation. Smith v. Swormstedt, supra; Supreme Tribe of Bein-Hur v. Cauble, supra; Groves v. Farmers State Bank, 368 Ill. 35, 12 N. E. (2d) 618. It is quite another to hold that all those who are free alternatively either to assert rights or to challenge them are of a single class, so that any group merely because it is of the class so constituted, may be deemed adequately to represent any others of the class in litigating their interests in either alternative. Such a selection of representatives for purposes of litigation, whose substantial interests are not necessarily or even probably the same as those whom they are deemed to represent, does not afford that protection to absent parties which dne process requires. The doctrine of representation of absent parties in a class suit has not hitherto been thought to go so far. See Terry v. Bank of Cape Fear, C. C., 20 F. 777, 781; Weidenfeld v. Northern Pac. Ry. Co., 8 Cir., 129 F. 305, 310; Mc-Quillen v. National Cash Register Co., D. C., 22 F. Supp. 867, 873, affirmed, 4 Cir., 112 F. (2d) 877, 882; Brenner v. Title Guarantee & Trust Co., 276 N. Y.. 230, 11 N. E. (2d) 890, 114 A. L. R. 1010; cf. Wabash R. R. Co. v. Adelbert College, 208 U. S. 38, 28 S. Ct. 182, 52 L. Ed. 379; Coe v. Armour Fertilizer Works, 237 U. S. 413, 35 S. Ct. 625, 59 L. Ed. 1027. Apart from the opportunities it would afford for the fraudulent and collusive sacrifice of the rights of absent parties, we thin It that the representation in this case no more satisfies the requirements of due process than a trial by a judicial officer who is in such situation that he may have an interest in the outcome of the litigation in conflict with that of the litigants. Tumey v. Ohio, 273 U. S. 510, 47 S. Ct. 437, 71 L. Ed. 749, 50 A. L. R. 1243.”

The questions that are involved in the instant case are somewhat similar to the facts as they are related in the opinion of the court in Hansberry v. Lee, 61 S. Ct. 115, so that it will be necessary to apply the reasoning of the Supreme Court of the United States in the instant case. We find from an inspection of the questions that are involved that the defendants have suggested that the extension agreements that were entered into by the plaintiff have a binding force upon the question that this restrictive agreement runs with the land and is binding upon the mortgagee, and that, in some way, the plaintiff became estopped to assert that the restrictive agreement is not binding upon it, as a mortgagee who did not sign the agreement or consent thereto, because after the recording of the agreement, the plaintiff extended the time of payment of the mortgage debt. The plaintiff urges that in the absence of a detriment suffered by defendants, by reason of plaintiff’s failure to act, there can be no estoppel. From this record there is not one word that the defendants have done or failed to do anything in reliance upon the plaintiff’s omission to foreclose in 1932 or 1936, or in reliance upon its having become, by some implication, a party to the restrictive agreement. It has been well said by the plaintiff that the extension agreements were exactly what the term implies — simple agreements whereby the time of payment of the mortgage debt was extended upon the original security without any release of the original mortgage, taking of a new one, or renewal of the mortgage notes. The extension of the time of payment of a mortgage in no way impairs the mortgage lien as against subsequent incumbrancers or as against any other parties subsequently dealing with the title.

The trial court had before it the question as to whether the plaintiff was bound by this restrictive agreement by the fact of previous adjudications of its validity, and whether plaintiff, having signed the extension agreements which were recorded, is bound by the restrictive agreement which had been signed by Emma "W. • Meschke and her husband, August F. Meschke, predecessors in title. The decree that was entered in the Hansberry v. Lee {supra) case was in a class action wherein the court passed upon the questions that were before it, and the Supreme Court of the United States used this language with reference to the restrictive agreement:

“The restrictive agreement did not purport to create a joint obligation or liability. If valid and effective its promises were the several obligations of the signers and those claiming under them. The promises ran severally to every other signer. It is plain that in such circumstances all those alleged to be bound by the agreement would not constitute a single class in any litigation brought to enforce it.” This having been regarded by the State of Illinois Supreme Court as a class litigation ¿nd that the restrictive agreement by its terms imposes obligations and confers rights on the owner of each plot of land who signs it, if those seeking to obtain the benefits of the agreement were rightly so regarded by the State Supreme Court as constituting a class, it is evident from what was said in Hansberry v. Lee, supra, that “those signers or their successors who are interested in challenging the validity of the agreement and resisting its performance are not of the same class in the sense that their interests are identical so that any group who had elected to enforce rights conferred by the agreement could be said to be acting in the interest of any others who were free to deny its obligation.”

