text:
    Bowman Dairy Company for use of Phoenix Insurance Company of Hartford, Connecticut, Appellee, v. Charles P. Megan, Appellant.
    Gen. No. 39,840.

      Opinion filed June 21, 1938.
    Nelson J. Wilcox, Nelson Trottman and I. C. Belden, all of Chicago, for appellant; William T. Faricy, of Chicago, of counsel.
    Heth, Lister & Flynn, of Chicago, for appellee.
   Mr. Presiding Justice Friend

delivered the opinion of the court.

On the afternoon of October 1, 1935, four cars of milk, being transported in interstate commerce by the Chicago and North Western Railway to Chicago, were destroyed at Genoa City, Wisconsin, by a group of farmers who were conducting a so-called “milk strike.” The Phoenix Insurance Company of Hartford, Connecticut, had issued a policy covering these shipments and paid the Bowman Dairy Company, nominal plaintiff herein, the sum of $3,593.84 on account of the loss incurred. The insurance company, claiming subrogation to the rights of the Bowman Dairy Company, brought suit for its claim against Charles P. Megan, who had been appointed trustee of the property of the railroad company by the United States court, pursuant to a reorganization proceeding under sec. 77 of the Federal Bankruptcy Act. Megan, as trustee, filed an answer in which he admits the delivery of the shipment to him for transportation to Chicago, pleads a contract provision exempting the railroad company from liability for loss, damage or delay resulting from riots or strikes, and avers that the reason for such nondelivery was that the cars containing milk were, while at Genoa City, Wisconsin, and in transportation in interstate commerce, violently and forcibly destroyed by a group of rioters who were conducting a “milk strike” and who, without warning to defendant, overpowered its crew, seized the cars and destroyed the contents thereof, without negligence on the part of defendant. For a second defense Megan’s answer pleads a contract provision under which defendant claims to be entitled to the full benefit of any insurance effected on the property, so far as this should not avoid the policy of insurance, avers that the policy contained no clause under which the contract of insurance would be voided by the contract provision giving defendant the full benefit of any insurance effected upon the property transported, and therefore denies that the insurance company was the owner of the claim and asserts that by reason of the fact that insurance was effected upon the property and full reimbursement made by the insurer the defendant was not liable for the loss, whether or not he otherwise would have been liable. Plaintiff filed a reply setting forth in detail certain facts alleged to constitute negligence on the part of the defendant, and also asserting the invalidity of the contract provision with respect to defendant having the benefit of the insurance. The cause was tried by the court without a jury, resulting in findings and judgment for plaintiff. Megan, as trustee, has prosecuted this appeal.

It appears-from the evidence that two of the milk cars originated at Harvard, Illinois, one at Capron, Illinois, and one at Poplar Grove, Illinois. Poplar Grove and Capron are stations west of Harvard on a branch line of the Chicago and North Western Railway. Between Harvard and Chicago the railroad company has one line wholly within the State of Illinois and another line, over which these cars were routed, running in an easterly direction from Harvard across the Wisconsin State line toward Kenosha, where it joins with a north and south line into Chicago. It was stipulated that for good and sufficient operating reasons the railroad routed these shipments over into Wisconsin instead of entirely within the State of Illinois, and that in so doing it was not in any manner seeking to bring itself under the Federal law instead of the law of Illinois.

The shipments from Poplar Grove and Harvard were made under what is known as the “milk and cream way bill, ’ ’ a document issued in the case of milk shipments under a special tariff of the Chicago & North Western Railway governing milk and cream shipments into Chicago. This waybill performs the functions of the ordinary bill of lading, and the tariff under which it is issued specifically provides that traffic handled under it will be subject to the terms and conditions of the uniform bill of lading as published in the classifications. Among the contract terms and conditions of the .uniform bill of lading is a provision that no carrier shall be liable for loss, damage or delay “caused by the act of God, the public enemy, the authority of law, or the act or default of the shipper or owner, or for natural shrinkage,” and that “except in case of negligence of the carrier or party in possession, the carrier or party in possession shall not be liable for loss, damage or delay . . . resulting from . . . riots or strikes.” Under the provisions of the bill of lading the burden of proving freedom from negligence is cast upon the carrier or party in possession.

