text:
    Chicago Title and Trust Company et al., Appellants, v. Leslie H. Bamburg et al., Defendants. Sam Bernstein, Appellee.
    Gen. No. 37,536.

      Opinion filed December 11, 1934.
    Kirkland, Fleming, Green & Martin, of Chicago, for appellant Committee Organized Pursuant to Deposit Agreement Dated as of May 27,1930 for the Protection of the Holders of Certain First Mortgage Bonds Sold by the Equitable Bond and Mortgage Company, said Committee Consisting of Holman D. Pettibone, Walter J. McGuire, Harold M. O’Brien, H. E. Devereaux, Frederick J. Stebbins, Nicholas H. Dosker, C. A. Mueller and Grant L. Hughes.
    Litsinger, Healy, Reid & Bye, of Chicago, for appellant Chicago Title & Trust Co.
    Hyman J. Rosenberg, of Chicago, for appellant J. A. Paasche; Vernon M. Welsh, Charles R. Morrow and David Fisher, all of Chicago, of counsel.
    Shulman, Shulman & Abrams and Norman Asher, all of Chicago, for appellee; Meyer Abrams, of counsel.
   Mr. Justice Matchett

delivered the opinion of the court.

On July 7, 1930, complainant trustee filed its bill in chancery to foreclose a mortgage executed by Leslie H. Bamburg, one of the defendants, on May 15, 1926, whereby he conveyed to the trustee certain real estate situated in the City of Chicago, Cook county, Illinois, to secure an issue of bonds in the aggregate amount of $765,000. The cause was put at issue in the usual way and the evidence taken. On April 2, 1931, a decree ivas entered finding the amount due and directing that in further default of payment the property should be sold by the master for cash to satisfy the indebtedness; “that the complainant or any of the parties to this cause or any bondholder or group of bondholders may become the purchaser or purchasers at said sale,” and that any purchaser or purchasers might pay the amount bid by delivering to the master, unpaid bonds or interest coupons secured by the trust deed, but that sufficient cash should be paid to meet the costs and expenses of the proceeding. No sale, however, was made under the decree.

- On March 13, 1934, the intervenor, Sam Bernstein, filed his amended petition, setting up that he was the OAvner of bonds to the amount of $18,200, and averring that by reason of financial conditions the decree theretofore entered was not enforceable, there being no cash bidders who would purchase the property at its fair cash market value; that a bondholders ’ protective committee organized about May 7, 1930, had accumulated in its possession over 93 per cent .of the bonds and also acquired the equity of redemption, and intended to make a nominal bid at the sale; that non-depositors would receive the proceeds of this nominal bid; that the maker of the bond issue was insolvent and a deficiency decree against him would be of no avail; that it was the duty of the trustee to protect all bondholders alike, and that there were provisions in the trust indenture which would empower the court to direct the trustee to bid the full value of the premises (although there was no specific provision to that effect) and to fix the terms and provisions of the management of the trust estate. The prayer of the petition was that all parties, including the bondholders’ committee, should be required to answer; that the court fix and determine an upset price based on the value of the premises ; that the master in chancery be directed to proceed with the sale pursuant to the terms of the original decree; that in the event there was no bona fide bidder for cash the trustee should be directed to bid at such sale in its representative capacity, for the use and benefit of all bond owners, the full value less an amount sufficient to cover the income of the premises pending the period of redemption, and that in the event of a failure to redeem the master be directed to convey the premises to the trustee and the trustee authorized to issue beneficial trust certificates to the bond owners in accordance with their respective holdings;. that the court might retain jurisdiction of the subject matter of the trust, etc.

Answers were filed, and the matter coming on upon proofs submitted in open court, a supplemental decree was entered March 17, 1934. It found that the court had jurisdiction of the subject matter and of the parties ; that the decree theretofore entered had expressly retained jurisdiction of the parties and of all matters not disposed of, including the' administration of the premises and property, and also that the court reserved jurisdiction of the subject matter and of all persons to advise and instruct complainant as to its powers and duties as trustee under the trust deed and to direct complainant in the administration of the trust, and to provide for the prompt distribution to persons entitled thereto under the decree; that due to the financial condition of the country there is no market to sell the real estate and no cash bidders who would bid or purchase the premises at its fair cash market value; that such sale would not be a real sale of the premises commensurate with the real value thereof and would result in great loss to the bondholders ; that the terms and provisions of the decree theretofore entered could not be enforced and the trustee was in no position to administer the trust and distribute the proceeds to the beneficiaries unless the terms and provisions of the decree were modified so that the trust might properly function and operate; that a court of equity pursuant to its general equity jurisdiction has inherent powers to administer a trust estate so that the trust will not fail; that in an emergency the court of equity may for the preservation of the trust and-for the protection of the beneficiaries from loss, even authorize a trustee to depart from the strict terms of the trust agreement; that such an emergency existed, and the court was therefore empowered for the purpose of preserving the trust property and for the enforcement of its decree and the execution of the terms thereof, to depart from the strict terms of the trust agreement; that the property was known as the Mozart Apartments, located in Chicago, and consisted of a 14-story and basement, reinforced concrete apartment hotel building, containing 129 apartments of 1 room and kitchenette and 1 two-room apartment, all completely furnished and equipped as residential apartments; that on or about May 27, 1930, following the default in the payment of interest on the first mortgage bonds and pursuant to the request of holders of the bonds and with the knowledge and approval of the trustee, the bondholders’ protective committee was organized pursuant to a deposit agreement of that date and subsequently amended; that the committee is now composed of persons named; that it issued a call for the deposit of the bonds, and that pursuant to this call it had on deposit as of March 1,1934, $701,600, or 93.23 per cent of the outstanding "unpaid bonds; that the committee has maintained an office and clerical and stenographic force and agreed to pay a certain fee to the depositary, and to issue certificates of deposit, etc.; that services rendered by the committee and the depositary, including the necessary costs, expenses, etc., were worth not less than $30,000 as of March 1, 1934, including fees or compensation to the members of the committee; that no part of these costs and expenses had been paid; that this committee authorized the Chicago Title & Trust Co. as trustee to foreclose and furnish indemnity to it in connection therewith; that the committee was further authorized to procure concerted and unified action by the bondholders, in order that the full and unincumbered title to the property might be acquired for the bondholders, in the event that no adequate bid should be received for the property at the foreclosure sale; that all known owners or holders of the bonds had been invited to deposit their bonds with the committee and to participate in the reorganization of the property; that certain of the holders of the bonds had determined that the organization of such committee was the only means of ascertaining the wishes of the holders of the securities with respect to the ultimate reorganization and liquidation, and that the organization of such committee was the accepted and recognized method adopted to the end desired; that the equity of redemption formerly held by the Mozart Building corporation had been acquired by the committee, the title being held for it by one Olsen; that there were holders of junior incumbrances with whom the committee had reached an agreement; that the committee had formulated a plan of reorganization and in furtherance of it planned to purchase the property at the foreclosure sale and to cause an immediate redemption to be made and the property to be conveyed to a corporation organized under the laws of the State of Illinois, to cause this corporation to borrow funds as might be necessary to pay or provide for the payment of the taxes, court costs, fees, etc., in connection with the reorganization of the property, and to cause the corporation to distribute all of its stock to the committee, to be redistributed to the holders of certificates of deposit for the first mortgage bonds and a small percentage thereof to the holders of the junior incumbrances; that under this plan of reorganization, bonds not deposited with the committee would receive their pro rata distribution of the proceeds of the sale held pursuant to the decree, said distribution being paid in cash; that following the sale and redemption therefrom the receiver would immediately be discharged.

The supplemental decree further finds that this plan of reorganization had been formulated and the committee was prepared to put the same in operation as soon as the terms and provisions of the' Federal Securities Act, in force May 27, 1933, had been clarified and the necessary forms provided by the Federal Trade Commission, pursuant to the terms of that act; that the bond owners’ committee contends that the Federal Securities Act passed May 27, 1933, contained many provisions affecting the status of bondholders and bondholders’ committees, so that it is practically impossible at the present time and until the act has been clarified to proceed; that for that reason the committee is in no position to carry out its reorganization plans unless the Federal Securities Act should be construed and proper forms adopted; that the deposit agreement vests the full legal and equitable title of the bonds so deposited in the committee and obligates the depositors of the bonds to pay their pro rata share of the expenses and charges incurred by the committee in connection with the services it renders; that pursuant to the agreement the committee will attempt to acquire for the depositing bondholders the title to the property; that the committee is willing that the holders of all bonds secured by the trust deed participate in such property by depositing their bonds with the committee ; that the committee is desirous of acquiring the property at the foreclosure sale for the benefit of the depositing bondholders at the lowest price that it may deem advisable under the circumstances.

The decree finds that the balance of taxes due on the premises amounts to $21,113.79; that in addition thereto the taxes for the years 1932 and 1933 have accrued but are not yet payable; that these taxes will approximate $9,000 for each year; that the gross receipts derived from the property for the calendar year 1933 were $71,183.04; that for the same period disbursements amounted to $72,247.65. An itemized statement as to disbursements appears, showing that payments on account of taxes had been made in the sum of $2,410.28 for 1928, $2,000 for 1930, and $5,258.99 for 1931, and $434.77 for insurance premiums, $1,800 for furniture replacements, $3,598.70 receiver’s fees, and $3,300 fees to attorney for receiver, the balance of $53,444.91 being for operating expenses, so-called.