When we come to consider the questions as they are involved in the present litigation, we find that the defendants cite as authorities the cases of Burke v. Kleiman, 277 Ill. App. 519, wherein the decree was entered on October 2, 1933, and the case of Penoyer v. Cohn, wherein the decree was entered in the superior court of Cook county on May 5, 1938, both of which cases were — as the court by its opinion ruled that they were — class actions. ' The case of Lee v. Hansberry, 372 Ill. 369, also is cited, in which the Supreme Court of Illinois construed this very agreement and held it to be in full force and effect, as a class or representative one. The Supreme Court of the United States in Hansberry v. Lee, 61 S. Ct. 115, indicated that the litigation is not in the nature of a class action, and that the parties, so far as their rights were concerned, had a several and not a joint right which they could assert, and that the members of the class who were parties to the restrictive agreement, but who were not before the court, were deprived of the due process of law as guarantied under the fourteenth amendment to the Constitution of the United States.'

Under the facts and the law, as we have indicated, we are of the opinion that the court by its foreclosure decree properly entered this decretal order and that it is not subject to error. The action of the trial court is, therefore, affirmed.

Affirmed.

Denis E. Sullivan and Burke, JJ., concur.


source: Caselaw Access Project

author: Mr. Justice Burke

license: Public Domain

text:
    Almar Forming Machine Company, Appellee, v. F. and W. Metal Forming Machinery Company et al., Appellants.
    Gen. No. 41,229.

      Opinion filed January 22, 1941.
    Rehearing denied February 5, 1941.
    Campbell, Clithero & Fischer, of Chicago, for appellants ; Delbert A. Clithero and Raymond P. Fischer, of counsel.
    Louis S. Cohn, of Chicago, for appellee.
   Mr. Justice Burke

delivered the opinion of the court.

On May 12, 1937, the Almar Forming Machine Company, a corporation (hereinafter referred to as “Almar” or “plaintiff”), and F. & W. Metal Forming-Machinery Company, a corporation (hereinafter referred to as “F.. & W.”), signed, sealed and delivered a written contract, the preamble of which recited that F. & W. was the sole licensee under two applications for letters patent, filed by Harold Flagler, serial No. 122,892 filed January 29, 1937, entitled, “Method of and machine for bending sheet metal,” and serial No. 136,984 filed April 15, 1937, entitled, “Edge Bending Machine,” and that Almar desired to obtain the sole and exclusive right from F. & W. for a certain period to sell machines embodying either or both of the inventions. The agreement further provided that:

