text:
    Walter J. Spengler, Appellee, v. Joseph Eiger and Oscar Eiger, Appellants.
    Gen. No. 33,594.

      Opinion filed January 2, 1930.
    Lederer, Livingston, Kahn & Adler, for appellants.
    Sonnenschein, Berkson, Lautman & Levinson, for appellee; Henry S. Moser, of counsel.
   Mr. Presiding Justice Wilson

delivered the opinion of the court.

The plaintiff, Walter J. Spengler, filed his suit against the defendants, Joseph Eiger and Oscar Eiger, claiming that there was due him the sum of $13,750, for services rendered as a broker in procuring a purchaser for a certain real estate leasehold on the premises located at the northwest, corner of Milwaukee and Western Avenues in the City of Chicago.

The declaration consisted of four counts and the common counts. The first count charges that on March 15, 1923, he, the plaintiff, was a duly licensed real estate broker and was employed by the defendants to procure a purchaser of the leasehold on the premises located at Milwaukee and Western Avenues, for the sum of $150,000, payable $50,000 cash and balance of $100,000 by purchase money mortgage on the leasehold, payable in annual instalments of $6,000 per year and the balance at the end of the fifth year with interest at 6 per cent, payable semi-annually. That the defendants offered to pay the fair, usual and customary charge for such services and that the charge for such services was $13,750. The three additional counts were practically the same as the first.

Attached to the common counts was an affidavit of claim which, in fact, averred that one Don Carlos S. Mitchell'was the duly authorized agent of the plaintiff and, being first duly sworn, says that the demand of the plaintiff is for real estate broker’s commissions and that the plaintiff procured a purchaser ready, willing and able to pay at the price and upon the terms stated by the defendants, and that there was due after allowing all deductions and set-offs, the sum of $13,750. This affidavit of claim was not signed nor was the verification accompanying it.

The defendants, however, filed an affidavit of merits in which they allege that the nature of their defense is as follows: That the defendants did not employ plaintiff as a real estate broker, as set forth in the declaration; that the plaintiff was notified that he would not be employed to sell the property unless all three brothers who owned the property appointed him; that no price could be quoted until the owners agreed upon it and that they did not agree upon it, nor upon the price alleged in the declaration. They deny that the plaintiff procured a purchaser ready, willing and able to purchase the leasehold on said premises on the terms and at the price stated by the defendants.

The cause proceeded to trial on the declaration, plea of the -general issue, the unsworn affidavit of claim, to which no exception was made, and the affidavit of merits filed with the pleas. The jury returned a verdict in favor of the plaintiff in the sum of $13,750, upon which verdict judgment was entered and from this judgment an appeal has been perfected to this court.

Robert Gr. Regan testified on behalf of the plaintiff that he talked with the defendant, Joseph Eiger, in January, 1923, in regard to this leasehold, and was told that he would sell it for $150,000; that he then proceeded to find a purchaser; that he saw Eiger again and was informed that he, Eiger, had a brother Oscar Eiger with whom he desired to talk concerning the proposed sale; that he saw Oscar and, Joseph Eiger on the property two or three weeks after and talked over the terms of the sale with them and that Oscar Eiger, at that time said that the terms of $150,-000 for the property, were satisfactory. He saw them again about the middle of March and stated that he had a customer willing to buy the property at the price named for $50,000 cash, $6,000 a year for four years and balance in five years with interest at 6 per cent, and they stated that it would be all right. That he, Regan, then procured the purchaser Liebling and informed Joseph Eiger of that fact and was then told that there was another brother named Emil Eiger, and he thereupon stated to Joseph Eiger that it would be all right to take it up with Emil, but that he had procured a purchaser, and that he had not known that there was another brother by that name with an interest in the property. He again went down to see Oscar Eiger and, at that time, the brother Emil was present and he, Regan, was informed that they would not go through with the deal for less than $175,000, unless plaintiff would agree to waive his commission. Plaintiff further testified that he was a duly licensed real estate broker and was familiar with the rates fixed for the procuring of purchasers for long term leases by the Chicago Real Estate Board and that the rate was 4 per cent of the consideration and one year’s ground rent; that the total amount due was $13,750, according to the rates fixed by the Chicago Real Estate Board.

Walter J. Spengler testified that he met Joseph Eiger in April, 1923, and that at the time, Mr. Regan and himself and Joseph Eiger were present; that at that time Eiger told him that the terms were satisfactory and to go ahead with the deal, the purchase price to be $150,000, of which $50,000 was to be in cash and the balance payable $6,000 per annum, secured by a first mortgage, and the balance in five years with interest at 6 per cent; that Spengler told him at that time that it would be necessary for them to give a guaranty policy, an abstract of title, or Torrens certificate and that the rents and taxes would have to be prorated and that the brokerage commission would be fixed according to the Chicago Real Estate Board rate, and that he was told that the terms were satisfactory. Spengler further testified that after procuring the customer, Liebling*, he examined the records for the purpose of verifying the title and found that the property was in the name of the three brothers, Joseph, Oscar and Emil Eiger. He, thereupon, procured a check for $15,000 from the prospective purchaser Liebling, and prepared a contract which was exhibited in evidence marked plaintiff’s exhibit 3.

Abraham M. Liebling, a witness on behalf of the plaintiff, testified that he was the Liebling whose signature was attached to the contract for the purchase of the leasehold in question and that he had deposited his check for $15,000 with Spengler and that he was ready, willing and able to pay the balance provided for in the agreement.

We have examined Liebling’s testimony and are of the opinion that he was financially able to carry out the terms of the contract-.

Joseph Eiger, defendant, testified that he never told Began that he wanted to sell his interest in the property and did not recall any part of the conversation with Began; that his interest was a one-third interest and that his brothers, Oscar and Emil, were also interested in the property; that he told Began that the property was not for sale and that neither Began nor Spengler ever mentioned the name of Liebling to him in connection with the property, and he never had a conversation with Began and Spengler at which his brother Oscar was present. He testified, however, that he received a letter, marked plaintiff’s exhibit 1," and turned it over to his brother Oscar.

Oscar Eiger testified that Began spoke to him about the property and asked him whether he would listen to an offer, and he stated that he might, but that the property was not for sale and that he would have to submit the proposition to his brothers and that his brother Emil was out of the city. He testified further that he said to Began that he could not sell the property without the consent of his two brothers; that he saw Began later and told him that he had taken up the matter with his brothers and that they refused to sell; that Began never showed him any papers or contracts of any kind, and that he never had heard the name of Liebling before, nor did Began tell him that he had a check for $15,000 from the prospective purchaser.

, An examination of the testimony of the Eigers discloses the fact that after the procuring of the contract, their refusal was based entirely on the fact that they had not authorized Began to proceed in the matter, but had refused to sell the property or, at the most, would not sell without the consent of the three owners. There does not appear at any place in their testimony any objection to the contract on the ground that the terms contained therein were objectionable, or not in conformity to their understanding of the arrangement claimed by the plaintiff.

It is insisted, however, that even thbugh there was a contract between themselves and the broker for the sale, under the pleading plaintiff is not entitled to recover because the contract introduced in evidence did not conform to the agreement set forth in the declaration: first, because the contract provided that $15,000 earnest money be held by the plaintiff until the final transfer; second, that the vendor should furnish an abstract of title or a Torrens certificate; third, that if material defects were found in the title and not cured within 60 days, it should, at the purchaser’s option, become void; fourth, that the earnest money deposited should go to pay expenses and commissions; fifth, the taxes should be prorated; sixth, the insurance premiums on the buildings should be prorated.

An examination of Spengler’s testimony shows that he stated to the defendants that they were to furnish an abstract to title or a Torrens certificate or guaranty policy; that the rents and taxes were to be prorated and that the commission was to be fixed according to the rates of the Chicago Eeal Estate Board. The terms and conditions, to which objection is made, are contained in almost all Chicago real estate contracts. The prorating of taxes, rents and insurance rates would naturally follow and their insertion in the contract is in general use. This applies also to the furnishing of an abstract of title, as no purchaser would care to buy unless assured of the fact that his title would be good. The objections were, in a large part, frivolous. There may have been something in the retention of the $15,000 earnest money by the broker, but this could have been easily obviated, if the defendants had shown the slightest inclination to go through with the deal. If, in fact, there was an agreement between the parties, by which plaintiff was to procure a purchaser for the property, any effort of the defendants might have resulted in a modification of this clause in the contract. To say the least, defendants would not have been injured if the contract had, in fact, been entered into with the retention, of the deposit by the broker, as ultimately it would have to be paid and the defendants would not be injured if the commission were paid in advance.

While, as a matter of fact, the affidavit filed with the declaration was not signed or sworn to, it was evidently considered by the defendants as part of the pleadings when they filed their affidavit of merits. An affidavit of merits would not be required unless an affidavit in support of the declaration were filed. The case evidently proceeded on this theory.

The defense that there were additional terms and provisions in the contract which were not agreed to by the defendants was waived by their affidavit, because they were not set forth therein nor relied upon. Reddig v. Looney, 208 Ill. App. 413; Cooper v. Anderson, 246 Ill. App. 1.