The decree finds that the present fair market value of the real estate exclusive of furniture and equipment, is $200,000; that the maker of the bonds is insolvent, and that a personal deficiency decree against him would be of no avail. It was therefore ordered and adjudged that the upset price of the premises should be fixed and determined at the sum of $200,000; that the master in chancery should be directed to proceed with the sale of the premises according to law as provided in the original decree; that in the event of there being, no bona fide bidder for cash in the sum of $200,000, the Chicago Title & Trust Co. was directed to bid in its representative capacity for the use and benefit of all the bondholders the full amount of the debt due the trustee, less $25,000, being an amount sufficient to cover the income of the premises during the statutory period of redemption, and that the master in such case should strike off and sell the same to such trustee and issue its certificate of sale to the Chicago Title & Trust Co. and receipt for the full purchase price in lieu of cash, with or without the production of the bonds secured by the trust deed; that the Chicago Title & Trust Co. might take such receipt as purchaser at such sale for the use and benefit of all bondholders, and that upon confirmation of the master’s sale and ivithin 30 days from the master’s deed the trustee should issue beneficial trust certificates to each bond owner for the proportionate amount of the bonds and coupons held by such bond owners as the court might direct and approve; that the interest of the bond owners should be only in the beneficial certificates and considered and treated as personalty and that no lien or judgment against the bond owners should attach to the realty, except to the interest of the beneficiaries in the proceeds to be realized from the beneficial certificates, and that the title should remain vested in the trustee free and clear from any and all liens and incumbrances against any of the beneficiaries of the trust; that such sale should operate as a complete satisfaction and cancellation of all bonds secured by the trust deed, the bondholders taking only the beneficial trust certificates in lieu of the bonds; that the funds then in possession of the receiver, or any sum or funds to be collected thereafter, should be turned over to the trustee to apply in partial payment of the amount due under the decree in the order or priority as set forth in the decree, and that the trustee was authorized to pay out of the income of the premises any and all prior liens or taxes including the costs and expenses as found and determined by the decree and subsequent to the expiration of the period of redemption; that if there should be no redemption, the possession of the premises should be turned over to the trustee for the management and operation thereof under the jurisdiction and supervision of the court until its determination either by the acts of the parties or by the further order of the court; that in the event the trustee should acquire the property at the sale and no redemption should be made and the possession of the premises should be taken by the trustee, the trustee should be and was fully authorized and empowered to manage, operate, improve and protect the property; to lease and demise the same, or any part thereof with the improvements- thereon for any term of years, or lesser terms; to contract to make leases; to grant options to lease and to renew leases; to contract respecting the manner of fixing the amount of present or future rentals; that the trustee should have full power to grant options to purchase, to contract to sell and to sell the trust property, or any part thereof, under the authority and direction of the court, and further, subject to the direction of the court, to mortgage, pledge or otherwise incumber the trust property, or any part thereof, with the improvements thereon; to pay out and distribute the proceeds of any sale, mortgage or incumbrance on the property under the authority and direction of the court; to rent, lease, purchase or otherwise acquire personal property required for the operation and management of the real estate; to insure the property, to pay the costs thereof; to pay taxes, special assessments, both accrued and thereafter to accrue; to pay any and all amounts found to be due to the trustee pursuant to the decree of foreclosure; to reimburse itself for any funds advanced in connection with the management or operation of the property and to pay itself a reasonable charge or fee for services performed in connection with the operation and management of the property; to employ attorneys, secretaries, accountants, superintendents, engineers, etc., and that no person dealing with the trustee with reference to the property should be required to see to the application of the rents, purchase money or moneys borrowed or advanced on the premises or property, or be obliged to see that the terms of the trust had been complied with, or be obliged to inquire into the necessity or expediency of any act of the trustee, or to inquire into the power and authority of the trustee.

It was further ordered that no sale of the premises should be had nor. mortgage placed thereon without the consent and approval of the court upon due notice, etc. ; that the court retained jurisdiction of the subject matter of the trust and of the parties for the purpose of enforcing the terms and provisions of the decree, for passing upon the account of the trustee and of the rights of the parties involved until such time as the trust property would be disposed of in such manner as the court might direct and approve. The court also retained jurisdiction for the purpose of considering and approving any reorganization plan to be submitted to it by the parties in interest and to pass upon the fees and expenses in connection with such reorganization plan and with the management of the trust estate.

From this decree the Chicago Title & Trust Co. as trustee, the bondholders ’ committee and J. A. Paasche, holder of certain undeposited bonds have perfected this joint and several appeal.

It is apparent that in entering this decree the procedure was intended by the chancellor to comply with the rules stated in Straus v. Chicago Title & Trust Co., 273 Ill. App. 63. Iii behalf of the appellants it is urged, in the first place, that the decree entered in 1931 was a final decree; that the supplemental decree thereafter entered undertook to materially vary the terms and provisions thereof, and that the court was wholly without jurisdiction to do this after the term had expired at which the decree was entered. We are not impressed with this contention. The original decree reserved jurisdiction for certain purposes, and the supplemental decree was within the reservations thus provided. It is the general rule, as appears from the cases cited in the briefs, that the limitation of control of the court to the term at which the decree was rendered does not apply to the provisions inserted for the purpose of carrying the decree into effect. Sterling Nat. Bank v. Martin, 213 Ill. App. 566. To the same effect are Mariner v. Ingraham, 230 Ill. 130, and Totten v. Totten, 299 Ill. 43.

It is contended, in the second place, that since the trust deed in this case contains no provision, authorizing the trustee to bid for and acquire the property on behalf of all the bondholders, it was improper for the court to enter an order directing it so to do. There is a conflict in authority on this point as stated in the opinion filed in Straus v. Chicago Title & Trust Co., 273 Ill. App. 63, where this court said: “We are in accord with the reasoning of the courts of Connecticett, Pennsylvania, Kansas and Iowa, rather than with the Federal Court and the Supreme Court óf Michigan.” It is unnecessary to again review the authorities mentioned in that opinion further than to say that we adhere to the views there stated. It is, however, to be noted that Detroit Trust Co. v. Stormfeltz-Loveley Co., 257 Mich. 655, was a case which involved the construction of a statute peculiar to the State of Michigan. It is also to be noted that since the filing of the opinion in the Straus case the Supreme Court of Nebraska in Kitchen Bros. Hotel Co. v. Omaha Safe Deposit Co., 126 Neb. 744, after review of all the authorities, has cited with approval the doctrine as stated in the Straus case.

Appellants here also contend that the court was without jurisdiction to enter the decree complained of because all of the bondholders were not. made parties to the proceeding, and a number of cases such as Nolan v. Barnes, 268 Ill. 515; Sellers v. Rike, 272 Ill. 303; Riley v. Webb, 272 Ill. 537; Peoples Bank & Trust Co. of Rockford v. Gregory, 347 Ill. 397, are cited to that point. Those proceedings, however, were entirely different in their nature from this one. Here, the trustee asserts in its bill that it is the sole representative of the bondholders, and, indeed, the right to bring such suit is by the trust deed expressly lodged in the trustee to the exclusion of the bondholders. Moreover, every class of parties disclosed by the proceedings is represented in this appeal — the trustee, the committee, the depositors and the non-depositors. No one who asked to be heard was denied a hearing and each and every class is represented. The contention cannot be sustained.

It is further contended that even assuming complainant trustee has the power to purchase the mortgage property in behalf of the bondholders, the result of such purchase would be to impair their interest in the property, because the trustee would be unable to deliver a merchantable title. This contention is made upon the theory that if the property came into possession of the trustee it would be subject to all the burdens of a tenancy in common and, further, subject not only to dower rights of a surviving husband and wife but also to the lien of judgment creditors. Here, again, the contention was made and disallowed in the Straus case. We there said:

“From what we have said, we think it appears that in case the property is purchased by the trustee for the benefit of the bondholders, he will have active duties to perform under the direction of the chancellor, and can convey good title to the property when the court thinks this should be done; and that the bondholders’ only interest is to receive their share of the proceeds of such sale.”

Indeed, plaintiffs concede in their argument that where a trustee has active duties to perform the statute of uses will not be effective. They insist, however, that in this case the trustee would be without active duties to perform. We do not so read the decree and think Moll v. Gardner, 214 Ill. 248; Emery v. Emery, 325 Ill. 212, are conclusive against plaintiffs’ contention.

Plaintiffs contend in the next place that even assuming the trustee has implied power to purchase the property for the bondholders the exercise of that power is a matter for the discretion of the trustee and that the chancellor is without power or right to interfere with that discretion. We held to the contrary in the Straus case, citing Corkery v. Dorsey, 223 Mass. 97. Plaintiffs also contend that assuming the authority and power, it should not have been exercised by the chancellor because the bondholders’ committee on reorganization is ready to make a bid at the sale. The findings of the decree make it impossible for us to sustain this contention. Whatever the qualifications of bondholders ’ committees generally may be and whatever merit this particular committee may have, it would appear that up to this time little has been accomplished other than obtaining from the holders of the bonds the possession thereof and placing the bonds with the committee. The agreement signed gives the committee 21 years in which to work out a plan, and the answer of the committee is to the effect in substance that it does not know what it wishes to do until a federal statute is construed. We cannot hold that it was any abuse of discretion for the chancellor to refuse to exercise patience and forbearance further under such circumstances. At the speed at which the committee moved the heirs and legatees of the bondholders might possibly receive some benefit at some future time, but there were no reasonable grounds for the belief that reasonably immediate benefits were attainable through the committee. It was well within the discretion of the chancellor to provide a more efficient remedy under all the circumstances.

It is also urged that the supplemental decree fails to make proper provision for the payment of court costs, charges, prior liens, etc. The provisions of the decree already recited at length, we think show the contrary to be the fact. We have not undertaken to discuss the points and authorities cited by plaintiffs. Substantially every case upon which they rely worthy of discussion was analyzed and considered in the Straus case. As already said, we realize there is a conflict in the cases, but we adhere to the decision in the Straus case, and the facts of this case bring it within the rules there announced. In conformity with that opinion, and for the reasons stated therein, the decree appealed from is affirmed.