“ Almar shall have the sole and exclusive right of sale and distribution (except as hereinafter provided) of machines as described in the specifications of the above identified applications for Letters Patent for three years from the date hereof, with the right to extend this agreement from year to year thereafter; but F. & W. shall have the right to amend clause III and clause VI.
“II. Almar will pay to F. & W. for each of the machines, as hereinafter described which it shall sell, as follows: (a) for each machine as described in the specification of application Serial No. 122,892, — irrespective of what claims are now included in said application or which may hereafter be included in a patent which may be. issued on said application, — the sum of Two Hundred Dollars ($200.00) plus the actual and legitimate costs of producing said machine inclusive of all overhead properly allocatable to the manufacturer thereof, it being agreed that such production cost of each machine is at the date of this agreement Two Hundred Fifty Dollars ($250.00); provided, however, that for each ten per cent (10%) increase in such legitimate and actual cost of manufacture, the amount to be paid shall result in an increase of Twenty Dollars ($20.00) in the first figure herein recited, it being the intent of this provision that as the cost of manufacture increases by steps of ten per cent (10%), the named figure of Two Hundred Dollars ($200.00) shall be similarly increased a like percentage, it being understood, however, that this latter provision does not modify the agreement that any increase in the cost of manufacture, — whether amounting to ten per cent (10%) or not, — shall be paid by Almar. (b) For each machine as described in the specification of application Serial No. 136,984, — irrespective of what claims are now included in said application or which may hereafter be included in a patent which may be issued on said application, — the sum of Five Dollars ($5.00) plus the actual and legitimate costs of producing said machine inclusive of all overhead properly allocatable to the manufacture thereof, it being agreed that such production cost of each machine is at the date of this agreement Twelve Dollars ($12.00); . . . (c) Whenever F. & W. shall report to Almar that the cost of producing either or both of the above machines has increased above the figures named in (a) and (b), i.e., Two Hundred Fifty Dollars ($250.00) and Twelve Dollars ($12.00) respectively, Almar shall have the right to call upon F. & W. to exhibit the invoices indicating the reasons for such asserted increase. . . .
“III. It is of the essence of this contract that the minimum number of machines to be sold by Almar per year shall be twenty-five (25) of those embodying the structure described in the specification of application Serial No. 122,892, and Three Hundred (300) of the machines described in the specification of Serial No. 136,984; it being understood, however, that in determining these 'figures for the first year of the life of this contract, Almar shall be given credit for those machines which may already have been sold by it at the date of the execution of this contract. . . .
“V. The exclusive right to sell as hereinbefore granted by F. & W. to Almar shall be extended to include'the right to Almar to grant sub-licenses to other persons, real or corporate, to promote the sale and distribution of the above mentioned machines, it being understood, however, that in all cases Almar shall be responsible for the acts of its thus-appointed agents in all respects relating to this agreement, and that in all cases the responsibility for paying for the machines thus sold in accordance with paragraphs (a) and (b) of Section II shall rest upon Almar in all respects as if Almar were making the sale itself.
“VI. F. & W. will manufacture and furnish the aforesaid machines in reasonable quantities required by Almar, but does not obligate itself to furnish more than eight of the big machines and fifty of the little machines in any thirty day period; . . . ”

On June 15,1939, plaintiff filed a complaint in equity in the circuit court of Cook county for specific performance of the contract to manufacture and sell the machines, for an injunction forbidding the defendants from violating the contract and for damages and loss of profits resulting from the alleged breach of contract. Defendants filed an answer, to which plaintiff filed a replication. Shortly after the filing of the complaint, plaintiff appeared before the chancellor, and without having served a notice on the opposing parties, obtained an order granting a temporary injunction for specific performance of the contract for the manufacture and delivery of the machines. The order was reversed in an opinion reported as Almar Forming Machine Co. v. F. & W. Metal Forming Machine Co., 301 Ill. App. 591, where, at page 596, this court said that “such multitudinous and detailed activities of individuals are not supervised and directed by a court of equity and the order directing that this be done should not have been entered.” The cause was referred to a master in chancery, who reported in favor of the plaintiffs. Objections filed to the master’s report were allowed to stand as exceptions. These exceptions were overruled and a decree was entered substantially in accordance with the recommendations of the master. The decree directed that the defendants and each of them be enjoined until May 12,1940, “from in any way or manner violating the terms, conditions and provisions of the contract dated May 12, 1937, between Almar Forming Machine Company and F. & W. Metal Forming Machinery Company,” and from in any manner accepting any order, selling or offering for sale or distributing to any person, firms or corporation, except plaintiff and its sublicensees, any and all of the metal-forming machines referred to in the contract, likewise from in any manner advertising, exhibiting or displaying any and all of the metal-forming machines designated in the contract, and the decree also required defendants to account to the plaintiff “for its loss of profits, damage and costs, together with other damages and costs sustained in or to be sustained up to and including May 12,1940, ’ ’ by plaintiff as a result of having sold the above-described machines to persons, firms or corporations other than plaintiff. The decree then again referred the case to a master in chancery for the purpose of stating the account as to the sum or sums of money due and owing to the plaintiff “for its loss of profits, damages and costs from the defendants.” The decree further entered a judgment in favor of F. & W. and against plaintiff in the sum of $878.67, which sum was awarded to F. & W. “as its damages, costs and attorneys’ fees for the erroneous issuance of the temporary injunction.” The decree directed that this judgment for $878.67 be set off against any sum or sums of money found to be due and owing to plaintiff from defendants. This appeal is prosecuted by the defendants for the purpose of reversing the decree except that part awarding to the defendant F. & W. a judgment in the sum of $878.67.

