text:
    John W. Keogh, Plaintiff in Error, v. Robert B. Peck, Defendant in Error.
    Gen. No. 34,349.

      Heard in the first division of this court for the first district at the June term, 1930.
    Opinion filed January 26, 1931.
    McNab, Holmes & Long and Alden, Latham & Young, for plaintiff in error; Hobart P. Young and Allan W. Cook, of counsel.
    Samuel B. King and Montgomery, Hart, Pritchard & Herriott, for defendant in error; Samuel B. King and Louis E. Hart, of counsel.
   Mr. Presiding Justice Matchett

delivered the opinion of the court.

I. By this writ of error plaintiff seeks to reverse two judgments in favor of defendant in actions of assumpsit entered upon the verdicts of a jury as directed by the court. While the causes were begun separately in the trial court, they were consolidated for hearing and were heard at the same time and by the same judge and jury. However, separate verdicts were returned, separate judgments entered, separate bills of exceptions preserved and separate records filed in this court, where the causes by order have been consolidated for hearing.

In the trial court one cause was No. 465755 and that cause is No. 34349 in this court; the other cause was No. 477022 in the trial court and is No. 34350 in this CQWt

There seems to be no material controversy as to the actual facts. On March 26, 1900, Comfort E. Peck entered into a 99-year lease with one James B. Keogh, as lessee, demising to him certain premises in the lease described. Comfort E. Peck was at that time the owner in fee simple of said premises, which were improved. The lease by its terms bound not only the parties but also their heirs, executors, administrators and assigns, and in and thereby the lessor owner granted an option to the lessee to purchase the demised premises at any time during the term of the lease for the sum of $10,000.

On December 6, 1911, Comfort E. Peck by quitclaim deed conveyed the premises to defendant, Robert B. Peck. On June 1, 1915, James B. Keogh, the lessee, by a writing assigned his lease to plaintiff, John W. Keogh. The assignment is in evidence as plaintiff’s exhibit C. Plaintiff elected to exercise his option to purchase the premises, and on February 21, 1922, gave written notice of his intention so to do to defendant. Defendant refused to accept the offer made and refused to execute a deed, claiming that plaintiff, while in possession of the premises, had committed waste thereon. On April 10, 1922, defendant notified plaintiff of his election to terminate his tenancy.

On March 1, 1922, plaintiff filed his bill to compel the specific performance on the part of defendant to convey and secured a decree in his favor on April 10, 1923. Defendant Peck appealed to the Supreme Court of Illinois, and that court affirmed the decree on February 17, 1925. Keogh v. Peck, 316 Ill. 318. On June 19,1925, defendant conveyed to plaintiff in conformity with that decree.

In cause No. 34349 plaintiff seeks by his action in assumpsit to recover for attorney and solicitor fees necessarily incurred by him in the preparation and prosecution of the suit for specific performance, and also for like fees and expenses incurred in defending an ejectment suit brought by defendant against plaintiff, while the suit for specific performance was pending, this ejectment suit having been dismissed on motion of the attorney for plaintiff, John W. Keogh. Plaintiff’s demand is for $5,250 on this claim, and it is not urged that the demand is unreasonable if he is entitled to recover any sum for such fees and expenses.

In cause No. 34350 on the same facts and upon a further showing that the loan value of the premises (which the court decreed should be conveyed) pending the litigation was $250,000, and that by reason of these suits plaintiff was deprived of this loan value use during the pendency of the suit, plaintiff seeks to recover damages to the amount of $1,875 for expense incurred necessarily in the payment of a premium to secure the release before maturity of a mortgage on other premises and further damages to the amount of $30,-456.02 incurred in the payment of interest upon a mortgage placed upon said other premises.

It is urged in behalf of plaintiff that on the facts thus appearing, it was error for the court to direct verdicts for defendant and to enter judgment thereon.

II. We shall consider the demand for attorney’s fees as set forth in cause No. 34349. This claim is based upon the 13th clause of the lease, which provides : v

“The lessee further covenants and agrees to and with the lessor to pay all the expenses of the lessor; and the lessor, on his part covenants and agrees to and with the lessee to pay all the expenses of the lessee (including attorney’s and solicitor’s fees) paid or incurred by the lessee in any suit or legal proceeding to which he, without his fault, shall be party either plaintiff or defendant in his capacity as lessee in and under this lease,’’

Plaintiff also relies upon the 16th clause of the lease, which provides in part:

“It is mutually covenanted and agreed by and between the parties hereto that each and every of the expressions, phrases, terms, recitals, conditions, provisions, stipulations, admissions, rights, privileges, promises, agreements, requirements, covenants, and obligations contained and expressed in this lease shall at all times be construed as covenants running with the land and shall be held to apply to and shall bind or inure to the benefit of, as the case may require, not only the parties hereto, but each and every of the heirs, legal representatives and assigns of the party of the first part and each and every of the heirs.”

The first question arising upon the record concerns the construction which should be given to these clauses of the lease. It is not contended that aside from these covenants any obligation on the part of the defendant to pay attorney’s or solicitor’s fees existed. The express language of the 13th clause of the lease limits the liability of the party obligated to pay such fees to such as may be “paid or incurred by the lessee in any suit or legal proceeding to which he, without his fault, shall be party either plaintiff or defendant in Ms capacity as lessee in and under tMs lease.” Defendant contends that when plaintiff gave notice of his election to purchase the demised premises he put off the relation of lessee to plaintiff and took on that of a purchaser or vendee; that the litigation which followed concerned the covenant of defendant to sell and of plaintiff to purchase and did not concern any covenant relating to the lease, strictly speaking. Defendant says that unquestionably the expression, “in his capacity as lessee in and under this lease,” was intended by the parties to have some meaning and insists that the usual and ordinary meaning of these words should be given to them. He says that the lessor did not covenant to pay all of the expenses and attorney’s fees which might be incurred by Keogh but covenanted to pay only such expenses as Keogh might incur in his capacity, as lessee and for defendant’s fault; .that the instant the relationship of lessee and lessor ceased to exist the obligation to pay such expenses and attorney’s fees also ceased; that the effect of the notice of February 21,1922, was to relieve plaintiff from any and all obligation to pay further rent, and that plaintiff thereby ceased to be lessee and became purchaser with the right to demand the transfer of the property to him upon the payment of $10,-000; that all the expenses for which plaintiff sues were incurred subsequent to the service of the notice that plaintiff would purchase, and that at that time plaintiff was no longer lessee, and, as the Supreme Court held, defendant was not lessor.

The rule for which defendant contends seems to have been applied under similar circumstances in a number of well considered cases. Thus in Powell v. Dayton, S. & G. R. R. Co., 16 Oregon 33, 16 Pac. 863, the Supreme Court of that State said:

“The exercise of the right to purchase during the term extinguishes the lease, and thus terminates the relation of landlord and tenant, and creates at once the relation of vendor and vendee. The effect is not simply to nullify the implied covenant to use the property in a tenant-like manner, leaving the lease in all other respects in full force and operation, but to blot out of existence the lease, with all its incidents, express or implied.”

In Master v. Roberts, 244 Pa. 342, 90 Atl. 735, the court- said:

“The general rule in such cases is that, where the relation of landlord and tenant exists under the terms of a written.lease, containing an option to purchase at a stipulated price, which option is properly exercised during the term, the relation of landlord and tenant is thereby terminated, and thereafter the parties stand in the relation of vendor and vendee under the agreement. It follows that, if Master properly exercised his option to purchase, he stood in the relation of vendee under the agreement and from the time the contract became mutually binding upon both parties. After that tinge the relation of landlord and tenant ceased to exist, and the rights of the parties must be determined upon the basis of a contract to sell and convey on one side, and to purchase on the other. ’ ’

In Behr v. Harwitz, 90 N. J. Eq. 110, 105 Atl. 486, it appeared that a lease existed between the parties with an option to the lessee to purchase; that notice of the exercise of the option was given by the lessee and that for a period of about two months the lessee did not pay rent. The lessor claimed that the failure to pay rent was a violation of the terms of the lease which justified a refusal on his part to convey; but the court said:

“The position thus assumed is untenable. When the complainant declared his option by his notice in writing served on the defendants, a mutual contract was created binding upon the one to buy and the other to sell, thereby vesting the equitable title in the complainant; and thereafter it was beyond the power of the defendants, by wrongfully refusing for a period of -almost two months (thereby being guilty of a breach of their covenant to convey) to compel the continuance of the relation of landlord and tenant, even after the bill was filed, for the purpose of creating a breach of the covenant to pay rent, thus enabling them to declare the option right forfeited.” See also Bakaitis v. Fink, 340 Ill. 440.

The above cases are cited in defendant’s brief. They are not discussed by plaintiff. Plaintiff, however, says that assuming the construction of the lease contended for by defendant is correct, the damages for which plaintiff sues were incurred by him as lessee. Plaintiff says that his expenses for solicitor’s fees were incurred as lessee because the relationship of lessor and lessee would continue, while matters preliminary were pending, up to the time of the consummation of the purchase by the payment of the price and execution of the deed. He says that while the suit for specific performance was pending he tendered rent and complied with other obligations imposed upon him by the lease; that defendant recognized the fact that he was considered a tenant by suing him for waste; that defendant then contended plaintiff was a lessee and it is now inconsistent for him to contend that plaintiff was a purchaser; that defendant wrongfully prevented plaintiff from becoming the purchaser; that it would now be unjust to permit him to take advantage of his own wrong by asserting that the damages and expenses were not incurred by plaintiff in his capacity as lessee. Plaintiff makes the rather •technical distinction that he had not exercised his option but that he had only elected to exercise it. He says that the lease was not terminated until the execution and delivery of the deed.