Affirmed.

0 ’Connor, P. J., and McSurehy, J., concur.


source: Caselaw Access Project

author: Mr. Presiding Justice O’Connor

license: Public Domain

text:
    Arvid J. Aarseth, Administrator of the Estate of Carl Aarseth, Deceased, Respondent, v. A. L. Stein et al., Defendants. A. L. Stein, Petitioner.
    Gen. No. 37,740.
    Opinion filed December 12, 1934.
    Miller, Gorham, Wales '& Adams, of Chicago, for appellant; Herbert C. DeYoung and Charles F.' White, "both of Chicago, of counsel.
    Helmer C. Patterson and Herman Waldman, both of Chicago, for respondent; Maurice Washer, of Chicago, of counsel.
   Mr. Presiding Justice O’Connor

delivered the opinion of the court.

Plaintiff brought suit against the defendants, A. L. Stein, Arthur D. Lewis, Louise and Thomas H. Loach, doing business as Dependable Garage, Willard Huron, Charles Formato and Joseph Savaglio, to recover damages on account of the wrongful death of Carl Aarseth, which plaintiff claimed resulted from the negligence of the defendants. It is said that the defendant Willard Huron was not served and the suit was dismissed as to him. At the close of plaintiff’s case the court directed a verdict as to the defendants A. L. Stein, Thomas H. Loach, Louise Loach, Charles Formato and Joseph Savaglio, and at the close of all the evidence the jury found the above named defendants not guilty as directed, and by its verdict the jury found the defendant Arthur D. Lewis guilty and assessed the plaintiff’s damages at $3,500. Afterward the defendant Lewis made a motion for a new trial and plaintiff also made a motion for a new trial. The court sustained Lewis ’ motion and awarded him a new trial, and sustained plaintiff’s motion and awarded him a new trial except as to Charles Formato and Joseph Savaglio. As to these two defendants judgment was entered on the directed verdict. The defendant Stein applied to this court for leave to appeal from the order allowing plaintiff’s motion for a new trial as to him. We granted this leave and the case is before us on the printed briefs of both parties.'

Since we have decided that the court was warranted in allowing a new trial to" Stein,-which is the only question before us, we refrain from discussing the facts in the case except as it is necessary in stating the reasons for our decision.

The record discloses that about 11 o’clock at night on May 28, 1932, the deceased, Carl Aarseth, a man not quite 20 years of age, was standing at the southeast corner of the intersection of Central avenub and Jackson boulevard, Chicago. Jackson boulevard extends east and west and Central avenue north and south. Defendants Charles Formato and Joseph Savaglio, with other persons, were riding east in a Studebaker automobile in Jackson boulevard, just west of Central avenue. A Buick automobile claimed to have been owned or operated by the defendants, or some of them, viz., Stein, Lewis or the Loaches, was being driven south in Central avenue. The Loaches operated a garage in Avhich.the Buick car Avas kept. The two cars collided at the intersection and the Buick Avas throAvn over to the southeast corner of the intersection up" against a building, striking Carl Aarseth and injuring him, as a result of which he died. It is to recover for his death under the Injuries Act that the present suit was brought.

The defendant Stein filed a plea of not guilty and another plea denying oAvnership and operation of the Buick car at the time of the collision. There is eAddence tending to show that the defendants Thomas H. Loach and Louise Loach conducted a garage known as the Dependable Garage, and the defendant Willard Huron was employed by them in the garage; that the Buick car was being kept in the garage by the defendant Stein and at times when Stein would drive the car to the garage, Huron Avould drive Stein to his home and return the car to the garage. The defendant Thomas H. Loach, called by plaintiff under section 60 of the Civil Practice Act, Cahill’s St. ch. 110, ¶ 188, testified that on May 28,1932, Stein came to the garage and was taken home in the Buick car, Huron driving the automobile. It is not clear Avhether the accident occurred while Stein was being driven to his home or while Huron was returning to the garage with the automobile. Some tim'e after the accident, but not on the night of the accident, he talked to defendant Stein about the accident. “Mr. Stein wanted to. know who Avas going to take care of the damage on his car.” Whether Huron at the time he was driving the Buick car was acting for the owners of the garage or for Stein is uncertain.

Upon a consideration of all the evidence in the record we think the court ought not to have directed a verdict in favor of the defendant Stein, and that afterward when he discovered the error was warranted in awarding plaintiff a new trial. While the evidence in the record is far from satisfactory, we think the action of the court in awarding the new trial was warranted. There is no contention that Carl Aarseth was in any way negligent; nor is there any suggestion that his death was not caused through the negligence of defendants or some of them. Aarseth was standing a considerable distance from the curb at the southeast corner of the street intersection, and through the negligent operation of one or both of the automobiles a collision occurred, the Buick car struck and killed Aarseth and ran into a building on the corner. Obviously, in this situation plaintiff has a right to recover from some one. Sec. 58 of the Civil Practice Act, Cahill’s St. ch. 110, ¶ 186, and other provisions of that act, and the rules of the Supreme Court furnish ample machinery for discovering before trial who was to blame.

In Ladd v. Cochran & McCluer Co., 274 Ill. App. 427, in a specially concurring opinion it was said: “It is to be hoped that hereafter most, if not all, of the facts will be adduced before the actual trial begins, pursuant to section 58, and other sections of the new Practice Act in connection with Rules 17, 18 and 19, adopted by our Supreme Court, so that there will be fewer appeals and reversals for failure to bring out the facts.”

The order of the circuit court of Cook county awarding a new trial to the plaintiff as to the defendant Stein is affirmed.

Order affirmed.

McSurely and Hatchett, JJ., concur.


author: Mr. Justice Matchett

text:
    Chicago Title and Trust Company, Appellant, v. Max Robin et al., Defendants. Walter H. Hildebrand, Appellee, v. Thomas R. Ferguson et al., Appellants.
    Gen. No. 37,632.

      Opinion filed December 18, 1934.
    Miller, G-orham, Wales & Adams, of Chicago, for appellants Thomas R Ferguson et al.
    Berger & Newmark, of Chicago, for appellant. Chicago Title &s Trust Co.
    Warren B. Buckley and James A. Velde, both of Chicago, for appellant Anna Rychecky.
    Concannon & Dillon, of Chicago, for appellee.
   Mr. Justice Matchett

delivered the opinion of the court.

This is another case in which the chancellor has applied to the situation before him the rules announced in Straus v. Chicago Title & Trust Co., 273 Ill. App. 63, followed in the ease of Chicago Title & Trust Co. v. Bamburg, 278 Ill. App. 1.

On April 1, 1931, the Chicago Title & Trust Co. as trustee filed its bill to foreclose a trust deed made April 1,1926, by Max Robin and Belle Robin, his wife, to secure the payment of 77 bonds for the aggregate amount of $28,500. On March 30,1932, a decree of foreclosure and sale was entered. It found the sum of $27,507.43 to be due subject to a lien for costs, etc., to the amount of $2,258.93. The property was advertised, and on March 20, 1934, the master filed his report showing the sale of the premises to Carl Devoe for $5,000. The report of sale states that if the bid is confirmed by the court, payment will be made in cash to the amount of $3,254.28 and the balance in bonds and coupons; that the cash will be retained and distributed as follows: $125 for trustees’ fees, $2,000 to William B. Berger for complainant’s solicitors’ fees, $515.90 for master’s fees and expenses, and $613.38 to complainant as trustee for the use and benefit of the owners and holders of non-deposited bonds and interest coupons.

On March 21, 1934, Walter H. Hildebrand filed his intervening petition in which he recited that he was the owner of bonds Nos. 22 and 32 and requested the institution of foreclosure proceedings with an offer to indemnity; that on May 28, 1931, a bondholders’ committee' (naming the individuals composing it) solicited bondholders to deposit bonds with it under an agreement of that date (a copy of which is attached to the petition); that petitioner is informed that bonds to the amount of $18,500 were deposited with this committee prior to the entry of the decree of foreclosure on March 30, 1932; that Devoe purchased the real estate on behalf of the bondholders’ committee.

Setting up other facts as hereafter recited in the supplementary decree, the petition prayed that the sale to Devoe might be disaffirmed, the master directed to readvertise, that the court determine the full fair value of the real estate, construe the trust deed and the powers of the trustee thereunder, modify and enlarge the provisions of the trust deed and direct the trustee to bid at the resale for the bondholders the full, fair value of the real estate unless there was a bona fide bid for cash; that the master might issue a certificate of sale to the trustee and in such case the court should instruct the trustee as to the management of the estate.

The petition also prayed for general relief. All the parties to the action, the members of the bondholders ’ committee, non-depositing bondholders, and the trustee were made defendants to the petition. The trustee, Anna Rychecky (a non-depositing bondholder), the bondholders’ committee and Carl Devoe answered denying that petitioner was entitled to the relief for which he prayed.