The first point advanced by the defendants is that the master’s findings of fact and the undisputed evidence in the record established that under the rules of pleading and the principles of law applicable to instruments under seal, the contract of May 12, 1937, has been abrogated. Plaintiff responds by saying that the court correctly found that the contract is in full force and effect and that the written contract was not abandoned.^ Plaintiff maintains that if F. & W. did not insist on compliance with a certain provision of the contract which was inserted therein for its benefit, such conduct does not affect the terms or enforcement of the contract. As announced in MacAndrews & Forbes Co. v. Mechanical Mfg. Co.. 367 Ill. 288, the contract must be construed in the light of the circumstances surrounding its execution, including the patent application to which it refers. The parties are in substantial agreement that a sealed instrument cannot be modified or changed by parol. Plaintiff cites Fuchs v. Peterson, 315 Ill. 370, as authority for the proposition that while a sealed executory contract cannot be modified or changed by parol so as to authorize either party to sue upon it, it is equally well settled that a party to a written contract may by parol waive performance of a condition which was inserted in the contract for his benefit. It becomes necessary, therefore, to discuss the facts. Prior to January, 1937, Harold G-. Flagler, designed two machines for bending sheet metal. One was a small hand machine, known as “Easy Edger,” which made an ordinary flange or right angle bend. The other machine was a power-driven machine, which the plaintiff named the “Standard.” The latter machine formed a seam or double fold in sheet metal. The particular shape of the fold thus formed was commonly known to the trade as a Pittsburgh lock. On January 29, 1937, Flagler applied for a patent on the power lock-forming machine and on the method of bending sheet metal which it embodied. He also applied for a patent on the “Easy Edger” machine. Thereafter, F. & W. became the sole licensee and began to - manufacture and sell the “Easy Edger” and the power machine called “Standard” to the Ward Machinery Company, of which William M. Ward was president. The plaintiff corporation, Almar Forming Machine Company, was then organized by Ward, and on May 12, 1937, Almar and F. & W. entered into the written contract heretofore set ont. The contract recited that the machines to be manufactured and sold were those described in the specifications “irrespective of what claims are now included in said application or which may hereafter be included in a patent which may be issued on said application.” The contract also referred to the sales already made and stated that for the purpose of satisfying the requirements of the contract as to the minimum number of machines to be sold each year, machines already sold at the time of the execution of the contract were to be included in the first year’s sales. The annual contract minimum is 25 of the “Standard” machines described in patent application No. 122,892, and 300 of the edgers described in patent application No. 136,984. The patent application covering the “Standard” machine referred to in the contract included detailed drawings showing its motor, shafts, gears and rollers and described each part in its relation "to the other parts in minute detail. The machines were further identified by the contract as those that had been sold prior to the execution thereof. After the execution of the contract the parties proceeded to perform according to its terms, and the defendants, F. & W., sold plaintiff “Easy Edgers” for $17 each and “Standard” machines for $450 each, the prices fixed by the contract. There was nothing unique about a power-driven machine to form Pittsburgh locks. Other machines were on the market and the specifications of the patent recited that the invention relates to the sequence of steps in the bending, and that the metal-forming machine “is definitely less expensive than those which are now used for similar purposes.” During the year 1937 other manufacturers began to produce cheaper machines. William M. Ward, plaintiff’s treasurer, testified that his salesmen said “that it was necessary to get a machine at a cheaper price to meet the competition that they had. ’ ’ There is conflicting testimony as to whether Ward or Flagler first suggested that new machines be developed, but all the witnesses agree that the change in the course of dealings with the parties was initiated at a meeting in the Ward offices of salesmen employed by the plaintiff and the Ward Machinery Company, held on December 27, 1937. Plaintiff’s witnesses all testified that at this meeting the salesmen present agreed that they needed a lighter, cheaper machine and also a heavier machine to meet competition. Ward testified that at this salesmen’s meeting he turned to Flagler, president of F. & W., “and asked if he