The expenses incurred, for which plaintiff sues, do not in any wise concern the lease as a lease. These expenses were incurred in enforcing the provision concerning the agreement to sell upon the exercise of plaintiff’s option. The writing was severable. The notice of February 21, 1922, stated that plaintiff “has elected and does hereby elect to purchase from you as lessor said premises at the agreed price of $10,000.” The same notice fixed April 29, 1922, as the date for the consummation of the purchase. The expenses for which plaintiff sues were not incurred until after that date. Plaintiff did not sue or incur the expenses which he seeks to recover in his “capacity” as lessee. He sued as a vendee to compel the conveyance of the premises to-him. The construction for which plaintiff contends would render the limiting phrase “in his capacity as lessee” entirely meaningless. We are of the opinion that even if plaintiff was the original lessee and defendant the original lessor, plaintiff could not recover.

While it is true that defendant refused to convey and resisted the proceedings brought to compel him to do so, the final judgment of the Supreme Court settled the point contrary to the contention of defendant and in favor of the contention of plaintiff. In other words, the Supreme Court decided that defendant was obligated to convey at plaintiff’s election. That suit was in equity, and under the well known maxim of equity the thing which ought to be done would be regarded as having been done. Defendant therefore after his wrongful refusal to convey on April 29, 1922, could no longer be regarded as the owner nor plaintiff as his lessee; but on the contrary plaintiff would from that date be regarded as the true owner of the property. It is not suggested, as we understand it, that plaintiff continued to pay rent after that date, or that he was obligated to do so. That obligation was essential to the relationship of landlord and tenant or of lessor and lessee.

III. There remains for consideration another controlling question, namely, whether the 13th clause of the lease, by which the parties covenanted as to attorney’s fees, is or is not a covenant running with the land. Defendant is not the original lessor. He did not take his title directly as assignee of the original lessor. His right in and to the premises is derived from a quitclaim deed executed by Comfort E. Peck on December 6, 1911 — ten years after the lease was executed. There is no claim that either in that deed or by any other document did defendant specifically assume the burden of complying with any of the covenants of the lease. It is apparent that conceding that the original lessor is liable under this clause of the lease, it by no means follows that defendant, personally a stranger to the covenant, is liable thereunder.

As already stated, however, plaintiff contends that the covenant expressed in this 13th paragraph runs with the land because of the provision contained in the 16th paragraph to the effect that all of the agreements, stipulations and covenants contained in the lease should be construed as covenants running with the land and be binding upon or inured to the benefit of the parties, their respective heirs and assigns. The intention of the parties to the lease is not controlling. The general rule is as stated in 15 Corpus Juris 1245:

“No agreement between the parties, however strongly expressed, can cause a covenant to be attached to the land if it is not of such a nature that the law permits it to be attached, although such an agreement may create a lien upon the land as against a subsequent purchaser with notice notwithstanding it will not bind such purchaser personally.”

And such is the holding of the courts of this State, as in Gibson v. Holden, 115 Ill. 199, where our Supreme Court said:

“Moreover, where the covenant is not of a nature that the law permits it to be attached to the estate as a covenant running with the land, it cannot be made such by agreement of the parties.”

The court cited with approval Masury v. Southworth, 9 Ohio St. 340, which held:

“If the covenant cannot, or does not run, with the land, no words of assignment can create a privity of estate; if a privity of estate be created, no words of assignment are necessary.”

In Rubel Bros. v. Dumont Coal & Ice Co., 182 N. Y. S. 204, the court said: running with the land by a stipulation between the parties to the contract that it shall be an easement or covenant running with the land.” Citing Harsha v. Reid, 45 N. Y. 415, and Pierce v. Keator, 70 N. Y. 419. See also Wilmurt v. McGrane, 45 N. Y. S. 32; Hurxthal v. St. Lawrence Boom & Lumber Co., 53 W. Va. 87, 44 S. E. 520, and Geiszler v. DeGraaf, 166 N. Y. 339, 59 N. E. 993, and a note to said cause in 82 A. L. R. 664.

“That which is essentially a personal contract cannot be made into either an easement or a covenant

It would therefore appear that the clause of the lease upon which plaintiff relies cannot be construed as one running with the land because of the express declaration of the parties alone. The necessary qualities of such a covenant must also appear. Is the covenant for the payment of solicitor’s fees and expenses incurred in litigation concerning the land a covenant running with iff? That seems to be the ultimate question here. The leading case as to when a covenant will or will not run with the land is Spencer’s Case, 5 Coke 16, 1 Smith’s Leading Cases 174, where it was said:

. . When the covenant extends to a thing in esse, parcel of the demise, the thing to be done by force of the covenant is quodam modo annexed and appurtenant to the thing demised, and shall go with the land, and shall bind the assignee (a), although he be not bound by express words; . . . But although the covenant be for him and his assigns, yet if the thing to be done be merely collateral to the land, and doth not touch or concern the thing demised in any sort, there the assignee shall not be charged. . . . ”

In Norcross v. James, 140 Mass. 188, Mr. Justice Holmes, after a consideration of the ancient authorities, including Bracton, Fleta and the Year Books, states:

“The discussion of the question under what circumstances a landowner is entitled to rights created by way of covenant with a former owner of the land, has been much confused since the time of Lord Coke, by neglecting a distinction, which he stated with perfect clearness, between those rights which run only with the estate in the land and those which are said to be attached to the land itself: ‘So note a diversity between a use or warranty and the like things annexed to the estate of the land in privity, and commons, advowsons, and other hereditaments annexed to the possession of the land.’ Chudleigh’s Case, 1 Coke, 122 b; S. C. nom. Dillon v. Fraine, Poph. 70, 71.”

In Dorsey v. St. Louis A. & T. H. R. R. Co., 58 Ill. 65, Dorsey sold to a certain railroad company a considerable strip of land, in consideration of which the company agreed to construct and maintain a good and suitable fence upon each side of the railroad, on the lines and bounds of the land, with proper cattle guards, etc., and also to construct a depot on the lands. This railroad company thereafter conveyed its road, franchises and appurtenances to another railroad company, which refused to comply with the covenants, and Dorsey sued. The trial court sustained a demurrer to the declaration, which judgment was reversed although the agreement did not purport to bind anyone other than the parties thereto. The court said that a covenant was said to run with the land when the liability to perform it, or the right to enforce it, passed to the assignee of the reversion; that the covenant of warranty had its origin in the common law from the feudal system which imposed upon grantee the duty of tenure and bound the lord to the reciprocal obligation of protecting his tenant, a liability which descended to the heir as long as he had the lands of his ancestor to answer for it; that the word of' feoffment, “dedi” implied a warranty, and that if a warranty be made to one, his heirs and assigns, by express words, the assignee should have the benefit of the covenant and should have warrantia charta. The same opinion, however, pointed out that if the thing to be done was merely collateral to the land and did not touch or concern the premises demised, the assignee should not be charged, for instance, if the lessee should covenant to build a house on land of the lessor other than the demised premises.

In Graves v. Toledo P. & W. Ry. Co., 202 Ill. App. 478, the railroad company granted to an individual the right to build a grain elevator upon its right of way, and certain terms of the lease were that the defendant should not be liable for any damage caused by fire resulting from the operation of its railroad. The lessee transferred to one Roberts, and the building was thereafter destroyed as alleged by reason of fire caused by sparks emitted by defendant’s locomotive. It was held that the owner, although not a party to the lease, was bound by the covenant and could not recover.

In Wiggins Ferry Co. v. Ohio & M. Ry. Co., 94 Ill. 83, it appears that the Ferry Co. made a deed to the railroad company which conveyed no land but only the right to construct, maintain and use upon and over certain lands such railroad tracks, depots, warehouses, etc., as the company should find necessary or convenient in transacting its business and to keep the property of the railroad company thereon, this land being distinct property from the ferry franchise, in consideration of which the railroad company covenanted with the ferry company always to employ the latter to transport over the Mississippi river all property and persons which might be taken across the river, either way, by the railroad company. It was held that since the covenant was for the benefit of the owners of the ferry and not of the owners of the land, out of which the easement was granted, the ferry company could not maintain an action at law for a breach of the covenant against a party who succeeded to the rights, property and franchises of the railroad company. The court said that it was not shown that the two parcels of land in which the easement was granted were any part of the ferry; that for aught that appeared the properties were totally distinct and independent of each other. The court further said:

“Following this form of expression, the easement here granted is in the two parcels of land, not in the ferry, while the covenant relates to and affects the ferry only. Undoubtedly the covenant enhances the value of the ferry, or renders it more beneficial, but this has nothing to do with the two parcels of land in which the easement is granted. ’ ’

In Brockmeyer v. Sanitary District of Chicago, 118 Ill. App. 49, the court said:

“A covenant which may run with the land must have relation to the interest or estate granted, and that the act to be done must concern the interest created or conveyed. ’ ’

In Fitch v. Johnson, 104 Ill. 111, it was decided that by the weight of authority the doctrine that covenants run with incorporeal as well as corporeal hereditaments was fully established, and that where the owner of certain premises conveyed a part of them, covenanting that the purchaser, his heirs and assigns should enjoy certain permanent rights in and with respect to the premises retained by the grantor, and also covenanting in the conveyance to do and perform from time to time certain acts which were essential to the use and enjoyment of the purchased premises, such covenant, although regarded as a burden, would be deemed to run with the servient estate and to subject the assignee thereof to its performance.

In Gibson v. Holden, 115 Ill. 199, there was an agreement between two adjoining owners with reference to a party wall to the effect that half of the cost of the construction of the party wall should be paid by the adjoining owner, and the court held that the assignee would be no more benefited by receiving this money than by receiving money from any other source or on any other acount; that in order to benefit him as a landowner, it must in some way affect the value or use of the land. It was held that the covenant did not in that case run with the land but was purely a contract or covenant.