The evidence was taken by the chancellor upon the issues thus formed, and on May 21, 1934, the decree appealed from was entered. It recites the proceedings to obtain jurisdiction of the parties in interest, including unknown owners, etc., and prior proceedings including the sale by the master and the deposit of bonds with the bondholders’ committee under agreement dated May 28,1931. It finds that no part of the amount found due under the decree of March 30,1932, has been paid, the advertisement of the premises by the master and the sale to Devoe, the organization of the bondholders’ committee and the members of it; that Devoe acted for the committee; finds the improvements on the premises and that the fair value of the same at the time of the execution of the trust deed was not less than $35,000; that the full, fair value of the same at the present time is not less than $19,000; that unpaid taxes amount to approximately $2,500, and that the fair value of the real estate at the present time, subject to the tax liens, is not less than $15,000; that the bid of Deyoe is grossly inadequate and does not represent one-third of the real value of the real estate; that no one other than the Robins are. personally liable and that they have no apparent funds or other property with which to pay any deficiency decree that might be rendered; that if the sale to Carl Devoe is approved, the non-depositing bondholders will receive less than 10 cents on the dollar; (as a matter of fact less than 9 cents); that the financial depression has practically destroyed sales of real estate in Chicago other than by persons forced to sell at a sacrifice; that there practically have been no purchases at foreclosure sales other than by owners of the mortgage, or purchases made on behalf of bondholders’ committees; that in practically every case where the bondholders’ committee has purchased, the property was bid in at only a nominal part of its real value and the non-depositing bondholders received only a few cents on the dollar; that owing to those conditions it cannot be reasonably expected that upon a resale the premises will bring anything near the real value; that the owners and holders of the bonds will suffer serious damage and injury unless the court fixes and determines the full, fair value of the real estate and unless the Chicago Title & Trust Co. as trustee is instructed and directed by the court to bid at such sale for the use and benefit of all owners and holders an amount equal to the present full, fair value of the real estate; that Hildebrand and Anna Bychecky are respectively owners and holders of certain of these bonds, none of which has been deposited with the committee; that the committee owns and holds $18,500 of the bonds, the remainder being held by divers persons unknown; that Anna Bychecky and the committee were made respondents to the end that they might represent persons who were similarly situated and in order that such persons be bound and concluded by the decree; that the trust deed provides that in case of default the trustee may, inter alia, proceed to protect and enforce the rights of the trustee and the bondholders by appropriate proceedings at law or ill equity, whether for the specific performance of any covenant, condition or agreement, or in aid of the execution of any power therein granted, or for the enforcement of such other appropriate legal or equitable remedy as may in the opinion of the counsel be most effectual to protect and enforce the rights aforesaid; that upon default the trust became active; that the prevailing financial, social and chaotic conditions present problems in the administration of the trust which would not have been foreseen by the creators of the trust and for which adequate provision was not made; that the intervening petitioner and the trustee are entitled to the orders and directions of the court with respect to the interpretation and construction of the trust deed, the determination of the rights, powers, duties and obligations of the trustee thereunder, and for the instructions and directions of the court with respect to the administration of the trust and the protection afforded thereby.'

The decree further finds that the master’s sale should be disaffirmed and disapproved by the court, the certificate of sale issued by the master be canceled and annulled, and the premises resold by the master as ordered by the decree; that the Chicago Title & Trust Co. as trustee is vested with power and authority to see that the real estate conveyed is not sacrificed and lost to the owners and holders of the bonds and coupons secured thereby and that upon such resale the trustee is vested with power and authority in the event no bona fide bid of $15,000 is made at the sale for the benefit of the owners and holders of the bonds, to bid an amount equal to the present full, fair value of the real estate, in order that the purposes of the trust may be effectuated and the 'owners and holders of the outstanding bonds and interest coupons may have the full benefit of the security given.

It is therefore ordered and adjudged that the sale be set aside and the certificate of sale canceled and annulled; that there should be a resale at which the trustee should bid in the premises in the event there was no bona fide cash bid for the price fixed; that in ease of such purchase by the trustee the trustee is authorized to use the indebtedness found due or so much as is necessary to make payment of the bid; that a certificate of sale in such case should be issued to the trustee and in case of failure to redeem a deed should issue to the holder of the certificate; that the Chicago Title & Trust Co. is declared to be the trustee of an active trust in the execution of the powers and directions therein enumerated, and that if the Trust Co. shall be the owner and holder of the certificate of sale at the expiration of the period of redemption, it shall be entitled to the premises, and is ordered and directed to hold, manage, operate, lease, sell, convey and otherwise deal with the real estate as such trustee for the use and benefit of the owners and holders of the outstanding and unpaid bonds and interest coupons, subject to the further order and direction of the court.

It was further ordered that the right, title and interest of the owners and holders of the bonds and interest coupons be declared to be personal property and not real estate, and that the only right, title and interest of the bondholders to any of the assets of the trust should be to receive their proportionate share of the income, proceeds and avails of the real estate and the other assets of the trust; that in case the Trust Co. should become the purchaser at the sale it should have a first and prior lien upon the assets of the trust and the rents, income, proceeds and avails thereof in the sum of $2,258.95, as found due by the decree of March 30,1932, and in addition thereto for the amount of fees of the master as fixed by the decree and additional fees which might be allowed to the master, including his commissions and charges on such sale and all costs of the proceeding advanced and paid by the trustee and for its reasonable compensation to be fixed by the court for administering the trust, and that it might pledge the master’s certificate of sale or any assets of the trust upon such terms and conditions as the court might thereafter authorize and direct for the purpose of raising funds with which to meet these obligations; that the court, in addition to other reservations, retained jurisdiction of this proceeding for the purpose of thereafter fixing from time to time reasonable compensation to be paid the trustee for administering the trust and for the purpose of thereafter fixing and determining the terms and conditions upon which the trustee might pledge the assets of the trust for the purposes aforesaid; that the court reserved jurisdiction of this cause and of all the parties, for the purpose of providing for the disposition of the rents, issues and profits thereafter to accrue from the premises and any proceeds from the sale thereof; for the purpose of entering a personal decree for deficiency, if any, against Max and Belle Robin and to provide for execution thereof; for the purpose of directing, advising and instructing the Trust Co. in the execution and management of the trust and with respect to any question arising in connection therewith; to determine all controversies between any persons claiming title to ownership of or interest in, any unpaid bonds or interest coupons issued under and secured by the trust deed, and to determine the manner in which the interest of the cestuis que trust in the trust shall be evidenced and the manner in which the interest may be assigned.

From this supplementary decree the members of the bondholders’ committee, Carl Devoe and the Chicago Title & Trust Co. have perfected their appeal, while Anna Rychecky prosecutes a separate appeal in her own behalf. She contends that the decree improperly directed the trustee to purchase at the resale and to manage the property for the benefit of the bondholders, because of the absence of necessary parties to the proceeding, because the terms of the trust deed did not warrant an implication of power in the trustee so to do, and because the provisions in the decree that after the sale the trust will be active and the interests of the bondholders in personal property are contrary to established principles of law. She insists that that portion of the decree which disapproved the sale to Devoe and directed a resale should not be disturbed; that it was within the discretion of the chancellor to fix an upset price and that he did not abuse his discretion in doing so. She contends generally that a court of equity has power in its discretion to establish an upset price before a judicial sale.

In behalf of the trustee, the bondholders ’ committee and Devoe, it is contended that the decree should be reversed because it impairs the obligations of the contract entered into by the owners of the premises and the holders of the bonds; that the depression does not warrant changing the provisions of the contract of the parties as expressed in the trust deed; that, at any rate, the court erred in directing the trustee to bid because a reasonable reorganization was otherwise available, because no method of obtaining funds to satisfy the prior lien was provided, and because (as contended by Anna Rycheeky) all the bondholders were not before the court. They also contend that the court’s order incumbers the title to the real estate; that the court was not warranted in interfering with the discretion of the receiver as to whether it should bid and that the amount of the minimum price to be accepted at a resale was erroneously arrived at.

Practically all these points have been passed on by this court, contrary to the contentions of appellants, in Straus v. Chicago Title & Trust Co., 273 Ill. App. 63, and in Chicago Title & Trust Co. v. Bamburg, 278 Ill. App. 1. In the last named case the contention was made, citing the same authorities here relied on, that the court was without jurisdiction to enter the decree because all the bondholders were not made parties to the proceeding. We said:

“Those proceedings, however, were entirely different in their nature from this one. Here, the trustee asserts in its bill that it is the sole representative of the bondholders, and, indeed, the right to bring such suit is by the trust deed expressly lodged in the trustee to the exclusion of the bondholders. Moreover, every class of parties disclosed by the proceedings is represented in this appeal — the trustee, the committee, the depositors and the non-depositors. No one who asked to be heard was denied a hearing and each and every class is represented.” In addition to what was there said, it will be noticed that here each and all of the bondholders were made parties either expressly by name or under the designation of “unknown owners.” The contention was also made in those cases that since the trust deed contained no provision expressly authorizing the trustee to bid for and acquire the property in behalf of all the bondholders, it was improper for the court to enter an order directing it to do so, and such direction would amount to the impairment of the obligations of the contract between the parties. With reference to that point we said in the Bamburg case:
“There is a conflict in authority on this point as stated in the opinion filed in Straus v. Chicago Title & Trust Co., 273 Ill. App. 63, where this court said: ‘We are in accord with the reasoning of the courts of Connecticut, Pennsylvania, Kansas and Iowa, rather than with the Federal Court and the Supreme Court of Michigan.’ It is unnecessary to again review the authorities mentioned in that opinion further than to say that we adhere to the views there stated. It is, however, to be noted that Detroit Trust Co. v. Stormfeltz-Loveley Co., 258 Mich. 655, was a case which involved the construction of a statute peculiar to the State of Michigan. It is also to be noted that since the filing of the opinion in the Straus case the Supreme Court of Nebraska in Kitchen Bros. Hotel Co. v. Omaha Safe Deposit Co., 126 Neb. 744, after review of all the authorities, has cited with approval the doctrine as stated in the Straus case. ’ ’

The contention was there also made that the decree of the court would incumber the title to the real estate and the trustee would be unable to deliver a merchantable title. On that point in the Bamburg case we said:

‘ ‘ This contention is made upon the theory that if the property came into possession of the trustee it ivould be subject to all the burdens of a tenancy in common and, further, subject not only to dower rights of a surviving husband and wife but also to the lien of judgment creditors. Here, again, the contention was made and disallowed in the Straus case. We there said:
“ ‘From what we have said, we think it appears that in case the property is purchased by the trustee for the benefit of the bondholders, he will have active duties to perform under the direction of the chancellor, and can convey good title to the property when the court thinks this should be done; and that the bondholders’ only interest is to receive their share of the proceeds of such sale. ’
“Indeed, plaintiffs concede in their argument that where a trustee has active duties to perform the statute of uses will not be effective. They insist, however, that in this case the trustee would be without active duties to perform. We do not so read the decree and think Moll v. Gardner, 214 Ill. 248; Emery v. Emery, 325 Ill. 212, are conclusive against plaintiffs’ contention. ’ ’

The contention ivas also made in those cases that the direction of the trustee by the court to bid against its own inclination and judgment was an abuse of discretion on the part of the chancellor. We held to the contrary in the Straus case on the authority of Corkery v. Dorsey, 223 Mass. 97. The contention was also made in the Bamburg case, as here, that the court erred in' directing the trustee to bid because a bondholders’ committee had prepared a fair reorganization plan which was available. Whatever of merit or demerit there may be in the intentions expressed by the bondholders’ committee, it is apparent that so far as the non-depositing bondholders are concerned, the plan means practically that they will be deprived of their property. The deposit agreement which appears in the record is attached to the intervening petition and made a part of it. We shall not undertake to discuss its provisions in detail further than to say that the bondholders who deposited thereunder seem in name at least to have put their property entirely outside their own control and that the proceeds which they will receive therefrom both as to time and amount will be according to the pleasure of the committee. The plan adopted by the court has the merit of placing the property of all the parties interested under the jurisdiction of the chancellor and within the protection of his conscience.