could make a machine that sold for $450.” Flagler said that he would try. As a result of this meeting F. & W. proceeded to design another machine. This machine was called the “Junior.” It had a 3/4 horsepower motor instead of the 1 horsepower motor which was always used on the “Standard” machine; the design of the cabinet of the machine was altogether different, the machine was of a much cheaper construction and its appearance was altogether different from the appearance of the “Standard” machine which had" been delivered under the written contract and was shown in the original patent application. After the new machine had been designed, a partially completed or “dummy” model was set up in defendant’s plant, and Ward, plaintiff’s representative, was called to examine it. The testimony as to what was said on this occasion is conflicting. Flagler testified that he told Ward $300 was the best price F. & W. could make on the “Junior” machine, and that in view of the lower price a new contract was necessary. Ward denied that he said a new contract was necessary. After these negotiations F. & W. proceeded to manufacture “Junior” machines as well as the “Standard” machines. The first “Junior” machines were sold to the plaintiff on January 14, 1938. The “Junior” machines were sold at a price of $300 instead of the price of $450 each, which the written contract contemplated for a motor-driven lock-forming machine. In accordance with the opinion of the salesmen that a heavier machine should be designed, F. & W. proceeded to design and construct a machine known as the “Heavy Duty.” The first “Heavy Duty” machine was sold to plaintiff on February 17, 1938. On February 15, 1938, Ward and Flagler had a conversation and Ward wrote to Flagler under date of February 15, 1938, that “As per our conversation today, it will be understood that the Heavy Duty Machine will be invoiced at $775.00.” The “Heavy Duty” machine is about three times the size of the “Standard” machine, and weighs three times as much as the “Standard” machine. It has a three horsepower motor instead of a one horsepower motor and has different starting equipment. It is adjustable for different gauges of metal. It has 24 forming rolls in 8 sets, instead of 14 forming rolls in 5 sets on the “Standard” machine, which are shown and described in the patent application and it forms a Pittsburgh lock by 8 steps instead of 5. In April, 1938, about a year after the execution of the contract, Almar ceased to order machines, and thereafter all orders were placed by the Ward Machinery Company. The machines were invoiced and delivered to the Ward Machinery Company, and the Ward Machinery Company sold them to the public through its own organization. Thereafter, Almar employed no salesmen, paid no salaries, paid no rent, purchased nothing, and aside from expenditures like franchise taxes necessary to keep the corporation in legal existence, Almar expended no money after April, 1938. During the spring of 1938, a competitor developed a dual purpose machine, which not only formed the Pittsburgh locks, which were the only locks which the “Standard,” “Junior” and “Heavy Duty” machines were capable of forming, but also formed other types of bends or locks. To meet this competition F. & W. developed the “Universal” machine which, in addition to Pittsburgh locks, formed locks known as drive cleat rolls, standing seam rolls, double seam rolls and right angle flange rolls. As a result of conversations between Flagler and Ward, F. & W. spent more than $2,000 designing and developing the “Universal” machine and sold the first six to the Ward Machinery Company at a price of $500 each. F. & W. ’s actual costs, without any profit, ran from $450 to $475, leaving a profit of from $25 to $50 a machine instead of the minimum profit of $200 provided by the written contract. During the period from August, 1938, to May 12,1939, the Ward Machinery Company purchased 11 of these “Universal” machines ranging from $452 to $725 each. After the “Universal” machine had been brought out, Ward had further conversations with Flagler about the desirability of designing the “Master” machine, which was a machine similar to the “Standard” machine, combined with equipment to perform operations other than making Pittsburgh locks, including double seam rolls and drive cleat rolls. The machine was developed and the Ward Machinery Company purchased the “Master” machines, the first purchase being on October 6,1938. During the period from October 6,1938 to May 12,1939, the Ward Machinery Company purchased 27 “Master” machines at prices ranging from $325 to $441 each. Flagler told Ward he could not make much money on the machines selling at that price, but that he would try it. This .price did not cover the cost of manufacturing plus $200, as provided by the contract. In November, 1938, F. & W. sent the Ward Machinery Company a new price list with a letter stating that it superseded “all previously quoted