author: Mr. Justice Matohett O’Connor, P. J., and McSurely, J.,

text:
    John Bartosik, Appellee, v. The Chicago River & Indiana Railroad Company, Appellant.
    Gen. No. 35,417.

      Opinion filed March 28, 1932.
    Rehearing denied April 29, 1932.
    Sidney C. Murray, Marvin A. Jersild and Harold E. Christensen, for appellant.
    Joseph D. Ryan, for appellee.
   Mr. Justice Matohett

delivered the opinion of the court.

In an action on the case under the Federal Employers’ Liability Act, Cahill’s St. ch. 114, f 321 et seq., at the close of all the evidence, defendant moved for an instruction in its favor, which was denied. The cause was submitted to a jury which returned a verdict for plaintiff in the sum of $30,000, and the court, overruling motions for a new trial and in arrest, entered judgment which defendant seeks to reverse by this appeal.

The declaration was in three counts. The first count alleged in substance that defendant was a common carrier engaged in interstate commerce; that it maintained in the City of Chicago a yard in which were divers tracks, switches and leads used by defendant in switching and moving freight cars in interstate transportation ; that it assembled cars in making up trains; that plaintiff was employed by defendant in such interstate commerce, his duty being to repair cars “so being assembled as aforesaid, and which said cars then and there contained merchandise” consigned to places outside of Illinois; that on April 23, 1929, while in the course of his employment, it became plaintiff’s duty to make light repairs on cars being so assembled and which then and there contained commodities consigned to points outside of the State of Illinois; that defendant without notice or warning kicked, shunted or propelled other cars with great force and violence against the cars, one of which plaintiff was repairing, and that as a proximate result of the negligence, one or more of the cars came in contact with plaintiff and one of his legs was thereby so crushed and bruised that it became necessary to amputate it.

In the second count plaintiff averred that on April 23, 1929, defendant assembled a number of cars on a track; that these cars were destined to points outside of and beyond the State of Illinois; that it was the usual practice and custom of defendant to make light repairs on the cars so assembled in order that the cars and the train aforesaid, after it was made up, could be operated and moved in safety; that the coupler and the coupling appliances on one of these cars were then in a state of disrepair and defective and it then and there became and was plaintiff’s duty, in the due course of his employment, to repair the same; that plaintiff was also then ordered to do so by an agent of defendant; that prior to his engaging in the work of making these repairs another servant of defendant assured plaintiff that all of the cars comprising the train had been placed on the track; that while he was making the repairs as directed and in reliance upon this assurance went between the ends of the cars for the purpose of repairing the defective coupler, defendant carelessly and without notice and warning propelled certain other cars against the standing cars and upon and against the car upon which plaintiff was at work, injuring him.

The third count does not aver a case under the federal act.

The first contention of defendant is that plaintiff at the time he received his injury was not employed by defendant in interstate commerce, and that the instruction requested by defendant at the close of all the evidence should have been given for that reason. The point is controlling, and it will be unnecessary to discuss any other.

The material facts are practically uncontradicted and were for the greater part presented upon the trial by stipulation. They are as follows: Defendant is a common carrier by railroad, engaged in interstate commerce, and it owned, operated and controlled the yard and tracks in question situated in the City of Chicago,, where plaintiff received his injury on April 23, 1929. Plaintiff had been employed by defendant for about six years as a safety appliance repairman in the ‘ ‘ Texas ’ ’ yard at 47th and Racine streets in Chicago. In this yard there were about 20 tracks running generally east and west. At each end were lead tracks connected therewith. Both empty and loaded cars destined to the various railroads entering Chicago were switched by defendant in this yard, and there was assigned to each one of the railroads so served a track upon which the cars assigned to it from time to time were received. The accident happened upon track No. 5, which had been assigned to' the Chicago, Burlington & Quincy Railroad Co. It was the custom to “kick” in these cars on the various tracks, but defendant made no effort to couple them together or to connect the air hose. Sometimes a cut of more than one car was “kicked” in and at such times the cars thus “kicked” in would be coupled together. Occasionally the cars thus “kicked” would move with a momentum sufficient to bring them in contact with cars already on the track, and sometimes in such cases these cars would be coupled automatically by- the impact. These were the only instances in which couplings were made, and the cars as they stood on the tracks were often widely separated. It was the usual practice that about five o’clock in the evening the train crews from the various railroads thus served would come to the yard and wait on an adjoining track with locomotives and cabooses until defendant had completed its switching operations. When it was ascertained that the switching was finished or when three blasts of the whistle were blown by the locomotive doing the switching, these crews understood that they might come into their respective tracks and take away the cars which had been placed thereon for their particular company. Sometimes the engineer would desire to move his train backwards and a similar whistle signal would be given.

The testimony of the conductor for the Burlington was that he would rearrange the cars set out for him in such a way that the cars which were loaded would be placed at the front end of the train. This testimony was, however, denied by plaintiff, but the uncontradicted evidence shows that before the foreign crews could move the cars out of the yard they had to move them together, couple them and connect the air hose.

There was an organization known as the Chicago Car Interchange Inspection Bureau which furnished car inspectors in the yard whose duty it was to inspect all the cars going to other railroads. If these inspectors found a defective car they placed on it a bad order card, which specified the particular defect. There Were a number of car repairmen whose duties were similar to those of plaintiff. They moved around the yard and made repairs upon the particular cars located on these tracks. They were supposed to make only light repairs. If the defect was such as to require heavy repairs or if it was considered dangerous to make repairs on the particular track where the car stood, or if for any reason the repairs were not made the defective car was moved over to what was known as a rip track for repairs and might be held until the day following.

On this particular occasion, this Burlington car stood on track five. It had been carded as in “bad order.” It needed a pin lifter hook in the coupler at the east end of the car. This car was empty. There were 27 cars on track five. Ten of these cars were loaded and were consigned to points outside the State. Six were loaded and consigned to points in Illinois. The rest of the cars were empty, and one of them was consigned to West Fargo, North Dakota. This empty Burlington car which plaintiff undertook to repair had been billed from St. Joseph Stock Yards, Missouri, on April 19,1929, loaded with pelts and hides consigned to Armour & Company, Wool House Track, Union Stock Yards, Chicago. It arrived at its destination on April 23 and was unloaded. On the same day, without being billed, it was moved from Armour’s wool house track and placed upon track five for delivery to the Burlington Railroad, the owner of the car. It was inspected by the Chicago Car Interchange Burean and found to be in bad order. The 27 cars on this track when assembled and made up were to have , been moved from track five to Hawthorne yard at 26th street and Cicero avenue for further classification.

Plaintiff’s testimony is to the effect that one of the inspectors told him that there was a car on track five which needed a pin lifter hook; that he went to his shanty to put away the tools he had been using and to obtain a hook; that he came back with the hook, saw the crew switch some cars and was then advised by an employee named Sullivan that they were through with switching; that three blasts of the whistle were blown and that he then went to work on the car; that he had to stand between the rails to make the repair; that the end of the car, which he was repairing, was not coupled to the next car but that there was a space of from four to six feet between it and the next car east of it; that he worked there from five to eight minutes when some more cars were switched on the track, causing his injury.

The number of this C. B. & Q. car was 16463, and it had been moved to the yard for the purpose of delivering it to the connecting carrier. It traveled under directions to be returned to its owner, after being unloaded and after repairs and inspection were made.

The question as to whether at a given time and as a matter of law a plaintiff and a defendant are or are not engaged in transportation of interstate commerce within the meaning of the Federal Employers’ Liability Act is sometimes difficult to answer. The question in the last instance is for the federal courts deriving their jurisdiction from the sovereignty by which the Federal Employers’ Liability Act was enacted. They have been requested to declare a standard invariable by circumstances or free from confusion in application. They have declined so to do, saying (Industrial Accident Commission v. Davis, 259 U. S. 182):

“If that were ever possible, it is not so now. Besides, things do not have to be in broad contrast to have different practical and legal consequences. Actions take estimation from degrees and of this, life and law are replete with examples.” In Shanks v. Delaware, L. & W. R. Co., 239 U. S. 556, the Supreme Court of the United States stated the rule as follows: ‘ ‘ The true test of employment in such commerce in the sense intended is, Was the employee at the time of the injury engaged in interstate transportation or in work so closely related to it as to be practically a part of it?” To that statement of the law the federal courts consistently adhere, as indicated by the opinion in the case of Chicago & Northwestern Ry. Co. v. Bolle, 284 U. S. 74, 52 Sup. Ct. 59.