Here, as in the Straus and Bamburg cases, it is urged that no proper provision was made for the payment of court costs, prior liens, etc. We think the provisions of the decree sufficient in that regard.

The duty of the chancellor under circumstances such as here appear is aptly expressed in Investment Registry v. Chicago & M. E. R. Co., 212 Fed. 594, where the court said:

“Most commonly the controversy over the sale arises when there are nonassenting bondholders. When such a controversy is on, the chancellor in our opinion not only has the right but owes the duty of being vigilant to see, on the one hand, that a dissenter be not permitted to create a maneuvering value in his bonds by opposing confirmation, and, on the other, that the majority does not use its power, unique in sales of this class, to oppress a helpless minority. . . .
“Courts of equity should be deemed no less powerful today than when the first chancellor looked to his conscience for guidance, to make fair dealing between man and man the test. And from what other source came, or could come, the recognized practice, in sales of this class, of the court’s ascertaining in advance of sale the minimum value of the property and thereupon fixing a minimum selling price ? ’ ’

In conformity with this view of the power and duty of a chancellor the rules announced in the Straus case were declared by this court, and the power of a chancellor in his discretion to direct a bid by the trustee would seem to be a necessary complement to the rule (well established) that a chancellor may in his discretion fix an upset price which will guarantee the fairness of' a sale. That rule began with no less an .authority than Lord Eldon in Jervoise v. Clarke, Jac. & W. 388, 37 English Reports 423 (1820). It has been followed in numerous cases in many jurisdictions. Provident Life & Trust Co. v. Camden & T. Ry. Co., 177 Fed. 854; Ex parte Equitable Trust Co., 231 Fed. 571; Guaranty Trust Co. v. Chicago, M. & St. P. Ry. Co., 15 F. (2d) 434; Blair v. St. Louis, H. & K. R. Co., 25 Fed. 233; Palmer v. Bankers’ Trust Co., 12 F. (2d) 747; Clinton Trust Co. v. 142-44 Joralemon St. Corp., 237 App. Div. 789, 263 N. Y. S. 359; United Building & Loan Ass’n v. Neuman, 113 N. J. Eq. 244, 166 Atl. 537; Investment Registry v. Chicago & M. E. R. Co., 212 Fed. 594.

We hold the relief granted in this case was within the discretion of the chancellor and that his discretion was not abused. The decree is therefore affirmed.

Affirmed.

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


author: Mr. Presiding Justice Hebel

text:
    Arthur P. Hagerman and Paul Maton, Trading as Hagerman, Weiner & Maton, Appellees, v. South Park Commissioners, Appellant.
    Gen. No. 37,072.

      Opinion filed December 19, 1934.
    George E. Gorman, of Chicago, for appellant.
    • Sylvan S. Eosenbaum, of Chicago, for appellees; W. F. Struokmann and Leo L. Weil, both of Chicago, of counsel.
   Mr. Presiding Justice Hebel

delivered the opinion of the court.

This is a first class contract action in the municipal court of Chicago, brought by the plaintiffs against the defendant to recover moneys paid under the terms of a contract, in which action the court entered a judgment against the defendant for the sum of $12,854.95 and costs of court upon a finding of the court for the plaintiffs upon the statement of claim and affidaxdt attached thereto. Upon motion of the plaintiffs the affidavit of merits of defendant xxas stricken from the files as constituting no defense, either in part or in xvhole, to the statement of claim, and the defendant electing to stand by its affidavit of merits, the court entered judgment for the amount above indicated, and this is defendant’s appeal from the judgment to this court.

The statement of claim sets forth that on the 14th day of March, 1929, the defendant advertised for bids for the exclusive privilege of operating refreshment concessions in the smaller parks under control of said defendant; that plaintiffs xvere successful bidders and entered into a contract with the defendant, on May 22, 1929, of which certain specifications attached to this contract were a part. The contract also provided for a bond conditioned for the performance of the provisions of the contract; that the plaintiffs were t,o pay to the defendant the sum of $12,700 in 20 equal payments of $635 each, on the first days of June, July, August and September in the years 1929, 1930, 1931, 1932 and 1933; that in compliance with the provisions of said contract, the plaintiffs paid $3,810; that the indemnity bond required cost the plaintiffs $500; that under and by virtue of the contract, the plaintiffs were forced to and did expend in and about the improvement, painting and repair of certain buildings occupied by them the sum of $631.19; that as a part of said contract the plaintiffs were required to and did purchase from the defendant for the sum of $12,854.95 five refreshment stands, each in a different small park, and also checking boxes and coat racks in four of the skating houses which sum the plaintiffs paid to the defendant, and thereafter entered into the possession of said property; that the defendant is a body politic and corporate; that its powers are conferred by the statute of the State of Illinois; that nowhere has it acquired the right, nor did it at the time of the solicitation of bids for or the making of the contract have the right to sell buildings to the plaintiffs as it knew or should have known; that such sale was a sale of public buildings located on property belonging to the State of Illinois, which was not made by any order of court nor by virtue of any legal process, nor by the authority of any power, right, privilege or duty conferred upon the South Park Commissioners; that such sale, being contrary to and in excess of any express, implied, or delegated powers, ivas and is wholly void; that the alleged purchase price of said buildings was neither the rental, profit, reservation, share or profit, or emolument attendant upon the said contract in the execution thereof, or in the sale and dispensing of foodstuffs, confectionery, or other edible articles contemplated in said contract and specifications; that the said sum of money paid by the plaintiffs to the defendant was received by the defendant for the use of the plaintiffs, and that there is now due to the plaintiffs by reason thereof the sum of $12,854.95, with interest thereon from the 28th day of May, A. D. 1929, until the date of judgment, at five per cent per annum; that the property in question had been purchased by the defendant from the previous concessionaire, who had acquired the same under a contract identical with the contract and specifications of the plaintiffs, and that the defendant had purchased or possessed a right to purchase said property from said previous concessionaire for the sum of $12,854.95, less 10 per cent per annum for the term of the previous concessionaire’s contract; that although often requested, the defendant has refused and still does refuse to pay any part thereof to the plaintiffs, wherefore the plaintiffs sue for these various sums, they being set out in detail in the statement of claim, and there being attached to the said statement of claim an affidavit of plaintiffs’ claim in due and regular form; and then, as a part of the statement of claim, a copy of the specifications referred to is set out in haec verba.

That particular provision of the' contract which plaintiffs claim is void, as set forth in the statement of claim, and in the specifications, is in exact words as follows:

“A number of small summer refreshment stands or buildings together with the checking boxes and coat racks in the skating houses at Sherman, Ogden, McKinley and Hamilton Parks are the property of the present concessionaire from whom the Commissioners will purchase this property for the sum of Twelve Thousand, eight hundred fifty-four dollars and ninety-five cents ($12,854.95) in accordance with the terms of his contract.
“The new concessionaire will be required to purchase from the Commissioners for his use this concessionaire-owned property at the same price for which the Commissioners bought it from the present concessionaire, namely, twelve thousand, eight hundred fifty-four dollars and ninety-five cents ($12,854.95). This property will in turn he purchased from the new concessionaire at the expiration of his contract at the above cost to him less a depreciation of ten per cent (10%) per annum dated from the first of the month following the award of contract.
"The bidder whose proposal for the concession is accepted, shall therefore within five (5) days after being notified of such acceptance furnish to the South Park Commissioners a certified check payable to them for the sum of twelve thousand, eight hundred fifty-four dollars and ninety-five cents ($12,854.95) as explained in detail above to cover the purchase by him of the concessionaire-owned property.
"This concessionaire-owned property consists of the following:
"Building at Location 1 — Sherman Park, refreshment stand.
"Building at Location 3 — Ogden Park, refreshment stand.
"Building at Location 5 — McKinley Park, refreshment stand.
"Building at Location 7 — Hamilton Park, refreshment stand. '
"Building at Location 9 — Calumet Park, refreshment stand.
"Checking boxes and coat racks in the skating houses at Sherman, Ogden, McKinley and Hamilton Parks.”