prices, either verbal or written, and will remain in effect until further notice.” This letter made no reference to the original written contract. Defendant did not sell any of the machines to any one other than the plaintiff prior to April, 1938, or to any one other than the Ward Machinery Company after that date until May, 1939, the end of the second year of the contract. Ward testified that Flagler told him in May, 1939, that he “intended to sell ‘Easy Edgers’ to dealers other than ourselves, ’ ’ and that his attorneys advised him that the contract was of no value. Flagler testified that he told Ward that the agreement had not been in effect for so long that he was going to sell the “Easy Edger” machine to other dealers, and that Ward said he (Ward) thought that he ought to have an exclusive on that one machine, and that Flagler replied that the contract had been void a year previously. Thereupon the Lock Former Corporation, of which Flagler is president, which had been organized early in 1939, began to sell the “Easy Edgers” to persons other than the plaintiff, Almar, or the Ward Machinery Company. In addition to the “Easy Edger,” the Lock Former Corporation sells another newly developed machine entirely different from any of the machines in question. All of the machines made under patent application No. 136,984, and subsequently known as “Easy Edger,” were all made under and pursuant to the terms of the written contract of May 12, 1937. The principal dispute in this case pertains to machines embodying patent application serial No. 122,892, which are identified as metal-forming machines. From a computation of their relations under the contract, it appears that plaintiff enjoyed a gross profit of $30,750 on the sale of the machines manufactured by F. & W. The Lock Former Corporation was organized by Flagler and occupied the same premises as the Flagler Engineering Company and F. & W. Metal Forming Machinery Company. Plaintiff contends that the language “irrespective of what claims are now included in said application or which may hereafter be included in a patent which may be issued on said application” constitutes the inclusion in the contract of any modification, change or addition to the original patent application, and was not a limitation. Defendants contend that the evidence clearly establishes that there was a voluntary abandonment of the written contract. On the other hand, plaintiff contends that notwithstanding the difference in the design, weight, power and price of the machines, they were delivered under the original written contract. Defendants state that the new machines were delivered pursuant to verbal agreements. The court found that all of the metal-forming machines embodied patent application No. 122,892, and were made pursuant to the contract of May 12,1937. We find that the contract of May 12,1937, is a contract for the sale of two types of machines. Such machines had already been manufactured and sold to the Ward Machinery Company, of which William M. Ward,- plaintiff’s treasurer, was president during a period of two months prior to May 12, 1937. When the contract of May 12, 1937, was signed, the parties knew that patent applications had been filed. They also knew that patent application serial No. 122,892, covering the motor-driven machine about which the principal dispute in this case centers, had been filed. Therefore, when they executed the contract of May 12, 1937, they knew exactly what machines they were dealing with. We are of the opinion that they intended to contract with respect to the two existing machines. This view is strengthened by the provision that the plaintiff ‘ ‘ shall be given credit for those machines which may already have been sold,” and the testimony of plaintiff’s treasurer Ward that this clause of the contract referred to the “Standard” machine and the “Easy Edger.” The patent specifications contained complete and detailed drawings of the machine and of all its important shafts, rollers and gears. The text of the specifications refers to these drawings and describes the nature and operation of each part. Plaintiff concedes that while an exec-utory contract under seal cannot be altered by a parol agreement, nevertheless, the law is well settled that a party to such a contract may waive performance of a condition which has been inserted therein for his benefit, and that such waiver is not held to be a change in the terms of the original contract. Defendants do not challenge the correctness of this statement of the law. They do say, however, that they find it difficult to understand how P. & W. can be said to have “waived” the requirements of the contract that it manufacture and sell two specified types of machines and “waived” into existence an obligation to design and manufacture six types of machines. We agree with the view of the defendants that the conduct of the parties does not show a waiver, but does show a definite abandonment of the contract.