After picking up the milk cars, the train, consisting of a locomotive and tender, four milk cars, one empty car, and a baggage combination car and a coach, left Harvard at 3:20 p. m., passed through Hebron, a station about eleven miles east of Harvard and arrived at Genoa City, Wisconsin, at 4:26 p. m. It stopped at the outskirts of Genoa City, near a switch from which there is a track leading to the Borden-Wieland, Inc., plant at that place. The reason for stopping at that point was to enable the engine to uncouple, proceed to the Borden-Wieland plant and pick up a car of milk there. When the train came to a stop, the cars involved in this case were standing on the bridge over Nippersink Creek. While the train was thus standing on the track, with the engine cut off, a mob, consisting largely of young men, swarmed, without warning, out from under the bridge, up the embankment, seized the cars, broke the seals and dumped the milk.

The record discloses that Bowman Dairy Company had consistently refused to patronize the railroad for more than a year, and had regularly transported milk by its own trucks to Chicago. When it became aware of dissatisfaction among producers in its territory, culminating in a strike on October 1, its executives, apprehending possible trouble to its trucks on the highway, on September 30, 1935, took out the policy of insurance against riot, upon which the insurer now relies for subrogation, and directed that shipments be made by rail, because they “didn’t want to take any chances” in getting their trucks through on the highway. It is evident that the Bowman Dairy Company took out this insurance because it anticipated some risk in making shipments, and although it could have fastened upon the railroad company the more stringent liability imposed upon carriers at common law in the absence of contract, by payment of a 10 per cent higher rate of insurance provided for in the classification, it elected to ship at the lower of the two optional rates, so that the carrier would be liable only if negligent in fact.

As affecting these questions, a summary of the facts preceding October 1,1935, discloses that the ‘ ‘ Chicago Millc Shed, ’ ’ from which this city obtains its supply of milk, embraces large portions of Indiana, Illinois and Wisconsin. The milk was supplied by some 26,000 farmers, of whom about 16,000 were members of the Pure Milk Association, which had contracted to sell the milk of these farmers to the milk companies at a stipulated price and for a specified time. The association had made an agreement with the milk companies, effective September 1, 1935, to lower the price of milk 20 per cent. Thereafter meetings were held at Hartford, Capron, Poplar Grove, Hebron, Genoa City and other towns in the district, by farmers who were dissatisfied with this reduced price, and rumors were spread that a milk strike was impending. Handbills were distributed at various places, and notices were posted that there was to be a meeting of milk farmers at Elgin, Illinois, on Sunday, September 29, 1935. This meeting was attended by about 500 farmers and a strike was voted for the following Tuesday, October 1. Write-ups concerning this meeting and the calling of the strike appeared in various newspapers published in Elgin, Kenosha, Chicago and other cities on Monday, September 30,1935, and were offered in evidence by plaintiff. However, express disclaimers of violence by the strike leaders were recited in these newspaper accounts, and two of the strike leaders, Fred B. Wolff and Henry Dunker, testifying as defendant’s witnesses with respect to what occurred at the Elgin meeting, both disclaimed any intention on the part of the strikers to commit acts of violence.

There is considerable, evidence that on the morning after the strike had been called, a group of farmers gathered at the various places from which the milk had been shipped, threatening farmers who were bringing in their supplies for shipment, picketing the Bowman plants, stopping' milk trucks and otherwise evincing acts of hostility, of which the various railroad agents were aware, and these facts are emphasized to support the contention that defendant had notice of the strike, that he was bound under the law to anticipate the nature of the violence that ensued, and that he took no precaution to guard against such violence; and it is argued that these circumstances indicate such negligence on the part of defendant as to render him liable under the uniform bill of lading.

Under plaintiff's theory of the case it becomes pertinent to inquire whether defendant, by reason of the newspaper articles, rumors of dissatisfaction, and the situation as it existed on the morning, of October 1, 1935, was apprised of any threats of violence and whether he, through his agents, should either have refused to accept the shipments in question or have taken some action to safeguard the shipments, notwithstanding the disclaimers of violence in the newspaper accounts and by the strike leaders.

