author: Mr. Presiding Justice Gridley

text:
    Chicago Assets Company, Defendant in Error, v. Austin A. Watrous et al., Defendants. Slater C. Brockman and Anna M. Brockman, plaintiffs in Error.
    Gen. No. 34,486.

      Opinion filed June 26, 1931.
    Mecartney & Duet, for certain plaintiffs in error; Luther F. Binkley, of counsel.
    Harper E. Osborn, for defendant in error.
   Mr. Presiding Justice Gridley

delivered the opinion of the court.

To reverse a foreclosure decree, entered on May 2, 1930, following the recommendation of a master, this writ of error was sued out on May 29, 1930, by Slater C. Brockman (a bachelor) and Anna M. Brockman (a widow and mother of Slater C. Brockman), two of the defendants to the bill and hereinafter referred to as the Brockmans. No supersedeas was applied for. On February 19, 1931, an order of severance was entered and the Brockmans were given leave to prosecute the writ of error alone.

In complainant’s bill, filed December 17, 1928, it is alleged that on March 30, 1928, Watrous and wife executed and delivered their promissory note for $20,000, payable to the order of themselves and by them indorsed, by which they promised to pay said sum as follows: $300 on April 30, 1928, and $300 on the 30th day of each and every month for four months succeeding, and final payment of $18,500 on September 30, 1928, with interest thereon at the rate of 6 per cent per annum, payable monthly on the 30th day of each month on the whole amount of the principal sum remaining from time to time unpaid, and with interest on each instalment after maturity at the highest lawful rate; that to secure the note and interest they on the same day executed and delivered their trust deed, conveying to the Chicago Title & Trust Co., as trustee, certain improved real estate (describing it) in the Village of Oak Park, Illinois; that the trust deed, recorded March 31, 1928, contained covenants usual’ in such deeds (some of them enumerated); that it was recited that the deed was “subject to a prior trust deed to Garfield State Bank of Chicago, dated March 29, 1928, given to secure an indebtedness of $125,000”; that complainant is the legal holder and owner of the $20,000 note; that there has been paid on account of principal $1,750,- — leaving a balance due to complainant of $18,250, together with interest at the rate of 7 per cent from September 30, 1928; that on October 15, 1928, complainant was obliged to pay and did pay $3,750, interest due on said prior trust deed, to protect its lien; that on May 9,1928, the grantors in the trust deed conveyed by warranty deed the premises to the Brockmans in joint tenancy, which deed was recorded on May 11, 1928; that it was provided therein that the grantees (the Brockmans) “assumed and agreed to pay the indebtedness secured by the trust deed herein being foreclosed and also said first mortgage indebtedness”; that on May 9, 1928, the Brock-mans conveyed the premises to the Central Oak Park State Bank, to secure an indebtedness of $5,000, but that its right or interest in the premises by reason of the conveyance is subsequent and inferior to complainant’s lien; that to further secure the $20,000 indebtedness Watrous and wife made a written assignment to Homer H. Schneider (president of complainant) of the rents and profits arising from the premises, which assignment was dated on March 30, 1928, and recorded on October 2, 1928; that the premises are only partially rented and are poorly managed; and that the rents are not sufficient to pay interest, taxes, insurance, repairs and other necessary expenses.

The bill prayed for an accounting, a receiver and a foreclosure of the trust deed, and also that a deficiency decree be entered against the Brockmans, in case the premises should not sell for a sum sufficient to pay the indebtedness due to complainant, interest, solicitors’ fees, costs, etc.

On December 21, 1928, the Chicago Title & Trust Co. was appointed receiver of the premises. The Brockmans, Watrous and wife and the Central Oak Park State Bank filed answers. Other defendants were defaulted. In the original answer of the Brock-mans, filed February 7, 1929, after denying certain allegations of the bill, they alleged as defenses (a) that the $20,000 note was usurious, and (b) that in the deed of the premises to them from Watrous and wife, dated May 9,1928, they did not assume and agree to pay said indebtedness. They further alleged that they purchased the premises from Watrous and wife “under a contract for sale, which contract was closed and consummated through the escrow department of the Chicago Title & Trust Co.”; that Watrous and wife, or parties acting for them, “with intent to defraud these defendants, caused to be placed on record a deed conveying the premises to these defendants, and fraudulently and maliciously inserted in such deed various statements purporting to be to the effect that the grantees (these defendants) assumed and agreed to pay certain alleged obligations, and that these defendants first received notice of such fraudulent and malicious act through the bill filed herein.” Subsequently the Brockmans filed an amended answer, and also a cross-bill making similar allegations. Theo. Ebért & Co., a corporation, by leave of court, filed an answer in the nature of an intervening petition, wherein it claimed, by virtue of a contract with the Brock-mans, a mechanic’s lien on the premises. On April 9, 1929, the cause was referred to a master to take proofs and report the same, together with his conclusions on the law and the evidence. Commencing on April 19, 1929, and ending on November 15, 1929, there were numerous hearings before him at which considerable oral, and documentary evidence was introduced.

On February 4, 1930, the master filed his report in. which, after making numerous findings, he stated that on behalf of the Brockmans it was contended that they “never inspected” the warranty deed (dated May 9, 1928) of the premises to them, and that they “are not bound by the statements in said deed”; that on behalf of the Title & Trust Co. testimony was offered to the effect that said deed “was examined both by said Slater C. Brockman and by his attorney at the time of the making of the original escrow agreement”; and that “If the defendants (the Brockmans) and their attorney failed to examine the deed of conveyance, whereby the property was conveyed to them, but relied upon their escrow agent (Title & Trust Co.) to protect their interests in the matter, and thereafter went into possession of the premises under and by virtue of the deed in question, it is incumbent upon them to show by a clear preponderance of the evidence that the deed in question is not in accordance with the agreement made by them. They have shown that the words in said deed, ‘Slater C. Brockman and Anna M. Brock-man, not as tenants in common but in joint tenancy, ’ and the words ‘City of Chicago’ in the following line, were not typewritten in said deed upon the same typewriter used in typewriting the remainder of said deed, but that proof in itself is not sufficient, in my opinion, to prove anything but that the names and the words in question were inserted after the deed was originally written. It is clear from the testimony, however, that those words were in the deed in question at the time the same was executed by said Austin A. Watrous and Sadie L. Watrous and at the time of the delivery of the deed to the Chicago Title and Trust Co.

“I therefore find that the cross-complainants have failed to prove the allegations of their cross-bill of complaint by a preponderance of the evidence and I recommend that the cross-bill ... be dismissed as without equity.

“I further find that all the material allegations of complainant’s bill have been proven and are true, and that complainant is entitled to the relief therein prayed. I therefore recommend that the usual decree of foreclosure be entered herein in accordance with the prayer of such bill and the findings of this report.”

The overruled objections of the Brockmans to the report were ordered to stand as exceptions before the court. On February 25, 1930, on their motion, the court ordered that they be given leave to withdraw their answer, amended answer and cross-bill and to file a “second amended answer,” all without prejudice, and that complainant’s replication stand as such to the second amended answer.