The defendants, not having pointed out at the trial the error in the failure to sign and verify the affidavit filed in support of the declaration, cannot take advantage of it on appeal. McKenzie v. Penfield, 87 Ill. 38.

It is evident from the affidavit of defense, filed herein, as well as from the testimony of the defendants, that their sole reliance, for the purpose. of defeating the claim, was based upon the fact that they had never authorized the sale of the property and that there was no agreement between themselves and the plaintiff. Having failed in this defense, they should not be permitted to raise objections here that were not raised at the time the contract was presented to them for signature, nor raised by them during the course of the proceedings in the trial court. If, as defendants claim, there was no contract at all, it would necessarily follow that they would not be called upon to make objections to the terms. If, on the other hand, there was a contract and they made no effort to point out objections that might have been cured, if the parties were working in good faith, then they should not be permitted to take advantage of these objections at this time.

The Supreme Court of this State in the case of Smith v. Keeler, 151, Ill. 518, in its opinion, says:

“The other provisions pointed out as being in excess of the authority given to appellee are those which required the vendor to furnish the buyer an abstract of title, showing the title to be good and free from all liens and incumbrances, and providing that if the purchaser should fail to perform the contract on his part, the $400 deposited should be forfeited by him as damages, and that if the abstract furnished did not show a good title, the $400 should be returned to the purchaser, and the agreement should be null and void, and making time material. Whether we may take judicial notice of the fact or not, it is a matter of common knowledge that substantially these provisions are usually embraced by dealers in real estate in Chicago in their contracts of sale, and at least a plausible argument might be made to the effect that they all come within the reasonable discretion conferred upon a real estate broker, who is employed to sell real property partly for cash and partly on time, and where no further specific directions are given as to the terms in which contracts of sale shall be made.

“But the decision of the question now before us 'need not be placed on that ground. Smith, when informed that his broker had found a purchaser and made a sale, made no question as to the fact of the sale or its terms, but simply declined to carry the contract out, the sole ground of his action being, that in the meantime he had received a better offer, and that he had concluded not to sell at all. The authority of his agent was hot in writing, and.so, as he doubtless knew, the contract was not binding on him. Whether he was informed of the precise terms of the contract is not shown, nor does he appear to have made any inquiries on that subject. As he had determined to avail himself of his rights under the statute of frauds, that matter was wholly unimportant. His failure to call in question the assertion that a sale had been made, or to find any fault with the terms of the contract, or even to make any inquiries in relation thereto, furnishes some evidence that his broker had made a sale upon terms which were within the purview of his authority, and which, if he had not concluded to withdraw the property from the market, would have been' perfectly satisfactory to him. There was some evidence, therefore, tending to support the appellee’s claim to commissions, and the refusal of the court to dismiss the claim was not erroneous. ’ ’

So, in the case at bar, the fact that the defendants wholly refused to carry out the agreement, indicated that they were not interested in nor concerned with the terms or conditions of the contract and did not rely upon these terms or conditions for the purpose of raising objection to the efforts of the broker in procuring a purchaser.

Objection is also made to the introduction of plaintiff’s exhibit 1. This was a letter from Spengler to Joseph Eiger advising them that Liebling had signed a contract and stating the terms. It was introduced in rebuttal, although in our opinion, it would have been competent in direct, as it was a notice to the effect that the broker had procured a purchaser for the leasehold in question, and as such notice, was competent for the purpose of showing that knowledge had been given to the defendants of the consummation of the deal. It appears, however, from the testimony of Joseph Eiger that he never heard of Liebling and did not know about him. "When preseiited with the letter, however, he identified it as having been received by him. He testified further that he then turned it over to his brother Oscar. Oscar Eiger also testified that he did not know of Liebling nor that he had paid $15,000 by check, although his brother testified that he had turned this letter over to him. This letter contained the facts concerning which the defendants denied they had knowledge. We are of the opinion that the letter was properly admissible in evidence, both as notice to the defendants, and in contradiction of their testimony.

The objection to instruction number 1, offered on behalf of the plaintiff, is not well taken. This instruction contained the facts upon which plaintiff had based his claim and upon which he relied. It was not necessary to include in said instructions all matters of defense claimed by the defendants. It is not error to instruct a jury on plaintiff’s theory of a case. The instruction in question contained the elements necessary for the plaintiff to prove in order to recover, and he was entitled to present his case on his own theory to the jury as embodied, in the instruction. City of Chicago v. Schmidt, 107 Ill. 186.

Four instructions were given on behalf of the plaintiff and'ten on behalf of the defendants. Objection is made to the modification of certain instructions offered and given as modified, on behalf of the defendants. We find no material objection to the giving of these instructions, as modified, nor do we find any reversible error in the giving or refusing of other instructions in the case.

The jury heard the evidence and observed the witnesses and found, by their verdict, that the plaintiff was entitled to recover. The trial court indorsed this verdict by entering judgment upon the same, and we are not inclined to disturb the judgment.

For the reasons stated in this opinion the judgment of the circuit court is affirmed.

Judgment affirmed.

Ryner and Holdom, JJ., concur.


source: Caselaw Access Project

author: Mr. Justice Holdom

license: Public Domain

text:
    Benjamin, J. Schiff, Appellant, v. Continental National Bank and Trust Company of Chicago, Appellee.
    Gen. No. 33,384.
    Opinion filed January 2, 1930.
    Moses, Kennedy, Stein & Bachrach, for appellant; Hirsch E. Soble and Arthur Magid, of counsel.
    Mayer, Meyer, Austrian & Platt, for appellee; Abraham Meyer and Frederick Burnham, of counsel.
   Mr. Justice Holdom

delivered the opinion of the court.

In the municipal court defendant made a motion to strike the statement of claim from the files on the ground that it did not state a case which, as matter of law, entitled the plaintiff to recover. This motion was allowed and the statement of claim was stricken and a judgment of nil capiat and for costs entered against plaintiff, and he brings the record here by appeal for our review.

The action is to recover money alleged to have been received by defendant to and for the use of plaintiff. In brief the claim made against defendant by plaintiff, as set forth in his statement of claim, is inter alia that on April 11, 1919, the plaintiff made, executed and delivered to defendant in its then known name a guaranty in which he and one Moses Schiff, jointly and severally, guaranteed the full and prompt payment to defendant at maturity and at all times thereafter, of any and all indebtedness which the Vitanola Talking Machine Company then or thereafter might owe defendant, and the full and prompt payment of every balance and part of any such indebtedness to the extent of $150,000; that the Vitanola Company thereafter became insolvent owing defendant $240,814.46; that thé plaintiff, as guarantor, to secure an extension of time for the payment of his guaranty, made an arrangement with a creditors’ committee whereby he put that committee in control of enough of his own securities to insure the performance of his guaranty. The Vitanola Company, through its creditors’ committee, subsequently paid certain dividends on defendant’s claim of $240,814.46, amounting in the aggregate to $117,999.10. Moses Schiff, joint guarantor with plaintiff, also paid defendant $15,371.07. Defendant needed $120,716.55 plus interest, to liquidate the balance of the Vitanola’s indebtedness to it. That amount was realized by the creditors’ committee selling some of the securities deposited with it by plaintiff, and with the proceeds paying defendant.

The dispute is environed within the question whether plaintiff is entitled to a deduction from the amount of his guaranty of a credit consisting of that proportion of the dividends received by defendant, which the amount of plaintiff’s limit of liability of $150,000 bears to defendant’s entire claim of $240,-814.46.

The question presented by the issues before us is, whether plaintiff is, as he contends, entitled to recover from defendant an amount which will be the difference between that proportion of the dividends received by defendant which the amount of plaintiff’s limit of liability under his guaranty of $150,000 bears to defendant’s entire claim of $240,814.46, on the theory that the excess of payment was on the unsecured portion of defendant’s debt, which contention defendant meets by insisting’ that there was no part of the debt unsecured, but that plaintiff’s guaranty was of the whole debt of the Vitanda Company with a limitation on the liability of plaintiff under his guaranty to $150,000.

The rights of the parties are confined to a construction in law of the purport and effect of the guaranty of plaintiff to defendant, whether it is as contended by defendant, a guaranty of the whole debt of the Vitanola Company, or simply a guaranty of $150,000 of such debt.