Defendants’ second contention is that a court of equity will not enforce a contract at the instance of one who has not performed his own obligations thereunder ; and defendants ’ third point is that a court of equity will not undertake to enforce a contract if the enforcement would require it to supervise a long series of manufacturing operations. In passing on the first point we decided that the parties abandoned the written contract. It follows that the plaintiff did not perform such contract. As we have seen the decree enjoins the defendants from in any manner violating the terms and provisions of the contract of May 12, 1937. This is in reality a decree of specific performance, though negative in form. This clause of the decree contains the same vice that was criticized by us in the appeal from the temporary injunction, wherein we said: “This amendatory [mandatory] provision, by its terms, puts the court in the position of determining how many machines should be furnished by defendants or at least to decide as to how many machines are sufficient to comply with the contract. ... In addition to this such multitudinous and detailed activities of individuals are not supervised and directed by a court of equity and the order directing that this be done should not have been entered. ’ ’ A court of equity will in a proper case, enforce a negative covenant. The clause that is being criticized, however, enjoins the defendants from violating the terms of the contract, which, in effect, is an effort to enforce specific performance of the contract.

The fourth point advanced by defendants is that plaintiff is not entitled to equitable relief because there is no showing of irreparable injury. The record clearly shows that the machines are not irreplaceable. Other machines are handled by competitors which do the same work. The patents covered the particular method of effecting the bends. We are of the opinion that even if the contract had not been abandoned, the plaintiff had an adequate remedy at law to recover damages for the alleged breach of the contract. In their fifth point defendants maintain that á court of equity will not enforce a contract unless all the terms and conditions are definite and certain. The decree finds that the contract ‘ ‘ still is in full force and effect; that the changes made by Harold Flagler and F. & W. Metal Forming* Machinery Company do not affect the validity and effectiveness of said contract dated May 12, 1937.” Plaintiff ceased to pay contract prices for the machines. Four machines, in addition to the two machines specified in the contract, were designed and developed. It is obvious that a court of equity could not enforce the contract as changed, because of uncertainty. The sixth point urged by defendants is that a court of equity will not enforce a contract unless its obligations are mutual and equitable in the event of breach by the other. Defendants made a persuasive argument in support of this point. We are of the opinion, however, that the contract does contain mutual covenants and obligations. The seventh contention of defendants is that a court of equity will not assume jurisdiction to' award an accounting of damages for an alleged breach of contract and thereby deprive a litigant of his right to trial by jury. Plaintiff replies to this contention by stating that no citation of authority need be made for the fact that the jurisdiction of a court of equity always includes the right to take an account between the parties where the court has once assumed jurisdiction. Hence, the plaintiff concedes that he is not entitled to an accounting unless the court has jurisdiction to give relief because of some equitable right.