Defendant contends that under the ruling announced in Foreman Trust d Savings Bank v. Grand Trunk W. Ry. Co., 242 Ill. App. 428, in which case certiorari was denied by the Supreme Court of the United States, 279 U. S. 839, it must he held as a matter of law that plaintiff here was not engaged in interstate commerce at the time he received his injuries. It must he conceded that the facts which appeared in that case are quite similar to those which appear here. The plaintiff’s intestate there was employed by the defendant carrier as a light car inspector, and while in the course of his employment in making repairs on an empty freight car standing on what was known as “long” or “C” track of defendant’s yard, he was injured by a train of cars moved backward by an engine under the control of defendant’s employees. The car upon which plaintiff was working had on that day been used to bring an interstate shipment of meat to the Union Stock Yards, Chicago, and the shipment after its arrival was unloaded at defendant’s freight house. At the freight house the intestate inspected the car and put a bad order card on it. On the same day this car was moved by defendant from the long- track and hauled out to what was known as the Elsdon yards, belonging to defendant, and this train carried freight and merchandise which were in transportation by defendant to points outside the State of Illinois. The train contained both interstate and intrastate cars, and it was being made up on the long track at the time the accident occurred. The evidence showed that the car was in such condition at the time of its arrival that it could not be safely removed in a train, and there was other evidence tending to show that the situation was such that the further movements of the car were unsafe unless it was repaired. The custom was to make light repairs only at Twelfth street so that the cars might be moved to the Elsdon yards at 51st street, where the general repair work was done. The car was dropped off at the Elsdon Yards, and there was no evidence indicating its next movement or tending to show what the intention of the defendant was with reference to its use after the interstate shipment of meat was unloaded at defendant’s freight house at Twelfth street. After reviewing the authorities, most of which are cited in this case, we said:

“From this review of the decisions, we are persuaded the evidence in this case fails to make prima facie proof of a case for plaintiff under the statute. When the interstate shipment of meat was unloaded at Twelfth street, so far as the evidence here discloses, the interstate movement of the car ceased. Other movements, first to the track and later to the yards for repair, were presumptively intrastate movements, and there is no evidence from which a jury could reasonably find that such movements were other than intrastate movements. In fact, there is not a scintilla of evidence in the record showing that the movements of the car, first to the track and afterwards to the yards, were in connection with any interstate purpose. The plaintiff cannot establish her case by a guess.”

Plaintiff says that there is a significant distinction between the Foreman case and the one before us; that in the Foreman case the movement of the car on which the plaintiff was working had ceased, the car had been placed on a track for the express purpose of repairing it, and not for any other purpose connected with transportation, that there was no evidence to show what its next movement would have been, and it did not form a part of any train, nor was it being assembled into a train; that here the car being repaired was standing coupled to others of a train on a track awaiting the arrival of an engine which would haul the entire train out, the repair of the car being only an incident to the general purpose of the movement. He further says that while in the Foreman case the car was not on a definite assignment, in the present case the car was assigned to and formed a part of the train which was about to move in interstate transportation; that the status of the train being assembled was entirely interstate, not only as to those portions of it which were themselves employed in interstate transportation; that its status was definitely fixed as an interstate train even as to those portions which may not have moved out of the State at all; that as it was established that the movement of the train out of the yard which was scheduled to occur shortly after the time plaintiff was injured (the engine assigned to make the haul being then in waiting just outside the yard) was interstate in character, the only question for determination is as to the relation the car in question bore to this interstate movement. Plaintiff further says that many decisions have held that instrumentalities of interstate transportation, when uncoupled from a train and well removed from it, retained their interstate character when intended to be used in such commerce, and he cites in support of these contentions North Carolina R. Co. v. Zachary, 232 U. S. 248; Chicago & Northwestern Ry. Co. v. Bower, 241 U. S. 470, and Roberts’ Federal Liabilities of Carriers (2d ed.), vol. 2, sec. 742, p. 1416.

As the reply brief of defendant points out, not one of the cases cited by plaintiff relates to the status of a car repairman, but all of them concern only trainmen. The distinction has been recognized in Roberts’ Federal Liability of Carriers (2d ed.), vol. 2, sec. 743, p. 1465, where the author states that the status of a repairman “depends upon the use being made of the instrumentality he is repairing at the time of the injury.” Moreover, the Foreman case is not distinguishable in respect of the matters which plaintiff points out. There, as here, the plaintiff was making light repairs on a car standing on a track in defendant’s yard. There, as here, he was injured by reason of a train thrown against other cars standing upon the same track. There, as here, the car had moved in interstate commerce and its shipment had been unloaded. There, as here, the car would ordinarily move out with other cars and be hauled to another yard within the State and in a ttain of cars which carried intrastate, as well as interstate, shipments. There, as here, this train was being made up on the track on which the plaintiff was injured; and there, as here, there was no further evidence as to what the next movement of the car would be. The statement in the opinion of the Foreman case that there was no further evidence indicating the next movement of the car refers, of course, to the movement next made after reaching the yards in which permanent repairs were to be made. The contention was made there, as here, that the plaintiff was engaged in transportation of interstate commerce because he was repairing the car which had been definitely assigned to move out of the yard in an interstate train and had been placed on a track coupled with other cars about to move as. a unit in this interstate train. In the argument of plaintiffs in both eases there is the assumption that the cars which stood on the track constituted an interstate train in being. But in neither case was such train in being at that time. A movement by transportation in interstate commerce would be necessary and a condition precedent to that result. The train was not yet made up. The interstate movement of the car in both cases ended with the delivery of the freight carried in the interstate movement. The “bad order” card had the effect of definitely withdrawing the car from any such movement even had it not been ended, and it could not again move in interstate commerce until the repairs were made and the car again inspected for use. Repairs and inspection would both be necessary before the car upon which plaintiff’s labor was being performed would become a part of the train about to come into being. Whether the car would be repaired in time to become a part of that train was uncertain and problematic. If the repairs were not made in time the ear would have been left behind and removed to a repair track.

Plaintiff next contends that he was at the time in question engaged in interstate commerce because the work in which he was engaged was necessary to enable interstate cars on the track to be reached and moved. He says that the controlling purpose of the movement was interstate transportation to which his work was a necessary and preliminary incident. He points out that at the time he was injured track five contained 27 cars. The car on which he was working was the fourth or fifth car from the west end of the track; that of the cars on the track, 10 were loaded and consigned to points outside of the State of Illinois, so that out of the 27 cars not less than 11 -were actually engaged in interstate transportation; that since there were 11 such cars on the track and not more than four at the most were west of the car on which plaintiff was working, it was obvious that at least seven interstate cars lay to the east of where he worked; that it was therefore apparent that when the engine would come in to move this cut of cars from the west, in order to move the cars to the east, it was necessary to move the car on which plaintiff was working; that in order to move the interstate cars lying to the east, the car in which plaintiff was working was required to be coupled to the car immediately to the east of it, and that it was therefore clearly established that the next movement on the track was to be one clearly interstate in character; i. e., the movement of the entire train. He says that it is clear from the evidence that had this movement been attempted without making the repairs to the coupler, one of two things must have happened — either the car would not have been coupled to the cars east of it, and thereby the intended movement of the interstate cars would have been impossible, or if it could have been coupled and the interstate cars thereby moved, such movement would have been a violation of the Federal Safety Appliance Act and would have rendered the carrier liable to a penalty therefor. It is therefore clear, plaintiffs says, that the repair in question had to be made in order to move the interstate cars in the manner contemplated by defendant; and it follows, he says, that any work being done on this car in order to place it in condition to be moved, was work so closely connected with interstate transportation as to be practically a part thereof. He cites in support of this argument Pennsylvania Co. v. Donat, 239 U. S. 50; New York C. & H. R. R. Co. v. Carr, 238 U. S. 260; Southern Ry. Co. v. Jacobs, 116 Va. 189, 81 S. E. 99, affirmed in 241 U. S. 229; Louisville & Nashville R. Co. v. Parker, 242 U. S. 13; Seaboard Air Line Ry. v. Koennecke, 239 U. S. 352; Southern Ry. Co. v. Puckett, 244 U. S. 571; Poindexter v. Cleveland, C., C. & St. L. Ry. Co., 319 Mo. 285.

Plaintiff also says that in this respect this case is distinguished and differentiated from the Foreman case, but he is mistaken in this regard, since there was express evidence there that the repairs made were necessary for the next movement of the train being made up. Practically all of the cases cited were reviewed in the Foreman case, and it will be unnecessary to repeat here what was said there. That case reached the highest national court and certiorari was denied. We are aware that does not mean that the court approved of the opinion, United States v. Carver, 260 U. S. 482, but it does mean that the decision in the Foreman case was approved and we know of no reason why a different decision should be reached upon a state of facts which cannot be distinguished upon any material point.