This answer is lengthy. Some of the allegations are that on April 30, 1928, the Brockmans and Watrous executed a written contract whereby the Brockmans were to convey to Watrous two (2) pieces of improved real estate in Chicago and to pay to him the sum of $2,500 in cash, in consideration of the conveyance by him to them of the premises in question, subject to two (2) mortgages (i.e,, said first mortgage of .$125,000 and the mortgage herein being foreclosed); that complainant had agreed to loan to Watrous $19,000, taking as security therefor a note of $20,000, dated March 30, 1928, and secured by the trust deed herein sought to be foreclosed; that Homer H. Schneider, president of complainant, knew of the contract between the Brock-mans and Watrous; that, “notwithstanding the fact that said contract did not provide for the assumption of the mortgages by these defendants (the Brock-mans) and provided for a clear title subject only to two (2) mortgages,” Schneider took Watrous’ written assignment of the rents of the premises and he claims to hold the assignment as additional security for complainant ; that Schneider was aware of the law that the $1,000 excess would bring the loan within the Illinois statute in respect to usury; that he “entered into a conspiracy with Watrous” to have the deed conveying said premises contain a clause whereby the Brockmans assumed and agreed to pay said indebtedness and also that said conveyance would be subject to the assignment of rents; that the Brockmans borrowed and received from the Central Oak Park State Bank $5,000 in cash, giving their note for that' amount secured by a trust deed on said premises; that on May 9, 1928, they deposited “a portion” of said loan in another escrow with the Title & Trust Co., — Escrow No. 73075; that there also was deposited the contract between them and Watrous; and that the escrow agreement recited that Watrous therewith handed to the escrowee a warranty deed, conveying the premises, and provided that the deeds deposited therein should be recorded at once.

It is further alleged in the answer that thereafter on May 11, 1928, complainant “without the knowledge or consent” of the Brockmans, deposited in escrow, No. 73022, $18,600, with directions to the escrowee to pay the same to Watrous “upon the indorsement of said note by the Brockmans or their specific assumption of such liability in the deed of conveyance ’ ’; that on the same day there was deposited in said Escrow, No. 73022, a deed from Watrous and wife to the Brockmans “purporting to convey the premises in question and containing a statement that the grantees (the Brockmans) assumed and agreed to pay the two mortgages on the premises”; that the deed was so deposited and recorded “without the knowledge or consent of these defendants” (the Brockmans); that thereafter the Brockmans “entered into possession” of the premises and “paid a considerable amount of money on account of interest and principal on the lien sought to be foreclosed herein”; but that they “never at any time accepted or knew about said deed. ’ ’ They denied that Watrous was indebted to complainant in the sum of $20,000, and alleged that Watrous negotiated a loan for $19,000, agreed to pay a commission of $1,000, and gave his note and trust deed for $20,000, and that said note is usurious and in violation of section 6 of chapter 74 of the Illinois statutes (Cahill’s Stat. 1927, p. 1531). They denied that complainant’s lien was superior to that of the Central Oak Park State Bank, and they prayed that complainant’s bill be dismissed for want of equity.

In the foreclosure decree in question, the court, after making numerous findings, adjudged and decreed inter alia, (a) that the master’s report be approved and confirmed; (b) that the premises be sold at a public sale to be made by the master unless within three days the defendants, or some of them, pay to complainant the sum of $25,468.58 (the sum included $3,000 for its solicitor’s fees), and also pay to Central Oak Park State Bank the sum of $6,097.22, and also pay to Theo. Ebert & Co. the sum of $1,441.04, together with all costs, master’s fees, expenses, etc.; (c) that if the proceeds of the sale be not sufficient to pay the complainant, said bank and said Theo. Ebert & Co. in full, the master shall proceed to take evidence to determine to what extent the labor and materials furnished by Theo. Ebert & Co. enhanced the value of the premises ; (d) that if the remainder of the proceeds be not sufficient to pay said amounts, interest and costs, due to complainant, said bank and Theo. Ebert & Co. in full, they and each of them ‘ ‘ shall be entitled to a judgment for such deficiency as shall be found due to them respectively against the defendants,” Watrous and wife and the two Brockmans, “who are personally liable therefor,” etc.; (e) that the premises shall be sold subject to the lien of the prior trust deed to the Garfield State Bank; (f) that the cross-bill of the Brockmans be dismissed for want of equity; and (g) that the receiver continue to act as such until the further order of the court.

The present transcript does not disclose whether or not after the sale there was a deficiency, but we are informed that at a master’s sale, held on June 3, 1930, the premises sold for $17,500, and that there was a deficiency.

In said decree, among the court’s findings, are that the sums of $300 to be paid upon the principal note of $20,000, each for the months of April, May, June, July and August, 1928, together with interest thereon to August 30, 1928, were duly paid; that when the final instalment of said note, in the sum of $18,500, became due and payable on September 30, 1928, the sum of $250 was paid upon the principal thereof, and interest in the sum of $92.50, up to and including September 30, 1928; that all of said payments were made by the Brockmans, “who up to that time had been in possession of said premises and were collecting the rents”; that after said deed of May 9, 1928, was executed and acknowledged, it was, on that day and in the presence of and with the knowledge and consent of the two Brockmans, handed to the Chicago Title & Trust Co. to be filed for record at once; that when it was so handed to the Title & Trust Co. the two Brockmans “had full knowledge of all the terms and conditions of said deed and accepted the deed”; that thereafter they “entered into possession of said real estate . . ., and commenced to and did collect the rents from the tenants thereof until November 1, 1928; and that under the terms of the deed complainant has the right to a deficiency decree, in ease a deficiency shall be had upon the sale of the premises, against said defendants (the Brockmans).”

The main contention of counsel for the Brockmans is that the finding of the court (that the Brockmans had full knowledge of the terms and conditions of said deed of May 9, 1928, and accepted it with knowledge of the assumption clause in it), is against the weight of the evidence. We cannot agree with the contention. While both of the Brockmans testified in substance that they did not have such knowledge and did not knowingly accept a deed having such an assumption clause in it, the testimony of other witnesses, corroborated by facts and circumstances in evidence, is to the contrary, and clearly establishes, we think, their acceptance of the deed and their ratification of the assumption clause therein' contained. The evidence shows that, in addition to their taking possession of the premises under the deed shortly after its date, and in addition to their collecting the rents and managing the building until about November 1, 1928, the Brockmans paid the aggregate sum of $1,750 on the principal of the mortgage indebtedness in question. These payments, in our opinion, constitute evidence of conduct on their part denoting an acceptance of the assumption clause in the deed. In Ludlum v. Pinckard, 304 Ill. 449, it appears that certain real estate was conveyed to Mrs. Pinckard by a deed, containing an assumption clause similar to the one in the present deed, and there was no evidence of her assent to the clause, or of her knowledge thereof, except the collection by her of the rents and the payment by her of a certain sum on the principal of the mortgage. The superior court decreed, following the master’s finding's, that she had assumed the oblig'ation of paying off the mortgage and was personally liable for any deficiency, etc. The first division of the Appellate Court for this district (221 Ill. App. 135, 138) reversed the decree and remanded the cause with directions to vacate that part of the decree providing for a deficiency judgment against her. The Supreme Court, however, on writ of error, reversed the judgment of the Appellate Court and affirmed that of the superior court, saying (pp. 453-4):

“The evidence shows that by letter she sent a payment of $1,000 on this mortgage .... It does not" appear" that the money came from the rents of the property or from any other source except the personal funds of defendant in error. She contends, however,— and in this she is supported by the Appellate Court,— that this is merely an evidence of a desire on her part to free the property of the lien and not evidence of acceptance on her part of the assumption clause of the deed. With this we cannot agree. In the absence of any proof limiting the effect of such payment, we are of the opinion that it must be taken as an act of assent on her part to the assumption clause of the quit-claim deed to her. This payment undoubtedly establishes actual knowledge on her part of the existence of this mortgage. It also negatives any repudiation of the assumption clause in the deed and constitutes evidence of conduct on her part denoting an acceptance of such clause. It is not necessary, to show an acceptance of such a clause, that the grantee in express language accepted or ratified it. Such may be shown by any facts and circumstances evidencing such acceptance. We think that under the circumstances of this case this payment on the mortgage must be taken as evidence of acceptance of the assumption clause in the deed.”