The guaranty of plaintiff in suit was dated April 11, 1919, and inter alia provided that:

“For value received and to enable Vitanola Talking Machine Co. ... to obtain credit, from time to time, of the Continental and Commercial National Bank of Chicago, we hereby request said Bank to extend from time to time to said debtor such credit as said Bank may deem proper, and we hereby jointly and severally guarantee the full and prompt payment to said Bank at maturity and at all times thereafter, and also at the time hereinafter provided, of any and all indebtedness, liabilities and obligations of every nature and kind of said debtor to said Bank, and every balance and part thereof, whether now owing or due, or which may hereafter, from time to time, be owing or due, and howsoever heretofore or hereafter created or arising* or evidenced, to the extent of One hundred fifty thousand dollars with interest . . . from maturity until paid; . . . And the liability hereunder shall in no wise be affected or impaired by any acceptance by said Bank of any security for any of said indebtedness, liabilities and obligations, or by any disposition of, or failure, neglect or omission on the part of said Bank to realize upon any of said indebtedness, liabilities and obligations, or upon any collateral or security for any or all of said indebtedness, liabilities and obligations, or by any application of payments or credits thereon. Said Bank shall have the exclusive right to determine how, when and what application of payments and credits, if any, shall be made on said indebtedness, liabilities and obligations, or any part of them. . . . The granting of credit from time to time by said Bank to said debtor in excess of the amount of this guaranty and without notice to the undersigned is hereby also authorized and shall in no way affect or impair this guaranty. . . . This guaranty shall be a continuing, absolute and unconditional guaranty, and shall remain in full force and effect until written notice of its discontinuance shall be actually received by said Bank, and also until any and all of said indebtedness, liabilities and obligations created before receiving such notice of discontinuance shall be fully paid.”

On March 22, 1921, the Vitanola Company was averred to be indebted to defendant in the sum of $240,814.46; that between April 11,1919 and the above last mentioned date, the Vitanola Company became insolvent and thereafter so remained; that plaintiff on March 22, 1921, entered into a trust agreement with four of his creditors, defendant being one of them, for the purpose of securing an extension of the time of payment of his debts to them. Three trustees were named in the agreement, one of whom was Harvey C. Vernon, an assistant cashier of the defendant; that in said agreement it is recited that the liability of plaintiff to defendant under his guaranty has accrued, and that defendant has the right to insist upon payment, and further recites that plaintiff transferred to the trustees for the benefit of his creditors, including defendant, pro rata in proportion to their respective claims against plaintiff, all his right, title, etc. in and to certain securities and real estate specified therein, and that the reasonable value thereof was $300,000. That the trustees were given the right to collect the income of the property so conveyed, and to sell the same at any time for such price and terms as they saw fit and with the proceeds to pay the indebtedness for which the same was held as security, and that in the event plaintiff should liquidate the indebtedness for which such property was held as security, then to re-convey the trust property to plaintiff.

On April 1, 1922, the Vitanola Company and a majority of its stockholders entered into a creditors’ agreement with Harvey C. Vernon and two others therein designated as a “Creditors’ Committee.” It is also averred that defendant was one of the creditors of the company assenting to such agreement; that in and by such last mentioned agreement the creditors assenting thereto did extend the time of payment of the indebtedness of the Vitanola Company to such time and upon such terms as the creditors ’ committee might in its judgment from time to time deem necessary to accomplish the purposes of the agreement; that by said agreement a majority of the stockholders of the Vitanola Company deposited with the creditors’ committee their certificates of stock in the Vitanola Company, indorsed in blank, and the committee was given the management of the business and assets of its comapny with power to continue the same in whole or in part, or at any time in its discretion to liquidate the same and its affairs in its sole and exclusive judgment, and with further power from time to time to make pro rata distribution out of the company’s treasury of such funds as may accumulate therein realized from its business or assets; that the committee thereafter assumed control of the company and for several years operated it and subsequently liquidated its affairs and business and concluded the same about September 7, 1927; that between April 1,1922 and September 7, 1927, the creditors ’ committee- made pro rata distribution of cash dividends to the creditors assenting to the aforesaid creditors’ agreement, out of the company’s treasury; that about January 29, 1924, August 14, 1926, September 16,1926, November 17,1926 and September 7,1927, the creditors ’ committee caused the Vitanola Company to pay to its creditors, including defendant, dividends of 12 per cent, three of 10 per cent and one of 7 per cent on their respective claims; that payments were by cheek on which was indorsed, “To apply on account of principal of our indebtedness to you;” that defendant cashed its checks without objection and that the same totaled $117,999.10; that interest payments were likewise made from time to time by the committee; that plaintiff at the time was a creditor of the Vitanola Company in the sum of $57,449.96; that under the terms of the creditors’ agreement plaintiff agreed that any dividend which was authorized by the creditors’ committee to be paid on account of his claim should be distributed among certain creditors, including defendant; that the distributive share of plaintiff’s dividend of $15,371.07 was paid to defendant September 7,1927; that prior to September 10, 1927, plaintiff paid in full to all of his creditors named in the trust agreement except defendant, and received releases from them therefor; that Harvey C. Vernon, surviving trustee, was notified in writing September 10, 1927, that the aforesaid indebtedness was paid in full; that plaintiff admits an indebtedness to defendant on September 10, 1927, of $84,844.50; that on said last mentioned date plaintiff tendered to defendant said last mentioned sum in legal tender, which defendant refused to accept, and demanded of plaintiff the sum of $120,716.55, which defendant claimed was the balance due it under plaintiff’s guaranty agreement.

Plaintiff avers that on or about September 13, 1927, defendant, without his consent or authority, wrongfully and illegally directed trustee Vernon to sell sufficient of the securities, deposited with Vernon under the foregoing trust agreement, to realize the sum of $120,716.55; that on said date trustee Vernon, without the consent of plaintiff and contrary to his direction, sold sufficient of said securities to realize thereupon the aforesaid $120,716.55, and said trustee did thereupon on said date wrongfully pay said sum to defendant, and defendant did wrongfully receive the same, and plaintiff claims that by reason of the foregoing recited premises defendant is indebted to him in the sum of $35,872.05 and for money had and received by defendant for his use.

It is our construction of the terms of the guaranty contract in the record between plaintiff and defendant, that it is a guaranty of the whole debt of the Vitanola Company to defendant with a limitation of $150,000, and following this, as a matter of law, plaintiff is not entitled to share in any dividend payable from the estate of the Vitanola Company, an insolvent debtor, until after all of the indebtedness of the insolvent debtor, incurred under the terms of plaintiff’s guaranty, has been paid and satisfied in full.

We quote from plaintiff’s brief in which it is quite correctly stated that, “The important inquiry . . . is: Is the guaranty one of the whole indebtedness owing from the debtor to the creditor, with a limitation only on the amount of the liability of the guarantor; or is it one of a limited part of said indebtedness? If the guaranty is one of the whole indebtedness, then the creditor may retain all the dividends and hold the guarantor for the residue of the debt up to the amount of the guaranty. If the guaranty is of a part of the indebtedness, then the guarantor is entitled to a rateable deduction from the sum covered by' the guaranty. ’ ’

In accord with this argument there is but little cause for disagreement, for adjusting this argument to the instant case the question for our decision is, does the guaranty guarantee the whole of the indebtedness or not. In the preceding paragraph we have reached the conclusion' that the whole indebtedness was embraced within the guaranty. While the authorities are not exactly harmonious on the point we will refer to those which we feel sustain the conclusion to which we have arrived, as hereinabove announced.

It may be conceded that the rule of strictissimi juris is the canon for construction of the liability of a guarantor, and that in a sense a guarantor is the favorite of the law. Such is simply to be borne in mind by the court in construing the liability of such guarantor and in so doing to accord him the benefit of any doubts which may arise from the language of the contract and not to extend by implication, construction or presumption beyond the precise terms of the contract. In our construction we have adhered strictly to these legal principles.

In Buffalo German Ins. Co. v. Title Guaranty & Trust Co., 99 N. Y. S. 883, the court inter alia said:

“The question appears to be novél in our jurisdiction, although in the English courts it has arisen upon engagements somewhat similar to that contained in this bond, and has been much discussed. The earliest adjudged case is Ex parte Rushforth, 10 Vesey, 409 (1805), and the numerous subsequent cases are reviewed in Ellis v. Emmanuel, 1 Ex. D. (L. E. 1876) 157. The English cases recognize this somewhat subtle distinction, depending upon the true nature of the surety’s engagement, viz., Was the guaranty of the whole debt with a limitation on the liability of the surety? If so, the principal may retain all the dividends, and hold the surety for the residue of the debt up to the extent of the bond.”

Dumont v. Fry, 14 Fed. 293, in which the leading English and American cases are reviewed, all of which are in point, sustains the conclusion to which we have arrived in the instant case.

Lord Eldon in Ex parte Rushforth, 10 Vesey, Jr. 409, stated that:

“The rule certainly has been, that, where a man, engaged for the whole of a debt,' pays only a part, he has no equity to stand in the place of the person paid. ’ ’

The plaintiff in the case at bar did not, according to the statement of claim, pay the full amount of the debt which he guaranteed. Consequently he is not entitled to a pro rata share in dividends declared out of the insolvent estate of the Vitanola Company. We agree with counsel for defendant that Ellis v. Emmanuel, 34 Law Times Rep. 553, (in which Ex parte Rushforth, supra, and numerous subsequent cases are reviewed) cited in support of plaintiff’s contention, is in fact favorable to the cause of defendant.

In Cole v. Myers, 100 Neb. 480, the English cases are reviewed, including Ellis v. Emmanuel, supra.