Defendant’s counsel say that they have been unable to find any decision involving a common carrier in' which under a similar state of facts this question has been directly passed upon, but that Portage Co-op. Creamery Ass’n v. Sauk County, 216 Wis. 501, which arose under a Wisconsin statute, and where the county instead of the carrier was defending, presents a situation which is indistinguishable from the case at bar, and presents authority for the defense here interposed. In that case the Portage Co-operative Creamery Association, plaintiff, brought an action under the statute to recover for the destruction of a quantity of cream by a mob of farm strikers on a public highway in Sauk county. The statute makes cities and counties liable for mob or riot damage, subject to the limitation that no one might recover unless he shall have used all reasonable diligence to prevent the damage, and shall have immediately notified the mayor or sheriff, “after being apprised of any threat of, of attempt at, such injury.” The damages in that case occurred November 10, 1933. Plaintiff knew that during the month of November farm strikes were being held throughout the State, and on November 7 a group of approximately fifty men appeared at plaintiff’s place of business, and through their spokesman made certain demands upon one Doyle, plaintiff’s manager. No threats were made to Doyle, and he was not told to discontinue his collections of milk and cream in that county, but while the conference was in progress, one Jensen, evidently one of the strikers, remarked to one Rasmussen, a driver of one of plaintiff’s trucks which collected cream in Sauk county, “if you don’t stay out of Sauk County it will be just too bad.” Although the delegation of strikers interviewing Doyle made no threat to him, they did request that plaintiff cease soliciting certain designated patrons, that plaintiff close its plant, with the exception of the bottled milk department, that a stipulated amount be paid for milk, and that plaintiff pay the strike fund a designated amount. All of these demands were disregarded, and without actual knowledge of the threats made to Rasmussen, plaintiff continued to operate trucks throughout Sauk county up to November 10. On that day a group of some twenty-five men approached Rasmussen’s truck on the highway, and dumped the cream. An action was brought to recover for this loss. Sauk county relied for its defense upon the statement by Jensen to Rasmussen, thereby contending that plaintiff had by this remark been apprised of the threat to its property, and that its failure to notify the sheriff of this threat constituted a defense. The Supreme Court of Wisconsin discussed at length the controlling question, whether the statement by Jensen to Rasmussen constituted a threat to injure plaintiff’s property, and whether plaintiff had knowledge of that threat by reason of the fact that it was made to Rasmussen, one of plaintiff’s employees, who was a driver of a truck upon one of plaintiff’s routes in Sauk county, and held that the employer is not chargeable with knowledge of the substance of every conversation that may occur between his employees and another; that in order for one to be regarded as an agent he must know that he is an agent and is being treated as such, and not as an individual; and that there must be circumstances which would, under reasonable calculations, cause the one so addressed to realize that he was an agent and was being told that as such. Under the circumstances in that-case, the court held that the conversation of Jensen and Rasmussen did not constitute a notice of threat to the plaintiff of interference with its business by a mob, pointing out that the assembly which waited on Doyle was orderly, and that no evidence appeared which warranted styling it a mob; and that the lower court’s finding of fact that Jensen was the spokesman of the delegation of November 7 was clearly against the manifest weight of the evidence, and could not be sustained. On the question of negligence, the court held that the evidence failed to disclose any failure or neglect on plaintiff’s part, and that the judgment should have been in favor of plaintiff.