Another fact or circumstance in the present case, tending to show that the Brockmans regarded the mortgage as their own obligation/is their trip to the office of Homer H. Schneider, president of complainant, in the latter part of September 1928, for the purpose of signing papers for a renewal or extension of the mortgage. It appears, however, that no renewal or extension was consummated because Schneider insisted upon an assignment of the rents of the building and the Brockmans would not consent to give such an assignment. And we think that the holdings in the case of Moran v. Pellifant, 28 Ill. App. 278, wherein Moran (as grantee in a deed containing a provision that he as such grantee would assume and pay a mentioned incumbrance) contended that he had not read the deed and was not aware of the assumption provision, are in point. The court says (p. 282):

“The defendant seeks to avoid the force of this provision in his deed by saying that he did not know it was in his deed, and that he did not read his deed and had it recorded without reading. In the absence of proof to the contrary we must treat defendant Moran as a man having reasonable business qualifications and of reasonable intelligence. In the light of this presumption and the evidence in the case, we regard his explanation of this clause in the deed as wholly insufficient. . . . Nor is it consistent with reason or common experience that men accept deeds without reading them or having them read to them, and so not knowing what land or what title they are getting or what incumbrance they, are assuming. ’ ’

And we do not think there is any substantial merit in the further contention of counsel for the Brock-mans that the court “erred in failing to find that the note and trust deed of Watrous and wife, herein sought to be foreclosed, were without consideration and void as to the Brockmans.” The validity of the trust deed was not questioned in the superior court and should not be allowed to be questioned here. Furthermore, it appears from the contract executed by the Brockmans that it was specially provided that the purchase by them of the property was subject to the lien of the trust deed, and in the escrow agreement it was also provided that said purchase was to be subject to said lien. In Terre Haute Trust Co. v. Wells Whip Co., 210 Ill. App. 602, 607, it is said: “The rule as stated by Pomeroy in his Equity Jurisprudence, sec. 1205, is that: ‘A grantee who thus takes a conveyance subject to a mortgage is presumed to have included the mortgage debt in the purchase price, and is not, therefore, permitted to dispute the validity of the mortgage; in this respect he is in the same position as one who expressly assumes the mortgage.’ ”

Counsel further contend that the court “erred in failing to find that complainant had charged and contracted for interest in excess of 7 per cent per annum to be paid by Watrous on account of the moneys, if any, actually loaned to him on account of the note and trust deed, all of which was in violation of the usury statute.” We cannot agree with the contention because (1) we do not find in the present record sufficient evidence from which to determine whether or not the note and mortgage were in fact usurious, and (2) because we think that, even if the note and mortgage were tainted with usury, the Brockmans by their assumption and agreement to pay the indebtedness secured by said mortgage are precluded from raising the question of usury. In Crawford v. Nimmons, 180 Ill. 143, 147, it is said: “The privilege of pleading-usury is personal to the mortgagor and those who are in privity with him, but if there is no agreement or understanding- about it his grantee will have the right to make the defense.” After citing several cases and discussing others the court continues (p. 148): “In Essley v. Sloan, 116 Ill. 391, the court found, from the evidence, that the incumbrances were figured up and amounted to $7.68 per acre, which amount was counted in to make up the price to be paid for the land. The incumbrances formed part of the consideration for the purchase, and it was immaterial what the presumption would be without proof as to their forming a part of the consideration. In such a case as that it would be permitting- a fraud to allow the grantee to plead usury. If the mortgagor chooses to affirm his contract and sets apart, out of the purchase price for the complete title, an amount sufficient to pay it, whether with an express agreement of the grantee to make such payment or with an option to either pay or suffer foreclosure, the grantee cannot question the amount. If the usury has become a part of the consideration in the agreement between the mortgagor and his grantee, it is an affirmance of the debt by the mortgagor, and when the grantee contracts with a view to the payment of the incumbrance, equity demands that he shall pay it or lose the property.” In Franklin County Building & Loan Ass’n v. Blood, 255 Ill. App. 175,185, it is said: “Where property that is subject to a mortgage is conveyed, it need not be expressly stated in the deed that the mortgage deed is a part of the consideration, if it can be reasonably inferred that the incumbrance is á part of the consideration for the purchase price. Whether it is so agreed in express terms is not material. The legal effect is the same. Galloway purchased this property subject to the incumbrance with full knowledge thereof, and it in no way concerns him as to whether the contract was tainted with usury as between Blood and the Building & Loan Association.” (Citing several cases. See, also, Schiele v. Anderson, 252 Ill. App. 390, 394.)

It is finally contended that the court “erred in allowing to complainant grossly excessive and exorbitant solicitor’s fees ($3,000).” We cannot agree with the contention. The court found in the decree that “the evidence shows that the sum of $3,000 is a fair, reasonable, usual and customary fee for like services as those rendered and to be rendered in this cause by the solicitors for complainant, considering the amount involved.” When consideration is given to the' amount of legal work that said solicitors performed because of the defenses interposed by the Brockmans, we think that the court’s allowance was a proper one and should not be disturbed. (See Follansbee v. Northwestern Mut. Life Ins. Co., 87 Ill. App. 609, 611; Watts on v. Jones, 101 Ill. App. 572, 573.)

Finding no reversible error in the present transcript the foreclosure decree of the superior court of May 2, 1930, is affirmed.

Affirmed.

Keener and Scanlan, JJ., concur.


source: Caselaw Access Project

author: Mr. Presiding Justice Gtridley

license: Public Domain

text:
    L. M. Snite, Trading as Local Loan Company (not Inc.), Defendant in Error, v. New York Central Railroad Company, Plaintiff in Error.
    Gen. No. 34,781.
    Opinion filed June 26, 1931.
    Glennon, Cary, Walker fe Murray, for plaintiff in error; L. Beers-Jones, of counsel.

      Orville W. Lee and Joseph E. Newton, for defendant in error.
   Mr. Presiding Justice Gtridley

delivered'the opinion of the court.

In a fourth class action in contract commenced in the municipal court on November 16, 1928, there was a trial without a jury on December 14, 1928, resulting in the court finding the issues against defendant, assessing plaintiff’s damages at $36.93, and entering-judgment in that sum against defendant.

In plaintiff’s statement of claim he alleged that his claim “is upon an assignment of 50 per cent of all salary and wages and 100 per cent of all commissions and other moneys of Edwin J. Hooper, dated December 20, 1927, due or to become due unto him from defendant, due notice of said assignment having been served upon defendant on March 14, 1928”; that by the assignment and notice plaintiff is entitled to recover of defendant 50 per cent of all moneys then due or to become due to Hooper from defendant for salary and 100 per cent for commissions; that plaintiff is the equitable and bona fide owner of said money so assigned and has demanded the same of defendant; and that plaintiff is, and was at the date of the execution of the assignment, duly licensed under the provisions of the Illinois Act as to “Regulation of Business of Making Loans.” (See Cahill’s Stat. 1927, ch. 74, ¶ 27 et seq. pp. 1533-4.) Accompanying the statement of claim is the affidavit of an agent of plaintiff, who states on oath that he has knowledge of the facts; that plaintiff’s claim is for money due him from the defendant upon the assignment above mentioned, after due notice thereof and demand for payment as above set forth; that “plaintiff is the actual bona fide owner thereof and acquired title thereto by means of the assignment set forth in the foregoing statement of claim and on the date thereof”; and that there is due plaintiff from defendant the sum of $200, etc.