Finally, defendants assert that the entire testimony of any witness who wilfully testifies falsely on any material issue, or is guilty of an attempt to foist spurious fabricated documents on the court, must be disregarded except as corroborated by credible evidence. One of plaintiff’s contentions is that it performed its obligations under the written contract through the Ward Machinery Company, which the plaintiff contended at the trial was the plaintiff’s sublicensee. The alleged sublicense is in the form of a letter from Almar to the Ward Machinery Company, dated May 17, 1937. Defendants argue that any reasonable man reading the record would be morally certain that the alleged sub-license document was a fabrication concocted and sponsored by the plaintiff’s witnesses, William M. Ward and Vivian Stetzer in an attempt to establish a right of action in the plaintiff. Defendants also call attention to the fact that during the trial Ward swore that he was the president of the plaintiff corporation. The master so found. After the hearings before the master were concluded, defendants discovered that Ward was not and had never been the president of plaintiff corporation. The trial judge then admitted exemplified copies of the two annual reports filed by plaintiff corporation, each of which was sworn to by defendant Ward, as treasurer, and stated under oath that Alice M. Ward was president of the corporation. At an early stage of the hearings Ward testified that “Almar Forming Machine Company granted a written license to the Ward Machinery Company, which I am going to produce as a matter of record. ” At a subsequent hearing his secretary, Vivian Stetzer produced a letter which was received as plaintiff’s exhibit 8, and testified that this was the sublicense. Ward brought to the hearing a stenographic notebook and produced it in an attempt to substantiate the document introduced as exhibit 8 as genuine. It is not claimed that any one connected with defendant was ever shown a copy of exhibit 8, or informed that any. sublicense existed. Miss Stetzer testified that this letter which purports to be dated March 17, 1937, was transcribed from notes placed in her stenographer’s notebook, which was offered in evidence as defendants’ exhibit 8. The book was turned over to the master for safekeeping. It appears from the uncontroverted testimony of defendants’ witness, Pearl Cleeton, a member of the faculty of a business college, that the stenographic notes from which the plaintiff claims this sublicense was transcribed, are inserted on a blank page of a stenographer’s notebook in the middle of a sentence in another letter directed to the Campbell Heating Company. The notes of the Campbell Heating letter are written in Munson shorthand. Miss Stetzer uses Gregg. Stenographic notes corresponding to the alleged sublicense are dated “3/17,” but the alleged sublicense is dated May 17,1937. The witness, Stetzer, first testified that the letter was dated March 17, 1937, and then attempted to correct her testimony and say it was dated May 17, 1937. The alleged sublicense is directed to the Ward Machinery Company, but the stenographic notes are directed to the Almar Forming Machine Company. The alleged sublicense was inserted in the middle of a letter written on March 18, 1937. The last letter in the stenographer’s notebook, other than the notes from which it is alleged plaintiff’s exhibit 8 were transcribed, was written on March 23, 1937, and the book was filled, except for one blank page, nearly two months before the date written on the disputed letter. The stationery on which plaintiff’s exhibit 8 was written bore a printed letterhead. Plaintiff did not buy and pay for any printed letterheads until November, 1937, six months after this letter was alleged to have been written, at which time plaintiff purchased 1,000 letterheads and 1,000 envelopes from the Jacobus Printing Company. In an attempt to explain how this letter could have been written before the stationery was printed, plaintiff produced an invoice from the American Printing Service, which indicated that in April, 1937, it had printed 50 letterheads for the defendant free of charge. All other ^correspondence between the parties prior to November, 1937, was on paper on which the letterhead had been typed, or inserted with a rubber stamp. Miss Stetzer could not recall that she ever saw a letter of the Almar Forming Machinery Company dated prior to November, 1937, which was written on a printed letterhead other than plaintiff’s exhibit 8. Miss Stetzer looked through the entire file of correspondence for the years 1937 and 1938, consisting of more than 50 letters, and could not find a single letter dated prior to March 16, 1939, which was written on a typewriter having the same shape of the letter “t” as that which appears on plaintiff’s exhibit 8. She stated that new type had been put on one typewriter at the Ward plant, but could not remember when it was installed. We are satisfied that the letter received in evidence as plaintiff’s exhibit 8 was a fabrication. The conduct of Ward and Vivian Stetzer is reprehensible. Their testimony should be entirely disregarded except where it is corroborated by other credible evidence or by facts and circumstances in evidence. This conduct impugns the good faith of the plaintiff in bringing this action. In People v. Spaulding, 309 Ill. 292, at page 305, our Supreme Court said:

“From the days of Moses to the present time it has been the law that a person who fabricates, suppresses or destroys evidence must take the consequences of the honest indignation which his conduct naturally excites. Moses declared, Cursed be he that removeth his neighbor’s landmark.’ (Deut. 27, 17.) Modern decisions establish the rule that all efforts by either party to a suit, directly or indirectly, to destroy, fabricate or suppress evidence may be shown as a circumstance indicating that the party’s cause is an unrighteous one.”

After a reading of the record and a consideration of the points presented and the authorities cited, we are convinced that the decree should be reversed. Therefore, the decree of the circuit court of Cook county is reversed and the cause remanded with directions to the chancellor to dismiss the complaint for want of equity, and to enter judgment for defendant, F. •& W. Metal Forming Machinery Company, and against the plaintiff in the sum of $878.67, the amount heretofore found to be due to such corporation under the suggestion of damages for wrongful issuance of the temporary injunction.

Reversed and remanded with directions.

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