In deciding the Portage Co-op. Creamery Ass’n case, the Wisconsin court relied upon and followed Long v. City of Neenah, 128 Wis. 40, an earlier case arising under the same statute. An action was there brought to recover damages for personal injuries sustained by plaintiff while a resident of the city of Neenah, Wisconsin. As an employee of Kimberly & Clark Company, he was assaulted by a riotous mob on July 5, 1904. Plaintiff had gone to work for that company on June 13, and was then told by his employer that there was likely to be a walkout in the plant. The employees, including plaintiff, were all nonunion men, and took their meals at a hotel in the city during the progress of the strike, which occurred in the period between June 13 to the date of the assault. During this period there were always groups on the streets, made up of union men and their sympathizers, who would jeer the men going to work in the Kimberly plant, call them vile names, and threaten them with violence. On one occasion two of the employees were knocked down and plaintiff evidently considered himself in danger. From June 20 to July 2, plaintiff and other nonunion men took their meals in the mill, and on Saturday evening, July 2, plaintiff went to Chicago and returned to Neenah shortly after three o’clock in the morning of Tuesday, July 5, when he was met at the depot by a riotous mob, and assaulted. He brought suit against the city under the riot statute, and the principal defense interposed was that plaintiff “after being apprised of any threat or attempt to do harm or injury to his person by any such mob or riot, ’ ’ did not “immediately notify the mayor of the city.” The question in that case likewise turned upon whether plaintiff was barred from a recovery because of his failure to notify the authorities, as contemplated by the statute. The Supreme Court of Wisconsin, after citing numerous New York decisions, held that plaintiff was only required to notify the mayor of any threat of the mob to do him injury, “after being apprised of the same”; that the requirement of notice necessarily contemplated that a sufficient period of time would intervene between the threat and the execution of it to admit of notice being given; and the court held that it found no evidence in the record that before going to Chicago plaintiff had been apprised of any danger to his person by the mob who met him at the depot upon his return from Chicago. It was also contended by defendant that plaintiff was negligent in leaving the mill alone, and going to and from the depot unguarded, but the court held against this contention, saying that it failed to find any evidence tending to prove that the injury was caused by plaintiff’s negligence.

One of the cases cited in Long v. City of Neenah is Loomis v. Board of Supervisors of Oneida County, 6 Lansing 269, a decision of a New York lower court in 1872. Action was there brought against the city to recover for damage to property destroyed by a mob. Plaintiffs, with others, owned the property destroyed, as tenants in common. Some of them, several days before the assembling of the mob, had been notified and apprised of threats and attempts made to destroy the property; but other plaintiffs had received no actual notice and had no personal knowledge of the threatened or intended destruction of the property. The defense interposed was that the notice required by the statute to be given the sheriff or the county had not been given. The court charged the jury that such of the plaintiffs as had been thus notified were not entitled to recover, because they had failed to notify the sheriff of the county regarding the threats, but that such of them as had not been notified, and had no personal knowledge of the threats, were entitled to recover, and that notice to their coplaintiffs and tenants was not, in law, a notice to them.

Although the question of a statute similar to the ones invoked in these various decisions is not involved in the case at bar, the logic and conclusions of the Wisconsin court are, in our opinion, clearly applicable to the situation presented here, and upon the record we think there was no occasion for defendant to apprehend any attack on the trains operated by him as trustee, by reason of the existence of a strike. The officers of the Bowman Dairy Company evidently had no serious apprehension of trouble in the case of shipments by rail, and there is no convincing evidence from which the court was justified in finding that the carrier should have anticipated mob violence. Although it is true that there were rumors of an impending strike, and that the railroad through its agents must have known by reason of the newspaper articles published in various cities and towns, that the milk farmers had attended a meeting at Elgin and voted to strike, and that groups of farmers had congregated at various places from which the milk was being shipped, evincing acts of hostility, no notice of threatened actual violence was given or brought home to defendant. Although, unfortunately, violence occasionally accompanies industrial and economic disputes, most labor controversies are carried on without violence or disorder, and the mere voting of a strike does not necessarily imply that violence will follow. In this case the disclaimers of violence by strike leaders, through the newspapers, would have justified the carrier in accepting those assurances at their face value. It is a familiar principle in equity that mere apprehension of danger, in the absence of something more tangible, such as actual threats, does not entitle a litigant to equitable relief, and the philosophy of anti-injunction legislation is largely based upon this principle.

The cases cited by the respective parties, allowing recovery against carriers for riot damage, in the main involved affirmative negligence after direct threats or actual knowledge of violence had been received by the carrier, and there are apparently few cases in the books which deal with damage to property in transit by mobs. Some of these cases are collected in a note in 20 A. L. R. 262. Where liability was fixed upon the carrier, however, the courts have invariably found evidence that there was ample time between actual threats of violence and the knowledge thereof, on the part of the carrier, to protect the shipment, and in such cases the courts have said that common prudence would have suggested the propriety of keeping a lookout where a mob, bent on destruction, was operating in close proximity. The evidence in the case at bar presents no situation of this kind, and the undisputed facts disclose that nothing occurred, up to the time that these milk cars were delivered to the carrier, which would reasonably lead one to suppose that the train transporting them would be attacked and the contents of the cars destroyed.