In Louisville & Nashville R. R. Co. v. Illinois Cent. R. Co., 174 Ill. 448, it was held that covenants running Avith the land were applicable to incorporeal as well as corporeal hereditaments.

In Purvis v. Schuman, 273 Ill. 286, the court said:

“If a covenant concerns the land and the enjoyment of it, its benefit or obligation passes Avith the ownership ; but to have that effect the covenant must respect the thing granted or demised and the act to be done or permitted must concern the land or estate conveyed.”

In Keogh v. Peck, 316 Ill. 318, it was said:

“An option agreement, contained in a lease, to purchase the leasehold premises concerns the land and the estate conveyed by the lease and the mode of the enjoyment of the demised premises.”

Plaintiff says: “The option clause in the lease has been held to be a covenant running Avith the land. The covenant as to the payment of attorney’s fees and expenses is so closely related to the option agreement and so tied up Avith this knoAvn covenant running with the land that to be consistent it should be held that the covenant as to the payment of attorney’s fees is binding upon the defendant, Peck. The purpose of-the covenants sued upon was, among other things, to make the enforcement of the option clause an inexpensive proceeding and thus make the option more valuable. It is part and parcel thereof. If the option clause is a covenant running Avith the land, then so is the other.”

The distinction between the option clause and the agreement to pay solicitor’s fees in connection with the enforcement of it would seem to be clear and distinct. The option covenant immediately concerns the land and the title to it, placing upon the holder of the title, whoever he may be, the duty to convey a fee simple upon the exercise of the option. In other words, it creates in equity an estate upon condition. The covenant to pay solicitor’s fees and other expenses, etc., is only collateral. It in no way concerns ■the land, the improvements on the land, the title to the land, nor the quality or character of either. It is not “annexed to the estate of the land in privity.” It does not purport to create any estate in. the land at all. It does not create an easement or other hereditameht, either corporeal or incorporeal, which might be annexed to the possession of the land. It does not concern any estate-of any nature in the land at all. The covenant is purely personal in its nature and brings into existence no estate or interest in the land which renders it capable of attachment thereto. It creates no privity of estate and as to defendant there is no privity of contract.

IV. Defendant has raised the further point that the claim which plaintiff now seeks to enforce has become res adjudícala by reason of the decree in the bill for specific performance. In view of what we have already said, it will be unnecessary to discuss this supposed defense. It was not set up by plea, and we think it doubtful whether evidence of a'former adjudication would be admissible under the general issue. 34 Corp. Jur. 1055. It would- not be admissible in equity in this state unless pleaded. Williams v. Williams, 265 Ill. 64; Bakaitis v. Fink, 340 Ill. 440.

For the reasons indicated the judgment is affirmed.

Affirmed.

O’Connor and McSurely, JJ., concur.


source: Caselaw Access Project

author: Mr. Presiding Justice Matchett

license: Public Domain

text:
    Aaron Freedman, Appellee, v. Madison & Kedzie State Bank, Appellant.
    Gen. No. 34,645.
    Heard in the first division of this court for the first district at the October term, 1930.
    Opinion filed January 26, 1931.
    Ryan, Condon & Livingston, for appellant; James G. Condon and John J. Sharon, of counsel.
    William Feldman, for appellee.
   Mr. Presiding Justice Matchett

delivered the opinion of the court.

This is an appeal by defendant from a judgment in the sum of $5,300 entered upon the finding of the court. Plaintiff sued upon a written contract made February 3, 1928, whereby defendant sold to plaintiff certain real estate bonds of the par value of $5,000, for which plaintiff paid par value with accrued interest. The memorandum of sale stated-:

“The Madison & Kedzie State Bank agrees to repurchase these bonds at any time at 99 and accrued interest, or in three and one-half years without losing any discount.
F. W. Grleason, V. Pres.”

The statement of claim alleges that on February 5, 1930, plaintiff made formal demand on defendant that it comply with the contract and tendered said bonds to it, but defendant refused to repurchase same.

The affidavit of merits denies that Grleason, who signed the contract, had authority to bind defendant; avers that defendant was a banking corporation organized under the laws of the State of Illinois, and that the agreement to repurchase the bonds was beyond its powers as authorized in said act. The affidavit further avers that the agreement was without consideration; denies the tender as alleged by plaintiff, and avers that the contract was void as a gambling contract.

Upon the trial plaintiff proved the execution of the contract, the purchase of the bonds, the tender of the same with a demand for repurchase, and the refusal of defendant to repurchase the same. Plaintiff also introduced in evidence a check to" the order of defendant dated February 3,1928, showing the payment upon that date of $5,084 to defendant for the bonds. Plaintiff also produced the bonds and offered them in evidence. The attorney for defendant objected, whereupon the following took place:

“Mr. Tuohy (attorney for defendant): We admit these are the bonds described in the statement of claim.
The Court: I think it is enough to produce the bonds and by agreement they are the bonds described in the statement of claim, without offering them in evidence and making them an exhibit.
Mr. Feldman (attorney for plaintiff): At this time, of course, I want to make a tender in open court; resume our tender.
Mr. Tuohy: Are you tendering them to me?
Mr. Feldman: Tendering them to you as agent of the defendant.
The Court: You are tendering the bonds and demanding the money?
Mr. Feldman: Absolutely.
Mr. Tuohy: We are in no position at this time to pay the money for these bonds. As I understand, the tender is made to me now as attorney for the defendant, conditional upon my ability, or defendant’s ability, to pay?
Mr. Feldman: That is right.
Mr. Tuohy: And I wish to state for the purpose of the record, that we are not in such position at this time. ”

At the close of plaintiff’s evidence, defendant moved the court for a finding which was denied, and defendant then introduced in evidence the certificate of the Auditor of Public Accounts of the State of Illinois, in and by which he certified that defendant bank was authorized “to commence business as a Bank or Banking Association, under the provisions of said act, for the purpose of discount and deposit, and to buy, and sell, exchange, and to do a general banking business, excepting the issuing of bills to circulate as money, and with power to loan money on personal and real security, and to accept and execute trusts.”

Propositions of fact and of law were submitted to the court, and at the request of plaintiff the court held as a matter of law that the instrument of purchase and repurchase constituted a simultaneous transaction; that a corporation, including banking institutions, could not receive the benefits of a contract without assuming the burdens contained therein; that when the defendant company sold the bonds and at the same time agreed in writing to repurchase the same at the face value, less one per cent discount, the said contract of purchase and repurchase was within the scope of the corporate powers of the defendant company; that where a banking company has received the benefits of a written contract it must in natural sequence assume'the burdens of the contract and cannot choose which part of the contract it will recognize.

The court refused to hold, as requested by defendant, that if plaintiff was entitled to recover at all the amount of recovery must be limited to nominal damages merely; that where there was a breach of contract on the part of a bank to repurchase from its customer bonds which it has sold to the customer, the measure of damages was not the amount at which said bank agreed to repurchase said bonds in the contract, nor was the measure of damages the amount paid for the bonds by the customer.

The court also refused to find as a proposition of law that the execution of the writing sued on .was ultra vires defendant’s charter powers, and it refused to find as a fact from the evidence that Gleason had no authority from defendant to enter into an agreement on behalf of defendant to repurchase the bonds sold to plaintiff.

The first contention of defendant is that it was without authority either express or implied to repurchase these bonds. That the bank assumed to give such authority in its behalf to Gleason is hardly contradicted upon the record, but defendant now contends that such authority was wholly outside the powers granted to it by the law of the State under the charter by which it was created.

Plaintiff concedes that a corporation for pecuniary profit has power to purchase .its own bonds or shares of stock, and that such agreement is not ultra vires the powers of such corporation, as is so held in many cases by the courts of this State. A few of these are Ward v. Johnson, 95 Ill. 215; Wolf v. Nat. Bank of Illinois, 178 Ill. 85; Stewart v. Dodson, 282 Ill. 192; Roush v. Illinois Oil Co., 180 Ill. App. 346; Hills v. Kopp, 210 Ill. App. 365; Massachusetts Bonding & Insurance Co. v. Phillips Co., 230 Ill. App. 38. These cases also in effect hold that a sale with an agreement to repurchase by the vendor is only a conditional rather than an absolute sale. Defendant contends, however, that such rule is inapplicable to a corporation of this State organized for banking purposes and cites Wedesweiler v. Brundage, 297 Ill. 228, where the distinction between banking corporations and others organized for pecuniary profit is pointed out. Defendant also cites and relies on a number of cases decided by the Supreme Court of Minnesota, most of which are easily distinguishable from the facts of this case, although the language of the opinions, it must be admitted, would seem to sustain defendant’s contention. One of these cases is Fberlein v. Stockyards Mortgage & Trust Co., 164 Minn. 323, 204 N. W. 961, where it was held that the secretary of the defendant company without express authority had no apparent implied power to bind the bank by an agreement do repurchase securities owned by the bank when selling the same. In Farmers’ & Mechanics’ Sav. Bank v. Crookston State Bank, 169 Minn. 249, an agreement of a bank to guaranty mortgage loans negotiated by it, other than its own, was held invalid. Greene v. First Nat. Bank of Thief River Falls, 172 Minn. 310, 215 N. W. 213, is a case where it was claimed that a national bank had agreed to repurchase certain notes and mortgages, and the decision of the court was based upon the construction of a statute of the United States defining and limiting the powers of a national bank. An examination of that opinion discloses that Logan County Nat. Bank v. Townsend, 139 U. S. 67, and Thompson v. St. Nicholas Nat. Bank, 146 U. S. 240, which seem to express a contrary view were not called to the attention of the court, and that the Supreme Court of Minnesota has not always adhered to the rule appears from an examination of Hunt v. Hauser Malting Co., 90 Minn. 282, and Beyl v. Swanson, 165 Minn. 278.