In Jenkins v. National Surety Co., 277 U. S. 258, that court in its opinion adhered to the English cases and inter alia held that even on the theory of indemnity, the surety company was not entitled to share pro rata in the dividends of the insolvent bank until the receiver had been paid in full.

The Canadian case of Mather v. Bank of Ottawa, 51 Dom. Law Rep. 353, is strikingly analogous to the instant case and similar in every essential particular. In the Mather case the guaranty reads, inter alia,

“This is a continuing guaranty and shall cover the whole indebtedness to the amount aforesaid, or the ultimate balance from time to time due thereon to the amount aforesaid and shall cover any number of transactions up to the time of demand of payment thereof upon us on this guaranty. ... ”

In the case at bar and in the Mather case, supra, the liability was limited “to the extent of $150,000.” The. only difference in the two'guaranties is, in the Canadian case the words “ultimate balance” are used, and in the Sehiff guaranty the words used are “every balance or part thereof,” which we think by interpretive construction mean the same.

The court stated clearly the contentions of the parties in the Mather case in the following language:

‘ ‘ The contention of the respondent is that the extent of the liability of the guarantors is to be determined upon a consideration of the terms of the bond alone; and that, according to its true construction, they are liable for the ultimate balance owing by the company as a direct debt to the respondent, the amount they may be called upon to pay being limited to $150,000; and the contention of the appellants is two-fold: first, that according to the true construction of the bond the guarantee is one for a part of the company’s indebtedness ($150,000). ...”

The court then proceeded to dispose of the question of what was the meaning of the guaranty, and said:

“I turn now to the consideration of the terms of the bond. In my view, it is not, as Mr. Anglin contended, a guarantee of $150,000 of the indebtedness of the company, but a guarantee of the whole of the indebtedness, the amount which the guarantors were to be called on to pay being limited to $150,000.

“If the provision that the subscribers to the bond, guarantee ‘the repayment of the said advances, discounts, loans, payments, overdrafts, and other in- . debtedness, to the amount of $150,000, together with all interest, costs, charges, and expenses incidental thereto,’ is read without reference to the remainder of the instrument, it may be that Mr. Anglin’s contention that the bond is to be construed as applicable only to $150,000 of the company’s indebtedness to the respondent is well-founded; but, when the remainder of the bond is read, it is, I think, not so, for it is provided that ‘the guarantors shall be liable for the ultimate balance remaining unpaid after all moneys which may have been received from other sources shall have been applied in reduction of the indebtedness which shall be owing from the Ontario and Manitoba Flour Mills to the said bank’; which indicates plainly, I think, that the suretyship was to be in respect of the whole debt of the company, with a limitation of the liability of the ■ guarantors to $150,000.

“However, if it be assumed that the guaranty is applicable only to $150,000 of the indebtedness, it by no means follows that the payment of that sum by the company on account of its indebtedness, it still remaining indebted in more that that sum, discharges the guarantors. There is nothing in the cases cited by Mr. Anglin which supports such a view. Ellis v. Emmanuel (1876) 1 Ex. D. 157, is the leading case on the subject, but there is nothing in it or in the cases referred to by Blackburn, J., who delivered the judgment, to support the view that in the case of such á guaranty, where it is a continuing one, the surety’s liability is discharged pro tanto by payments made by the principal debtor on account of his indebtedness.

“The importance to a surety of his guaranty being treated as applicable to a part only of the principal debtor’s indebtedness is that, if he pays that portion, hfe has in respect of it all the rights of a creditor, and therefore, if the principal debtor becomes bankrupt, is entitled to the dividends on so much of the indebtedness, provable against the bankrupt’s estate, and, if the creditor holds other securities for his debt, to the benefit of a proportionate part of them.

“It is not, as I read the cases, payment by the principal debtor, but payment by the surety that gives him these rights; and, as I understand the law, so long as any indebtedness exists, the surety is liable to make good any part of it not exceeding the amount which he has guaranteed. It would, I think, be a strange result that where a surety gives a continuing guaranty for a stated amount of the principal’s indebtedness, he is entitled to say, whenever the principal pays an equal amount on account of his indebtedness, leaving, however, as much still owing, the surety is discharged, or that all payments made by the debtor on account of his indebtedness on a running account discharges pro tanto the surety; and that is not, in my opinion, the law. ’ ’

All of the foregoing reasons in the Mather case are forcefully applicable to the situation in the instant case and in our judgment, together with the other cases cited to a like effect, conclusive of the rights of the parties in this appeal.

In consonance with the cases herein cited the plaintiff in its statement of claim in the municipal court did not state a cause of action entitling him to recover in the action, and that as a guarantor he was not entitled to share in any dividends paid by the insolvent debtor of the defendant until defendant had been paid in full. Therefore the judgment in this appeal is affirmed.

Affirmed.

Wilson, P. J,, and Ryner, J,, concur,


text:
    Meyer W. Lippman, Appellant, v. Hyman Graber, Appellee.
    Gen. No. 33,473.
    Opinion filed January 2, 1930.
    Rehearing denied January 15, 1930.

      Wm. M. Tannenbaum, for appellant; Sydney R. Drebin, of counsel.
    Irving S. Abrams, for appellee.
   Mr. Justice Holdom

delivered the opinion of the court.

In a trial before-the municipal court without a jury there was a finding for defendant and a judgment of nil capiat and for costs, from which the cause comes to this court by the appeal of plaintiff.

Plaintiff commenced this 'suit against defendant in an effort to recover the sum of $1,500 which, he claimed was the balance due of the purchase price of a junior mortgage note for $3,000, sold by plaintiff to defendant for 55 per cent of the amount thereof, and also for the sum of $150 which plaintiff claimed defendant agreed to pay on account of plaintiff’s solicitor’s fees. In the statement of claim plaintiff credited defendant with $300 delivered in escrow. The $3,000 note was delivered to Chicago Title and Trust Company, as escrowee, to be delivered to defendant on payment of the balance of the purchase price. In the affidavit of merits it is charged that plaintiff and defendant executed and delivered a contract in writing covering the transaction, but denied that defendant agreed to pay $150 for plaintiff’s solicitor’s fees or any other sum; that defendant failed to consummate the contract and elected to forfeit the $300 paid by him as forfeit money, and the plaintiff now has the $300 and consequently defendant is not indebted to plaintiff in the amount of his claim or any other sum.

In the contract between the parties is found the following provision:

“In the event that the party whose bid is highest fails, neglects or refuses to pay the balance of the purchase price within the time specified, he shall forfeit the $300 as liquidated damages, and it shall be the duty of said Chicago Title and Trust Company to turn said $300 over to the party whose bid is lowest, and to be kept by said party as and for his liquidated damages, and not as a penalty. ’ ’
The claim for $150 solicitor’s fees is founded upon a letter written by one Irving S. Abrams, of the law firm of Abrams & Sonnenschein, to the plaintiff, in which it was said:
“In connection with the above entitled cause, I hereby agree to accept the sum of Three Hundred and Fifty Dollars ($350.00) in full for my services as solicitor for complainant.
“This letter is executed in connection with the contemplated purchase between the respective parties of a portion of a second mortgage on which foreclosure has been instituted in,the above entitled cause in order to more definitely set forth the items of expense in connection with said foreclosure.
“$150.00 to Tannenbaum & Polikoff, O. K. Irving S. Abrams.
(Signed) Irving S. Abrams.”

The letter was offered in evidence and an objection thereto made by defendant was sustained, and error is assigned on that ruling of the court. Mr. Abrams was impotent to make a contract of any nature saddling a liability upon plaintiff without procuring his consent thereto. We think it, therefore, patent that the ruling of the court excluding such self-serving document as evidence to bind plaintiff to pay $150 for a solicitor’s fee, which there was no evidence to show he agreed to pay, was correct.

It is argued for reversal that this provision of the contract is penal and not in liquidation of damages. If this court should so hold, it would be tantamount to making a new contract de hors that which was made by the parties themselves. Furthermore, to so hold would eliminate that vital clause of the contract. We must assume that when the parties made the contract they had in mind that defendant might not wish to conclude it, and therefore in contemplation of such a situation occurring and to avoid litigation and the uncertainty thereof, agreed upon the measure of damages ' which should be assessed for such breach. We hold in construction of this clause of the contract that the damages provided for thereby were in their nature liquidated and not “as a penalty.”

Where a contract provides for liquidated damages by the stipulation of the parties, such becomes the limit of recovery. As said in Hennessy v. Metzger, 152 Ill. 505:

“If the amount named in the contract be regarded , as liquidated damages, it forms the measure of damages, and the jury are confined to it. (Sedgwick on Damages, 6 Ed., page 396.)”

And in Boyce v. Watson, 52 Ill. App. 361, in which the parties by their contract stipulated as to the amount of the liquidated damages in case of .breach, where the trial court sustained that provision of the contract, it is said:

“The ruling of the Circuit Court, that the amount, of the recovery was controlled and fixed by the sum stipulated, was correct.”