Plaintiff further contends that he was engaged in-interstate commerce while making these repairs because the car in question had not yet arrived at its destination at the time of the accident. He points out that the evidence shows that it was specifically routed from St. Joseph, Missouri, to Chicago and thence to the connecting carrier, and says that as delivery to the connecting carrier had not been made, the interstate movement had not in fact ended. Trowbridge v. Kansas City & W. B. Ry. Co. (Mo. App.), 179 S. W. 777, is cited, and it must be conceded in this respect that the facts here are distinguishable from those which appeared in the Foreman case. The supposed facts upon which this contention is based are not undisputed on the record. One of the witnesses who did not see the car until two days after the accident stated, “It had the pool marks, same information as a home route car,” and that this mark was “5/21” and “iq-

forms you that it came from the C. B. & Q. on the 21st and it would move back to the C. B. & Q. road.” This witness also stated:

1 ‘When these foreign cars came in with loads and are being returned empty, there is a small information home route card placed on the car on the inbound movement of the car as well as a pool mark, placed by the inbound inspector, showing the road and the date it came from that road. All foreign equipment travels on home route cards.” This witness also testified in substance that there were a number of loaded cars whose return to the connecting carrier was compulsory “if the empty car was not reloaded and diverted out on a new original bill of lading,” and in response to a hypothetical question he said that a car which had a home route ticket “had to move back to the delivery road, empty, unless it was reloaded and a new bill of lading originated on it.” Under the car service rules which were introduced in evidence, it appeared that this particular car might have been returned either empty or loaded. The evidence shows that it had a “home route card” or pool mark “5/21” which was apparently placed on it on the 21st, two days after it was first billed from Missouri and began its interstate trip and not upon the day on which it was unloaded, which was the 23rd. At the most, as defendant contends, this pool mark was nothing more than a conditional direction that if after it was unloaded the car was not used or needed for another shipment its next ' trip would be to its owner, but that trip, if it was ever -made, would be begun after the first one was ended.

This case is distinguishable on the facts from the Trowbridge case where the plaintiff was injured while switching a car in Kansas preparatory to its return to the Missouri Pacific Railroad at Dodson, Missouri, the Missouri Pacific Railroad having at that time given orders at Dodson that all box cars should be sent west to a point in Kansas to be loaded with wheat. The opinion of the court in that case expressly stated that the court did not need to go so far as to hold that the mere return of the car to Dodson was a part of its incoming trip because of this direction by the Missouri Pacific road that all box cars returned to Dodson should be sent to their distribution point at Osawatomie, Kansas, to be used in the transportation of wheat. The contention that the effect of “home route” cards is to continue an interstate movement which otherwise would be ended, has been considered and expressly denied in Rogers v. Canadian Nat. Ry. Co., 246 Mich. 399, 224 N. W. 429, in which certiorari was denied in 280 U. S. 554. The opinion of the court there said:

“To bring the empty cars again into interstate commerce service, the burden rested upon plaintiff to show that, at the time of the accident, they had commenced predetermined interstate movement. . . . The ‘home route ’ card, accompanying cars ° bringing freight into this State, acts as a guide for the return thereof to the owning road, but does not predetermine their use and movement after delivery to the consignee and their unloading.” To the same effect is Wise v. Lehigh Valley R. Co., 43 F. (2d) 692. The concurring opinion of the presiding justice in the Foreman case stated:

“The unloading of the interstate freight terminated the interstate character of the car, and in the absence of any proof as to whether its next movement would be interstate or intrastate, the legal presumption that it would be intrastate prevails. Any other rule would lead to confusion.” Here the contemplated movement of this empty car from the yard of defendant to that of the owner was intrastate.

After oral argument and after this opinion was prepared, plaintiff by leave cited additional authorities (Gaines v. Detroit, G. H. & M. Ry. Co., 181 Mich. 376, 148 N. W. 397; Northern Pac. Ry. Co. v. Maerkl, 198 Fed. 1; Sterner v. Michigan Cent. R. Co., 231 Mich. 382, 204 N. W. 102; Stottle v. Chicago, R. I. & P. R. Co., 321 Mo. 1190, 18 S. W. (2d) 433), and it is urged that this last case modifies the Poindexter case cited in the opinion. It is true that that case distinguishes the Poindexter case, but on the ground that “Plaintiff (Poindexter) was a repairman and not a part of the switching crew.” We have given consideration to all these cases as well as to Gidley v. Chicago Short Line Ry. Co., 346 Ill. 122, a recent opinion by the Supreme Court of our State. We do not find anything in these cases which would change our conclusion.

In 2 Roberts’ Federal Liability of Carriers (2d ed.), sec. 765, p. 1469, the author says:

“For many years after the enactment of the Federal Employers’ Liability Act, the interstate character of such employees in repairing engines and cars used indiscriminately in moving both interstate and intrastate traffic was not passed upon by the national Supreme Court. Many State and federal courts had held that an employee repairing a car or an engine, even while not being used in transportation, and set aside for repairs or preparation for another trip, was engaged in interstate commerce if the engine or car, being repaired was in fact, when ‘on the road,’ used indiscriminately in both interstate and intrastate commerce. But, under a controlling decision of the national Supreme Court rendered in 1917 (Minneapolis & St. L. R. Co. v. Winters, 242 U. S. 353), the rule adopted by these courts to determine interstate employment of car and engine repairers, was too broad; for the court in the Winters case held that an employee repairing an engine when not used in pulling trains, is not within the purview of the federal ■ statute unless the engine being repaired is exclusively devoted and assigned to the movement of interstate traffic. The same principle would necessarily apply to car repairers.” Northern Pac. Ry. Co. v. Maerkl, 198 Fed. 1, is cited by the author, vol. 2, p. 1469, as a case which announces an incorrect rule of law. Sterner v. Michigan Cent. R. Co., supra, seems to have been decided after the Winters case, and relying upon Erie R. Co. v. Collins, 253 U. S. 77, and Erie R. Co. v. Szary, 253 U. S. 86, which have been definitely overruled by the U. S. Supreme Court in Chicago & Eastern I. R. Co. v. Industrial Commission, 284 U. S. 296, where the court reaffirmed the test laid down in Shanks v. Delaware L. & W. R. Co., 239 U. S. 556, and Chicago & Northwestern Ry. Co. v. Bolle, 284 U. S. 74, 52 Sup. Ct. 59. The Sterner case seems to be in direct conflict with New York, N. H. & H. R. Co. v. Bezue, 284 U. S. 415, 52 Sup. Ct. 205.

In Chicago & Northwestern Ry. Co. v. Bolle, supra, the opinion of the court, elucidating the test as theretofore defined in the Shanks case, said:

“It will be observed that the word used in defining the test is ‘transportation,’ not the word ‘commerce.’ The two words were not regarded as interchangeable, but as conveying different meanings. Commerce covers the whole field of which transportation is only a part; and the word of narrower signification was chosen understandingly and deliberately as the appropriate term. The business of a railroad is not to carry on commerce generally. It is engaged in the transportation of persons and things in commerce; and hence the test of whether an employee at the time of his injury is engaged in interstate commerce, within the meaning of the act, naturally must be whether he was engaged in interstate transportation, or in work so closely related to such transportation as to be practically a part of it.”

The more recent opinions of the Supreme Court as cited indicate an intention to adhere to this definition, and to this definition of the national Supreme Court this court is, of course, bound to adhere in the construction of this statute.

Our conclusion is that on the uncontradicted evidence and as a matter of law the plaintiff in this case was not engaged in interstate transportation at the time he received the injuries for which he sues, and that his remedy is not under that law. The judgment of the trial court is therefore reversed with a finding of fact and judgment here for defendant.

Reversed with finding of fact and judgment here for defendant.

O’Connor, P. J., and McSurely, J.,

concur.

Finding of fact: We find as a fact that plaintiff and defendant at the time plaintiff received the injuries for which he sues were not engaged in interstate transportation within the meaning of the Federal Employers’ Liability Act.


source: Caselaw Access Project

author: Mr. Justice Matchett

license: Public Domain

text:
    Sterling-Midland Coal Company, Appellant, v. Great Lakes Coal and Coke Company, Appellee.
    Gen. No. 35,472.

      Opinion filed March 28, 1932.
    John J. Sherlock and Haight, Adcock, Banning Sa Fathchild, for appellant; John J. Sherlock and William H. Haight, of counsel.
    Winston, Strawn & Shaw, for appellee; Charles ■Calderini and J. Sidney Condit, of counsel.
   Mr. Justice Matchett

delivered the opinion of the court.