The act referred to in the statement of claim became in force on July 1, 1917, and is entitled “An act to license and regulate the business of making loans in sums of $300 or less, secured or unsecured, at a greater rate of interest than 7 per centum per annum, . . . and regulating the assignment of wages or salaries earned or to be earned, when given as security for any such loan.” In section 1 of the act it is provided that “it shall be unlawful to make any loan of money, credit, goods or things in action in the amount or to the value of $300 or less, whether secured or unsecured and charge, contract for, or receive a greater rate of interest than 7 per centum per annum therefor, without first obtaining a license from the Department of Trade and Commerce as herein provided.” Then follow provisions as to how the license may be obtained by the filing of an application, the giving of a bond and the payment of an annual license fee, etc.; also provisions concerning the revocation of an issued license, etc. A part of section 2 of the act and all of section 4 are as follows:

“2. Every licensee licensed hereinunder may loan any sum of money, goods, or things in action, not exceeding in amount or value the sum of $300, and may charge, contract for and receive thereon interest at a rate not to exceed 3% per centum per month; . . .

“4. No assignment of any salary or any wages, earned or to be earned, given to secure any loan made under this Act, shall be valid, unless in writing signed by the borrower; nor shall such assignment be valid unless given to secure an existing debt or one contracted simultaneously with its execution.

“Under such assignment or order for the payment of future salary or wages given as security for a loan made under this Act, a sum of fifty (50) per centum of the borrower’s salary or wages shall be collectible by the licensee from the time that a copy thereof, verified by the oath of the licensee, or his agent, together with a verified statement of the amount unpaid upon such loan, has been served upon the employer.”

It will be noticed that the present action was commenced by plaintiff, as assignee of a chose in action not negotiable, in his own name under the provisions of section 18 of the Practice Act, Cahill’s St. ch. 110, ¶ 18, passed in 1907, and amended in 1915, and further amended in 1925. It is only by virtue of the provisions of this section that he, as such an assignee, can bring the action in his own name. In Allis-Chalmers Mfg. Co. v. City of Chicago, 297 Ill. 444, 449, it is said: “Before the passage of section 18 of the Practice Act of 1907 no cause of' action existed in favor of the assignee of a chose in action.”

Said section 18, as amended, is in part as follows: (Cahill’s Stat. 1927, ch. 110, p. 1944).:

“The assignee and equitable and bona fide owner of any chose in action not negotiable, heretofore, or hereafter assigned, may sue thereon in his own name, and he shall in his pleading on oath, or by his affidavit where pleading is not required, allege that he is the actual bona fide owner thereof, and set forth how and when he acquired title; but in such suit there shall be allowed all just set-offs, discounts and defenses, not only against the plaintiff, but also against the assignor or assignors, before notice of such assignment shall be given to the defendant: Provided, that in all cases in which the chose in action sued upon shall have been (assigned for the purpose of securing the payment) of an indebtedness from the assignor to the assignee thereof, and in which the chose in action so assigned consists of wages due or to become due to the assignor thereof from the defendant in such action, at least five days’ written notice of the pendency of such suit shall be served upon the assignor of such chose in action, before the trial of the same; and upon application of the assignor of such chose in action, the court shall allow said assignor to interplead and be made a party to such action; and said assignor, or the defendant to said suit in behalf of said assignor, shall be allowéd to set up or affirmatively maintain any just set-off, discount or defense which said assignor may have to said assignments of said chose in action, or to the indebtedness the payment of which is secured by the assignment of said chose in action; . . . ”

The bill of exceptions discloses that, upon the cause being called for trial on December 14, 1928, defendant’s attorney stated that plaintiff, under the provisions of section 18 of the Practice Act, could not maintain his suit unless he showed that a written notice of the pendency of the suit had been personally served upon Edwin J. Hooper, the assignor, at least five days before December 14th; that thereupon plaintiff’s attorney stated that said Hooper was dead; and that thereupon plaintiff was allowed to introduce in evidence, over defendant’s objection, a certain written notice, signed by plaintiff’s attorney and dated December 6, 1928, and to which notice was attached an affidavit, signed and sworn to by one Newton on December 6. The notice is entitled in the cause and is addressed to “Edwin Hooper,” and thereby he is notified that the cause has been set for trial on December 14, 1928, at 9:30 o ’clock A. M. before a certain judge of the municipal court (naming him), and that the suit “is an action by the Local Loan Co. to recover the salary earned by you under the assignment of ivages dated December 20,1927.” No mention is made in the notice as to “commissions” and, apparently, the words “salary” and “wages” are used interchangeably. In the affidavit Newton swears that he served the above notice “by mailing a copy of the same to the within named Edwin J. Hooper this 6th day of December, 1928.” It is not stated to what address the letter, containing the notice, was sent.

The bill of exceptions further discloses that plaintiff then called as his witness Mrs. H. M. Stevens, who testified that she was employed in the dining car department of defendant; that Hooper was in its employ on December 20, 1927; that he died on March 6, 1928; and that defendant “was indebted to Hooper on March 14,1928, in the sum of $73.87.” It will be noticed that 50 per cent of this sum is $36.93, the amount of the judgment in question, and that the witness does not state what said sum is owing to Hooper for, whether for wages or salary, or otherwise. Thereupon plaintiff called as a witness one of his employees, D. E. Fitzgerald, who testified that he personally handled the last loan made to Hooper and that on March 14, 1928, Hooper was indebted to plaintiff in the sum of $100, with 3% per cent per month interest from February 20,1928. The witness identified Hooper’s signature on each of two of plaintiff’s exhibits, which were then introduced in evidence. Exhibit 1 is Hooper’s judgment note, dated Chicago, December 20, 1927, by which-he promised to pay to “L. M. Suite, doing business as Local Loan Co. (not inc.) $120, in instalments as follows, to wit, $10, together with interest on the principal sum of this note at the rate of 3% per cent per month, on the 20th day of January, 1928, and the same sum, together with interest at the same rate on the unpaid balance of said principal sum, on the 20th day of each consecutive month thereafter, until the full amount of this note, with interest at said rate on all unpaid balances thereof, is paid.” Above the signature, in addition to the usual judgment clause, are other clauses in small printed type. Two of these clauses are: “Default in the payment of any installment of the principal or interest hereof, or of any part of either, shall, at the option of the holder hereof and without notice, render the then unpaid balance of the principal hereof and accrued interest thereon at once due and payable”; and “the payee herein named is licensed by the State of Illinois to make loans in sums of $300 or less at rates of interest not exceeding 3% per cent per month.” Below the signature is the statement, in larger type on the margin of the note: ‘ ‘ This note is secured by wage assignment.”

Exhibit 2 is the assignment sued upon. It is on a printed form (filled in by typewriting), is headed on its face “Assignment of Wages, Salary and Commissions,” is dated December 20, 1927, and is signed and sealed by “Edwin J. Hooper.” It is in part as follows :

“For value received, I hereby sell, assign, transfer and set over to L. M. Snite, doing business as Local Loan Co. (not inc.), Chicago, hereinafter described as the assignee, fifty (50) per cent of all salary and wages and one hundred (100) per cent of all commissions and other moneys earned or to be earned by me within ten years from date hereof in the employ of New York Central Railroad, their successors, heirs or assigns, or any other firm, person, company, or corporation by whom I may hereafter be employed, or who may owe me money for any consideration whatsoever.

“ . . . I authorize and direct my said employers to pay said salary, wages, commissions and other moneys to the said assignee. I constitute the said assignee, my attorneys to take all legal proceedings which may be proper or necessary for the recovery of the salary, wages, commissions and other moneys hereby assigned' and to receive and receipt for the same, or any part thereof, in my name, . . .