While the law as to liquidated damages is at times uncertain and involved, yet the courts have applied certain rules which are controlling. On this point in Berger v. Nants, 172 Ill. App. 623, it is said:

“The primary question is to determine the meaning and intent of the parties from the contract itself, the subject-matter thereof, the terms used to express the intent, and the circumstances under which the contract was made.”

Applying this principle to the contract of the parties, we find no difficulty in concluding that the provision for liquidated damages, being freely entered into, is binding upon the parties. The stipulation of the parties in the contract, in the absence of fraud in procuring the execution of the contract, is binding upon them, and in the case at bar there is no contention made that any fraud was practiced in procuring the execution of the contract. In the absence of fraud the amount fixed by the parties is the guide for the court’s action: Gobble v. Linder, 76 Ill. 157; Scofield v. Tompkins, 95 Ill. 190; Boyce v. Watson, supra; Poppers v. Meagher, 148 Ill. 192.

We think this case 'is peculiarly susceptible to the application of the doctrine of stipulated liquidated damages. It embodies the elements which justify its application, because in an action for breach by either party, the amount of damages recoverable is uncertain and not capable of exact ascertainment, and rests mainly in estimation void of mathematical certainty, and not capable of being ascertained by any satisfactory or known rule for measuring damages. The elements contained in the leading case in this State, Gobble v. Linder, supra, are present in the instant case in the matters above recited and equally controlling of our decision.

Plaintiff submitted several propositions of law-to the trial judge, whose rulings thereon were without error.

There is no reversible error in the record of this case. It therefore follows that the judgment of the municipal court ought to be and is affirmed.

Affirmed.

Wilson, P, J., and Ryner, J., concur.


text:
    City of Chicago, Appellee, v. E. M. Dollarhide, Sued as E. C. Dollarhide, Appellant.
    Gen. No. 33,533.

      Opinion filed January 2, 1930.
    M. D. Dolan, for appellant.
    Samuel A. Ettelson, Corporation Counsel, for appellee ; Leon Hornstein, James I. McCarthy and Roy S. Gaskill, Assistant Corporation Counsel, of counsel.
   Mr. Justice Holdom

delivered the opinion of the court.

On a trial before the court without a jury defendant was found- guilty of carrying on a general brokerage business without a city license and fined the sum of $25, upon which finding a judgment was entered after the court had overruled defendant’s motion in arrest of the judgment, and defendant brings the cause here by appeal.

In the inception of the trial, Mr. Leon Hornstein, representing the city, made the following statement:

“It is stipulated and agreed that the defendant is a resident of, and is and during 1928 and prior thereto was engaged in business in Chicago, Cook County, Illinois, where he occupies offices which bear a sign erected by him in public view reading ‘DoIIarhide Lumber Company’; that he has not applied for or taken out a license under the ordinance of Chicago relating to General Brokers; that in his business he and help employed by him take orders in Chicago for lumber to be delivered by non-resident lumber mills to consignees in Chicago; that he carries no stock of lumber, handles no lumber, represents no lumber mill, jobber or dealer in Illinois, takes no orders for lumber located, stored or owned by any person or concern in Illinois; that he sends the orders he receives to one of twelve wholesale lumber mills located outside the State of Illinois, and the lumber so ordered is shipped direct to the purchasers by the mills, jobbers or dealers, who send their bills to, and receive remittances direct from, the purchasers; that all orders (unless the defendant is authorized in a particular case to sell at a fixed price) are taken subject to rejection by the non-resident principal; that defendant received a'commission on all orders accepted and filled, which is paid by the non-resident mills; that defendant journeys about the city and vicinity soliciting orders for lumber, which orders are taken in the name of the non-resident mills.”

It was also agreed by counsel for the city and defendant that the introduction of the foregoing stipulation in evidence should not preclude either party from introducing additional evidence “not contrary to the facts stipulated. ’ ’ The ordinances involved in this proceeding are as follows:

“City of Chicago Municipal Code of 1922, Section 373, ‘It shall be unlawful for any person, copartnership, association, firm or corporation to engage in the business of or to act in the capacity of a general broker, as hereafter defined, without first having obtained a license so to do as herein provided. ’

“Section 374, ‘Any person, copartnership, association, firm or corporation, other than an employee of the principal or principals for whom the business is done, that negotiates, buys, sells, trades, leases or handles for another on a commission basis, or on the basis of compensation in proportion to the amount of the transaction, any stocks, bonds, mortgages, loans, investment securities, certificates of indebtedness, bills of exchange, letters of credit, steamship transportation tickets, grain, provisions, produce and live stock, goods, wares, and merchandise, or other commodity, property or article (except real property) whether similar or dissimilar to those herein mentioned, or acts through the medium of another licensed broker in the same capacity, or for any of the purposes aforesaid, shall be and is hereby defined as a general broker. ’ ’ ’

On behalf of the city, Hugh Ryan, a city license investigator, and one John H. Wilson, assistant superintendent of the department of licenses of the city, were examined as witnesses, and testified to conversations with the defendant. Nothing was extracted from these witnesses de hors the stipulation except that Ryan testified that the witness Wilson said to the defendant “according to the city ordinance you are a broker,” and defendant answered “yes.” Defendant, however, denies making such statement, the effect of which we will hereafter refer to. Counsel for the city introduced sections 373 and 374, theretofore read in evidence by counsel, and thereupon rested the case of the city.

Defendant was examined as a witness and inter alia denied that he stated to Wilson or Ryan that he took orders from everybody or anybody that came along; and testified that none of the mills he represented had lumber in Illinois; that he did not sell any lumber supplied, furnished, manufactured or produced in Illinois; that he had no employees except a stenographer, and further testified that he did not say to Mr. Wilson or Mr. Ryan in March 1928 that he represented competing lines of lumber, and further testified that in case an order was rejected or the firm was unable to'fill it, the order was canceled; that he did not tell Mr. Wilson or Mr. Ryan that he was a broker; that he never represented or held himself out as, or stated to anybody that he was a broker; that he did not represent or presume, or try to represent any person or persons other than the 12 mills, hereinabove specified, nonresidents of the State of Illinois; that he never sold lumber for the Edward Hines Lumber Company, the North Side Lumber Company, the Pilsen Lumber Company, or the Bishop Lumber Company; that he knew all these people, but he never sold or handled any lumber for them directly or indirectly but he sold lumber to them; that he never placed orders through any broker, and never received commissions froip any broker for lumber sales; that he remembers a conversation with Mr. Wilson in the presence of Mr. Dolan in the City Hall; that he told Wilson he was a sales representative of these 12 mills; that Wilson tried to convince him that he was a broker but defendant did not admit he was a broker to Wilson.

Every material question here involved is decided in Linehan v. City of Chicago, 227 Ill. App. 255, in which the Supreme Court denied an application for a writ of certiorari, making the opinion of this court final. Since that decision section 374 of the Municipal Code, above set out, has been amended, evidently in an effort to avoid the effect of the Linehan decision, supra. The contention that defendant admitted that he was a broker is not involved in the Linehan case. Neither is the question here involved as to defendant being engaged as the representative of the 12 nonresident lumber mills in interstate commerce.

First, as to the contention that defendant admitted that he was a broker. The record shows that he denied that he made any such statement to Mr. Wilson in the presence of the witness Ryan. Not only does defendant deny that he made any such statement, but the evidence of Wilson sustains defendant in such denial. True it is that if defendant had made any such statement, that would not amount to proof that he was a broker. Whether or not he was a broker is a question of law. Furthermore, the statement of Ryan in this regard is overcome by defendant’s denial that he made such statement, which denial is sustained by Wilson, to whom Ryan said defendant made the statement. Therefore, in any view of the case, such statement has no. probative value.

That defendant is a selling agent representing 12 nonresident lumber manufacturers, which, while undisputed, does not make him a broker within the meaning of the two sections of the Municipal Code hereinabove set forth, or liable to take out a license as a broker, it appears that defendant has a permanent connection with the 12 nonresident lumber manufacturers represented by him, and that he does not hold himself out to represent manufacturers generally, or as a broker, and that he does not accept or place orders for other manufacturers or industries than those with which he has permanent and continued dealings, as testified by defendant and stipulated by the parties in the case.

As said in the Linehan case, supra:

“ ‘Brokers’ in the ordinary acceptance and meaning of the word, designate persons who solicit business generally and represent any parties who may come to them. They are sometimes referred to as middlemen or negotiators of contracts or bargains between others. . . . The distinction between an agent representing a permanent, particular company, and a broker representing customers generally has been pointed out and followed in many cases. In McKinney v. City of Alton, 41 Ill. App. 508, it was sought to impose a license fee on insurance agents under subsection 91 in question. It was there held that such agents are not brokers because they ‘sustain a fixed and permanent relation to the companies they represent,’ and do not solicit business for others. To the same effect is City of East St. Louis v. Brenner, 59 Ill. App. 604, where the court aptly said of an insurance agent: ‘He represents only one party as an agent, like any other solicitor or drummer, who travels, seeking to build up trade. The business of a “broker” is to represent all parties, buyers,- or sellers, in his line. ’ This same distinction was observed in Braun v. City of Chicago, 110 Ill. 186, where a broker sold produce on a percentage for whoever employed him. The same is true of Banta v. City of Chicago, 172 Ill. 204, where the brokers were characterized as ‘engaged generally in business as negotiators of contracts and bargains between others.’ This distinction has been observed in many other cases which might be cited, and none of the cases cited by defendants holds to the contrary. We are of the opinion that the bill set up facts showing that complainants and other persons in like business were merchandise and manufacturers’ agents and not ‘brokers’ within the meaning of subsection 91, aforesaid.