This appeal is by plaintiff from a judgment in favor of defendant on its claim of offset for the sum- of $15,220.20. Plaintiff’s claim was for coal sold and delivered. The court found (and the finding is conceded to be correct) that there was due from defendant to plaintiff on that claim $36,963.68. The defense was a claim of offset, in that, as was alleged, plaintiff refused to accept screenings which it had purchased from defendant under the terms and provisions of two written contracts. The finding of the court was that there was due to defendant from plaintiff on the offset $52,184.08. Defendant (assigning cross errors) contends that it is entitled to recover in addition to that sum interest on that amount from April 20, 1925, until the date of judgment. The judgment represented the difference between the amounts found due to the parties under their respective claims, and that judgment plaintiff seeks to reverse by this appeal.

This cause of action is not a stranger in this court. It first reached us by appeal of defendant and is reported in 240 Ill. App. 216. The trial court held that defendant’s claim of offset might not be presented by way of defense to the original suit, struck the statement of claim of offset and entered judgment for the full amount of plaintiff’s demand. This court held that the trial court erred in striking the claim of offset and. reversed and remanded the cause for that reason.

The cause was then tried by the court without a jury and there was a finding against defendant on its claim of offset and in favor of plaintiff for the full amount of its claim and judgment in its favor for the sum of $31,047.55. Defendant appealed to this court, where that judgment was affirmed. (249 Ill. App. 634.) Defendant applied to the Supreme Court for certiorari which was granted, and upon hearing the judgment of this court and of the municipal court was reversed. (Sterling-Midland Goal Co. v. Great Lakes Goal & Coke Co., 334 Ill. 281.)

Defendant’s claim of offset was in substance that on April 4 and April 23, 1924, the parties entered into written contracts whereby defendant agreed to sell and plaintiff to buy certain coal screenings at prices named, but that plaintiff breached these contracts by refusing to accept the coal tendered by defendant. The defense interposed was that the coal tendered was not of the quality required. The facts which there appeared were that at the time these contracts were entered into the Black Servant Coal Co. operated a mine known as a stripping mine in Elkville, Jackson county, Illinois, and on March 26, 1924, entered into a written contract with the H. S. Odbert Coal Co. for the sale of a certain amount of this coal to be shipped from the mine at a price of $1.20 a ton for a period beginning April 1,1924, and ending March 31, 1925. On the same date the Odbert Coal Co. entered into a contract whereby it agreed to sell to defendant, the Great Lakes Coal & Coke Co. the same coal it had contracted to purchase from the Black Servant Coal Co. All this coal was of the kind known as screenings. On April 4, 1924, and April 23, 1924, defendant and plaintiff as a result of prior negotiations entered into contracts for the sale of certain amounts of this coal to plaintiff at the price of $1.50 a ton. These contracts were upon printed forms, and these last two contracts, unlike the contracts between the Black Servant Coal Co. and the Odbert Coal Co., contained no description of the specific quality of the coal to be delivered further than “Kind: Coal to be shipped from the stripping property of the Black Servant Co., located at or near Elk-ville, Jackson county, Illinois, on the Illinois Central Railroad.” The contracts also provided for the size of the screenings which should be delivered. The Western Electric Co. was a large customer of the plaintiff company, and the contracts provided that the coal sold to plaintiff should be consigned to that company. In July, 1924, after complaints by the Western Electric Co., which were communicated to the defendant and by it to its vendor, the Odbert Coal Co., plaintiff refused to receive further shipments of the screenings. Defendant made a claim against its vendor, the Odbert Coal Co., for damages on account of the defective quality of the screenings delivered to it which was settled March 24, 1925, when the Odbert Coal Co. paid $5,500 for a release.

The controlling question upon the prior appeal to this court was whether the trial court had erred in admitting parol evidence tending to show that defendant had warranted the quality of the screenings to be delivered to it, and that the sale had been made by sample, and that the screenings delivered did not comply with the quality as warranted or with the sample furnished. The trial court held that by making a claim against the Odbert Coal Co. and finally settling with it, defendant made an election of remedies which precluded it from recovering on its claim of offset.

This court held that the written contracts were incomplete and that the parol evidence and the evidence as to the claim made against a settlement by defendant with the Odbert Coal Co. was properly received, and it sustained the findings of the trial court. The Supreme Court was of a contrary opinion. It held that the trial court erred in receiving the parol evidence and stated:

“It is contended by plaintiff that as this cause was tried by the court without a jury, the court would be presumed to have disregarded all incompetent evidence and to have based its findings and judgment only upon the competent evidence, and that this court is bound by the findings of fact of the Appellate Court and can only here consider questions of law. Such findings of fact, however, can be inquired into in this court where there is no evidence in the case upon which to base the findings. (Toffenetti v. Mellor, 323 Ill. 143.) Where a trial is had before the court without intervention of a jury, errors in the admission of evidence, if they exist, do not require a reversal where there is in the record competent evidence to justify the finding of the court. (Merchants’ Despatch Transportation Co. v. Joesting, 89 Ill. 152; Pratt v. Davis, 224 id. 300.) In the instant case, however, there is no competent evidence to justify the finding of the court. The uncontradicted evidence showed the making of the contracts, the breach thereof by plaintiff, the readiness, willingness and ability of defendant to supply the coal to plaintiff, and damage resultant to defendant by reason of plaintiff’s breach of the contracts. The record shows that both the trial and Appellate Courts entirely disallowed defendant’s claim for damages, and that there was no competent evidence in the record upon which to base the judgment of the municipal court. ’ ’ In conformity with this ruling of the Supreme Court, the trial court excluded all the evidence of defendant tending to show the alleged defective quality of the screenings delivered by defendant to plaintiff. The court also excluded the evidence offered by plaintiff tending to show the purchase by defendant from the Odbert Coal Co. and by the Odbert Coal Co. from the Black Servant mine of the screenings in question and the evidence of the claim made by defendant against the Odbert Coal Co. and settlement of the same for $5,500. Plaintiff contends that this latter evidence was erroneously excluded, while defendant contends that under the ruling of the Supreme Court the law of the case had been settled and that it would have been error to admit such evidence. Plaintiff again insists, citing Birdsell Mfg. Co. v. Oglevee, 187 Ill. 119; 20 Corpus Juris 3, that the court erred in excluding this evidence tending to show an election of remedies, and it urges, citing Pittsburg, C., C. & St. L. Ry. Co. v. Gage, 286 Ill. 213, that the Supreme (3ourt was without power to determine an issue of fact upon which the parties were entitled to a trial by jury, and that upon the remandment of an action at law for a new trial, the views expressed in the opinion of the Supreme Court are not binding on a question of fact. Such is the law as stated in the opinion cited, but when the question arises as to whether a given state of facts raises an issue of fact or one of law, the decision of the Supreme Court is binding upon this court, and where that court in a given case has assumed jurisdiction as a matter of law, it is not for this court to say that the Supreme Court acted beyond its jurisdiction. It is true that the opinion of the Supreme Court did not discuss the question of law raised by plaintiff upon the facts which, plaintiff contends, showed as a matter of law that defendant had made an election of remedies which precluded it from maintaining its claim of offset. This court in its opinion suggested from its viewpoint the importance of that matter as an issue of fact, and with this opinion as well as the briefs of plaintiff before it, the Supreme Court made the statement above quoted. The evidence plaintiff offered was not materially different from that which was received on the former trial, and if that evidence as a matter of law could be construed as plaintiff contends, then it seems to us the Supreme Court must have affirmed instead of reversing the judgment. As we understand the opinion of the Supreme Court, it declared this evidence when admitted on the former trial immaterial and incompetent. We must therefore hold that the trial court did not err in excluding it.

Plaintiff has also argued here at great length that the trial court erred in the matter of the assessment of defendant’s damages under its claim of set-off. Upon the authority of the leading case of Sisson v. Cleveland & T. R. Co., 14 Mich. 489, as approved by the text books (see Chamberlayne on Evidence, vol. 3, sec. 2099-C; Jones on Evidence, 2nd ed., vol. 4, sec. 1754; 10 R. C. L. 1167, Evidence sec. 367; 22 Corpus Juris 187; 43 A. L. R. 1192) and as approved by this court in Pass v. Briggs & Turivas, 231 Ill. App. 214; and Bushnell v. Curtis, 236 Ill. App. 89, as well as the decisions of the courts of other States, Weigel v. Powers Elevator Co., 49 N. D. 867, 194 N. W. 113; Webber v. Umback, 125 Kan. 117, 263 Pac. 786, plaintiff argues that evidence which it offered as to daily quotations of prices in the Chicago Journal of Commerce should have been accepted by the court as indicating the actual value of the coal which plaintiff refused to accept at the times mentioned. The parties seem to agree that the amount of damages was to be determined in conformity with section 64 of the Uniform Sales Act, Cahill’s St. ch. 121a, 67 (Smith-Hurd’s Ill. Rev. Stats, ch. 121%, sec. 64, p. 2580) which in its several paragraphs states in substance that the measure of damages in such cases is the estimated loss directly and naturally resulting in the ordinary course of events from the buyer’s breach of contract, and that where there is an available market for the goods in question the measure of damages is, in the absence of special circumstances, showing proximate damage of a greater amount, “the difference between the contract price and the market or current price at the time or times when the goods ought to have been accepted.”