“This assignment is executed and delivered as security for a loan of $120, which is the actual amount of the loan made to me this day by the assignee becoming due in monthly instalments of $10 each, payable on the 20th day of each and every month after date hereof, with interest thereon at the rate of 3% per cent per month. ’ ’

On the reverse side of the instrument is an “affidavit” and a “notice to employer.” In the affidavit, signed and sworn to by one Kearns on March 14, 1928, the affiant says that he is “the agent of the assignee named in the assignment of which a copy is contained upon the reverse side hereof”; that the copy is a true copy “of an assignment of wages, salary and commissions and other moneys, made and delivered to L. M. Suite, ... by Edwin J. Hooper in your employ as steward at 33 Root street”; and that “there is now due and unpaid on the loan secured by said assignment the sum of $100 of principal, with interest thereon at ■the rate of 3% per cent per month from February 20, 1928.” Immediately below is the notice, signed in plaintiff’s name by said Kearns as his agent and addressed to the defendant railroad company at Chicago. It is as follows: “Please take notice of the above named assignment and hold all moneys now or hereafter in your hands, which would otherwise be payable to said Edwin J. Hooper, subject to my order.”

The above was all the evidence introduced by plaintiff. Defendant’s motion for a finding in its favor was denied by the court. Thereupon defendant introduced in evidence the copy of said “assignment,” “affidavit” and the “notice to employer” which it received on March 14, 1928. They are practically the same as those introduced by plaintiff, with the exception that the “affidavit” and “notice to employer” are signed by one White (instead of Kearns) as agent for plaintiff. No further evidence was introduced by either party. . Defendant’s renewed motion for a finding in its favor was denied and thereupon the court entered the finding and judgment against defendant as first above mentioned. In the bill of exceptions is the certificate of the trial judge that rule 22 of the municipal court was in force at the time of the trial of the cause. Said rule provides that section 18 (as well as certain other sections) of the Practice Act “shall be held to apply to and govern all civil proceedings ... in the Municipal Court as far as the same may be applicable,” etc.

After reviewing the present transcript we are of the opinion that the finding is not sufficiently sustained by the evidence and that the judgment cannot stand. The suit is based upon the act of 1917, above referred to, concerning the “Regulation of Business of Making Loans,” and plaintiff introduced no evidence whatsoever showing a compliance by him with section 1 of that Act. It does not appear that he was licensed under the act when he made the loan to Hooper, or at any other time. As stated in the section, unless he had a license, the making of the particular loan was “unlawful. ’ ’

Furthermore, it appears that the loan was secured by the “wage assignment” introduced in evidence, and plaintiff brought suit in his own name, as assignee named in that assignment, under the provisions of section 18 of the Practice Act. In that section it is provided that “in all cases ... in which the chose in action so assigned consists of wages due or to become due to the assignor thereof from the defendant in such action, at least five days’ written notice of the pendency of such suit shall be served upon the assignor of such cause in action, before the trial of the same; and upon application of the assignor of such chose in action the court shall allow said assignor to interplead,” etc. We regard a compliance with this provision by the assignee of a chose in action as a condition precedent to his right to maintain on the trial his suit against a defendant, who may be indebted to the assignor for wages. We think that the statute should be construed as meaning that the five days’ written notice be served on the assignor personally. In 21 Am. & Eng. Encyc. Law, 2nd Ed., p. 583, it is said: “Where a statute requires the giving of notice and there is nothing in the context of the law or in the circumstances of the case to show that any other notice was intended, personal notice must always be given.” (See 29 Cyc. p. 1119; Chicago & Alton R. Co. v. Smith, 78 Ill. 96, 98; Haj v. American Bottle Co., 261 Ill. 362, 364 — 5; First Nat. Bank v. Farmer’s Bank of Gays, 219 Ill. App. 624:, 629.) And it has been held that said section 18 of the Practice Act, being in derogation of the common law, should be strictly construed (Fingado v. Wilson Braiding & Embroidering Co., 205 Ill. App. 267, 269; Madison & Kedzie State Bank v. Old Reliable Motor Truck Co., 236 Ill. App. 442, 444); and that a person cannot recover as the assignee of a contract, in an action not brought in the name of the assignor, where he does not bring himself within said section 18. (Edwards & Bradford Lumber Co. v. Bontjes, 193 Ill. App. 392, 395.) While it appears that Hooper (the assignor) died about nine months before the present suit was commenced and that plaintiff must have known of such death prior to such commencement, yet it also appears that plaintiff commenced the suit against defendant, under section 18 of the Practice Act, and, on the eve of the trial, attempted a compliance with the provisions of the statute (as to notice to the assignor) by mailing a notice to Hooper, who was not then living.

Our conclusion is, under the uncontradicted evidence, that plaintiff was not entitled to maintain the action under section 18 of the Practice Act or to recover any judgment against defendant, as a matter of law. Accordingly, the judgment is reversed.

Beversed.

Keener and Soanlan, JJ., concur.


text:
    Marion T. Hibbs, Plaintiff in Error, v. United States Fidelity & Guaranty Company, Defendant in Error.
    Gen. No. 34,841.
    Opinion filed June 26, 1931.
    Rehearing denied July 7, 1931.
    William McKinley and Paul E. Price, for plaintiff in error.

      Edward W. Rawlins and Eugene P. Kealt, for defendant in error; Fay Warren Johnson, of counsel.
   Mr. Presiding Justice Gridley

delivered the opinion of the court.

In an action in assumpsit, commenced on November 3, 1927, and based upon defendant’s policy of accident insurance, there was a trial before a jury in June, 1930. At the conclusion of plaintiff’s evidence the court instructed the jury to return a verdict in defendant’s favor, which wras done, and judgment was entered against plaintiff for costs. She sued out the present writ of error to reverse the judgment and the main question is whether, under the provisions of the policy and plaintiff’s evidence, the court erred in so instructing the jury and in entering the judgment.

The policy, originally issued to plaintiff’s husband on April 6, 1923, and thereafter kept in force by annual renewals up to April 6, 1928, provided in part that defendant “does hereby insure Wiliam R. Hibbs, hereinafter called the insured, ... in the principal sum of $5,000,

(1) Against loss, as hereinafter defined, resulting directly and independently of all other causes from accidental bodily injuries, fatal or non-fatal, being hereinafter referred to as ‘such injury,’ as follows:

Death, Dismemberment, Loss of Sight, Speech or Hearing

Schedule I. . . .

(b) Or, if within six months from the date of accident, irrespective of total disability, ‘such injury’ shall directly result as aforesaid in one of the losses specified under Specific Losses, the Company will pay the sum set opposite such loss, ...

Specific Losses

Loss of Life..............The Principal Sum. . . . Schedule III.

(a) Sunstroke, Freezing, Hydrophobia or Asphyxiation, due solely to ‘such injury,’ shall be covered by this policy.

Blood Poisoning

(b) Blood Poisoning resulting directly from ‘such injury’ shall be covered by this policy. . . .

Standard Provisions. . . .

To Whom Indemnities Payable. 11. Indemnity for loss of life of the insured is payable to the beneficiary, if surviving the insured, otherwise to the estate of the insured. . . .

Additional Provisions. . . .