“ ‘The settled rule is that statutes granting powers to municipal corporations are to be strictly construed, and any fair and reasonable doubt as to the existence of such powers is resolved against the municipal corporation claiming the right to exercise them. A city having no power, except by delegation from the General Assembly, to license any occupation or require the payment of a tax for the privilege of engaging in it, the power must be expressly granted in the charter or be a necessary incident to a power so granted.’ Poison v. City of Chicago, 304 Ill. 222.

“The ordinance in question is not within the delegated police power of the municipality. To regulate the business of manufacturers’ agents is not granted under any of the ordinary police powers, and the legislature has not delegated to cities and villages the entire police power of the State. City of Chicago v. M. & M. Hotel Co., 248 Ill. 264; Stoessand v. Frank, 283 Ill. 271; City of Chicago v. O’Brien, 268 Ill. 228; People v. Village of Oak Park, 268 Ill. 256.”

The foregoing decision is to date the law of this State.

The amendment in section 374 of the Chicago Municipal Code, in so far as it attempted to nullify the Line han decision on this point and to define “a general broker,” failed of its intent and purpose.

The occupations sought by the foregoing section are arbitrarily designated by the words, “shall be and is hereby defined as a general broker.” It will be perceived that nowhere is the term “manufacturers’ agent,” or a like term, used or referred to, and as said in the Linehan case, supra:

“ ‘The express enumeration of certain occupations or businesses in the statute over which the municipalities are given control is by a well-known canon of construction an exclusion of all other occupations. ... . It was not the intention of the legislature to confer unrestrained and unlimited police power upon municipalities.’ People v. City of Chicago, 261 Ill. 16.”

The proofs undisputedly show that defendant is a manufacturers’ agent representing 12 lumber firms which are nonresidents of the State of Illinois; that he solicits orders for them in and about Chicago, and when procured sends them to one of such 12 nonresident lumber firms.

In Haberer & Co. v. Smerling, 225 Ill. App. 336, the following definition was quoted with approval from Stratford v. City Council, 110 Ala. 619:

“We would say the idea of exclusiveness enters into an employment of agency, while with respect to brokers, there is a holding out of one’s self generally, for employments in matters of ‘trade, commerce and navigation.’ ”

The fact that the defendant represented a number of such mills does not change his position from a manufacturers ’ agent to a general broker. It is the facts of the case which determine the capacity in which the defendant acted. Such cannot be overcome by an attempt to define in an ordinance that such. person is really what he is not, and cannot be changed by ordinance from a manufacturers’ agent to that of a general broker.

Article V, section 1, of the Cities and Villages Act, Cahill’s St. ch. 24, 65 (91), provides as follows:

“The city council in cities, and the president and the board of trustees in villages shall have the following powers . . .

“Ninety-first: To tax, license and regulate auctioneers, distillers, breweries, lumber yards, livery stables, public scales, ice cream parlors, coffee houses, detective agencies, private detectives, money changers and brokers. ’ ’

Such act is the only source of the cities’ power to license occupations. There is no license of sales representatives or manufacturers’ agents covered in that section or any other. The enumeration of powers in that statute is exclusive of all other subjects and the statute is to be strictly construed as if it in express terms inhibited the licensing of all trades and occupations not mentioned therein.

In City of Cairo v. Bross, 101 Ill. 475, the court said: “When the legislature, by the general incorporation act, declares that the corporate authorities of cities and villages organized and acting under its provisions shall have power to license certain occupations and kinds of business, specifically enumerating them, such declaration must by a familiar canon of construction be construed precisely as if the act in express terms. inhibited the licensing of all trades and occupations not contained in the enumeration.”

The word “broker” has a fixed, definite meaning, as defined by the authorities and the character and attributes of a broker cannot be imposed by any ordinance in an attempt to make one a broker who is not a broker by definition in an ordinance. Defendant is not a broker, general or otherwise, but is a manufacturers’ agent.

As said in Kiel v. City of Chicago, 176 Ill. 137:

“The power to pass an ordinance^and impose a penalty for its violation is to be strictly construed, and is not to be extended, by implication, to persons or things not expressly within the terms of such power.”

A further reason why the defendant should not have been proceeded against under the ordinance which he was charged with violating, is the undisputed fact that as the agent of the manufacturers of lumber, he was engaged exclusively in interstate commerce. There is no evidence in the record disputing this fact. He represented 12 wholesale lumber mills, nonresidents of the State of Illinois. He solicited orders for lumber for these nonresident mill owners in the City of Chicago, and the orders were filled by the shipment of lumber from the nonresident mills to the purchasers. The lumber was billed to the purchasers and they paid the mills, and the defendant was paid his commission by the mills whose lumber he sold. Further, it is undisputed that defendant sold no lumber supplied, furnished, manufactured or produced in Illinois, and that he had personal knowledge of the shipment of lumber of the mills, orders for which he procured for the mill owners. The sales negotiated by defendant for his principals were transacted in interstate commerce and beyond the power of the State to interfere therewith by taxation, license requirements, or otherwise.

In Shead v. Louisiana Lumber Co., 182 Ill. App. 310, the plaintiff, a Chicago lumber broker, sold for defendant, a Missouri corporation, certain lumber, to be shipped to Arkansas and sued to recover his commission. The suit was defended on the contention that he was not entitled to recover because he had not taken out a broker’s license, as required by the ordinances of the City of Chicago, and the court said:

“The contention that the plaintiff is not entitled to recover on the ground that he has no broker’s license, as required by an ordinance of the City of Chicago, cannot be sustained. The transaction in question was one of interstate commerce. As to interstate commerce transactions the said ordinance of the City of Chicago, making it unlawful for brokers to conduct a brokerage business without obtaining a license as therein provided, is of no force or effect.”

It was held in City of Bloomington v. Bourland, 137 Ill. 534, that an ordinance of a city prohibiting the soliciting of orders for books within the city by an agent for a wholesale house in another State, without taking out a license and paying a license fee, was void as being in conflict with that clause of the United States constitution which gives congress power to regulate interstate commerce.

In Stochard v. Morgan, 185 U. S. 27, which was tried on an agreed state of facts in the trial court similar to the stipulation of the parties in this case, in which the Supreme Court of Tennessee held complainants liable for the tax and dismissed their bill to enjoin its collection, the Supreme Court of the United States reversed the judgment, holding that the complainants were engaged in interstate commerce and were not bound to pay the tax. In support of this conclusion the court said:

“Althoughit is said in the opinion of the state court herein that the thing taxed is the occupation of merchandise brokerage, and not the business of those' employing the brokers, yet we have seen from the cases already cited that when the tax is applied, to an individual within the state selling the goods of his principal who is a nonresident of the state, it is in effect a tax upon interstate commerce, and that fact is not in anywise altered by calling the tax one upon the occupation of the individual residing within the state while acting as the agent of a nonresident principal.”

Crenshaw v. Arkansas, 227 U. S. 389, supports the doctrine announced in Stochard v. Morgan, supra.

In International Text-Book Co. v. Pigg, 217 U. S. 91, the court in defining interstate commerce said:

“Importation into one state from another is the indispensable element, the test, of interstate commerce;

and every negotiation, contract, trade, and dealing between citizens of different states, which contemplates and causes such importation, whether it be of goods, persons, or information, is a transaction of interstate commerce.” Dahnke-Walher Milling Co. v. Bondurant, 257 U. S. 282; London Guar. & Acc. co. v. Watte, 234 Ill. App. 497; Lehigh Portland Cement Co. v. McLean, 245 Ill. 326.

Harmon v. City of Chicago, 140 Ill. 374, was a case where the city ordinance required a license fee for the operation of a tug boat on the Chicago River on the theory.that such license fee was compensation to the city for increased navigation facilities in dredging and deepening the river channel, and the Illinois court held that the tax was lawful. However, the Supreme Court of the United States, in 147 U. S. 396, reversed the Illinois decision, saying:

“In the present case a neglect or refusal of the owner of the tugs to pay the license required by the ordinance subjects him to the imposition of a fine. His only alternative is to pay the fine, or the use of his tugs in their regular business will be stopped. . . . It would be a burden and restraint upon that commerce, which is authorized by the United States and over which Congress has control. No state can interfere with it, or put obstructions upon it, without coming in conflict with the supreme authority of Congress.”