The trial court received in evidence the daily quotations from the Journal of Commerce, and evidence as to all the actual sales of coal screenings which had been made by the Black Servant mine during the period in question was also received. Defendant also offered and the court over objections received proof of similar market transactions in other screenings. Evidence was also received as to the manner in which the quotations and trade reports of the Journal of Commerce were made up, and there was evidence tending to show that the reports did not refer to sales of the same kind of coal screenings nor amounts similar to those involved in this suit. There was evidence tending not only to impeach the source from which these were derived, but also to show that these quotations were not usually relied upon or considered trustworthy by the trade. It is true, as plaintiff points out, that the opinion of the witnesses disclosed wide divergence as to the market price of these coal screenings at the time they should have been accepted, the different items of evidence indicating a variance of from $33,865.88 to $61,646.92. Plaintiff insists that under these circumstances this court should hold that it was the duty of the trial court to accept the prices as shown by the daily quotations in the Journal of Commerce. The price of a given article in a given market is most satisfactorily determined by what a buyer not compelled to buy would be willing to give and a seller not compelled to sell would be willing to take for a given article at a given time (Parson v. Buder, 187 Ill. App. 318), and the best test of a market Amine is the price realized from such sale (Wigmore on Evidence, vol. 1, sec. 462, p. 844; 10 R. C. L. 955; Parmenter v. Fitzpatrick, 135 N. Y. 190, 31 N. E. 1032; Budd v. Van Orden, 33 N. J. Eq. 143; Ommen v. Talcott, 175 Fed. 259, 260; Northwestern Fuel Co. v. Mahler, 36 Minn. 166). Illinois cases, numbers of which might be cited, are to the same effect (Hasler Co. v. Griffing Florida Orchard Co., 133 Ill. App. 635; Johnson v. Canfield-Sivigart Co., 292 Ill. 101); the question of market value is a question of fact (Chicago & Northwestern Ry. Co. v. Dickinson, 74 Ill. 249), and where the case is tried by a judge without a jury his findings Avill not be disturbed unless they are clearly and manifestly contrary to the evidence (City of Quincy v. Kemper, 304 Ill. 303; People v. Nagel, 243 Ill. App. 490; Stephens-Adamson Mfg. Co. v. Fireman’s Fund Ins. Co., 257 Ill. App. 443).

The coal in question was purchased and delivery was to be made f. o. b. at the mines, and the trial judge who saw and heard the witnesses received evidence as to the price paid upon actual sales made at the Black Servant mine at the times in question. After listening to all the evidence and Aveighing it, the court decided that these actual sales, better than any other evidence, showed the true market value. We cannot say that his finding is manifestly wrong but are disposed to approve his conclusion.

Defendant, however, earnestly contends that it is entitled to recover interest at the rate of five per cent on the amount found to be due on its offset from April 20, 1925, when the contracts were breached, until the date of judgment, and that the judgment should be modified in this court so as to include such interest. If interest should have been allowed, this would be the proper practice. Dean & Sons, Ltd. v. W. B. Conkey Co., 180 Ill. App. 162; Supreme Lodge of A. O. U. W. v. Zuhlke, 129 Ill. 298; Penn Plate Glass Co. v. J. H. Rice Co., 216 Ill. 567.

This contention requires a construction of section 2 of the Interest Act, Cahill’s St. ch. 74, H2 (SmithHurd’s Ill. Rev. Stats. 1931, ch. 74, p. 1754) which provides:

“Creditors shall be allowed to receive at the rate of five (5) per centum per annum for all moneys after they become due, on any bond, bill, promissory note or other instrument of writing; on money lent or advanced for the use of another; on money due on the settlement of account from the day of liquidating accounts between the parties and ascertaining the balance on money received to the use of another and retained without the owner’s knowledge, and on money withheld by an unreasonable and vexatious delay of payment. ’ ’

In the absence of an express agreement interest at common law is not recoverable, and it is not recoverable except when authorized by the statute. Sammis v. Clark, 13 Ill. 544; Fowler v. Harts, 149 Ill. 592; People v. Franklin Nat. Ins. Co., 343 Ill. 336. Defendant says that upon the first appeal this court held that the damages of defendant were liquidated and that this is now the law of the case by which the court is bound. The question upon that appeal was whether defendant could maintain its claim of offset. The claim was stricken in the trial court. The question before this court simply arose on the pleadings. The proper construction of section 2 of the Interest Act was not involved there, and it was not considered and was not in any way necessary to a decision of the question then before this court. That decision is therefore not controlling. Neither are the cases from other jurisdictions, such as Faber v. City of New York, 222 N. Y. 255, 118 N. E. 609; Demotte v. Whybrow, 263 Fed. 366; Miller v. Robertson, 266 U. S. 243, and Druckman v. Forsyth Furniture Lines, Inc., 22 F. (2d) 59, all of which are cited by defendant. It does not appear that the construction of section 2 of our Interest Act or a similar statute was in any way involved in any of these cases.

There is a line of cases in the Supreme and Appellate Courts of this State, such as Norton Iron Works v. Wilson Steel Products Co., 232 Ill. App. 523, holding in substance that where damages are ascertainable by computation of the difference between the contract price and the market price, interest may properly be allowed. Morris v. Taliaferro, 75 Ill. App. 182, is also cited, but interest was allowed in that case because of a vexatious delay of payment, under which circumstances interest is granted under the statute.

In Driggers v. Bell, 94 Ill. 223, Bell sued Driggers for refusing to take as agreed wheat purchased at $1.50 a bushel. Bell recovered a judgment. The trial court charged the jury that if they found for plaintiff, interest might be allowed. This was assigned for error. The opinion of the Supreme Court said that it was conceded that where the price of the property was paid by the purchaser before default of the seller, the plaintiff might recover interest, but it was contended to be otherwise where the contract price had not been thus paid. The court said, “No reason, on principle, is perceived for such a distinction,” and that in either case the damages were compensation for delay in payment. The statute was not cited nor was any authority.

In Plumb v. Campbell, 129 Ill. 101, the plaintiff recovered a judgment for the default of defendant in taking bonds at a price as agreed. Interest was allowed, and the court held this was not error, citing Driggers v. Bell, supra, and Thomas v. Wells, 140 Mass. 517. The statute was not cited and the Massachusetts case does not cite any statute nor any other authority.

In Murray v. Doud & Co., 167 Ill. 368, the plaintiff sued for damages for default of defendant in taking “bought and sold” notes as agreed, and there was an instruction that the plaintiff might have interest at five per cent on the amount found due. The court said:

“If the ‘bought and sold notes’ constituted a written contract, as it was held in Memory v. Niepert, supra, they did, under our statute interest was recoverable. Morever, the recovery of interest in a case of this character is recognized and sustained in Driggers v. Bell, 94 Ill. 223, and Plumb v. Campbell, 129 id. 101.”

In Laughlin v. Hopkinson, 292 Ill. 80, the action was for fraud and deceit, and the plaintiff recovered a judgment for $15,000. On the trial the court had given an instruction to the effect that interest might be allowed. This was held error. The court said:

“It is therefore apparent that the damages, if any, were not only unliquidated but were wholly incapable of being ascertained by computation.”

In Smith v. Gray, 316 Ill. 488, the plaintiff sued on a construction contract in writing, and the defendant counterclaimed for damages for delay. It was held that interest was properly allowed on the sum due the contractor under the contract but that the instruction that the defendant might have interest on his counterclaim was erroneous, the court saying, ‘ ‘ Such damages claimed by defendant are unliquidated damages, on which no interest is allowable under our statute.”