The defendant moved to strike the statement of claim from the files as insufficient in law, which motion Avas overruled, and thereupon the defendant filed an affidavit of merits, claiming, among other things, said contract to be valid and binding, setting forth the nature of the refreshment stands and that they were neither by defendant nor other persons, at any time, treated as realty, but in the nature of trades fixtures, and personal property; that they were maintained for the public use, benefit, and recreation of all persons who might lawfully go to said parks and desire refreshments ; that the contract iñ question, while nominally a sale, was in fact merely a right to temporarily use the refreshment stands, with a compensation to be paid by the plaintiffs for the use and depreciation thereof, as evidenced by the fact that at the end of the term they were not to be removed, but an adjustment was to be made with the plaintiffs with respect thereto; that calling the matter a sale did not make it a sale, either in law or in fact; that defendant was authorized to purchase such personal property for use in the parks as was necessary or convenient for the general public, provided it was adapted to park purposes, and to sell the same when it appeared to the defendant to be desirable so to do from the standpoint of the public and the taxpayers; that the only occasion when it was necessary for the defendant to obtain other authority than its own for a sale was in the case of land, which was not the fact under the contract; that the plaintiffs, having enjoyed the benefit of said contract, are now estopped to make the claim set forth in this suit; that the statement of claim is insufficient in law to justify a recovery or judgment in their favor, which affidavit of merits was on motion of plaintiffs stricken from the files as insufficient to constitute any defense to the claim of plaintiffs either in whole or in part.

The question is whether the contract entered into by the parties in this cause is void for want of power conferred by law upon the defendant, and whether the plaintiffs having paid money to the defendant under a void contract can therefore maintain an action against the defendant to recover the money so paid in an action for money had and received.

The South Park Commissioners are vested by law with authority to manage, control, maintain and regulate the parks for the benefit, health and recreation of the public. Section 13 of the Statutes of February 24, 1869, provides, in part, for the powers and duties of the South Park Commissioners, as follows:

“Sec. 13. Power to govern. The said board shall have full and exclusive power to govern, manage and direct said park; to lay out and regulate the same; to pass ordinances for the regulation and government thereof; to appoint such engineers, surveyors, clerks, and other officers, including a police force, as may be necessary; to define and prescribe their respective duties and authority; fix the amount of their compensation ; and, generally, in regard to said park, they shall possess all the power and authority now by law conferred upon, or possessed by, the Common Council of the City of Chicago, in respect to the public squares and places in said city; and it shall be lawful for them to commence the improvement of said park as soon as they have obtained one hundred acres of the premises herein described.”

While it is true that a corporation can only exercise such powers as are granted, it may also exercise such further powers incidental to the general powers of the corporation. Therefore, a contract of a corporation which is outside the object of its creation as defined in the law of its organization, which powers were granted by the legislature, is void, and of course the contract is of no legal effect But where the power exercised by a corporation is incidental and used to carry out the general purpose of a corporation and is within the scope of such general authority conferred by the legislature, the corporation, as well as persons contracting with it may be estopped to deny that it has complied with the legal formalities prerequisite to its existence or to its actions.

The plaintiffs contend that the defendant has only such power and authority conferred by the act approved and in force February 24, 1869, together with such power as is possessed by the common council of the City of Chicago in respect to the public squares and places in the city, and in the exercise of power, is limited to the time the power is granted. The plaintiffs further point to the various acts subsequently passed and in force, and contend that there is no power granted by any statute, public or private, that confers power upon the South Park Commissioners to enter into the contract upon the terms provided for in the contract in question. While a grant of power to a municipal or quasi-corporation is to be strictly construed, still the court will not so strictly construe the grant of power as to destroy the purpose for which the grant was passed by the legislative body.

The rule in support of the position we have indicated is well settled in the opinion of the Supreme Court in the case of National Home Building & Loan Ass’n v. Home Savings Bank, 181 Ill. 35.

The contract in question may not have strictly complied with the legal formalities; still the purpose of such an instrument is best stated by the Supreme Court in the case of Furlong v. South Park Com’rs, 320 Ill. 507, a somewhat analogous case, where the court said:

“Appellee was vested by law with authority to manage, control, maintain and regulate the park for the benefit, health and recreation of the public. . . . Park purposes are not confined to a tract of land with trees, grass and seats, but mean a tract of land ornamented and improved as a place of resort for the public, for recreation and amusement of the public. The construction and maintenance of a building for museums, art galleries, botanical and zoological gardens, and many other purposes, for the public benefit, are recognized as legitimate purposes.”

What the court said in its opinion applies and is applicable to the contract between the parties in the instant case. The agency employed by the defendant was to carry out a proper activity of the defendant as a municipal entity. It is not material whether the contract in question is to be construed to be a sale, lease, or a license. The real purpose of the contract was to benefit the public. The plaintiffs in this case enjoyed the benefit of the contract undisturbed, and so far as we are able to determine, were still in possession at the time the lawsuit was instituted, and so in possession of the various stands located at the places provided for by the contract, and as a party thereto received the benefits provided for in the contract.

The contract does not by any of its provisions convey to the plaintiffs any interest in the real property in the park district.

The plaintiffs contend that the statute requiring certain legal formalities to’be complied with in the exercise of a right to enter- into a contract, must be performed by the defendant, such as the passing of an ordinance of the park commissioners which authorizes the publication and sale of personal property by a three-fourths vote of the members of the commission. The answer to this contention is that the record does not disclose that the legal formalities were not complied with, and there is a presumption in the performance of official duties that such formalities were properly performed at the time the contract was entered into by the parties. The facts are that the plaintiffs did not object upon the above ground, but went into possession of the property under the provisions of the contract, and while in possession retained the benefits derived from such possession, and plaintiffs are estopped at this time to raise this question.

The defendant by its contract with the plaintiffs permitted plaintiffs to use the refreshment stands, or the buildings so-called, and for the use thereof paid to the defendant $12,854.95 for the period of the contract, and under its terms the defendant at the end of the period was to deduct 10 per cent for depreciation for each of the five years used. It is significant that the plaintiffs are not granted authority to sell the refreshment stands at the expiration of the term of the contract, but are to receive the amount advanced, less the amount of 50 per cent depreciation for the full period, and the plaintiffs are limited in the use by the contract, which would indicate that the plaintiffs’ possession of the property was limited, and in a true sense, not a sale of the personal property to the plaintiffs, as contended for by the plaintiffs.

For the reasons stated in the opinion, the trial court erred in striking the defendant’s affidavit of merits, and the judgment will be reversed and the' cause remanded with directions that the court enter such orders as may be consistent with the views expressed in this opinion.

Reversed and remanded with directions.

Wilson and Hall, J J., concur.


text:
    The Warner Construction Company, Appellee, v. The Commissioners of Lincoln Park, Appellant.
    Gen. No. 37,081.

      Opinion filed December 19, 1934.
    Rehearing denied and opinion modified January 9, 1935.

      James M. Slattery, of Chicago, for appellant; William H. Beckman and George E. Woods, both of Chicago, of counsel.
    Chester E. Cleveland, of Chicago, for appellee.
   Mr. Presiding Justice Hebel

delivered the opinion of the court.

This is an appeal by the Commissioners of Lincoln Park, a municipal corporation, as defendants, from a judgment of the superior court of Cook county, Illinois, entered upon a verdict of a jury for $42,030.12, and is based upon a suit instituted by the plaintiff wherein the plaintiff filed the common counts on August 17, 1931, together with a bill of particulars claiming a total of $47,774.78, due from the defendant. Nine different items made up this total. The defendant filed a plea of the general issue with an affidavit of merits denying liability for the entire amount, except $1,000. No question is raised as to the materiality or form of the pleadings.

It appears from the facts in the controversy that the defendant advertised for bids for the construction of 38 sub-piers to support columns for the roadway forming the approach from Grand avenue to the bridge over the Illinois-Michigan Canal or Ogden Slip in the Lincoln Park District. The approach is one section of the Outer Drive Improvement. The sub-piers were in nine bents or rows running east and west and extending from the surface of the ground down to solid rock or a distance of roughly 115 feet. The various diameters were four feet and four feet six inches and five feet. Bent 18 was along the south wall of the North Pier Terminal Building. The unit price bid by the plaintiff and accepted by the Lincoln Park Commissioners, and as provided in the contract, was $1.43 per cubic foot for the six complete cylindrical piers in Bent 18 and $1.38 for the 32 complete cylindrical piers in the other bents. The unit price in Bent 18 was higher, due to the possibility that shoring or underpinning might be necessary.

At the time the defendant advertised for bids for the construction of the described improvement, the Commissioners furnished the plaintiff a printed form of proposal with a blank space in which to furnish the price bid per cubic foot for the concrete piers. The plaintiff filled in the prices in such proposal, viz., $1.43 per cubic foot for the piers in Bent 18 and $1.38 per cubic foot for the piers in Bents 29 to 39 there being no Bent 37. These prices covered all the work and materials used in constructing the piers. The plaintiff also inserted in the blank for piers constructed under air pressure an additional $12 per cubic foot, which is almost eight times the cost of building them not under air pressure.

After this proposal was submitted to the Commissioners, the Warner Company, at the request of J. M. Egan, chief engineer for the Commissioners, wrote him a letter dated July 7, 1930, outlining how it, the plaintiff, proposed to do the work.