From what we have heretofore said we hold that the defendant is not a general broker, but a manufacturers ’ agent of the 12 nonresident lumber mills which he represented, and for whom he did business, and that in the doing of such business and all of the transactions, so far as shown by the record, he was engaged in interstate commerce and therefore not subject to any ordinance of the City of Chicago or statute of the State of Illinois interfering with such interstate commerce by the imposition of a tax, license fee or otherwise.

The judgment of the municipal court is reversed, and as the trial was before the court without a jury, we will do here what the municipal court should have done,— enter a judgment for the defendant without remanding the cause.

Reversed and judgment here for defendant.

Wilson, P. J., and Ryner, J., concur.


author: Mr. Justice Ryner

text:
    Roy C. Merrick, Appellant, v. Home Stove and Foundry Company et al., Appellees.
    Gen. No. 33,317.

      Opinion filed January 2, 1930.
    Jacobson, Merrick & Latter, for appellant.
    Brundage & Gorman, for appellees.
   Mr. Justice Ryner

delivered the opinion of the court.

The Superior court of Cook county sustained a demurrer to complainant’s amended bill of complaint. The complainant elected to abide by his amended bill of complaint which was thereupon dismissed for want of equity. The complainant has perfected this appeal.

The material allegations of the amended bill are that the Home Stove and Foundry Company was an Illinois corporation engaged in the manufacture of .stoves and foundry products; that the company was founded in 1892 and was a prosperous concern until some years prior to the year 1924, when it became unable to meet its financial obligations; that on March 1, 1924 and for a long time prior thereto, as the complainant is informed and believes, its total assets did not exceed in value the sum of $130,000; that shortly prior to March 1, 1924, the parties in charge of the business of the Home Stove and Foundry Company conceived the plan of relieving the financial difficulties of the company by transferring its debts and assets to the investing public.

The amended bill further alleges that shortly prior to March 1, 1924, Thomas L. Grace, and othgr individuals, attempted to form a purported corporation under the name of Thompson, Kent & Grace, Inc., “but said organization was invalid, for the reason that the object for which it was formed was to engage in the banking business and the business of loaning money, without complying with the statutes concerning the organization of corporations for these purposes, the declared object of said Thompson, Kent and Grace, Inc., being Go buy, sell, acquire, take, own, hold, transfer, pledge, mortgage, encumber, convey, dispose of and deal in bonds, mortgages, notes, debentures, stocks, corporate and personal securities, assets and property of every kind and description’; that said corporation was organized with a capital of $125,000.00, and in its application for incorporation, the incorporators thereof certified that half of its capital stock was paid for, to wit, $31,250.00 in cash, and $25,000.00 in property; that said stock was not in fact paid, but in order to show an apparent payment, stock to the amount of $25,000.00 was stated in its application for incorporation to have been paid for in property, to wit: ‘Files, prospect’s lists, customer’s lists, bond buyers’ lists, leasehold interests and good will, all located in the office of the company, ’ but which alleged property was, in fact of no substantial actual market value whatever, and did not constitute money or moneys worthy required by law to be paid for corporate stocks, and that therefore, the attempted organization of said corporation was fictitious, and the said parties became and are liable as partners for their transactions under the guise of such pretended corporation.”

The amended bill then charges that the parties acting under the name and style of Thompson, Kent ■ & Grace, Inc. entered into an agreement with the officers of the Home Stove and Foundry Company that the latter should issue its bonds to the amount of $200,000, and that the Thompson, Kent & Grace organization would sell the bonds to the investing public; that the parties all knew, or should have known, that the total assets of the Home Stove and Foundry Company did not exceed in value the sum of $130,000, yet they caused a fictitious appraisal to be made of the assets which gave them a purported value of $630,443.52; that the bonds were issued and the main portion of them sold and that from the proceeds of sales, $165,000, came into the hands of the persons constituting the Thompson, Kent & Grace organization and the officers of the Home Stove and Foundry Company, but that no substantial addition was made to the assets of the latter company.

It is also alleged that the bonds were secured by a first mortgage lien upon the lands and buildings of the Home Stove and Foundry Company; that the aggregate face value of the bonds (but not including interest coupons thereon secured thereby) exceeded the fair cash market value of the lands and buildings mortgaged ; that the bonds, therefore, were securities in Class “D” within the purview of the Illinois Securi- * ties Law, Cahill’s St. ch. 32, Tf 254 et seq.; that none of the parties involved filed in the office of the Secretary of State the statements and documents required by law in the case of Class “D” securities and “that the sales of said bonds were made in the course of repeated and successive transactions of like character, and were made by and through the said Thompson, Kent & Grace organization as brokers or dealers in said securities or Underwriters thereof, within the purview of said statute; and that said sales and each of them were contrary to said statute.”

It is further charged that the Home Stove and Foundry Company retired about $35,000 worth of the bonds; that in.the year 1928 it abandoned its business, entirely closed down its factory, leaving debts unpaid, to unsecured creditors in the amount of approximately $25,000, allowed its property to be sold for taxes in 1926, and finally in April, 1928, permitted a decree to pass against it, forfeiting its charter, at the suit of the Attorney General of the State of Illinois; that in March, 1927, the Home Stove and Foundry Company executed its note for $10,000, secured by a trust deed, and the complainant is informed and believes that the note is held and owned by one or more members of the purported corporation, Thompson, Kent & Grace, Inc. as security for a loan but that there was no legal con- ' sideration for the note, for the reason that the transaction was ultra vires the purported corporation and the note and trust deed should be canceled and set aside.

The complainant alleges that he purchased one of the bonds, issued under date of March 1, 1924, paying $500 for it; that there .has been a default in the payment of principal and interest; that he brings his bill for himself and on behalf of all other owners and holders of said bonds who choose to participate in the - suit and share the expense thereof and “that complainant has elected to declare the sale of said bond to him void, under said statute and has tendered the said bond to the said makers and sellers thereof, and now here again tenders said bond to them, and demands the return of the consideration paid by him thereof, together with interest and his costs herein and his reasonable attorneys’ fees in this action.”

The prayer for relief is:

“1. That a receiver be appointed to take charge and possession of all of the assets of the Home Stove and Foundry Company.

“2. That all individual defendants be required to account to the Home Stove and Foundry Company and the receiver for the proceeds of bonds which came into their hands.

“3. That the individual defendants be required to pay to the complainant and other bondholders the amount of the bonds which they hold for actual value, together with interest, costs and reasonable attorney’s fees and that such bonds be declared fraudulent, in violation of the Illinois Securities Law, and therefore null and void.

“4. That the complainant and other holders of bonds be decreed to have an equitable lien upon the assets of the Home Stove and Foundry Company for the amounts paid by them for such bonds.

“5. That all of the assets of the Home Stove and Foundry Company, or so much as may be found necessary, be sold and the proceeds applied to the payment of said bonds so far as they are owned and held by bona fide purchasers for value.”

The demurrer which the trial court sustained was filed by part of the individuals charged in the amended bill of complaint with having organized and managed Thompson, Kent & Grace, Inc. It stated as grounds for demurrer that the amended bill was without equity, that it was multifarious and that there was a lack of privity between the complainant and the demurring defendants. The trial court sustained the demurrer and dismissed the amended bill for want of equity.

Both the original and amended bills alleged that Thomas L. Grace, John F. Kent, George W. Thompson, Timothy J. Grace, Joseph A. Johnston, Thomas B. Hemmens, E. J. Lachmann, A. B. Beady, John A. .Immel, A. L. Sawyer, Charles W. Wadsworth, B. M. Morrish, William A. Shay, Walter F. Truettner, W. B. Dorris, B. N. Murphy, Henry Battles and Howard A. Brundage, incorporated the Thompson, Kent & Grace, Inc.

Five of the individual defendants charged to have been connected with the organization and management of Thompson, Kent & Grace, Inc., i. e., Thomas L. Grace, John F. Kent, Timothy J. Grace, Joseph A. Johnston and Howard A. Brundage interposed a demurrer to the original bill of complaint and it was sustained.

The Home Stove and Foundry Company and one of its officials, Richard M. Morrisch, filed a demurrer to the original bill which appears not to have been disposed of. They were not ruled to join issue on the amended bill and they filed no plea, answer or demurrer to it.

George W. Thompson and Thomas R. Hemmens, two of the alleged organizers of Thompson, Kent & Grace, Inc., likewise filed a demurrer to the original bill of complaint which was never disposed of. Neither were they ordered to, nor did they plead to the amended bill of complaint.

The defendants, whose demurrer was sustained, and at whose instance the amended bill of complaint was dismissed for want of equity, represented only a part of the individuals charged with having illegally organized Thompson, Kent & Grace, Inc. As we view the record, therefore, the only question presented upon this appeal is whether the complainant is entitled to recover, from the demurring defendants, the principal and interest, due upon his bond, together with his costs and solicitor’s fees. Apparently that is the view taken by counsel for the applicant, because in their brief they say: “The individual defendants may obviously be proceeded, against either on the theory that their at-| tempted organization of the selling corporation was invalid, and left them liable as partners, or because they are liable as persons who knowingly did acts in furtherance of the illegal sales. ’ ’

The charter powers of Thompson, Kent & Grace, Inc. as set out in the amended bill, were: “to buy, sell, acquire, take, own, hold, transfer, pledge, mortgage, encumber, convey, dispose of and deal in bonds, mortgages, notes, debentures, stocks, corporate and personal securities, assets and property of every kind and description.”