Injuries Not Covered. 21. This policy does not cover any accidental bodily injury caused or contributed to, directly or indirectly, by sickness or disease, . . . ”

Plaintiff’s declaration consisted of two counts, to which were attached a copy of the policy and an affidavit of merits, claiming that $5,000 was due to her. In one count, after setting forth the issuance of the policy and some of its provisions, she alleged that she is 'the beneficiary of the policy; that on July 3, 1927, while the policy was in force, the insured died “as the result of an infection following the extraction of a tooth”; that his death “resulted directly and independently of all other causes from accidental bodily injuries”; that during his lifetime the insured kept and performed all the terms and conditions of the policy on his part to be kept and performed; that upon his death she gave to defendant due notice thereof, but it refused to furnish forms for filing proofs of loss, and that by reason thereof, within apt time, she submitted to it written proofs as to the occurrence and the character and extent of the loss; and that she has demanded of defendant payment of said sum of $5,000, but the demand has been refused, etc. The other count is substantially the same, except that it does not particularize as to the cause of the death and merely alleges that the insured came to his death on said date “directly and independently of all other causes from accidental bodily injuries,” while the policy was in full force and effect.

Defendant filed a plea of the general issue and four special pleas. In the first and second the averments are that the insured’s death “did not result from accidental bodily injuries independently of all other causes.” In the third special plea, after setting forth certain statements made in the insured’s application, it is averred that at the time of his death he “was not in a sound condition mentally and physically and was subject to fits, disorders of the brain and had bodily and mental infirmity or deformity.” In the fourth special plea, after setting forth the provisions as contained in paragraph 21 of the policy, under the heading of “Additional Provisions” (above mentioned), it is averred that the insured “died as the result of sickness and a diseased condition existing prior to the issuance of said policy.” Replications to the special pleas were filed.

On the trial, after plaintiff had introduced the policy in evidence, as well as the last “renewal voucher” showing payment and acceptance of premium of $45 for the year ending April 6, 1928, it was stipulated that due notice of the insured’s death had been given to defendant and also that due proofs of loss had been made. Thereupon plaintiff testified in her own behalf and she called as witnesses Chris Christensen, an office associate of the insured for several years prior to his death; Drs, Moorehead and Potts, dental surgeons, who treated the insured shortly prior to his death; Drs. Koch and Scott, medical experts; and Dr. Oberhelman, who witnessed the post mortem examination of the insured, had at St. Luke’s Hospital, Chicago, on July 4, 1927.

Plaintiff’s evidence disclosed the following facts in substance: For many years prior to his death, at about 60 years of age, the insured had enjoyed excellent health. On the evening of May 31, 1927, after he had worked as usual during the day, he complained to his wife (plaintiff) of pain in his lower jaw, and at his request she looked at the gums of that jaw but could not see anything that looked wrong. At his further request she sterilized an ordinary sewing needle by putting it in alcohol, and inserted it “perhaps three-eighths of an inch” into that portion of the jaw or gums which he said was the most painful. Nothing, however, came out except a little blood. During the night he complained of increased pain. On the following day he consulted Dr. Moorehead, a dental surgeon, who examined his jaw and also caused an X-ray picture to be taken. The doctor testified that he “found considerable swelling, redness and puffing of the tissues, indicating an acute infection,” and also found “a small fragment of a tooth root which was imbedded in the tissues” and not exposed to view; that, after making the usual operative preparations, he removed the fragment of the root “which was the seat of the infection”; that when he made the incision prior to such extraction the tissues were swollen and inflamed; that he employed the usual and proper surgical technique in the extraction; that the fragment of the root was “submerged” and not “exposed to view” because the tissues had healed over it; that the operation was a simple one; that on the following Sunday (June 5), being summoned by telephone, he went to the insured’s home and gave him further treatment; that he then complained of severe pain in his jaw and neclc; and that he did not see him or treat him thereafter. The insured’s pain continued to increase and the infection to spread, and about June 7 he was taken to St. Luke’s hospital and there treated by Dr. Potts, who testified that he found the patient “had a large swelling on the side of his face, had fever and was septic”; that by septic is meant “poison from pus and infection”; that he saw the necessity for at once opening the “large abcess” on the jaw, and he opened it and put in some tubes and secured drainage; and that he “also opened the sinus which was discharging pus up inside of his mouth. ’ ’ The insured, although receiving further treatment, continued to get worse and finally died at the hospital on July 3, 1927. The post mortem examination revealed “an acute infection of the mandible (lower jaw, right side) with pus formation extending into the soft tissues below the jaw and up along the side of the face, beneath the skin, dissecting its way up beneath the scalp and following through the cranium bones, and . . . extending through the little canals . . . and with an accumulation of pus beneath the brain membrane, giving a so-called localized brain abcess on the right side.”

The testimony of plaintiff’s medical expert witnesses disclosed that one of the ways an infection can enter healthy tissues and create an acute infection in the mouth is by having the mucous membrane broken by traumatism and thus afford a port of entry for germs; and that this may be brought about in various ways, such as puncturing the gum surface with a needle, biting a sharp crust, injuring the gum surface while cleaning the teeth with a toothpick, irritating the gum surface by plates of a set of false teeth (which it appears the insured wore), or any other cause sufficient to make a break in the mucous membrane. Dr. Summer L. Koch testified in substance that “infection is in a great majority of cases introduced into the system through an open wound”; that “an open wound may come from a very trivial thing, from a sliver, the puncture of a needle, a scratch, from any puncturing wound that goes into the tissues, anything that carries disease producing bacteria with it”; that “this is the most common method of introducing infection”; and that “germs which might cause the death of a person may be introduced by the introduction of a needle into the jaw. ’ ’ After a question regarding a hypothetical person had been put to the witness and he had answered it, he was further asked if he had an opinion “as to what might or could have caused the infection that caused the death of this hypothetical person?” On defendant’s attorney objecting to the question as “invading the province of the jury,” the court sustained the objection. The witness further testified that “wounds cause an open seat for infection to set in”; that “it is possible that irritation in a person’s mouth, who is wearing false teeth, may cause a wound from which an infection may set in”; that “false teeth may cause wounds just like a sliver or any kind of an instrument”; and that “any type of wound, no matter how it is caused, may be a portal entry for bacteria.” On cross-examination he further testified: “A root that is quiescent may lie in a jaw for months or years without giving trouble, and it would be rather unusual for a sudden infection to develop from that source, although it is possible. Where a man has an old root in his jaw which is covered over and develops a severe and persistent pain, it might indicate an infection or pressure on a nerve. It is very unusual for infection to be present without making itself felt by constant symptoms.”

After considering the terms of the policy, plaintiff’s evidence and the exhaustive briefs of opposing counsel, in which are cited and discussed many adjudicated cases in this State and in other states and jurisdictions, we are of the opinion that the trial court erred in directing a verdict in defendant’s favor and in entering the judgment in question. We think that plaintiff’s evidence disclosed prima facie that the insured met his death as the direct result, and independently of all other causes, of having received accidental bodily injuries, and that the cause should have been submitted to the jury under proper instructions. Our conclusion is supported, we think, by the holdings and decisions in the following cases: United States Mut. Acc. Ass’n v. Barry, 131 U. S. 100, 121; Lewis v. Ocean Accident, etc., Corp., 224 N. Y. 18, 20-21; Higgins v. Midland Casualty Co., 281 Ill. 431, 437; Christ v. Pacific Mut. Life Ins. Co., 312 Ill. 525, 535-6; Schleicher v. General Accident, Fire & Life Assur. Corp., 240 Ill. App. 247, 252; Vollrath v. Central Life Ins. Co., 243 Ill. App. 181, 187; Costello v. Federal Life Ins. Co., 259 Ill. App. 321, 325-6; Garrett v. International Travelers’ Ass’n (Tex. Civ. App.), 14 S. W. (2d) 944, 946. In the Higgins case, supra, our Supreme Court, quoting from another case, said: “If in the act which precedes the injury, though an intentional act, something unforeseen, unexpected and unusual occurs which produces the injury, it is accidentally caused.” In the Christ case, supra, our Supreme Court, quoting from another case, said: “The intention is, as has been said, to afford full protection and indemnity to the assured. Any accident that causes bodily injury in any way is included. Bodily injury is more commonly associated, perhaps, with physical force of some sort, but in the absence of anything in the policy limiting it to that, we do not see how or why it can or should be so restricted. A liability growing out of an accident which results in infecting the workman with a loathsome and dangerous disease, and thereby causes him great and perhaps lasting injury, would seem to be as much within the spirit and intent of the contract as if the injury had been caused by a blow or some other equally obvious manifestation of force. ’ ’ In the Garrett case, supra, it appeared from plaintiff’s evidence that the insured preceding his death had a cold and during this period had rubbed his nose with a handkerchief and had picked at it with his hand; that a pimple and a sore on the nose developed which he rubbed and squeezed so that the nose became raw and chafed and a carbuncular infection developed which spread all over his face and head, from which he died; that there was medical testimony to the effect that such infection could arise only from the introduction of germs from the outside; and that the policy contained a similar provision as to blood poisoning or septicemia as in the present policy. At the conclusion of the plaintiff’s evidence the court directed a verdict in favor of the defendant and entered a judgment against the plaintiff. In reversing the judgment and remanding the cause the court said (p. 946):