After July 7, 1930, the Warner Company received a communication from Hugh E. Young, another engineer for the Commissioners pursuant to which there was a meeting at Young’s office of T. R and T. L. Warner, representing the plaintiff, and Young, representing the Commissioners. At this meeting Young said the matter of handling the work had been taken out of his hands, but had been returned to him, and he wanted to be sure that the work was properly done and avoid, if possible, the use of air and that if air were used the cost would possibly be $1,000,000. Young then presented a typewritten paper which was tentatively a form of addenda and asked the Warners if they would be willing to do the work according to such addenda. The typewritten addenda as prepared by Young, among others, contained the following paragraphs:

“That in the event that wood lagging is found to be impractical, to provide and drive in place a ring of steel piling or a steel shell around the tops of all cylindrical piers in this contract. This shall be of sufficient length to penetrate at least ten feet into non-water bearing soil and shall be at least two feet, and not greater than three feet larger than the plan diameter of each caisson. It shall be braced by steel rings, spaced at proper intervals, and made up of semi-circular arcs, bolted together at ends. . . .
“That under no circumstances shall compressed air be used for excavating or placing concrete in cylindrical piers, unless, in the opinion of the engineer, all other methods are impossible. Then it shall only be used on such caissons and to such depth as the engineer directs. . . .
“No extra compensation will be allowed for the use of the different methods of construction as indicated above. ’ ’

■ Young, after giving a copy of the addenda to the representative of the plaintiff, asked if the plaintiff was willing to do the work in the manner provided in the addenda, and T. L. Warner asked to have the addenda so he could take it to their office and study it and give their decision the next day. This was permitted, and the next day the plaintiff, through its agent, returned the addenda to Young after changing it by substituting “impracticable” for- “impossible” and inserting after the clause in Young’s draft of the addenda, viz.: “No extra compensation will be allowed for the use of the different, methods of construction as indicated above” the words, “other than actual sheeted areas which will be paid for on unit cubic feet prices.”

On July 17, 1930, Young returned the addenda/ as revised, to the Warner Company. On July 18, 1930, the Warner Company signed the addenda as so revised and returned it to Young and it was embodied in its proposal.

■ On July 25, 1930, the formal contract was signed by the Commissioners of Lincoln Park and the Warner Company, by which contract the Warner Company agreed to do the work, and the Commissioners agreed to pay for it according to the proposal and addenda to proposal, the latter dated July 18, 1930.

From the plaintiff’s bill of particulars it appears, in substance, that the claim was for work done by the plaintiff for the defendant under a contract in the sum of $7,189.61; that the sheeted area actually excavated by the plaintiff in and about constructing the six piers was 13,411.37 cubic feet for which the plaintiff was entitled to be paid by defendant at the rate of $1.43 per cubic foot, this amount being the difference between the amount charged by the plaintiff and the amount paid to the plaintiff by the- defendant, and being the amount stated in the bill of particulars as unpaid; and also the further sum of $34,830.51, being the difference between the amount received by the plaintiff from the defendant and the amount due the plaintiff for work necessarily done in excavating the sheeted area by the plaintiff in and about constructing the 32 piers, for which the plaintiff was entitled to be paid at the rate of $1.38 per cubic foot, being the contract price.

It also appears from the bill of particulars that the plaintiff seeks to recover from the defendant the sum of $1,840 for work done in driving through a sunken boat, $897.28 for extra work for the removal of a submerged dock, and $1,000 which is due the plaintiff and retained by the defendant as security for repairing Illinois street, and which amount is admitted by the defendant to be due the plaintiff for this completed work.

The manner in which the excavation and concrete work was done on each of the piers was that there was a preliminary excavation at the surface of five or six or seven feet. The steel piling or steel shells were put together in circular form. The form was driven down to a depth of 10 feet into non-water bearing soil. The earth within this circle of steel was excavated. Arrangements were made to remove such water as seeped through the steel sheeting. Then, within the circle of steel, wood forms were set up, the inside of which was the size of the concrete piers. The concrete was poured into these wood forms. These wood forms were braced against the steel sheeting to make it true. After the concrete was set, the wood forms were removed. Then the space between the steel sheeting and the concrete pier was back-filled with earth and the steel sheeting pulled out.

The principal controversy was over the amount claimed by the plaintiff which was charged for the space between tlie steel sheeting and the concrete pier, and back-filled by the plaintiff after the concrete had set.

The theory of the defendant upon its appeal in this case is that the payment of the first two items set forth in the bill of particulars should be only for the cubic feet of concrete in place. The existence of the water-bearing strata down to clay was shown by plans and specifications furnished the plaintiff and other contractors at the time the defendant called for bids. The defendant could not dictate the method as long as satisfactory caissons were built, except that air could not be used unless directed by defendant’s engineer. The addenda was in confirmation of the contract and the contract provided $1.43 and $1.38 per cubic foot for complete cylindrical piers, including the cost of excavation and the furnishing and placing of any sheet piling or steel shells where necessary, and any other work or material necessary to do this work.

The questions involved are based upon the written addenda attached to the contract. The original written addenda was submitted by the defendant and was modified by the plaintiff by adding these words, ‘ other than actual sheeted areas which will be paid for on unit cubic feet prices,” after the words, “No extra compensation will be allowed for the use of the different methods of construction as indicated above.”

From an examination of the record it is obvious that there is some conflict of opinion. as to the technical meaning of the additional words used by the plaintiff, but in the construction of the language the words should be construed in the general acceptation of their use. The defendant contends, however, that the items for which claim is made for payment should be only for cubic feet of concrete in place; that the addenda was in confirmation of the contract, and the contract provided $1.43 and $1.38 per cubic foot for complete cylindrical piers, including the cost of excavation and the furnishing and placing of steel sheets where necessary and required. The figures are stipulated in the record without prejudice that if the plaintiff would offer proof it would show (1) there is due the plaintiff $7,199.61 for 5,034.69 cubic feet of space in Bent 18 at $1.43 and (2) $34,830.51 for 25,239.50 cubic feet of space in -the other eight Bents at $1.38. In addition to these amounts, the defendant has admitted that $1,000 is due plaintiff, which was held by the defendant until the plaintiff made certain repairs — which have been done. The purpose in drafting the addenda was to make clear what was uncertain in the contract, and that was as to the size of the excavation and the method used necessary to make the excavation and the payment for the work. The form of the addenda was in all respects approved, except that the plaintiff did not agree, but amended the addenda so that the “actual sheeted areas would be paid for in unit cubic feet prices.” The purpose of the addenda was to exclude extra compensation for all work done under the contract, except the plaintiff was to be paid for the actual work performed in the area within the sheeted pilings ■ secured by steel rings of semicircular arc, bolted together at the ends in each of the bents in question. In construing the language it is clear that the plaintiff is entitled to recover for the work and to be paid at the cubic feet prices.

The defendant complains that the court erred in instructing the jury as follows:

“With respect to plaintiff’s claim, based upon unit cubic feet prices, the court instructs you that in arriving at your verdict with respect to the items of the plaintiff’s claim above mentioned you should take into consideration all parts of the contract bearing upon the same, including the ‘addenda to proposal’ embodied in the contract; and you are further instructed that if and to the extent, if at all, you find any irreconcilable conflict between the printed part of the contract and the typewritten addenda to proposal, you should adopt and accept such typewritten addenda in preference to the printed part of the contract in arriving at your conclusion as to what was meant by the words ‘ actual sheeted areas’ in such addenda.”

The jury were instructed at the request of the defendant that in order that the plaintiff may recover, he must prove by a preponderance of the evidence that the plaintiff performed the work pursuant to the agreement, and that the jury are to determine from the contract the rights and obligations of the plaintiff and the defendant, and unless the work was done pursuant to the written contract, the plaintiff could not recover.

We are all familiar "with the general rule that questions of construction of written instruments are for the court, and are of law and not of fact. The instruction given by the court for the defendant left it to the jury to determine the rights and obligations of the plaintiff and the defendant, and they are to be determined from the written contract, and the jury are to construe the contract as to whether the work was done according to the jury’s construction of the contract between the parties, so that when we come to determine whether the instruction offered and given by the court for the plaintiff is reversible error, it is necessary to consider the instructions given at the request of the defendant, and if faulty, the defendant cannot complain of a like error in the instructions given for the plaintiff. Chicago & A. R. Co. v. Harrington, 192 Ill. 9; Cicero & P. Street Ry. Co. v. Meixner, 160 Ill. 320; Judy v. Sterrett, 153 Ill. 94.

It seems that the defendant complains that the words in quotation marks are not proper because such marks tend to emphasize. With this contention we agree, and the court should not have given the instruction in this form. Still we do not believe that in the form as given —in view of the other instructions given at the request of the defendant — it is reversible error.

There is also complaint by the defendant as to the instruction wherein the court directed the jury that where there is any irreconcilable conflict between the printed part and the typewritten part, the jury are to adopt and accept such typewritten addenda in preference to the printed part of the contract. The general rule is clearly stated in 13 Corpus Juris, page 536:

“Writing and Printing. Where, as in the use of printed forms, a contract is partly printed and partly written, and there is a conflict between the printing and the writing, the writing will prevail. Handwriting will under the same rule prevail over typewriting, and typewriting over printing. But where the antagonism is merely apparent, the difference should be reconciled, if possible, by any reasonable interpretation. The rule that effect must be given, if possible, to all terms of a contract applies to instruments partly written and partly printed as well as to those wholly written or wholly printed.”

The Supreme Court of this State in the case of City of Chicago v. Weir, 165 Ill. 582, upon this question, said: “It seems that the contract was drawn on a printed form used by the city, with blanks to be filled in by writing. The clause referred to from the specifications is a part of the printed form, while that part of the contract heretofore set out providing for payment for rock excavation is written in the contract with pen and ink. The law is well settled that where a printed form is used, to be filled up by "writing, the written part will control in the construction of the contract. (American Express Co. v. Pinckney, 29 Ill. 392.) In so far, therefore, as the clause in the specifications may conflict with that part of the contract in regard to rock excavation, the latter, having been written in the contract, must control. ’ ’

"We quite agree that the instruction offered by the plaintiff and given by the court upon the question of interest, in these words:

“The court instructs the jury that this suit being upon a written contract, the plaintiff is entitled to interest at the rate of five per cent on the amount, if any, you find to be due the plaintiff from the time the same became due, ’ ’ was not justified from the facts in this case, but when we examine the verdict we find that the jury returned a verdict for $42,030.12. This is the total amount of the two items of $7,199.61 and $34,830.51, involved in this litigation, and it would be a reasonable assumption, from these figures, that the jury did not allow interest upon these amounts, and we are satisfied from this record that the defendant was not prejudiced and that the judgment should not be reversed upon this guound.