Various other questions are raised and argued, including the contentions that under the provisions of the bill of lading the defendant is entitled to the.benefit of the insurance, as set forth in defendant’s answer, and as to the admissibility of various items of evidence, but in view of our conclusion on the main point involved, we deem it unnecessary to further prolong this opinion by discussing them. After a careful examination of the record we are of the opinion that the court should have found the issues in favor of defendant, and since the case was tried before the court without a jury, upon a voluminous record, it would serve no useful purpose to remand it for retrial. Therefore, the judgment of the superior court is reversed.

Reversed.

Scanlan and John J. Sullivan, JJ., concur.


source: Caselaw Access Project

author: Mr. Presiding Justice Friend

license: Public Domain

text:
    In the Matter of the Estate of Giuseppe Togneri, Deceased. Fred Togneri, Appellee, v. Gabriele Bonaldi, Appellant.
    Gen. No. 39,854.

      Opinion filed June 21, 1938.
    Rehearing denied July 7, 1938.
    Leon Lecour Drolet, of Chicago, for appellant.
    Krinsky, Levitan & Q-lassner, of Chicago, for appellee.
   Mr. Presiding Justice Friend

delivered the opinion of the court.

Giuseppe Togneri, a resident of Chicago, died intestate in Italy, August 15, 1932. In September, 1932, letters of administration were issued by the probate court of Cook county to one Gabriele Bonaldi, a cousin of the deceased, who made proof of heirship, testifying that deceased was unmarried and left him surviving a brother, five sisters, two nephews and a niece, and a table of heirship was entered by the court accordingly. November 10, 1933, Bonaldi, as administrator, filed his final account reporting distribution of the balance of the estate, amounting to $3,975.73 in cash, in accordance with the court’s finding of heirship. The account was approved, and the administrator discharged by the probate court.

Some three years later, December 8, 1936, Fred Togneri, hereinafter referred to as petitioner, filed a petition in the probate court alleging’ that he was the son of Giuseppe Togneri, deceased; that when Bonaldi filed his petition for appointment as administrator and at the time when proof of heirship was made, Bonaldi knew that decedent was in fact married and had a child, Fred Togneri, the petitioner, who was then living; and the petition prayed that the order approving the final account and report of Bonaldi as administrator be vacated and set aside and for an order on Bonaldi to pay petitioner, as the son and only heir of Giuseppe Togneri, deceased, the entire proceeds of the estate. After a hearing on the petition the probate court on May 12, 1937, entered an order denying the relief prayed. Petitioner perfected an appeal to the circuit court where a trial de novo was had, and on June 30,1937, an order was entered allowing the petition and ordering Bonaldi, the respondent, to pay petitioner, as the only heir of deceased, the sum of $3,975.73 which had previously been distributed and paid to the brothers and sisters, nephews and niece of the deceased. Respondent appeals from the order of the circuit court thus entered.

Petitioner takes the position that the probate court, in the exercise of its equitable powers, and the circuit court on appeal from the probate court, had the power to vacate its order of November 10, 1933, approving the final report and account of the administrator, and to direct him to pay petitioner the amounts which had previously been distributed and paid to those shown by the table of heirship. It is urged that no proper adjudication of the rights of interested parties can be made, unless and until jurisdiction by personal or constructive service, is obtained; that a court, in order to enter a final and binding order, must have jurisdiction of the parties as well as the subject matter; and that since petitioner had not yet reached his majority he is to be considered as the ward of the court, whose duty it is to see that his rights were properly protected. These various contentions resolve themselves into the controlling question, whether, in the absence of fraud, an administrator, who in good faith complies with the order of the court in the distribution of an estate, is protected by such order. This requires a consideration of the fundamental nature and purpose of proceeding’s for administration of the estates of deceased persons, which is well stated in Tilt v. Kelsey, 207 U. S. 43, 55, as follows:

“When the owners of property die, that property, under the conditions and restrictions of the law applicable, is transmitted to their successors named by their wills or by the laws regulating inheritance in cases of intestacy. For a suitable time it is essential that the property should remain under the control of the state, until all just charges against it can be discovered and paid, and those entitled to it as new owners can be ascertained. . . . It is the duty of the sovereign to provide a tribunal, under whose direction the just demands against the estate may be determined and paid, the succession decreed and the estate devolved to those who are found to be entitled to it. . . . Somewhere the power must exist to decide finally, as against the world, all questions which arise in the settlement of the succession. Mistakes may occur and sometimes do occur, but it is better that they should be endured than that, in a vain search for infallibility, questions shall remain open indefinitely.” (Italics ours.)