In Duncan Lumber Co. v. Leonard Lumber Co., 332 Ill. 104, the Duncan Company sued the Leonard Company, claiming that it had sold and delivered lumber to the defendant for which there was due to it $1,219.53. The defendant filed a claim of set-off with an affidavit of merits. The affidavit of merits did not dispute the liability on the claim sued on, bnt alleged that on February 2, 1926, the plaintiff contracted to sell and deliver to the defendant certain other lumber f. o. b. Chicago, which the plaintiff refused to deliver and which the defendant was compelled to purchase in the open market, paying therefor $3,909.92 more than the contract price, leaving the balance due the defendant, after deducting plaintiff’s claim, of $2,690.39. The municipal court, on motion of the plaintiff, struck the defendant’s counterclaim from the files, and defendant electing to stand by its set-off and counterclaim was defaulted and judgment was rendered against it for $1,219.53. The court held that such damages were unliquidated and might not be offset. As we understand the statute in a case of this kind, the damages must be first liquidated, or, second, of such a nature as to be the subject of computation, otherwise interest thereon may not be allowed. The reason for the rule is that the opposite party, where the damages are neither liquidated nor subject to exact computation, is not able to ascertain the exact amount which is due and therefore is not able to make a tender of the same. The opinion of this court upon the first appeal was based simply and solely on the pleadings. It did not purport to construe the statute on interest.

It is quite impossible, upon this record, to hold that the damages were liquidated or that the same could be ascertained by a simple and certain computation. As already indicated, defendant offered evidence tending to show seven different sums as the damages which it had sustained, and these ranged in amount from $33,865.88 to $61,646.92. The plaintiff offered evidence, which was received, tending to show that the amount of damages was only $10,730.40. Thus the parties submitted evidence tending to show eight different sums as indicating the damages sustained, and no two of these eight sums are alike. We cannot hold that such damages were liquidated or could be ascertained by an easy and certain computation.

The judgment of the trial court is affirmed.

Affirmed.

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


author: Mr. Justice Hatchett

text:
    Samuel L. Steinberg, as Trustee Under Trust Agreement No. 25, Appellant, v. Kloster Steel Corporation, Appellee.
    Gen. No. 35,717.

      Opinion filed March 28, 1932.
    Bernard J. Brown, for appellant.
    Winston, Strawn & Shaw, for appellee; Harold A. Smith and Anthony L. Michel, of counsel.
   Mr. Justice Hatchett

delivered the opinion of the court.

Plaintiff caused a judgment by confession on a lease to be entered against defendant for the sum of $3,583.30, the amount of rent which had accrued under the terms of the lease for 10 months, llamely, from October 1, 1930, to July 1, 1931. The lease was dated July 16, 1929, and the judgment was entered on July 12, 1931. On July 31 thereafter defendant made a motion that the judgment be set aside. The motion was supported by an affidavit which set up a defense upon'the merits, and on August 19, 1931, an order was entered that the judgment confessed should be opened and defendant given leave to appear and defend and that the judgment should stand as security and the affidavit filed in support of the motion should stand as an affidavit of merits. The cause was tried by the court. There was a finding in favor of defendant and judgment for costs, against plaintiff, which he seeks to reverse by this appeal.

It is urged that the court erred in receiving evidence offered by defendant over plaintiff’s objection, but as the trial was by the court, this assignment of error, even if well taken, would not require a reversal, if (as we hold here) there is other competent evidence in the record sufficient to sustain the finding.

The defense set up in the affidavit of merits was in substance that of payment, and the facts in connection therewith were stated to be that on July 12, 1927, Jesse M. DeBeck was the owner of the leased premises and that on that date he executed a certain junior trust deed to Samuel II. Rosenthal as trustee to secure the payment of 30 principal promissory notes of even date, duly signed and delivered, for the sum of $7,000; that notes numbered 1 to 29, inclusive, for $125 each, were due and payable beginning on August 12, 1927, and every month thereafter, and note No. 30 for $3,375 was due and payable on or before January 12, 1930, with interest at six per cent per annum, payable at the office of the trustee or at any other place which he might appoint.

This trust deed contained the following paragraph:

“It is Further Agreed, That as further and additional security hereto said grantors agree to assign and by these presents, do assign, all the rents, issues and profits arising or to arise out of said premises to the said grantee herein and authorize him, in his own name, as assignee or otherwise, to receive, sue for or otherwise collect such rents, issues and profits, to serve all notices which may be or become necessary, to institute forcible detainer proceedings, to receive possession, to rerent and re-lease said premises, or any portion thereof, for such term or terms and on such conditions as he may deem proper, and apply the proceeds thereof, First, to the payment of the expenses and charges against said property; Second, to the payment of interest and expenses of this trust’including advancements, if any, and, Third, to the payment of the principal sum hereby secured, rendering the over-plus, if any, to the undersigned when the indebtedness hereby secured shall have been fully paid and can-celled.” This trust deed was duly delivered and recorded in the recorder’s office, of Cook county. The equity in the property was conveyed by DeBeck to plaintiff, who thereafter leased the premises to defendant for a term and upon the reservation of rent to be paid, as set forth.

The affidavit of merits also avers that the Madison & Kedzie State Bank became the owner and holder of notes Nos. 9 to 30, inclusive, falling due on the 12th day of each month beginning April 12, 1928, to and including January 12, 1930, prior to the maturity of the notes; that although demand for payment of these notes was made, neither principal nor interest was paid; that there is due and owing from the maker of the notes to the Madison & Kedzie State Bank the principal amount of said notes, plus interest; that the trust deed also provides that in case of default and foreclosure “the grantor waives all right to the possession of and income from said premises pending such foreclosure proceedings, and until the period of redemption from any sale thereunder expires.”

The affidavit of merits avers that on June 30, 1930, foreclosure proceedings were instituted in the circuit court of Cook county and that on that date the Madison & Kedzie State Bank entered into possession of the premises and under and by virtue of the provisions of the trust deed, collected the rents from the premises from defendant which are claimed in plaintiff’s statement of claim; that such payment by defendant to the Madison & Kedzie State Bank was a complete discharge of its obligation to pay rent under the lease.

It was stipulated upon the hearing that the sum for which judgment was confessed was the amount of rent payable under the lease at the time and that no part of that amount had been paid to plaintiff. Plaintiff was represented by Mr. Brown and defendant by Mr. Smith. The following colloquy occurred:

“Mr. Brown: We will stipulate the facts set out in your petition, except the conclusions of law, are true.

Mr. Smith: That is right.

Mr. Brown: In other words, we stipulate all the facts set out in your petition, except the conclusions of law, are the facts in the case so far as the defendant is concerned.

Mr. Smith: We do not have to offer any evidence.

Mr. Brown: That is right. You do not need to.

Mr. Smith: Well, there is just one thing. I want to show that the Madison & Kedzie State Bank in this case was in possession as the agent of the trustee under that mortgage; that the trustee told the bank to go into possession and collect the rents.

The Court: The payment by the defendant to the Madison Kedzie State Bank was a complete discharge of its obligations to pay rent under the lease, and you rely upon that. You rely for that statement upon the order issued by the Circuit Court in the foreclosure proceeding.

Mr. Smith: Yes. There was no specific order directing them to pay, but under this mortgage they went into possession and collected the rent.

Mr. Brown: It purely becomes a question of law whether they had the right to take possession under the trust deed. There was no order.”

Thereafter, the trustee was called as a witness and undertook to testify in regard to a conversation with a person at the Madison & Kedzie State Bank. In the course of that examination, the following took place:

“Mr. Brown: Not only that, your Honor, but if counsel will try to understand my simple English, I stated that I will admit all the facts pleaded in the affidavit of defense, except the conclusions of law. That eliminates any necessity of putting on any witnesses.

The Court: Was there any money due and owing on these notes on July 16, 1930?

Mr. Brown: Your Honor, I have admitted in my stipulation.

The Court: That there was.

Mr. Brown: I stipulated that every fact alleged in the petition in support of the motion to vacate that judgment is admitted by the plaintiff, except the conclusions of law.

Mr. Smith: All right.

Mr. Brown: Now, then, I thought that would eliminate the necessity of any witnesses being introduced.

Mr. Smith: All right.

Mr. Brown: If you want to go to trial on that, I won’t cross-examine your witness. Strike out the testimony and go to the question of law.

Mr. Smith: The only thing I wanted to offer in

addition to that was to show how the Madison & Kedzie Bank went into possession,

Mr. Brown: Y on have pleaded how. I thought we admitted.

Mr. Smith: No, I have not stated that they went into possession under authority given by this man.

The Court: This man is trustee.

Mr. Smith: That is right.

The Court: Under that trust deed.

Mr. Smith: That is right.

The Court: This evidence may stand.

Mr. Brown: That is all.