There is objection to certain evidence offered on behalf of the plaintiff to the effect that by the use of air in doing the work, it would cost a million dollars, but upon examination it would seem that the witness, in so testifying upon this question, was relating a conversation with Mr. Young, the engineer in control of the work for the defendant, and we are of the opinion that the evidence was not of such character that the defendant was prejudiced by the evidence of this witness.

By the admission of the defendant that the $1,000 deposited was due the plaintiff, it is apparent that this amount was not included in the verdict of the jury, and that said sum should have been included. However, for a failure to include this amount it will not be necessary to reverse the judgment, for by the provision of sec. 111, ch. 110, Cahill’s Ill. Rev. Stat. 1929, the judgment may be partially reversed and such judgment rendered here as the trial court should have rendered. Minnesota Mut. Life Ins. Co. v. Welsh, 131 Ill. App. 103.

The plaintiff filed cross errors to include other items in the judgment that were not considered by the jury when it returned the verdict. The cross errors filed by the plaintiff have been considered by this court, but we are of the opinion that the item of $1,840 for work done in driving through a sunken boat, and the item of $897.28 for extra work in the removal of a submerged dock, were questions for the jury to pass upon, and the items not having been included in the verdict, we will not further consider these cross errors.

The plaintiff indicated by cross error that it regarded the amount of the judgment as being erroneously entered, and in part we have agreed with this contention, and upon this suggestion entered judgment in this court for the amount stated in the opinion. It follows, this being the judgment entered, interest will be computed from the date of the judgment entered in this court.

For the reasons stated in this opinion, the judgment will be affirmed in part as to the sum of $42,030.12, and amended so as to include the $1,000 admitted by the defendant to be due the plaintiff, and therefore judgment will be rendered here for the sum of $43,030.12.

Affirmed in part and amended in part and judgment here.

Wilson and Hall, JJ., concur.


text:
    Irving S. Florsheim, Appellant, v. Gatzert Company, Appellee.
    Gen. No. 37,330.
    Opinion filed December 19, 1934.
    Rehearing denied January 9, 1935.
    Winston, Strawn & Shaw, of Chicago, for appellant; Harold Beacom, Harold A. Smith and Douglas C. Moir, all of Chicago, of counsel.
    • Samuel A. and Leonard- B. Ettelson, of Chicago, for appellee.
   Mr. Presiding Justice Hebel

delivered the opinion of the court.

This is an appeal by the complainant from a decree entered in the cause based upon a bill of complaint praying for the rescission of a sale by the defendant to the complainant of certain bonds known as “Village of Dolton Improvement Bonds,” upon the ground that fraudulent representation induced the purchase of the bonds, and that the defendant be ordered to pay the complainant $12,288, the amount received by the defendant from the complainant — the purchase price of the bonds and accrued interest.

The defendant filed its answer and thereafter the cause was referred to a master in chancery of the circuit court, and from the report it appears that upon the conclusion of the hearing the master recommended that the complainant’s prayer for relief be denied. Objections were filed to the master’s report, and were considered by the chancellor as exceptions to this report, and upon a hearing, the exceptions were overruled and a decree entered dismissing the bill of complaint for want of equity.

The facts appearing in the master’s report are, substantially, that on January 23, 1928, the complainant bought from the defendant 12 Village of Dolton, Special Assessment Bonds, each being for the sum of $1,000, and paid therefor $12,288 for the face amount of the bonds and accrued interest. There is evidence that the defendant on January 11, 1928, mailed to the complainant a circular, which in part is as follows:

“A very unusual cushion fund will be established to further insure the prompt payment of principal and interest on these bonds, by deposit with the Illinois Merchants Trust Company, of Chicago, of a fund equal to 20% of the total bond issue. Upon delivery to us, therefore, of the $360,000 bonds, $72,000 in cash will simultaneously be deposited with the depositary which is to be used to pay for any interest or principal that might default or for the purpose of purchasing delinquent property at tax sale.”

It further appears from this circular that Special Assessment Bonds No. 27, as well as Special Assessment Bonds No. 28 were to be protected by this so-called cushion fund. This circular was mislaid by the, complainant, and upon his telephone request, Walter A. Gatzert, president of the defendant company, sent a similar circular to the complainant, which was received by him on January 13, and as he was about to leave the city, he requested Gatzert by telephone to hold $12,000 of the bonds until the complainant returned to Chicago; that upon complainant’s return the bonds in question were purchased. There is conflict in the evidence as to whether the complainant purchased the bonds upon his return, relying upon the statements contained in the circular.

On November 23, 1927, two months before the bonds were purchased by the complainant, Walter A. Gatzert, as president on behalf of the defendant company, entered into an agreement with the Illinois Merchants Trust Company and Pastoret, Dorsey, Barrett Company, a copartnership, the contractors who performed the work on the improvements in the Village of Dolton for which the bonds were issued. This contract provided for the establishment of the fund with the Illinois Merchants Trust Company, and also provided that at the direction of Pastoret, Dorsey, Barrett Company, together with Gatzert Company, the funds were •to be invested in the bonds, or any other securities which the parties should direct. Said agreement also provided that the accretions from the investments in that fund were to be paid to Pastoret, Dorsey, Barrett Company.

There is evidence that when the complainant learned of the agreement late in the summer of 1932, he requested a copy of the agreement from Walter Gatzert, president of the defendant company. There was some delay in furnishing complainant with a copy of this contract until Gatzert talked with his attorney, and finally the complainant received a copy of the contract. There is also evidence that this request by the complainant for a copy of the contract was made after receipt of a letter by him shortly after July 6, 1932, which letter informed the complainant that there was $12,293.41 left in the fund to take care of defaults in the payment of principal upon the matured bonds and accrued interest.

• It also appears that an issue of bonds known as County Court docket No. 57876 was also secured by the cushion fund, together with Nos. 27 and 28. It further appears that investments in the cushion fund were made, and that the total accretions from interest collected was $15,773.73. Of this amount, $8,626.91 was paid to Pastoret, Dorsey, Barrett Company, $4,200.86 was lost to the capital fund on the investments, and there was deposited over $13,000 worth of bonds other than Dolton bonds, of which $7,020 were in default, and in April, 1933, there was also included as part of the investment of the fund, $12,500 Village of Dolton bonds maturing subsequently to the defaulted bonds held by the complainant.

The first contention of the complainant is that the misrepresentation of a fact primarily within the knowledge of the party making the statement, with the intention that it shall be acted upon by a party to whom made and relied upon, constitutes fraud justifying a rescission, and in support of this position complainant relies, in part, upon the case of Pustelniak v. Vilimas, 352 Ill. 270, where thé court held that the predictions of future profits and statements tending to exaggerate or boost the value of property are generally not fraudulent where the parties deal at arm’s length; hut false representations of pre-existing material facts relating to value or the amount of business done, and relied upon by the party to whom made with no actual knowledge of their falsity, amount to a fraud.

The question resolves itself: Does the descriptive circular received by the complainant make representations that are false, and which were false when made and known to be false by the defendant, and which were relied upon by the complainant when he purchased the bond?

The evidence is that at the time of the issuance of the circular by the defendant there was established the so-called cushion fund! That being the fact, this representation was not predicated upon a fraudulent statement. The fund, as represented, was to be maintained and, according to the circular, the monies were to be used to pay any interest or principal in default, in addition to the purchase of delinquent property at a tax sale, which means that the delinquent property subject to the special assessment for the improvement in question, might be purchased at a tax sale by the' use of this cushion fund.

And finally, it is represented in the circular that by the increase of the cushion fund, after a time, the deposit will equal the amount of the bonds outstanding, “assuming that there are no delinquencies.” This means, of course, that if delinquency did take place, the cushion fund would not be equal in amount to satisfy the outstanding bonds when due, and that being so, the investor was informed of the possible delinquency that mig'ht arise and interfere with the payment of the bonds under discussion. However, the complainant suggests that the contract by the defendant, Pastoret, Dorsey, Barrett Company and the Illinois Merchants Trust Company was executed by the parties two months before the circular was issued and received by the complainant, and that he had no knowledge of the contract until some time after the purchase of the bonds. It is significant from the following language of the circular that further steps were necessary:

“A very unusual cushion fund will be established to further insure the prompt payment of principal and interest on these bonds, by deposit with the Illinois Merchants Trust Company, Chicago, of a fund equal to 20% of the total bond issue.” This circular is silent upon what terms the 20 per cent was to be deposited with the Illinois Merchants Trust Company, Chicago, and it was a necessary incident to such deposit that a contract be entered into for the distribution of the fund. There is nothing in the circular that would indicate to a purchaser that a contract such as was entered into in the instant case "would not be entered into so that the fund on deposit could be disposed of according to its terms.

The point is made by the defendant that no proper tender was made by the complainant of bonds to the defendant before institution of the suit. The rule is quite different upon this 'question between an action at law and one-in equity. At law the complainant before instituting suit must offer to place the defendant in status quo in an action of this character, but in equity, based upon a like action, it is sufficient if the complainant offers to do equity. Taylor v. Taylor, 259 Ill. 524.

The question whether from the evidence the complainant relied upon the statements contained in the circular is not wholly important. From what we have said in this opinion upon the statements contained in the circular, the complainant is chargeable with the terms and statements, which the complainant claims he relied upon at the time he purchased the bonds in question, and our conclusion upon this question being that the complainant should have known from an examination of the circular that it would be necessary to further investigate and not rely upon the circular in its entirety, the decree will be affirmed.

Decree affirmed.

"Wilson and Hall, JJ., concur.