All these Minnesota cases, as well as cases from other States, cited by defendant construe statutes quite different from our own. Such, in particular, is true of Gause v. Commonwealth Trust Co., 196 N. Y. 134, 89 N. E. 476, a case upon which defendant seems to place great reliance. Defendant concedes in its brief that no- case decided by the courts of this State sustains the contention it now makes. • On the other hand, in Wolf v. National Bank of Illinois, 178 Ill. 85, our Supreme Court (reversing the Appellate Court in the same case) held valid an agreement by a national bank for the sale of bonds of the Auditorium Association on June 22, 1896, with an option of the vendee to resell the bonds to the bank in January, 1897. The contention made in that case was that the agreement was void as violating section 130 of the Criminal Code, Cahill’s St. ch. 38, H 308, prohibiting gambling contracts; but the Supreme Court said that it was only & conditional sale with the right in the vendee to return the bonds and that the transaction was not unlawful. It is true, as defendant here points out, that the precise question of ultra vires was not raised in the briefs or considered in the opinion of the court; but as the parties to that suit were represented by able counsel they would not have missed the point had it been deemed available.

We are not cited to any statute which forbids expressly such contracts as was here made; and on the plainest principles we think defendant is estopped to set up that defense. Even if a statute expressly forbade it, there would remain the question of whether it was the intention of the legislature, by the enactment of the statute, to make such a contract wholly void as contrary to public policy. It is not contended by defendant that the power of selling and purchasing bonds at a discount is wholly' without the powers of the defendant bank, and there is, of course, no claim that the transaction is one involving moral turpitude. Morse on Banks and Banking, 5th ed., secs. 735-740.

Defendant next contends that at any rate under the evidence only nominal damages should have been allowed. It is urged that the true measure of damages is the difference between the contract price at which defendant agreed to buy and the market value at the time of default of defendant in its agreement to repurchase. Erickson v. Sherwood, 171 Ill. App. 426 ; 35 Cyc. 592; 24 R. C. L. 116; 2 Sutherland on Damages, 4th ed., sec. 647, and many other authorities are cited which so hold in cases where plaintiff brings his suit upon that theory. Here, however, plaintiff not only tendered the bonds before beginning suit but also tendered them in court. A suit for such damages was not the only remedy of plaintiff. Even before the enactment of the Uniform Sales Act a plaintiff in such case had the option of making a tender and keeping it good and suing for the full agreed price of the thing sold. Osgood v. Skinner, 211 Ill. 229; New York Hamilton Corp. v. First Illinois Co., 257 Ill. App. 125; Santa Rosa-Vallejo Tanning Co. v. Kronauer & Co., 228 Ill. App. 236; Cahill’s St. ch. 121a, ¶ 66; Wallace Bank & Trust Co. v. First National Bank of Fairfield, 40 Idaho 712, and see note to the same case in 50 A. L. R. 316, 325. Formal pleadings are not required in the municipal court. Of course the plaintiff holds these bonds for the defendant.

We find no reversible error in the record and the judgment of the trial court is therefore affirmed.

Affirmed.

McSurely and O’Connor, JJ., concur.


author: Mr. Justice McSurely

text:
    William A. Paine et al., Trading as Paine, Webber & Company, Appellees, v. Continental & Commercial National Bank of Chicago, Appellant.
    Gen. No. 34,591.
    Heard in the first division of this court for the first district at the October term, 1930.
    Opinion filed January 26, 1931.
    Loucks, Eckert & Peterson, for appellant.

      Poppenhusen, Johnston, Thompson & Cole, for appellees ; Floyd E. Thompson, of counsel.
   Mr. Justice McSurely

delivered the opinion of the court.

In an action of assumpsit tried by the court, plaintiffs had judgment for $11,562.50, from which defendant appeals.

Although the respective briefs give considerable space to a recital of the pleadings, yet we are not asked to pass on any point arising on them. The declaration in appropriate language alleged that defendant was obligated for money had and received by reason of its payment of its cashier’s check upon a forged indorsement. Defendant’s liability, if any, must be determined upon this action.

The facts were stipulated as follows: Plaintiffs are partners engaged in the stock brokerage business in Chicago and elsewhere. Defendant is a banking corporation carrying on business in Chicago. December 15, 1926, and for a long time prior and subsequent thereto plaintiffs maintained a checking account with defendant, carrying on numerous banking' transactions. During this time plaintiffs had in their employ in the Chicago office Joseph J. Collum as assistant cashier, whose duty it was to draft and receive checks on behalf of plaintiffs, enter the same upon the books and perform the usual duties of a cashier. He had no authority to draw checks for plaintiffs except to pay their obligations. No check drawn and signed by Collum was valid until it had been signed either by the resident partner or the office manager or Walter Brunton, the head bookkeeper of plaintiffs at the Chicago office. Brunton usually signed more than a hundred checks a day. The checks were drawn on the defendant bank, which had instructions to honor such checks. Collum also had authority to give directions in the name of plaintiffs to defendant to issue its cashier’s checks.

December 15, 1926, Collnm drew a check on plaintiffs’ account with defendant, payable to the order of defendant, for $10,000, and signed the same and presented it along with other checks to Brunton for signature. Brunton signed the check. Collum thereupon sent the check by messenger to defendant bank with a written requisition in the name of plaintiffs for a cashier’s check in the sum of $10,000, payable to the order of George Halas, a man in business in Chicago and a customer of plaintiffs. Brunton at this time did not know that Collum was acting dishonestly and did not know that the check was to be used for any other purpose than the payment of an obligation of plaintiffs. Brunton made no examination of his books to ascertaip the facts as to the Halas account but relied on Collum’s representations concerning the same. The facts were that on that date plaintiffs were not indebted to Halas and did not know of Collum’s intention to purchase the cashier’s check. Defendant accepted the check in the regular course of business and charged it to plaintiffs’ account and in consideration of the sum therein mentioned, $10,000, executed and delivered to plaintiffs’ messenger its cashier’s check for $10,000, payable to the order of George Halas. None of defendant’s officers had any knowledge of Collum’s secret intention to use said check for his own private purposes. This cashier’s check was never delivered to Halas.

When the messenger returned to plaintiffs’ office with the cashier’s check, it was given by Collum without the knowledge, consent or approval of any of plaintiffs and indorsed by Collum as follows: “Pay to order of George Gottschalk — George Halas” and was sent by Collum to Gottschalk at Los Angeles, California. Upon receiving same Gottschalk indorsed it to John C. Feys & Associates, Inc., who were stock brokers of Los Angeles, California. The check was sent by Collum through G-ottschalk, without the knowledge of plaintiffs, to be applied and the same was applied by Feys & Associates as required margin on an account that was then being carried on by Collum in the name of Gottschalk with Feys & Associates.

December 27, 1926, defendant paid the amount of said cashier’s check to the holder thereof. It bore the indorsement above stated and the subsequent indorsements of John C. Feys & Associates, Inc., and others. Defendant now has possession of the cashier’s check. George Halas never had possession of it nor any interest in it and has received no part of the proceeds of same. Plaintiffs have never delivered said cashier’s check to anyone for any purpose and have received no part of the proceeds thereof.

About June 1, 1927, plaintiff discovered the theft of the cashier’s check and thereupon notified defendant that said check had been stolen from them and had not been delivered to nor indorsed by Halas and called upon defendant to repay said sum of $10,000 paid by plaintiffs to defendant for the cashier’s check, which defendant refused to do.

From December 1, 1926, to July 1, 1927, defendant rendered monthly statements to plaintiffs showing all deposits made by plaintiffs and all checks drawn against their account and with such statements returned to plaintiffs the cancelled checks. This included the check of plaintiffs for $10,000, dated December 15, 1926, with which' the cashier’s check was purchased.

During all the time between November 1, 1926, and May 14,1927, Collum was a trusted employee of plaintiffs and none of them had any knowledge of his unfaithfulness. About May 14, 1927, while plaintiffs’ books were being audited, Collum voluntarily confessed to one of the resident partners of plaintiffs that he had embezzled large'sums of plaintiffs’ funds during the past year and that he had for a time successfully concealed his defalcations by manipulating the records and accounts of plaintiffs. Prior to June 1, 1927, none of plaintiffs had any knowledge of the purchase of the cashier’s check on December 15, 1926, payable to G-eorge Halas, and did not know that Collum had indorsed this with the name of Halas nor the use he had made of it nor that defendant had paid said check. Immediately upon discovering the facts plaintiffs notified defendant by letter and demanded payment. It being refused, this suit was commenced July 30, 1927.

Collum confessed that he had embezzled a total amount of over $100,000, and offered to make restitution so far as he was able to do so, and thereupon delivered to plaintiffs certificates of stock in the Julian Petroleum Corporation. Plaintiffs had no knowledge of the existence of Collum’s account with John C. Peys & Associates. When the certificates of the Julian Petroleum Corporation were delivered to plaintiffs by Collum, the shares were of unknown value and there was no market for them. Shortly thereafter the Julian Petroleum Corporation was placed in the hands of a receiver and new shares of stock were issued, plaintiffs exchanging the shares they had received from Collum for new shares. At this time plaintiffs knew that the cashier’s check had been used by Collum to pay his obligations to John C. Feys & Associates. The actual value of the new shares of stock is unknown and its market value is continually fluctuating, although it was agreed that at the time of the stipulation its market value was approximately 15c a share. Plaintiffs’ unrecouped losses as a result of Collum’s embezzlement still exceed $100,000.

Objections to certain paragraphs of the stipulation as irrelevant and immaterial were made by respective counsel, but we have set forth virtually all the facts contained in the stipulation.