“The evidence raised the issue as to whether carbuncular infection was present on insured’s hands and handkerchief and about his nose at the times above mentioned. The showings above mentioned are not presumptions drawn from presumptions, as contended by appellee, but they are the ultimate facts, drawn as reasonable inferences from a group of facts and circumstances testified to by witnesses. . . . We think the jury might have reasonably found from the evidence that insured infected his nose by rubbing it and picking at it with his hands and handkerchief; and that the carbuncular infection resulted from an external force, to wit, the rubbing and picking of the nose as above mentioned, rather than from natural causes.”

The judgment of the circuit court should be reversed and the cause remanded, and such will be the order.

Reversed and remanded.

Keener and Scanlan, JJ., concur.


author: Mr. Justice Kerner

text:
    The Danville Hotel Company for the use of B. Stevenson, Appellee, v. Charles Benson, Inc., and The Aetna Casualty & Surety Company, Defendants. The Aetna Casualty & Surety Company, Appellant.
    Gen. No. 34,586.

      Opinion filed June 22, 1931.
    Rehearing denied July 7, 1931.
    Dent, Dobyns & Freeman, for appellant; Louis L. Dent and Seward H. Bowers, of counsel.
    A, S. and E. W. Froeblich, for appellee.
   Mr. Justice Kerner

delivered the opinion of the court.

Action was brought by plaintiff, The Danville Hotel Company, a corporation, for the use of B. Stevenson, against Charles Benson, Inc., a corporation, and The Aetna Casualty & Surety Company, a corporation, to recover for damages alleged to have been sustained by the beneficial plaintiff, B. Stevenson, as a result of a breach of conditions of a contractor’s bond executed by Charles Benson, Inc., as principal, and The Aetna Casualty & Surety Company, as surety, to The Dan-ville Hotel Company as owner. Charles Benson, Inc., was never served with summons and did not appear and the cause proceeded to trial against The Aetna Casualty & Surety Company alone. The case was tried before the court without a jury, and a judgment was rendered in favor of the plaintiff for $15,475, from which the defendant, The Aetna Casualty & Surety Company, appealed.

The material facts are that Charles Benson, Inc., a corporation, was a general contractor for the construction of the Wolford Hotel at Danville, Illinois. November 11, 1925, The Danville Hotel Company entered into a contract with Charles Benson, Inc., whereby the general contractor was to construct the Wolford Hotel for $822,699, and to furnish all of the materials and perform all of the work shown on the drawings and described in the specifications for the Wolford Hotel; the work to be commenced immediately and to be completed before the expiration of eighteen months from the date of the contract, and on May 3, 1926, Charles Benson, Inc., as principal, and the defendant, The Aetna Casualty & Surety Company, as surety, executed a bond in favor of The Danville Hotel Company, as owner, to insure the performance of the contract between Charles Benson, Inc., and The Danville Hotel Company. After reciting the fact that Charles Benson, Inc., and The Danville Hotel Company entered into said contract for the construction of the Wolford Hotel, on November 11,1925, the bond recited that:

“Now, therefore, the condition of this obligation is such that if the Principal shall faithfully perform the contract on his part and satisfy all claims and demands, incurred for the same, and shall fully indemnify and save harmless the Owner from all cost and damage which he may suffer by reason of failure so to do, and shall further reimburse and repay the Owner all outlay and expense which the Owner may incur in making good any such default, and shall pay all persons who have contracts directly with the Principal for labor or materials, then this obligation shall be null and void; otherwise, it shall remain in full force and effect.”

November 27, 1925, B. Stevenson entered into a contract with Charles Benson, Inc., whereby Stevenson agreed to furnish the labor and material for the heating work in the Wolford Hotel for $40,000, and thereafter did furnish such material and labor and fully completed his contract on April 15, 1927, and there remained due and unpaid to him $13,409.24 with interest at five per cent per annum for May 15, 1927. In order to finance the building of the hotel The Dan-ville Hotel Company executed a mortgage to secure a $700,000 bond issue, and Caldwell & Company of Nashville, Tennessee, underwrote the issue, and as the work progressed the general contractor would obtain payments on its contract, from Caldwell & Company, based on architects’ certificates, plus waivers of lien from the various subcontractors and materialmen. March 12, 1927, Charles Benson, president of Charles Benson, Inc., had a conference with one Elmer C. Lind, an employee of B. Stevenson, and gave Lind two promissory notes aggregating $13,409.24, and Lind gave Benson a waiver of lien which stated that B. Stevenson in consideration of one dollar waived any and all liens for labor and materials furnished upon the Wolford Hotel; at this conference Benson said there was a balance due from Caldwell & Company of $70,000; and that Caldwell & Company would forward to Stevenson the balance due him; that it was necessary that he (Benson) have the waiver to present to Caldwell & Company in order to obtain Stevenson’s money, and it was upon these assurances that Lind gave Benson the waiver of lien and obtained the two notes. The waiver of lien was mailed to Caldwell & Company but Stevenson did not receive the balance due him. Neither Charles Benson, Inc., nor Stevenson ever received any payment from Caldwell & Company or the Danville Hotel Company after the execution of the waiver of lien. When the Wolford Hotel was completed, Stevenson and several- other subcontractors had not been paid in full. The subcontractors, but not Stevenson, filed and established claims for mechanics’ liens against the hotel. Subsequently The Danville Hotel Company went into voluntary bankruptcy and the property was sold. B. Stevenson never filed a claim for a mechanic’s lien and was not adjudged to have a right to share in the assets of the bankrupt.

The principal question presented for decision is whether or not the obligation of the bond sued on covers the claim of Stevenson. The defendant contends that the bond was executed for the sole benefit of The Danville Hotel Company and not for Stevenson ; that Stevenson was not a party to the execution of the bond, his name not appearing therein, and that he did not furnish any consideration for the bond and did not enter into his contract in reliance upon it.