Mr. Smith: That is all. Now with the admission

that all the things in the affidavit are true, that is my case. ’ ’

Such being the state of the record, we think that it must be conceded as facts that the Madison & Kedzie State Bank went into possession of these premises under and by virtue of authority by Rosenthal, the trustee named in the trust deed, on June 30., 1930, and that the bank thereafter remained in possession and collected the rents as provided for by the lease for and in behalf of the trustee. The sole question for our decision therefore is whether the payment of these rents to the mortgagee and agent of the trustee in possession was right and legal and a proper payment which exonerates the lessee from making any other or further payments to the lessor.

Plaintiff urges the proposition that the bank was without authority to collect the rents under the terms of the assignment contained in the trust deed, and he cites to this point St. Louis Union Trust Co. v. Wabash, Chester & Western R. Co., 258 Ill. App. 9, in which case the opinion states, “It is a well-settled rule of law that a mortgagor is entitled to the rents and income from the mortgaged property for his own use until a receiver is actually appointed,” and Rohrer v. Deatherage, 336 Ill. 450, where the court in substance stated that the inclusion in a mortgage of the rents, issues and profits of the land “would not alone deprive the mortgagor of the right to receive the rents for his own use until the mortgagee took some steps to enforce his lien upon the rents and profits.” Neither proposition has ever been questioned. Frank v. Siegel, 263 Ill. App. 316. In the St. Louis Union Trust Co. case, it does not appear whether the trust deed assigned the rents, issues and profits but it does appear that the same were conveyed by the mortgage under consideration in the Rohrer case. This court has consistently held that such conveyance of the rents and profits of land to a trustee by way of security for an indebtedness is valid and legal and that the rents and profits when so conveyed “constitute a primary fund equal with the land for the payment of the debt.” (Greenebaum Sons Rank & Trust Co. v. Kingsbury, 248 Ill. App. 321.) It is not necessary to again discuss the long line of authorities cited in the opinion filed in the Greenebaum case. Where rents and profits are thus assigned as security the rights of the trustee, or the mortgagee, are not exclusively by way of an appointment of a receiver, although it is undoubtedly true that until the mortgagee, or the trustee, has taken affirmative steps to enforce his lien upon the rents and profits, the mortgagor, even after condition broken, is entitled thereto. That is the holding as we understand it in the Rohrer case which again recites the well-established law that after condition broken the mortgagee is as between him and the mortgagor the owner of the fee; that the mortgagor cannot make a lease of the mortgaged premises which will give greater rights than he himself possesses or interfere with the right of the mortgagee to enter under condition broken.

As was stated in the opinion in that case:

“Upon default in the condition of the mortgage the mortgagee has the right to possession against the mortgagor, his grantee, lessee or anyone claiming under him by any right. In such case the mortgagee has several remedies which he may pursue to enforce the payment of his debt. He may sue the mortgagor in assumpsit for a judgment upon the personal obligation; he may sue in equity for the foreclosure of the mortgage; or he may recover the possession of the mortgaged property by an action of ejectment. These remedies are concurrent or successive, as the mortgagee may deem proper, and he may pursue any two or all three of the remedies simultaneously. (Bradley v. Lightcap, 202 Ill. 154; Fish v. Glover, 154 id. 86; Harper v. Ely, 70 id. 581; Rogers v. Meyers, 68 id. 92; Carroll v. Ballance, 26 id. 9; Vansant v. Allmon, 23 id. 26.)”

Plaintiff also contends that the Madison & Kedzie State Bank had no authority to take possession of the premises after the bill to foreclose the trust deed had been filed, citing in support of this contention the same cases. The rights of a trustee (under a trust deed) to whom an assignment of the rents, issues and profits was made, have received careful and quite thorough consideration in the recent case of Altschuler v. Sandelman, 264 Ill. App. 106, where it was in substance held that the right of a mortgagee to the possession of premises after condition broken was of such nature that he had a right to take possession even as against a receiver appointed by the court on a bill filed by a junior mortgagee. We think there can be no doubt of the right of the Madison & Kedzie State Bank to take possession of the premises at the request of the trustee after default by the mortgagor.

Plaintiff also contends that there was no evidence tending to show that anything was due on the debt and cites authorities to the effect that the title which such trustee or mortgagee takes is held as security for the debt and that when the debt is paid the rights of the grantee are at an end. Bradley v. Lightcap, 201 Ill. 511; Theiner v. Speckin, 290 Ill. 181. There is no doubt of that proposition of law, but the facts set up in the affidavit of merits, which plaintiff stipulated were true, are to the effect that this indebtedness was not paid.

Plaintiff also contends that the payment of the rent to the bank would not discharge defendant for the reason, as he says, that the evidence fails to show affirmatively that the bank was the holder of the indebtedness. It stood in the position of a mortgagee actually in possession, and its rights, so far as this record shows, were unquestioned from the day it took possession.

We hold on the undisputed facts that the defense of payment was established. The judgment will therefore be affirmed.

Affirmed.

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


author: Mr. Presiding Justice G-rtdley

text:
    In re Estate of Selma Wedelius, Formerly Insane, Now Deceased. Calumet National Bank, Administrator De Bonis Non of Said Estate, Appellee, v. South Chicago Savings Bank, Appellant.
    Gen. No. 35,422.

      Opinion filed April 5, 1932.
    Schnackenberg & Hansen, for appellant; Elmer J. Schnackenberg, of counsel.
    Haight, Adcock, Banning & Fathchild, for appellee.
   Mr. Presiding Justice G-rtdley

delivered the opinion of the court.

In January, 1931, the Calumet National Bank, as administrator de bonis non of the estate of Selma Wedelius, deceased, filed in the probate court of Cook county its verified petition to discover assets against the South Chicago Savings Bank, an Illinois banking corporation (hereinafter called the Savings Bank), to which petition the Savings Bank filed its verified answer. On April 24, 1931, after a hearing, the probate court entered an order dismissing the petition, from which order the Calumet Bank appealed to the circuit court where, during July, 1931, there was a trial de novo, resulting in the court entering an order or judgment on July 29, 1931, wherein the Savings Bank was directed “to transfer and deliver” to the Calumet Bank, as administrator, “a certain principal note in the amount of $10,000, signed by John Chimoures and wife, dated March 11, 1926, secured by a trust deed on real estate in Cook county, Illinois, together with the trust deed, insurance policies, evidences of title and all other papers accompanying said note; also a principal note signed by Calumet National Bank, as trustee, in the amount of $4,000, dated May 9, 1930, and secured by trust deed on real estate in Cook county, together with the trust deed, insurance policies, evidences of title and all other papers accompanying said note (said last mentioned note being one heretofore substituted in place of a certain note made by Wellington B. Mitchell and wife, dated December 15, 1926, in the amount of $4,000).” From this order or judgment the Savings Bank appealed.

There is no dispute as to the facts, which are in substance as follows:

For many years one Niel Lykke conducted a real estate and loan business in South Chicago, and for about 10 years he was in the habit of borrowing considerable sums of money from the Savings Bank on his individual notes, secured by collateral. The collateral usually consisted of notes, with interest coupons attached, executed by third persons and secured by trust deeds on real estate together with accompanying papers. If a loan was paid when due the collateral was surrendered to him; if a loan was renewed the collateral was retained; on occasions certain collateral was withdrawn and other collateral substituted therefor. The aggregate amounts of the loans made to him varied at different times from $3,000 to $45,000. He also maintained an individual deposit account with the bank. During his lifetime he acted as conservator in the probate court of the estate of Selma Wedelius, insane, and upon her death as administrator of her estate. He died on July 31,1930. For about two years prior thereto he was one of the directors of the Savings Bank.

On April 7,1930, Lykke borrowed from the Savings Bank the sum of $3,000, and gave to it his individual note for said sum payable on demand to the order of the bank, and as security therefor deposited with the bank the promissory note of Wellington B. Mitchell and wife for $4,000, dated December 15, 1926, payable 5 years after date, and secured by a trust deed on certain real estate. Some time during May or June, 1930, Lykke substituted for the Mitchell note, etc., a note of the Calumet Bank, as trustee, for $4,000, dated May 9, 1930, payable to bearer on December 15,1931, and likewise secured by a trust deed on certain real estate. On June 21,1930, Lykke borrowed from the Savings Bank the further sum of $5,000, and gave to it his individual note for said sum, payable 90 days after said date to the order of the bank, and as security therefor deposited with the bank the promissory note of John Chimoures and wife, dated March 11,1926, for $10,000, payable five years after date to the order of John Chimoures, and by him indorsed in blank, and secured by a trust deed on certain real estate. This was the first time that the Chimoures note had come into the possession of or to the notice of the Savings Bank. The Mitchell note, for which said substitution was made, had been in the bank’s possession, on two prior occasions in 1927, as collateral security for other loans to Lykke. On all these transactions, wherein loans were made to him and collateral securities therefor deposited with the bank, said transactions were consummated on behalf of the bank solely through its president, Warren W. Smith. A vice president of the bank, Arthur H. Hansen, was a brother-in-law of Lykke, but Hansen did not act for the bank in any of said transactions with Lykke, and he (Hansen) never knew anything about the Mitchell, Calumet Bank or Chimoures notes until after Lykke’s death.