Defendant first asserts that the cashier’s check was payable to bearer and hence it properly paid the same, regardless of the validity of the indorsement. Section 9 of the Negotiable Instruments Act (Cahill’s Illinois Statutes, paragraph 29, chapter 98) provides:

The instrument is payable to bearer: . . . When it is payable to the order of a person known by the drawer or maker to be fictitious or non-existent or of a living person not intended to have any interest in it.”

It is conceded that George Halas, the payee in the cashier’s check was a “living person not intended to have any interest in it.”

The statute provides that an instrument is payable to bearer when “the drawer or maker” knows that the payee is fictitious or non-existent or a living person not intended to have any interest in it. It is the intention of the maker of the instrument which controls its character with respect to whether or not it is payable to bearer.

This is the uniform construction of this statute. In National Surety Co. v. Hoisted Street State Bank, 246 Ill. App. 92 (writ of certiorari denied by the Supreme Court), the agent of an Insurance company caused drafts to be issued by the company to policyholders in payment of fictitious claims and instead of delivering them to the payees forged indorsements of the payees and procured the payment of the drafts by the bank. It was held that the fact that the agent did not intend to deliver the drafts to the payees but intended to use them in his own behalf did not make the payees • fictitious within the meaning of the Negotiable Instruments Law, for the drawer of the drafts, the Insurance company, assumed that the fictitious claims were genuine and that it was intended that the payees and no one else should receive the proceeds of same. In Grand Lodge v. Emporia National Bank, 101 Kan. 369, under somewhat similar circumstances, where a certificate was drawn payable to a fictitious beneficiary, it was held that the plaintiff did not know that the payee was a fictitious person but supposed she was an existing person and issued the order to that person, the opinion saying:

“When a negotiable instrument is knowingly issued to a fictitious person it is payable to bearer, because there is no one to endorse it; but when such an instrument is issued to a person supposed to be in existence, it is not knowingly issued to a fictitious person. When the instrument is not knowingly issued to a fictitious person it must be endorsed by the person to whom it is issued.”

To the same effect is National Union Fire Ins. Co. v. Mellon Nat. Bank, 276 Pa. 212, where there is an extensive review of the authorities, the court holding that the fictitious persons “must be known to the drawer of the drafts to be such, before the result contended for could operate on the instruments.” In McCornack v. Central State Bank, 203 Ia. 833, 211 N. W. 542, it was contended that, as the payees had no interest in the checks involved, they were payable to bearer. The court held otherwise, saying that a check payable to the order of a fictitious person with the knowledge of the drawer is páyable to bearer, but: “Where the fact that it is payable to a fictitious person is unknown to the drawer, the bank upon which it is drawn, on paying it, is in no different position than where it pays a check payable to a real party upon a forged indorsement.”

In American Express Co. v. Peoples Savings Bank, 192 Ia. 366, it was held that, where drafts were drawn to the order of a fictitious person, but the drawer did not know this, the drafts would not be payable to bearer. The intention of the drawer is the test. These and many other cases which might be cited concur in holding that, where the drawer of the draft does not know that the payee is fictitious or one who has no interest in the check, such check is not payable to bearer.

In the instant case it is manifest that defendant had no intention to issue its cashier’s check payable to a person who had no interest therein. It must be presumed to have believed that George Halas, the payee, was interested in the proceeds of the check and was entitled to the same. It had no knowledge to the contrary, and therefore its check cannot be construed as payable to bearer.

Defendant’s cited cases do not conflict with this rule, but are different in the facts. A typical case is American Hominy Co. v. National Bank, of Decatur, 294 Ill. 223, where the unfaithful agent drew the drafts, not intending that the payees should have any interest therein, and himself forged the indorsements, and it was held that the plaintiff was estopped to deny the authority of its agent who was clothed with general powers. The language of the opinion recognizes the distinction between knowledge of the drawer of the instrument and lack of knowledge.

Defendant’s position seems to be that, because Collum had a secret intention to use plaintiff’s check improperly in purchasing a cashier’s check payable to a person who had no interest in the cashier’s check, this secret intention in some way is the knowledge of defendant in issuing its cashier’s check. We can see no legal connection between the acts. The situation would be just the same if Collum had improperly taken cash from the plaintiff’s funds and bought the cashier’s check with the same. It is immaterial how the cashier’s check was purchased. Nothing that was done in issuance of plaintiff’s check payable to the defendant had any legal connection with the payment by defendant of its cashier’s check on a forged indorsement. A similar situation arose in Seaboard National Bank v. Bank of America, 193 N. Y. 26, where the agent used a check of the firm employing him to purchase a New York draft payable to the order of an existing firm but one which the agent intended should have no interest in the draft. It was there specifically held that the fraudulent act of issuing the check with which to purchase the draft was wholly unrelated to the improper act of the bank in paying its draft upon a forged indorsement ; that there was no legal connection between the two transactions.

Considerable argument is presented with reference to the authority of Collum. It may be admitted that, when he ordered the cashier’s check he did not pretend to order it for himself but for the plaintiffs, and that defendant knew that he had authority to use plaintiffs’ funds for the use of plaintiffs. The purchase of the cashier’s check was wholly within the scope of Collum’s authority. Defendant could not be expected to know as to the account between plaintiffs and their customer, Halas, and whether or not such account showed a balance due Halas was immaterial so far as defendant was concerned.

There is no merit in defendant’s claim that the loss was occasioned by plaintiffs negligence in not earlier discovering Collum’s defalcations. For aught that appears to the contrary, the first wrongful act done by Collum was his fraudulent representation which induced Brunton to sign plaintiffs’ check for the purpose of securing the cashier’s check from defendant. There is no evidence that the prior payments made by Collum to Feys & Associates were improperly made. The most that the stipulation shows is that certain payments were made, although the year is not given, but where the money was procured with which Collum made such payments does not appear.

It is said that plaintiffs ratified the' acts of their employee, Collum, by claiming title to the cashier’s check. We do not agree with this. We repeat, plaintiffs cannot complain of the purchase of the cashier’s check. They must be held to have purchased it and thereby became the owners of it; but, because the principal may be held by one act of his agent, he is not obliged to adopt a wrongful act for which he is in no way responsible. Independent Oil Men’s Ass’n v. Fort Dearborn Nat. Bank., 311 Ill. 278. In Morris & Bailey Steel Co. v. Bank of Pittsburgh, 277 Pa. St. 81, 120 A. 698, the court said: “We must assume Leder (the agent) had authority to draw and deliver the original checks in favor of plaintiff and, as the cashier’s checks issued in lieu of them were intended for plaintiff, it had a right to ratify the action of Leder up to the time he received them. This did not operate as a ratification of his subsequent wrong in indorsing the checks, his conduct in this respect being repudiated both before and by this suit. ’ ’ To the same effect are Farmer v. People’s Bank, 100 Tenn. 187; Robinson Machine Works v. Vorse, 52 Ia. 207.

When plaintiffs accepted the Julian Petroleum Corporation stock from Collum in partial satisfaction of his defalcations, they had no knowledge that he had stolen the cashier’s check and had forged the indorsement of the payee, thereby using it to discharge his obligation to John C. Feys & Associates in connection with the purchase of stock. It was not until two weeks after the certificates of stock were delivered to them that they learned of the purchase and use of the cashier’s check. The record shows that the value of the stock turned over to them does not appreciably make good the losses suffered by Collum’s defalcations.

Feys & Associates were not holders in due course. They could not have collected against the bank, if the bank had discovered that the payee’s name was forged and had refused payment for this reason. Feys & Associates’ remedy would be against Grottschalk, the prior indorser, and it is reasonable to presume that defendant has its recourse against the prior indorsers.

Defendant did not render a statement to plaintiffs between the time the cashier’s check was purchased and the time it was cashed, so that plaintiff had no opportunity to know the facts of the transaction until long afterwards. Furthermore, such statements would not have disclosed the payment upon the forged indorsement.

Deduced to its simplest elements, this is a case where the defendant issued its cashier’s check payable to a certain payee who, as far as the bank knew, was interested in its proceeds. In due time the check was returned to the bank for payment with a forged indorsement of the name of the payee. Without making any inquiry as to the genuineness of this indorsement the bank paid the check. While counsel have extensively argued and presented numerous decided cases, the view we take of the essential elements of the case leads inevitably to only one conclusion, namely, that the plaintiffs’ loss was occasioned by the mistake of the bank in paying the check. Under such circumstances the bank must make good the loss. The judgment is therefore affirmed.

Affirmed.

Hatchett, P. J., and O’Connor, J., concur.


author: Mr. Justice O’Connor

text:
    The People of the State of Illinois, Defendant in Error, v. Robert E. Ryan, Plaintiff in Error.
    Gen. No. 34,545.
    Heard in the first division of this court for the first district at the October term, 1930.
    Opinion filed January 26, 1931.

      McDonnell & McDonnell, for plaintiff in error.
    John A. Swanson, State’s Attorney, for defendant in error; Edw. E. Wilson and Grenville Beardsley, Assistant State’s Attorneys, of counsel.
   Mr. Justice O’Connor

delivered the opinion of the court.

By this writ of error the defendant, Robert E. Ryan, seeks to reverse a judgment entered by the municipal court of Chicago whereby he was found guilty of unlawfully carrying a revolver concealed upon his person, in violation of the statute, and sentenced to one year in the House of Correction.

The case was tried before the court without a jury, both the People and the defendant being represented by counsel. When the defendant was arraigned he stood mute, whereupon it was ordered that a plea of not guilty be entered. The court then heard the evidence of witnesses, argument of counsel, found the defendant guilty, and imposed the sentence as stated. We have only the common law record before us. What took place on the trial is not preserved by a bill of exceptions.