While some of these powers may be exercised by banks, yet the mere grant of them does not make the licensee a banking institution, nor does the exercise of one or more of these powers constitute the doing of a banking business. Cahill’s St. eh. 32, H13; Smith-Hurd Illinois Revised Statutes of 1929, ch. 32, sec. 13, reads, in part, as follows :

“Corporations created or to be created under the provisions of this Act, or created under the provisions of any prior corporation law of this State, to buy, sell, or otherwise deal in notes (not including the discounting of notes), open accounts, and other similar evidences of debt (not including bills of exchange), shall not be construed or considered to be within the prohibition of this section. No corporation shall be created under this Act to deal in commercial paper in the exercise of the functions of bank discount.”

See also Wedesweiler v. Brundage, 297 Ill. 228, where the court said: “In Reed v. People, 125 Ill. 592, in discussing the meaning of the words ‘banking powers,’ as used in section 5 of article 11 of the constitution of 1870, the court said: ‘We think the language employed should be used in its common, ordinary sense, and when this is done the banking powers referred to mean such as are ordinarily conferred upon and used by the various banks doing business in the country. The ordinary and usual powers exercised by banks are to discount notes and receive deposits. They may, and often do, possess other powers, but these are the ordinary and usual powers conferred upon and exercised by banks and bankers. Bouvier, in defining a bank, says: “A place for the deposit of money; an institution (generally incorporated) authorized to receive deposits of money, to lend money and issue promissory notes, (usually known by the name of bank notes,) or to perform some one or more of these functions.” “Banks are said to be of three kinds: deposit, discount and circulation.” (See, also, People v. Doty, 80. N. Y. 225; Pratt v. Short, 79 id. 437.) Speaking in a commercial view, Bouvier is doubtless correct in his definition of a bank; but one of the chief characteristics and one of the most essential elements of a bank, as that term is ordinarily understood, is that it is a.place for the deposit of money. The powers and functions of a bank are well stated in Oulton v. Savings Instihition, 17 Wall. 117, as follows: “Banks, in the commercial sense, are of three kinds, to-wit: First, of deposit; second, of' discount; third, of circulation. Strictly . speaking, the term “bank” implies a place for the deposit of money, as that is the most obvious purpose of such an institution.” ’ ”

Furthermore the amended bill of complaint does not allege that the corporation was organized under the laws of the State of Illinois, or even that it engaged in the banking business. It merely alleges that it engaged in the business of negotiating for and issuing and marketing bonds secured by mortgage or other loans.

The allegation that the stock of the corporation was partly paid for with property “of no substantial actual market value whatever” is a mere conclusion of the pleader. We are not advised as to what the actual or potential value of the property was.

While the complainant prays for a variety of relief, his amended bill is really predicated upon his alleged rights under “The Illinois Securities Law,” and particularly under section 37 of that act, Cahill’s St. ch. 32, ft 290, which reads as follows:

“ (1) Every sale and contract of sale made inviolation of any of the provisions of this Act shall be void at the election of the purchaser, and the seller of the securities so sold, the officers and directors of the seller, and each and every solicitor, agent or broker of or for such seller, who shall have knowingly performed any act or in any way furthered such sale, shall be jointly and severally liable, in an action at law or in equity, upon tender to the seller or in court of the securities sold, to the purchaser for the amount paid, the consideration given or the value thereof, together with his reasonable attorney’s fees in any action brought for such recovery.”

The allegations of the amended bill, pertinent to this issue, are:

1. That certain negotiations were had between the officers of the Home Stove and Foundry Company and “certain members of the organization known as Thompson, Kent & Grace,” resulting in an agreement that the Home Stove and Foundry Company would issue its bonds in the amount of $200,000 and that the “Thompson, Kent & Grace organization” would sell the securities to the investing public.

2. That certain of the parties to the agreement well knew, “and the others by the exercise of reasonable diligence and good faith, would have known” that the Home Stove and Foundry Company was in an insolvent and failing condition and that the aggregate value of its assets did not exceed $130,000.

3. That certain of the said parties ’ ’ caused the assets of the Home Stove and Foundry Company to be appraised at the inflated and fictitious valuation of $630,443.52.

4. That $165,000 worth of bonds were sold and that the proceeds from the sales “came to the hands of the said persons constituting the organization known as Thompson, Kent & Grace, and the officers of the Home Stove and Foundry Company.”

5. “That the said organization known as Thompson, Kent & Grace, and the several members thereof, then proceeded to and did knowingly sell said bonds to a large number of persons, including your orator.”

6. That the aggregate face value of the bonds (but ' not including interest coupons thereon secured thereby), exceeded the fair cash market value of the property conveyed by the trust deed securing the bonds and that therefore the securities were of Class “D” under the statute.

7. “That neither said Home Stove and Foundry Company, nor said persons comprising the organization known as Thompson, Kent & Grace, nor any one for them, or any of.them, nor any other person, filed or caused to he filed in the office of the Secretary of State of the State of Illinois, the statements and documents” required to qualify such securities for sale.

8. That repeated sales of the bonds “were made by and through the said Thompson, Kent & Grace organization as brokers or dealers in said securities or underwriters theerof.”

These allegations are insufficient to charge the demurring defendants of being sellers of the securities in question or of being officers or directors of the seller. Neither do they show that any of them acted as solicitor, agent or broker of the seller. In addition to this, it is not charged that the particular defendants had knowledge of the alleged financial condition of the Home Stove and Foundry Company, or that they knowingly performed any acts in furtherance of sales in violation of the Illinois Securities Law.

For the foregoing reasons, the decree of the superior court of Cook county is affirmed.

Decree affirmed.

Wilson, P. J., and Holdom, J., concur.


text:
    J. E. Cunningham, Appellee, v. Crane Company, Appellant.
    Gen. No. 33,357.
    Opinion filed January 2, 1930.
    Alden, Latham & Young, for appellant; Charles Martin, of counsel.
    Knapp & Campbell, for appellee; Joseph L. Early-wine, of counsel.
   Mr. Justice Ryner

delivered the opinion of the court.

The plaintiff brought suit in the municipal court of Chicago to recover' damages sustained to his automobile because of a collision with a truck owned and operated by the defendant. The trial resulted in a verdict and judgment in favor of the plaintiff for $350.

The plaintiff presented his case in the trial court upon the theory that his car had been so badly damaged that it could not be advantageously repaired. The only proof of the amount of damage was his testimony that, prior to the time of the accident, he purchased the automobile for $500 as a used or second-hand one and that, about five months after the accident, he traded it in on the purchase price of another car and received a credit of $100.

This evidence, although coupled with testimony as to the condition of the car before and after the accident, was incompetent for the purpose of proving the amount of the damages. In addition to this, there was no proof that the reasonable cost of repairing the automobile would exceed'its market value before the accident or that, after the accident, the only value it possessed was as junk or wreckage.

The court at the request of the plaintiff, instructed the jury that:

The jury are instructed that if you find the damage to the plaintiff’s automobile was caused solely by the negligence of the defendant, and if you find also that the plaintiff’s property could'not be repaired, or that the cost of repairing the damaged property was greater than the market value of the automobile before the accident, then you can assess as plaintiff’s damages the difference between the market value of the property • before the accident and the value of the damaged automobile or wreckage after the accident and in addition the reasonable amount for the loss of the use of the plaintiff’s automobile.”

Counsel for the plaintiff concede that the portion of the instruction which reads: “and in addition the reasonable amount for the loss of the use of the plaintiff’s automobile” was erroneous, but contend that the giving of the entire instruction did not constitute reversible error. In support of their contention they cite Latham v. Cleveland, C. C. & St. L. Ry., 164 Ill. App. 559, and McNamara v. Melson, 237 Ill. App. 279. These cases do not support their contention.

In the first case there was testimony showing that, after the accident, the wreckage was worth $100 and that, before the accident, the value of the automobile was $1,450. The jury found the damages to be $1,350; The plaintiff was permitted to testify as to damages sustained on account of loss of the use of the automobile. This was held to be error, but not sufficient to warrant a reversal, because it was apparent, from the testimony and the amount of the verdict, that the jury made no allowance for loss of the use 'of the automobile.

In the second case the trial court gave an instruction similar to the one under consideration. The Appellate Court held the instruction to be erroneous, but refused to reverse the judgment because the amount of the verdict of the jury was in dollars and cents identical with the amount which the evidence disclosed would be the reasonable cost of repairing the motor truck.

In the instant case, we are unable to reconcile the amount of the verdict with the testimony of the plaintiff or with the instruction.

For the foregoing reasons, the judgment of the municipal court of Chicago is reversed and the cause is remanded.

Judgment reversed and the cause remanded.

Wilson, P. J., and Holdom, J., concur.