When the Mitchell, Calumet Bank and Chimoures notes, and accompanying papers, were delivered to Smith (acting for the Savings Bank) as collateral security for the bank’s loans to Lykke as aforesaid, all three notes were complete and regular upon their face, and had not yet matured, and the Savings Bank had no actual notice or knowledge of any infirmity in them or of any defect in Lykke’s title thereto, and took them in good faith and for value in the ordinary course of business. After Lykke had received the last loan of $5,000, on June 21, 1930, he owed the bank the total sum of $45,400.

About two months after Lykke’s death, Smith, president of the Savings Bank, consulted attorney Alvin Hansen, of the law firm of Schnackenberg & Hansen, in regard to realizing on said securities. Hansen is the son of said Arthur H. Hansen. Upon examining the two notes (i. e., that of the Calumet Bank, as trustee, and the Chimoures note) and accompanying papers, Alvin Hansen recognized them as belonging to said Wedelius estate, of Avhich Lykke had been acting as administrator, and Hansen as attorney for said administrator. Hansen knew that Lykke, during the lifetime of Selma Wedelius, had as conservator purchased the Mitchell and Chimoures notes for said estate, but he did not know, until after Lykke’s death, that the notes had been pledged by Lykke with the Saving’s Bank as collateral for his own individual indebtedness. While neither said law firm nor Hansen Avas regularly employed by said bank as counsel, it or he occasionally did legal work for the bank, but neither the firm nor Hansen, prior to Lykke’s death, represented the bank, or Avas consulted by it, as regards the Lykke loans or the collateral deposited as security therefor.

When Smith consulted Hansen at the time aforesaid the latter advised him of the facts, and this was the first time that either Smith, as president of the Savings Bank, or the bank had any notice that Lykke was not the real owner of said notes and securities, or that there was such a pending estate as the Wedelius estate. Thereupon Hansen notified the administrator of Lykke’s estate of the facts. Subsequently, on October 24, 1930, the Savings Bank, after due notice, sold at a public sale said securities, and four other securities. The Savings Bank was the purchaser thereof at the sale. After applying the proceeds on Lykke’s total indebtedness to the bank for borrowed money, there was still an unpaid balance due to the bank. The two notes, trust deeds and accompanying papers, mentioned in the order of the circuit court appealed from, are still in the possession of the Savings Bank and it claims to be the lawful owner of the same.

The theory of law upon which the circuit court acted in entering the order appealed from, as we understand it, was in substance that, as Lykke was a director of the Savings Bank at the times he borrowed from it said sums of money in April and June, 1930, and deposited with it said two negotiable notes, etc., as collateral security, and knew that he did not then have good title to said collateral, his knowledge must be imputed to the bank, whereby it cannot be considered to be a holder in due course of said notes, etc.

The main contention of counsel for the Savings Bank, relied upon for a reversal of the judgment, is that it is the law in Illinois in substance that, where a bank acquires negotiable instruments, complete and regular upon their face and payable to bearer, in good faith and for value, and without actual notice of any infirmity in the title of the transferor, knowledge of such infirmity will not be imputed to the bank merely because said transferor (who knew of such infirmity at the time of such transfer) was then a director of the bank; where it also appears that in the transactions by which the bank acquired the instruments it was represented by an officer who had no notice or knowledge of such infirmity, and the transferor in the transactions was acting only for himself and not in the interest of the bank. We are of the opinion that the contention is a sound one, applicable to the undisputed facts of the present case. (See sections 52, 55 and 56, Illinois Neg. Inst. Law, Cahill’s St. 1931, ch. 98, ¶¶ 72,75,76, p. 1954; Higgins v. Lansingh, 154 Ill. 301, 387-8; Seaverns v. Presbyterian Hospital, 173 Ill. 414, 421; Home Savings & State Bank v. Peoria Agricultural & Trotting Society, 206 Ill. 9, 13-14; Alimon v. Salem Building & Loan Ass’n, 275 Ill. 336, 344; Metcalf v. Draper, 98 Ill. App. 399, 405-6; Mutual Investment Co. v. Wildman, 182 Ill. App. 137, 144; Sherman State Bank v. Smith, 244 Ill. App. 171, 175-6.) In the present case Lykke, who was at the times of the transactions mentioned a director of the Savings Bank, did not act for the bank therein but in his own interest and adversely to the bank. And said transactions were conducted on behalf of the bank, by its president, Warren W. Smith, and he then had no notice or knowledge, nor did the bank, of the infirmity of Lykke’s title to the negotiable instruments now in controversy.

Counsel for petitioner, in their printed brief here filed, admit that it was the law that “notice to an agent is not imputed to a corporation when the agent in the particular transaction in question is acting solely on his own behalf and, as it is sometimes stated, adversely to the corporation.” But they state: “We submit, however, that such rule of law no longer obtains in the State of Illinois since the case of Simmons v. Roseland Security Vault Co., 331 Ill. 563, was decided.” And they particularly rely upon one sentence contained in the opinion in that case on page 574, viz.: “Notice to a director of a corporation is notice to the corporation.” But after examining the facts of that case, as disclosed from the opinion, and considering the holdings and decision therein, we do not think that any radical departure from the prior Illinois decisions above mentioned was intended, or that there was such a departure. (See Mayer v. Erhardt, 88 Ill. 452, 457.) Furthermore, in the opinion in the case of Neagle v. McMullen, 334 Ill. 163,181 (decided since the Simmons case), a principle of law, enunciated in the above cited Higgins and Seaverns cases, applicable to the facts of the present case, is restated, viz.: “Notice to an agent is not notice to the principal where the facts in the possession of the agent authorize the inference that he will conceal the information from his principal. ’ ’ Furthermore, in the still later case of United States Cold Storage Co. v. Central Mfg. Dist. Bank, 343 Ill. 503, our Supreme Court, quoting with approval from an opinion in a California case, says in part (p. 516) : “But charging a principal with knowledge merely because such knowledge is possessed by an agent and charging him with acts done by the agent within the scope of his authority are not the same thing, and it is only in the latter case that the principal may be bound by the uncommunicated information or intent of the agent when such information or intent is hostile to the principal. ’ ’

Counsel for petitioner further contend that the present case “is not governed by the Negotiable Instruments Law, but depends upon the law relating to the assignability of mortgages,” and that “under such law, if the bank had sufficient knowledge to put it on inquiry, actual knowledge need not be shown.” We cannot agree with the contentions. We think that the sections, above cited, of our Negotiable Instruments Law are here applicable. The notes involved are negotiable instruments. The mere fact that they were secured by trust deeds does not affect the right of the Savings Bank to be-protected as an innocent purchaser of the notes, for value, and before maturity. (Zollmann v. Jackson Trust & Savings Bank, 238 Ill. 290, 294; Humble v. Curtis, 160 Ill. 193, 202; Drouineau v. First Nat. Bank of Marion, 244 Ill. App. 251, 255.)

And we do not think that, under the undisputed facts, there is any merit in petitioner’s counsel’s further contention that the judgment of the circuit court should be sustained, because of “the well known equitable maxim that, where one of two innocent persons must suffer loss, the one who trusted the wrongdoer must bear the loss.” This so-called maxim is referred to in 21 Corpus Juris, sec. 176, pp. 1170-72, in the article on “Estoppel.” It is there said: “Wherever one of two innocent persons must suffer by the acts of a third, he who has enabled such third person to occasion the loss must sustain it. Equity will not postpone the interest of one who has omitted no duty devolving on him to the interests of another whose negligence made it possible for the loss to occur.” We fail to see the applicability of the maxim or principle of law to the present case, where no negligence whatever on the part of the bank, or its president, in accepting the collateral in question as security, was shown. In the case of Toledo, W. & W. Ry. Co. v. Gilvin, 81 Ill. 511, cited by petitioner’s counsel in support of their contention, it is said (p. 517): “When one of two innocent persons must suffer by the knavery of a third, the party who trusted the knave must be the sufferer. It was gross negligence in the railway company to issue to Smith a bill of lading for grain without first having the possession and control of the grain. The loss sprang from this negligence, and not from any default of defendant.”

For the reasons indicated the order or judgment of the circuit court of July 29, 1931, is reversed, because of error of law on the undisputed facts.

Reversed.

Kerner and Scanlan, JJ., concur.