Counsel for the defendant in their brief state that: “The plaintiff in error demanded a jury trial.” There is nothing in the record to warrant such statement. The defendant contends that no order of record was entered showing that he waived his right to a trial by jury, and it is contended that without such an order the court was without jurisdiction to try the case. Nothing appears affirmatively in the record as to whether the defendant waived his right to a trial by jury, but it appears that he was represented by counsel, that he was arraigned, refused to plead, and the court ordered that a plea of not guilty be entered. Thereupon the case proceeded to trial and the court then heard the evidence and the argument of counsel.

While it has been held by the Supreme Court of Minnesota in State v. Graves, 161 Minn. 422, that a person charged with a misdemeanor may, by acquiescence in a trial by the court without a jury, be held to have waived a jury and that a formal waiver was not essential, yet we think that in this State the waiver of a jury by a defendant in a criminal prosecution must affirmatively appear of record. People v. Fisher, 340 Ill. 250. In that case our Supreme Court held that a defendant in a criminal prosecution might waive a jury and be tried by the court whether the offense charged against him be a misdemeanor or a felony. But in such case, the court said, the waiver of a jury must be expressly and understandingly made; that a waiver would not be implied; and (p. 257) that “The right of an accused person to a jury trial is absolute to the extent that he may have such a trial by claiming it or even by withholding his consent to proceed without it. The State owes to a person charged with crime a fair and impartial trial, including a strict compliance with every constitutional guaranty.” And the court there (p. 259) quoted from the opinion in People v. Scates, 4 (3 Scam.) Ill. 351, as follows: “ ‘The constitution requires that an accused person shall have a speedy and impartial trial by a jury of the vicinage. This is for his benefit and protection and the clause was inserted in all our constitutions. ... It is, then, a constitutional right which every man has to be tried by a jury of his neighborhood. . . .’ ” The court then referred to the case of Normaque v. People, Breese (1 Ill.) 145, and said, quoting from the Scates case: “This case means nothing more than this, that a prisoner in a capital case is not to be presumed to waive any of his rights; but that he may, by his express consent, admit them all away, can be neither doubted nor denied. He may certainly' plead guilty, and thus deprive himself of one of the most valuable rights secured to the citizen— that of a trial by jury. If he can expressly admit away the whole case then it follows that he can admit any part of it, but will not be presumed to have done so; the consent must be expressly shown, and this is the whole scope of the doctrine in the case referred to.” And continuing the court in the Fisher case said (p. 265): “The value of trial by jury has been established by long experience and the institution should be safeguarded. Upon the trial court is imposed the duty to see that an accused person’s election to forego such a trial is not only expressly but also understandingly made. The performance of that duty involves a responsibility which cannot be perfunctorily discharged. ’ ’

In the instant case there was no waiver of a jury trial by the defendant, and under the holding in the Fisher case we are of the opinion that a waiver of a jury trial in a criminal case must affirmatively appear, and it must further appear that the waiver was expressly and understandingly made. Since the record fails to show that defendant waived a trial by jury, the judgment of the municipal court of Chicago must be reversed.

The judgment of the municipal court of Chicago is reversed and the cause is remanded.

Reversed and remanded.

Hatchett, P. J., and HcSurely, J., concur.


text:
    Anna G. Huebner et al., Appellants, v. Nikodem Kornajzer et al., Appellees.
    Gen. No. 34,550.
    Heard in the first division of this court for the first district at the October term, 1930.
    Opinion filed January 26, 1931.
    Rehearing denied February 9, 1931.
    Ernest Saunders, for appellants.
    Schuyler, Dunbar & Weinfeld, for appellees; Henry E. Jacobs and George W. D. Lederer, of counsel.
   Mr. Justice O’Connor

delivered the opinion of the court.

Anna G. Huebner filed her bill of complaint to foreclose a real estate mortgage. Adolph Hammel, the appellee, filed his answer claiming a mechanic’s lien on the premises. The case was referred to a master who took the evidence and made up his report and recommended a decree of foreclosure. He found, however, that Hammel had not complied with the mechanic’s lien statute and was not entitled to a lien on the premises as against the complainant, but that he was entitled to a lien on the premises subject to the complainant’s mortgage. The chancellor sustained exceptions to the master’s report and held that Hammel was entitled to a mechanic’s lien to the extent that the improvement made on the real estate, after the recording of complainant’s mortgage, had enhanced the value of the premises and found that the improvement enhanced such value more than Hammel’s claim, and a decree was’entered in the usual form. To reverse this decree the complainant prosecutes this appeal, the contention being that she was entitled to a lien superior to that of the intervening claimant.

In support of her contention complainant argues that the claim filed in the office of the clerk of the circuit court of Cook county was filed by Hammel as assignee of the parties who entered into the contract with the owners of the premises for the construction of a garage on the premises; that the claim filed showed this to be the fact, and further, that it designated the improvement as a frame garage while the evidence showed that a brick garage was constructed on the property. It is argued that section 7 of the Mechanics’ Lien Act, Cahill’s St. ch. 82, If 7, authorizes only the person who enters into the contract for the construction of an improvement to file his verified claim, verified by himself, his agent, or his employee, but that the statute does not authorize a claim to be filed by the assignee of the contractor. Section 8 of the Mechanics’ Lien Act, Cahill’s St. ch. 82, f| 8, provides: “All liens or claims for lien which may arise or accrue' under the terms of this act shall be assignable, and proceedings to enforce such liens or claims for lien may be maintained by and in the name of the assignee, who shall have as full and complete power to enforce the same as if such proceedings were taken under the provisions of this act by and in the name of the lien claimant.” We think this section gives the assignee the right to file the claim in the office of the clerk of the circuit court as was done in the instant case, and the fact that the claim stated the garage was to be a frame garage while the evidence showed that it was a brick garage, we think immaterial. In these circumstances we think the decree was right in awarding the claimant a superior lien because section 16 of the Mechanics’ Lien Act expressly so authorizes.

But the claimant further contends that the allowance of the lien was unwarranted because the grantors covenanted in the trust deed which plaintiff was foreclosing “not to suffer any mechanic’s lien or other liens to attach to said premises.” We think this covenant is but one of the covenants in the trust deed which, if broken by the grantors, would permit the owner of the indebtedness to foreclose. It in no way prevented the claimant here from having his lien if he were otherwise entitled to it.

Complainant also contends that section 16 of the Mechanics’ Lien Act is unconstitutional because “It impairs the obligation of contracts in derogation of the constitutional provision.” Numerous decisions have held that any constitutional question is waived by appealing to this court.

The defendant, Hammel, has assigned cross errors and contends that the chancellor erred in sustaining complainant’s demurrer to his cross-bill by which he sought to make the parties interested in two prior mortgages on the real estate involved, parties to the proceeding, and in striking Hammel’s intervening petition, and in denying Hammel’s motion to consolidate the instant suit with another suit brought by Hammel in the superior court of Cook county to foreclose his mechanic’s lien. We think none of these questions is before us. These rulings of the court were made some time before the final decree appealed from was entered. Claimant prayed for an appeal from the order of the court sustaining the demurrer to his cross-bill and dismissing it, but he did not perfect the appeal. The matters contended for in this respect by claimant are not involved in the decree and therefore he is in no position to assign cross errors. Oliver v. Wilhite, 201 Ill. 552; McCreery v. Burnsmier, 293 Ill. 43.

The decree of the superior court of Cook county is affirmed.

Affirmed.

Hatchett, P. J., and HcSurely, J., concur.


text:
    Frederick Schneider, Appellee, v. Reuben Allen. Autoist Mutual Insurance Company, Garnishee Appellant.
    Gen. No. 34,575.

      Heard in the first division of this court for the first district at the October, term, 1930.
    Opinion filed January 26, 1931.
    Rehearing denied February 9, 1931.
    Joseph H. Hinshaw, for appellant.
    Eugene P. Kealy and Murphy O. Tate, for appellee.
   Mr. Justice O’Connor

delivered the opinion of the court.

Frederick Schneider brought this action of debt on a judgment rendered in his favor by a New York court against the defendant, Reuben Allen. The Autoist Mutual Insurance Company, a corporation, was served as garnishee. Allen was served by publication, he was defaulted and the trial was between plaintiff and the garnishee, the question being whether the garnishee was indebted to Allen. The case was tried before the court without a jury and there was a finding and judgment for $5,000 in plaintiff’s favor against the garnishee.

The record discloses that the garnishee was an Illinois corporation and had no place of business or agents in the State of New York; that the defendant, Reuben Allen, was living in New York City and wrote the garnishee at Chicago in reference to liability insurance on his automobile which he was using in New York. On August 22, 1923, the garnishee issued in Chicago its liability policy insuring Allen against liability for accidents. The policy was mailed from Chicago to Allen in New York and contained the usual provisions and conditions of such policies. While the policy was in force Allen, in driving his automobile in New York, injured the plaintiff Schneider, who brought suit there against Allen and Allen notified the Insurance Company. It took charge of the defense and filed Allen’s appearance and answer. Some time after the accident Allen went to Buffalo, New York, and counsel for the Insurance Company went there to see him concerning the case. Allen stated that he had no witnesses who would testify concerning the accident but himself, and he further stated that he would not return to New York City where the case was pending, when it should be reached for trial, giving as his reason that he had been arrested in New York City and thrown into-jail without reason and that he would not return under any circumstances. Counsel for the Insurance Company thereupon told him that the Insurance Company would not defend the New York suit and that they would withdraw from the case. Some time afterwards Allen came to Chicago, where counsel for the Insurance Company again took the matter up with him, and Allen again refused to return to New York when the case would be tried. He was again notified by the Insurance Company that it would not defend the case but would withdraw from it. Some time thereafter the Insurance Company notified their New York counsel of the matter and instructed him to withdraw the appearance and answer of Allen and to have nothing more to do with the case, and this was done. Several months after this the case was reached for trial. Allen was defaulted, no one appearing in his behalf, and judgment in the sum of $5,000 was entered against him in favor of Schneider.