The law is well settled that the judgment of the probate court, settling the estate of the deceased, was a judgment in rem. In Mosier v. Osborn, 284 Ill. 141, the court said (p. 147): “The administration of an estate in the probate court is not an action between party and party but is in the nature of a proceeding in rem acting directly on the res, which is the estate of the deceased. If the court has jurisdiction of the estate and the jurisdiction is properly invoked the decree of distribution is a judgment in rem, which conclusively determines rights of all parties interested just as fully as a decree in admiralty or any other court. (Ladd v. Weiskopf, 62 Minn. 29.) ” And it has been held that, in the absence of fraud, a judgment in rem binds all the world, irrespective of whether the persons bound are or are not parties to the litigation. (15 R. C. L., sec. 84, p. 641; Freeman on Judgments, 5th ed., vol. 3, par. 1520, p. 3117.)

Cleaveland v. Draper, 194 Mass. 118, involved the estate of one Sarah A. Ellis, deceased. February 27, 1904, a decree of distribution was entered directing payment of the entire balance in the hands of the administrator to Frank H. Skinner, a nephew, who was adjudged by the court to be her next of kin. The funds were distributed by the administrator after he had made an investigation and had been duly advised through reliable sources that Skinner was the closest living relative. Subsequently, March 1, 1905, a petition was filed on behalf of three grandchildren of deceased, asking that the order of distribution be set aside and vacated. The petition was allowed and an order was entered vacating the former order of distribution, “for the purpose of correcting a mistake of fact.” The validity of this order was not raised on appeal but subsequently, on October 30, 1905, the three grandchildren petitioned for a new decree of distribution of the estate to themselves as the only heirs of decedent, and an appeal was taken from the order of the probate court denying the petition. In discussing the question under consideration, the court said (p. 122): “In the present casé the court had jurisdiction of the settlement of the estate of Sarah A. Ellis and it had jurisdiction of the property to which the order of distribution relates. It was the duty of the court, after the payment of the debts and the lapse of such time as would enable it to act advisedly, to determine who was entitled to the balance of the estate and to order a distribution of it. A petition for an order of distribution is in the nature of a proceeding in rem, and the court unquestionably has jurisdiction in such cases. . . . If a mistake of law or fact is made in a decree of distribution, the consequences are not different from those following mistakes in other judgments or decrees. A decree of distribution is a protection to an administrator who acts in good faith under it. . . .We are of opinion that the administrator is entitled to the protection given him by the order and that the last decree of the probate court- is correct. If Skinner who received the money should acquire property, he may be compelled to refund. If he continues financially irresponsible, the petitioners will suffer from a misfortune for which the respondent is not blamable.” (Italics ours.) The petitioner in that case charged fraud on the part of the administrator, but the court held that the evidence did not establish the charge.

In the case of In re Coyne’s Estate, 103 Okla. 279, 229 Pac. 630, an error in the distribution of the estate was discovered before the final order discharging the administrator had been entered; nevertheless the court held that the administrator, while acting in good faith in making a partial distribution, should be protected. Coyne had died intestate April 27, 1918, and his brother and one Rodolph were appointed administrators. In August, 1919, the county court made a finding' that certain collateral relatives were the heirs of the decedent, and on the petition of the administrators entered an order of partial distribution to them. Evidently the administrators honestly believed the collateral relatives to be the heirs, and the order of the court was complied with by the administrators. In December following, Mary Hilton, a daughter of the deceased, accidentally learned of his death, immediately intervened in the county court and succeeded in satisfying the court that she was in fact the daughter and sole heir of P. E. Coyne. An order was thereupon entered setting aside the decree of heirship and declaring her to be the only heir of the decedent. Mary Hilton appealed from a ruling of the court overruling her objection to the final account, wherein the administrators took credit for the partial distribution to the collateral heirs, and in discussing this phase of the case, the court said (pp. 280-282): “It is admitted, as we understand it, that the disbursements made by the administrators under the orders of August 12, 1919, were made by them in good faith. . . .We are therefore of the opinion that the order of partial distribution . . . was valid, and that the administrators, acting in good faith thereunder in the disbursement and distribution of funds of the estate, are protected.” Citing Teague v. Smith, 85 Okla. 12, 204 Pac. 439; Frazer v. Page, 5 Ky. Law Reports 790; Charlton’s Appeal, 88 Pa. St. Rep. 476; Cowie v. Strohmeyer, 150 Wis. 401; Harris v. Starkey, 176 Mass. 445.