The bond in the instant case required the general contractor to faithfully perform its contract with The Danville Hotel Company, furnish all the materials described in the specifications for the Wolford Hotel, satisfy all the claims and demands incurred for the same, fully indemnify and save harmless The Danville Hotel Company from all cost and damage which it might suffer by reason of failure so to do, and fully reimburse and repay the owner all outlay and expense which it may incur in making good such default. From an examination of the provisions of the contract and bond, we have reached the conclusion that material-men furnishing materials for the Wolford Hotel under the contract between Charles Benson, Inc., and The Danville Hotel Company are sufficiently designated as a class for whose benefit the condition requiring the general contractor to pay for material was inserted in the contract and that it was meant to cover the claims of those furnishing such materials, where such persons had contracted directly with the general contractor. There are a large number of authorities to support our conclusion, in a number of which we find bonds which contain the precise language employed in the instant case, and these authorities, in our opinion, are flanked by sound legal reason. It is a cardinal rule of construction that, whenever possible, all the terms of a written instrument will be given effect, for parties do not ordinarily insert meaningless terms in their contracts; and applying this rule it seems clear to us that the condition of the bond in the instant case, when fairly interpreted, undertakes to cover not only any loss sustained by The Danville Hotel Company, but also any loss suffered by those who furnished labor or materials directly to the principal in the bond, and such an interpretation renders the defendant liable, and plaintiff was entitled to maintain an action directly against the defendant. In the case of Byram Lumber & Supply Co. v. Page, 109 Conn. 256 (146 Atl. 293), the court said:

“Faithful performance of the contract by the principal contractor, satisfaction of all claims and demands incurred for the same, full indemnity to the owner for all costs and damages by reason of the failure to keep these stipulations, and reimbursement of the owner for all expense in making good any such default, and then the provision, upon which reliance is placed in this case, that the principal contractor ‘ shall pay all persons who have contracts directly with the principal for labor or materials. ’ In the first place it is at once apparent that the clause quoted adds nothing to-the obligations before stated as regards the right of the owner to recover upon the bond; if any person furnishing labor or materials under contract with the principal in the bond had a claim against the owner, it would be the duty of the obligors under the stipulations preceding the one quoted to satisfy it, or, if the owner had paid the claim, to reimburse him.

“ ... there is significance in the fact that in the particular clause here in question those ‘who have contracts directly with the principal’ are singled out for special regard; if protection for the owner alone was in the minds of the parties, it is -difficult to see why this should be done; his concern would be to guard against all claims of whatsoever nature which might be made upon him, without regard to the way in which they had arisen, while this clause is made to turn upon a direct contractual relationship with the principal.” In Forburger Stone Co. v. Lion Bonding & Surety Co., 103 Neb. 202, the court said:

“The bond contains two contracts, one with the owner, and the other for the benefit of those who supply labor or materials. ‘The surety becomes bound for the performance of the work by the principal in accordance with the stipulations of the contract, and for the prompt payment of the sums due to all persons supplying labor and material in the prosecution of the work provided for in the contract. ’ Equitable Surety Co. v. United States, 234 U. S. 448, 34 Sup. Ct. Rep. 803. The laborers and materialmen are the beneficiaries in the bond.” See also Algonite Stone Mfg. Co. v. Fidelity & Deposit Co. of Maryland, 100 Kan. 28; Hartford Accident & Indemnity Co. v. W. & J. Knox Net & Twine Co., 150 Md. 40; Fidelity & Deposit Co. of Baltimore, Md. v. Rainer, 220 Ala. 262, 125 So. 55, 57; Orinoco Supply Co. v. Shaw Bros. Lumber Co., 160 N. C. 428; Concrete Steel Co. v. Ill. Surety Co., 163 Wis. 41. In Board of Education v. Chicago Bonding & Surety Co., 218 Ill. App. 20, the court said:

“The bond is dual in its nature; it contains two promises — one to the Board of Education that the contractor shall perform the work as agreed; the other to the laborers and materialmen to pay them for labor and material they might perform or furnish to the contractor. The consideration is sufficient to support both conditions.”

In Board of Education v. Aetna Indemnity Co., 159 Ill. App. 319, 321, the court said:

“To hold the bonds in question valid and binding is only to compel the obligors to do the thing they bound themselves to do.”

In Merchants Loan & Trust Co. v. Ummach, 228 Ill. App. 67 (certiorari denied by Supreme Court, 231 Ill. App. XXX), the court said:

“Where one makes a contract with another, for the benefit of a third person, the latter, though not a party to the contract, may maintain an action upon it against the promisor. The contract need not have been accepted or assented to by the third party. It does not involve an indemnity, but the promise is deemed to invest the person for whose benefit it is made with an immediate interest and right as though the promise had been made to him. To enable the third party to maintain an action on the contract, it is not necessary that any consideration shall have moved from the third party to the promisor. The consideration moving from the promisee is sufficient on which to base the liability of the promisor to the third party. In such an action the question of the liability of the promisee to the third party is immaterial, as the liability of the promisor does not depend upon the liability of the promisee to the third party. The promisee need not have been indebted to the third party, nor is it necessary that the obligation undertaken by the promisor shall relieve the promisee of any legal liability. It is not necessary, to enable the third party to sue the promisor, that the obligation shall have been undertaken by the latter directly or primarily for the benefit of the third person. The liability of the promisor to the third party in an action brought by the latter against the former depends merely upon the question of whether the third party has a beneficial interest in the enforcement of the contract.”

The next defense re’lied upon by the defendant is that The Danville Hotel Company, the promisee in the bond, failed to perform its agreement to pay the general contractor in full the sum of $822,699, as provided in the contract, and that this default impairs the plaintiff’s right of action on the bond. We find no merit in this contention for the. reason that the right of action on behalf of the plaintiff Stevenson, arose immediately upon the furnishing by him of his materials, and was not dependent upon any terms of the original contract, and by the terms of the bond when Stevenson furnished the materials used in the Wolford Hotel he became a beneficiary thereunder. (United States Gypsum Co. v. Gleason, 135 Wis. 539, 544; Royal Indemnity Co. v. Northern Ohio Granite & Stone Co., 100 Ohio 373.) The bond was dual in its nature; it contains two promises, one to The Danville Hotel Company that Charles Benson, Inc., shall perform its contract, as agreed, and the other to the materialmen to pay them for the materials furnished to Charles Benson, Inc. (Board of Education v. Chi cago Bonding & Surety Co., supra.) The respective rights of action of the subcontractors and The Dan-ville Hotel Company on the bond, were separate, distinct and independent. (Kaufmann v. Cooper, 46 Neb. 644.)

It is finally contended that Stevenson by giving the waiver of lien in return for the two notes of The Danville Hotel Company, and by failing to perfect Ms lien, has lost any right of action that he might have had against the defendant. Surety companies doing a surety business for profit cannot be relieved from their obligations except where it is shown there was a material departure from the contract which had resulted in some injury to the surety. (Gunsul v. American Surety Co. of New York, 308 Ill. 312; City of Chicago v. Agnew, 264 Ill. 288.) In the instant case the defendant is a surety company doing a surety business for profit. From the undisputed evidence it appears that the waiver of lien was given to Charles Benson, Inc., in order to obtain the money due Stevenson for materials furnished, and it was upon tMs assurance that Stevenson gave the waiver of lien and obtained the notes, and it further appears that Charles Benson, Inc., received no money upon its contract, at or subsequent to the date of the execution and delivery of the waiver of lien, and the funds in the hands of The Danville Hotel Company were not diminished. It therefore follows that the defendant suffered no injury because of the execution of the waiver of lien. Nor is the fact that Stevenson failed to file Ms lien against the Wolford Hotel a defense to this action, as he did nothing toward dissipating any fund in the hands of The Danville Hotel .Company. Stevenson’s conduct did not deprive the defendant of any fund and we agree with Stevenson’s contention that it was essential, before any defense could be predicated upon this ground, for the defendant to prove that Stevenson, by some affirmative action caused the loss to Charles Benson, Inc., and the defendant, of moneys which should have been used on their behalf. This the defendant has failed to prove.

After a careful consideration of all the evidence, and the law applicable thereto, we are of the opinion that no reversible error has been shown. The judgment is affirmed.

Affirmed.

Gtridley, P. J., and Scanlan, J., concur.