The evidence further shows that from the time Allen was seen in Chicago the Insurance Company did not know where he could be found, although it appears it made no effort to find him.

(1) The garnishee contends that the court erred in sustaining plaintiff’s demurrer to its plea or additional answer. This document set up that prior to the beginning of the instant case, Schneider had filed his bill in chancery in the nature of a creditor’s bill in the superior court of Cook county and that the same matters were involved in the two suits. We think the ruling of the court was correct. The instant case was commenced in the superior court of Cook county on November 19, 1929, the defendant filed its answers to the interrogatories on December 4, 1929, and shortly thereafter the issue was made up. The case went to trial June 16, 1930, and it was not until the case went to trial that the garnishee filed its plea or additional answer. Obviously it was then too late to inject a new issue into the case. The plea of another suit pending is a plea in abatement, and such plea cannot be filed after pleading to the merits of the action. 1 Ency. PI. & Pr. 771. In the instant case the garnishee had answered to the merits long prior to the time when he filed his additional answer or plea. It was therefore too late. Counsel for the garnishee contends that it was not proper practice to file a demurrer to this plea because the plea on its face was good, and if it was not filed in apt time plaintiff should have moved to strike it. We think this question is not properly before us. Both parties treated the filing of the demurrer and the action of the court in passing on it as the proper procedure, and therefore the garnishee cannot now contend to the contrary.

(2) Plaintiff further contends that the court erred in admitting in evidence a New York statute regulating liability insurance. That statute provides that no policy of insurance (such as the one in question) “shall be issued or delivered in this state by any corporation or other insurer authorized to do business in this state, unless there shall be contained within such policy a provision that the insolvency or bankruptcy of the person insured shall not release the insurance carrier from the payment of damages for injury sustained or loss occasioned during the life of such policy, and stating that in case execution against the insured is returned unsatisfied in an action brought by the injured person, . . . then an action may be maintained by the injured person . . . against such corporation under the terms of the policy for the amount of the judgment . . . not exceeding the amount of the policy. No such policy shall be issued or delivered in this state ... by any corporation or other insurer authorized to do business in this state, unless there shall be contained within such policy” certain provisions with reference to notice, etc. . . .

“A policy issued in violation of this section shall, nevertheless, be held valid but be deemed to include the provisions required by this section, and when any provision in such policy or rider is in conflict with the provisions required to be contained by this section, the rights, duties and obligations of the insurer, the policyholder and the injured person shall be governed by the provisions of this section.” Obviously this section of the New York statute has no bearing on the case. It is limited to policies issued or delivered in New York state “by any corporation or other insurer authorized to do business in this state. ’ ’ The evidence shows that the garnishee in the instant case had no agents and did no business in New York state; that it accepted Allen’s proposition contained in a letter mailed by him from New York to Chicago, and executed and mailed its policy in Chicago to Allen in New York. But plaintiff contends that even if the New York statute is not applicable, yet he was entitled to recover because the Insurance Company failed to defend the action against Allen in New York and did not cancel the policy. In support of this chief reliance is placed on the case of Kinnan v. Hurst Co., 317 Ill. 251. We do not think this case is in point. It was there held that an injured employee could not maintain an action against his employer’s liability insurance company where the policy was not for his benefit, but where the insurance company failed to defend the employee’s action against the employer, which it had agreed to do in the policy, a cause of action for such breach arose in favor of the employer which the employee, whose judgment against his employer was unsatisfied, might enforce by a creditor’s bill against the insurance company. In that case it was held to be the duty of the insurance company to defend the suit brought by the employee against the employer. The facts there show that the refusal of the insurance company to defend the suit was through its own fault. The court there said (p. 257): “The foundation of the rights of the parties under the contract (of insurance) was the assumption by the defendant in error of the investigation of all accidents, . . . and the defense of all suits of the character mentioned in the policy, and the exclusion of the assured from all interference in any of these matters except to aid the defendant in error at its request. The refusal of the defendant in error to defend the suit of the plaintiff in error against the assured; would have destroyed the foundation of the mutual obligation of the parties.” There the insurance company though notified of the accident and suit, denied that the accident was covered by the policy and refused to defend. And the court held that it was the duty of the insurance company to defend under the policy in that case.

In the instant case the policy provided that the assured, Allen, should aid the Insurance Company in securing evidence and in procuring the attendance of witnesses in any claim against him which was covered by the policy. The evidence shows that the only witness who knew about the accident was the assured, Allen, and he refused to go and testify on the trial. He was notified upon such refusal on two occasions that the Insurance Company would not defend and that it would withdraw from the case. Obviously, he could not bring suit on the policy against the Insurance Company in such circumstances, and it is conceded that if this be the fact plaintiff is in no better position. Nor was there any duty resting upon the Insurance Company to cancel the policy. We think any cancellation attempted after the accident would have been unavailing'. Moreover, the policy might cover other accidents during the life of the policy and it had not expired at the time.

In Schoenfeld v. New Jersey Fidelity & Plate Glass Ins. Co., 197 N. Y. S. 606, it was held under a substantially similar policy that a violation by the insured of a stipulation of the policy that he would cooperate in the defénse of an action against him is a defense to an action on a judgment rendered against the insured for injuries sustained by plaintiff in" the absence of a showing of bad faith on the part of the insurance company. In that case the plaintiff brought suit to recover damages for injuries he had sustained against the owner of an automobile covered by a policy of insurance, and obtained a judgment for $3,000, which he was unable to collect. Afterwards plaintiff brought suit on the judgment against the Insurance Company and it filed its answer alleging that it attempted to defend the suit brought by plaintiff against the assured but could not locate the assured for the purpose of preparing for trial, and therefore was unable to procure witnesses to show that there was no liability. The trial court struck this answer from the files and judgment was entered against the Insurance Company, which on appeal was reversed, the case being argued before five judges of the Appellate Division, all of whom concurred in the reversal. In the course of the opinion the court said (pp. 609, 610): “I think it must be conceded that, as between the assured and the insurance company, failure by the assured to comply with the condition of the policy requiring co-operation would prevent his recovery under the policy of the amount of the judgment if paid by him.....

“I think that the condition of the policy requiring co-operation on the part of the assured in the defense of the action brought against him by the injured party is one of great importance. Without the presence of the assured and his aid in preparing the case for trial, the insurance company is handicapped and such lack of co-operation may result in making the action incapable of defense.”

The action of Allen in refusing to go to New York on the trial of the case there prevented the Insurance Company from making any defense. Obviously he could not bring suit on the policy and neither can the plaintiff here.

Upon a consideration of all the evidence in the record we are clearly of the opinion that no recovery can be had in this case, and therefore the judgment of the superior court of Cook county is reversed with a finding of fact.

Judgment reversed with a finding of fact.

Hatchett, P. J., and HcSurely, J., concur.

Finding of fact: We" find as a fact that Reuben Allen, the assured, in failing to assist the Insurance Company on the trial of the case in New York, relieved the Insurance Company of any liability under the policy and therefore he could not recover on the policy; and that the plaintiff in this case is in no better position, and he cannot recover.


text:
    W. B. Martin, Appellant, v. Alexander Dunlap, Trading as Detective Publishing Company, and Alexander Dunlap, Appellee.
    Gen. No. 34,633.
    Heard in the first division of this court for the first district at the October term, 1930. '
    Opinion filed January 26, 1931.
    B. W. Rosenstone, for appellant; Arthur Arraham, of counsel.
    Harold L. Levy, for appellee.
   Mr. Justice O’Connor

delivered the opinion of the court.

April 15, 1930, plaintiff brought an action of forcible detainer against the defendant to recover possession of a suite of offices in the Martin Building, situated at the northeast corner of 11th Street and Wabash Avenue, Chicago. There was a trial before the court without a jury and a finding and judgment in defendant’s favor and plaintiff appeals.

The record discloses that the defendant was occupying the premises in question under a written lease which covered a period from the 1st of January, 1928, until December 31, 1931. On April 12, 1930, plaintiff caused a five-day notice to be served on the'defendant. In the notice it was stated that the defendant was in arrears $325 in the payment of his rent, and that “you are further notified that payment of said sum so due has been and is hereby demanded of you, and that unless payment thereof is made on or before the expiration of five days after date of service of this notice your lease of said premises will be terminated.” Two days after the receipt of this notice by defendant, namely, April 14, defendant tendered his check to plaintiff for $325. The check was given to one of plaintiff’s employees and some time the next day was returned to the defendant. April 16 the defendant tendered the $325 to the plaintiff in currency but the tender was refused. The day prior to this second tender, April 15, plaintiff brought his suit.

Under the terms of the lease, the defendant being in default in payment of rent, the landlord had a right to terminate the lease without notice; he did not do this, but served a five-day notice on the tenant advising him that unless the rent was paid within five days the lease would be terminated. Having served this notice, the tenant might within the five days tender the rent so that the lease could not be forfeited during the five days for failure to pay the rent. Hopkins v. Levandowski, 250 Ill. 372. In that case the court said (p. 376): ‘‘The provision declaring, a forfeiture for nonpayment of rent only made the* lease voidable at the election of the lessor. On reason and authority, therefore, if the defendant in error gave a five days’ notice he thereby recognized the tenancy of plaintiff in error and waived his right to forfeiture until the expiration of the time stated in the notice.” In the instant case, the notice having been given on the 12th of April and the rent having been tendered within the five days, the landlord could not, prior to the expiration of the five days, bring suit for possession. Counsel for plaintiff concede this to be the law and say in their brief that in the absence of a provision in the lease their suit would not lie. The provision in the lease which counsel rely upon is as follows: “the giving or making of any notice or demand, whether according to any statutory provision or not . . . shall not be construed as a waiver of Lessor’s right to act without notice or demand . . . or as an election not to proceed under the provisions of this lease.” The quotation is but a small part of paragraph 12 of the lease. There is no provision in the lease to the effect that although the landlord may give a five-day notice stating that unless the rent is paid within five days the lease will be terminated, that he may nevertheless bring suit for possession and declare the lease terminated within the five days. To permit this to be done would be in the nature of a fraud on the tenant who was seeking within the five days to pay the back rent. The landlord, after notifying his tenant in writing that he had waived his right to declare a forfeiture for a period of five days, ought not to be permitted to stultify himself within that time and to declare a forfeiture of the lease.