Charlton’s Appeal, cited in the Coyne estate opinion (103 Okla. 279), involved the estate of a decedent who died intestate January 27, 1875. More than a year later her administrator filed his account showing a balance of some $2,3.00, which was approved by the court, and the proceeds in the estate awarded to decedent’s daughter, Mrs. Conrad. In April, 1876, William Charlton, alleging that he was the husband of deceased, filed exceptions to the confirmation of the administrator’s account, and also a petition for review. The court opened the adjudication to permit him to be heard. For some reason the administrator received no notice of the filing or pendency of this petition, and on May 9,1876, complied with the court’s order of April 3 and paid the funds to Mrs. Conrad. Later, in December, 1876, the court entered an order correcting its previous adjudication and -ordered the administrator to pay William Charlton, as husband of the deceased, one-half of the balance remaining for distribution. The administrator appealed, and the court finding that the administrator had received no notice of the proceedings for review when he made distribution in May, 1876, said (p. 477): “If the sum, or any part of it, was actually paid over according to the decree before notice of the application for review, both the express provisions of the act of 1840, and the plain dictates of justice and equity, require that the appellant should be protected. . . . The decree of the 3rd of April, 1876, determined definitely that Mrs. Conrad was entitled to the whole sum of $2,351.56. ... It was a final adjudication that she was the sole distributee, and when her claims were met and satisfied, that was an end of the matter.”

In Exton v. Zule, 14 N. J. Eq. 501, an administrator who had made distribution to persons other than the rightful heirs, under an order of court, was protected by the court’s order, and it was held (p. 505): “The decree of distribution is in its nature a final decree. It concludes the rights of all parties, unless appealed from within six months from the time of making the decree. . . . There is no suggestion or pretence of any fraud or collusion in obtaining the decree, or in making distribution under it. It is conceded that the administrator acted in perfect good faith and in strict accordance with the decree of the court. . . . All he could ask or obtain at the hands of the court was indemnity in the performance of his official duty. . . . It may be true that neither the first nor the second set of claimants are the real next of ldn of the intestate— that the parties actually entitled are yet undiscovered. But this will not authorize the Orphans Court, upon every new ray of light that may be received, to set aside their own decree lawfully made, and compel the administrator to pay the estate over again to every new claimant. It is the duty of the court, before the decree of distribution is made, to see that the case is clearly proved. If there be reasonable room for doubt as to the rights of the parties the decree should be denied. When once made, and not appealed from, it operates as an effectual shield to the administrator, and protects him against all other claimants. If a party entitled to a distributive share is by the decree deprived of his rights without actual notice and without a hearing, his only remedy is against the distributees who have received the estate. ...” (Italics ours.)

Likewise in Sayre v. Sayre, 16 N. J. Eq. 505, the court, in discussing the question under consideration, said (p. 509): “ . . . The decree would be an effectual protection to the administrator, against all claims for moneys paid pursuant to the decree, although it should prove that the decree was erroneous and the money paid to a party not entitled. The remedy in such case, by a party who has been deprived of his rights by the decree, is not against the administrator, but against the distributees who have wrongfully received the estate. In their favor, as against the rightful claimant, the decree would not operate.”