The judgment of the municipal court of Chicago is affirmed.

Affirmed.

Hatchett, P. J., and HoS'urely, J., concur.


text:
    Farmers and Merchants Bank, Appellee, v. Michael R. Narvid and Stella Narvid, Appellants.
    Gen. No. 34,642.
    Heard in the first division of this court for the first district at the October term, 1930.
    Opinion filed January 26, 1931.
    Slakis & Spence, for appellants.
    James Gr. Skinner, for appellee.
   Mr. Justice O’Connor

delivered the opinion of the court.

Plaintiff: brought an action of assumpsit against the defendants to recover $1,591.02 with interest thereon at six per cent per annum from September 23, 1927. The claim was based upon a clause in a warranty-deed by virtue of which it is claimed that the defendants, as grantees, assumed and agreed to pay a mortgage upon certain real estate in Wisconsin. There was a jury trial and a verdict and judgment in plaintiff’s favor for the amount of its claim, and defendants appeal.

The record discloses that on March 18,1918, Dorothy Warren owned a farm in Juneau county, Wisconsin, and on that date executed a mortgage to plaintiff, the Farmers arid Merchants Bank of New Lisbon, Wisconsin, conveying the farm as security for $3,500 evidenced by a note of that date due five years after date, and another note for $500 payable in five years at the rate of $100 a year, both of which notes bore interest at six per cent per annum, payable semi-annually. On Xpril 2, 1918, the mortgagor, Dorothy Warren, conveyed the farm by warranty deed to William F. Nehf subject to the mortgage indebtedness of $4,000, and on December 17, 1918, Nehf and wife by warranty deed conveyed the property to the defendants, Michael B. Narvid and Stella Narvid. The consideration expressed in the deed to the Narvids was “One Dollar and other good and valuable considerations.” The conveyance was made “subject to a mortgage of Four thousand dollars ($4,000.00) which second parties assume and agree to pay as part of ‘purchase’ money.”

Upon the execution of the deed to Narvid and wife they entered into possession of the farm and lived on it for about two years when they sold the farm to a Mr. Pasch and then left the farm. This was more than two years before the $3,500 indebtedness became due and about six years before the instant suit was brought. Pasch some time later sold the farm to Doctor Sprecker. The time of the last two conveyances does not appear, nor does it appear what provisions were contained in either of the two deeds. The evidence is further to the effect that Narvid, while he was in possession of the farm, paid the interest on the mortgage to plaintiff, that he paid no part of the principal and made no payment at all after he left the farm, and that no demand was ever made upon him to pay the mortgage or any part of it until the present suit was brought in Chicago. The evidence further ■tends to show that after Narvid left the farm the interest on the mortgage and part of the principal was paid by the subsequent owners.

Counsel for plaintiff, i-n closing his proof, said: “I desire to admit that a payment on the principal of $3,500 of $1,908.98 has been made, and that interest on the note was paid up to September 24, 1927.” Up to that time there was no evidence as to who made the páyment nor any evidence as to what became of the $500 note. It later developed, however, that plaintiff foreclosed the mortgage on the farm and bid it in at the foreclosure sale for $3,000, and apparently applied the $3,000 towards the payment of the costs of foreclosure and the indebtedness, but the evidence is rather meager on this point.

On the trial of the case plaintiff’s president testified, and on cross-examination counsel for the defendant endeavored to find out, by questions, whether the bank had extended the time of payment of the indebtedness by agreement with the owner or owners of the farm subsequent to the transfer by the defendants. This was objected to by counsel for plaintiff as immaterial and the objection was sustained. Defendants contend that this ruling was erroneous and prejudicial and we think the contention must be sustained. If the time of payment had been extended by plaintiff with the subsequent owner or owners of the farm by agreement, for a consideration, so that it might be held that such owner or owners had agreed to pay the mortgage but without defendants’ assent, this would discharge the defendants from personal liability for the debt for the reason that the relation of the grantee and grantor towards the mortgagee is that of principal and surety. Albee v. Gross, 250 Ill. App. 98; Douglass v. Ullsperger, 251 Ill. App. 145; and cases therein cited; Binga v. Bell, 259 Ill. App. 361. (Union Mut. Life Ins. Co. v. Hanford, 143 U. S. 187; Spencer v. Spencer, 95 N. T. 353.)

The defendant, Michael R Narvid, was called as a witness in his own behalf and it was sought to elicit from him what was said at the time he bought the farm from Nehf, the deal having been closed at plaintiff’s bank. He testified that prior to the execution of the deed there was a contract entered into between him and Nehf. He was then asked by his counsel what was said by Mr. Nehf prior to the time this deed was given. This was objected to and the objection sustained on the ground that the basis of plaintiff’s suit was the written clause in the warranty deed and that it could not be varied by parol. The offered evidence was to the effect that Narvid would not and did not personally assume the mortgage debt, and although Narvid later gave testimony to the effect that the price he agreed to pay for the farm included the mortgage debt, yet this fact might not be conclusive of the question whether he had personally assumed the debt. Plaintiff was not a party to this deed and the parol evidence rule applies only to controversies between parties to the instrument, and the ruling was wrong. 17 Cyc. p. 749-52; 17 Am. & Eng. Ency. of Law (1st ed.) p. 453 ; 1 Gfreenleaf on Evidence, (13th ed.), sec. 279; vol. 1,. Wiltsie on Mortgage Foreclosure, (4th ed.), sec. 240; Northern Assur. Co. v. Chicago Mut. Building & Loan Ass’n, 198 Ill. 474; s. c., 98 Ill. App. 152; Washburn & Moen Mfg. Co. v. Chicago Galvanized Wire Fence Co., 109 Ill. 71; Chicago, S. & St. L. R. Co. v. Beach, 29 Ill. App. 157; Peters v. Goodrich, 192 Iowa 790.

In 17 Cyc. 749-52, it is said: “The rule excluding parol evidence to vary or contradict a written instrument applies only in controversies between the parties to the instrument and those claiming under them. It has no application in controversies between a party to the instrument on the one hand and a stranger to it on the other, for the stranger not having assented to the contract is not bound by it, and is therefore at liberty when his rights are concerned to show that the written instrument does not express the full or true character of the transaction. And where the stranger to the instrument is thus free to vary or contradict it by parol evidence his adversary, although a party to the instrument, must be equally free to do so. This has been held to be true in the case of writings of all kinds, as for example, deeds, mortgages, leases, bills of sale, licenses, insurance policies, and contractual receipts. And even a judicial record is not conclusive upon persons not parties or privies to the action or proceeding. ’ ’

In 17 Am. & Eng. Ency. of Law (1st ed.), it is said (p. 453): “The rule against contradicting the tenor of a written instrument by parol applies only to parties and privies. It has no application to strangers, nor is a party to an instrument estopped from contradicting it when it is offered in evidence in a suit to which a stranger to the instrument is a party.”

Professor G-reenleaf, in his work on evidence, in discussing the question of the admissibility of parol evidence to affect that which is written, says (sec. 279): “The rule under consideration is applied only (in suits) between the parties to the instrument; as they alone are to blame if the writing contains what was not intended, or omits that which it should have contained. It cannot affect third persons, who, if it were otherwise, might be prejudiced by things recited in the writings, contrary to the truth, through the ignorance, carelessness, or fraud of the parties; and who, therefore, ought not to be precluded from proving the truth, however contradictory to the written statements of others.”

Wiltsie, in his work above cited, in section 240 says: “A grantee is not conclusively bound by an assumption clause in a deed even as against the mortgagee or other third parties. He may show the real contract between the parties, though in contradiction of the assumption clause. And parol evidence is admissible.”

And the Supreme Court of this State in the Northern Assurance Co. case (198 Ill. 474) held that the rule that parol evidence is not admissible to vary or contradict a written instrument applies only to the parties to the instrument or those in privity with them. The court there said (p. 478): “the rule of evidence referred to by counsel, that parol testimony is inadmissible to contradict or vary a written instrument, applies only to the parties to the instrument or their privies. (1 Greenleaf on Evidence, sec. 279; Silsbury v. Blumb, 26 Ill. 287; Harts v. Emery, 184 Ill. 560; 17 Am. & Eng. Ency. of Law, — 1st ed.— 453). The appellee association was not named as a party in either of the deeds, but if regarded as privy thereto the deeds were introduced by one not a party to them, and it was competent for the appellee association to introduce proof to show the deed was not absolute, but a conditional conveyance. ’ ’

In Peters v. Goodrich, 192 Iowa 790, it was held that one who in exchange of equity in real estate takes a deed in which he inadvertently assumes the payment of a pre-existing mortgage on the property to which he is a stranger may when sued on such assumption clause show by oral testimony that there was no consideration for the assumption of payment and that the contract for the exchange of the properties did not in fact provide for such assumption. A number of authorities from other jurisdictions are cited and discussed in that case, which announces the same rule of law.

For the two reasons above stated the ruling of the court on the admission of evidence was erroneous and the judgment will therefore be reversed and the cause remanded.

The judgment of the circuit court of Cook county is reversed and the cause remanded.

Reversed and remanded.

Hatchett, P. J;, and HcSurely, J., concur.