It is obvious from these decisions that in the absence of fraud courts will afford protection to an administrator who in good faith has distributed the assets of the estate pursuant to the court’s order, and that the ordinary rules governing jurisdiction by personal or constructive notice are not applicable to the administration of the estates of deceased persons. Since proceedings in the probate court are not actions between party and party, but rather in the nature of a proceeding in rem, acting directly on the res, which is the estate of the deceased, interested parties under legal disability are also bound by a judgment which operates on the res as distinguished from one which operates against persons. In discussing a decree of distribution, the court, in Ladd v. Weiskopf, 62 Minn. 29, specifically touched upon its binding effect on persons under disability, as follows (p. 35): “It is binding and conclusive upon all persons interested in the estate of the deceased, whether under disability or not, or whether then in being or not. . . . Counsel admits the general rule, but insists that it is inapplicable to persons who were not born when the decree was rendered . . . that such persons cannot be parties to the proceeding . . . and hence are not bound by it. This argument is based upon a false conception of the nature of the proceedings. . . .”

This leads to a consideration of the remaining question, namely, whether the fraud charged in the petition of Fred Togneri was sufficiently shown by the required degree of proof. From evidence adduced upon the hearing in the circuit court it appears that respondent had known the deceased for over 20 years. Togneri first came to Chicago in 1911 or 1912, and remained for about a month or two. He then returned in 1917 or 1918, lived at respondent’s home with his family and worked together with him at the De Prado Statutary Company continuously from that time until July or August, 1931, when he left for Italy, where he died. In making proof of heirship Bonaldi was asked whether the deceased had ever told him that he had been married, and he answered, “Never; no.” Asked whether Togneri had at any time told him that he had lived with any woman, Bonaldi answered as follows: “I asked him one evening ‘Why don’t you get married,’ and he answered, ‘I don’t get married, because I had immoral relations with a woman and there was baby born, and he died.’ ”

To sustain the charge of fraud petitioner offered the testimony of Nicolina Rachiele, mother of petitioner, and the divorced wife of Gfiuseppe Togneri, the deceased. She then resided in Pittsburgh, Pa., and testified that she had been married to decedent on October 19, 1914, in Milwaukee, Wisconsin; that about a month later she came to Chicago with her husband and visited during the day and overnight at the home of Bonaldi, the administrator; that she had never seen Bonaldi thereafter, and was divorced from Togneri, the decedent, in Milwaukee in 1917; that Fred, the petitioner, was born of this marriage July 3,1915, and had lived with her ever since; that the divorce decree made provision for the care of the minor child, but no payments were ever made by decedent, who left her before the divorce and never communicated with her thereafter.

Bonaldi categorically denied that Togneri and his wife had ever visited them in Chicago. He testified that he knew the persons named in the table of heirship, having met them when he was a boy in Italy; that when he was appointed administrator of the estate he believed Togneri’s heirs to be as he found them, and paid out the money under the belief that they were the only heirs at law. After his appointment as administrator he located a safety deposit box at the bank, which was opened in the presence of an attorney named Ragalo and a representative of the court. In this box he found a sealed letter on the envelope of which was written, in the decedent’s handwriting, “Not to be opened until I die.” The letter within the envelope, written in the decedent’s handwriting, was introduced in evidence, and translated reads as follows: 11 Giuseppe Togneri, January 7, 1932. I declare to leave brothers and sisters and $1,000 to Fannie and her brothers, and also take out the expenses for the funeral and a monument of $500. Think of my closest relatives who are Fannie and her husband and G-abriele Bonaldi. Now then you have read and you will do what it says. Again I sign Grinseppe Togneri.”

Respondent testified that he had never seen petitioner before he appeared in court; that when the money was paid out by him as administrator he had “no idea that he had a son living”; and that when decedent left to go to Italy, where he died, he departed with the intention of being married there. It appears from the evidence that after the payment of costs and administration expenses respondent paid to Dr. Gr. Castruceio, Royal Italian Consul Greneral, as legal representative of the heirs, the following sums: 1/7 to Alberto Togneri — $567.96; 1/7 to Zaira Togneri— $567.96; 1/7 to Teresa Togneri — $567.96; 1/7 to Maria Togneri — $567.96; 1/7 to Dinmira Togneri — $567.96; 1/3 of 1/7 to Vittorio Togneri — $189.32; 1/3 of 1/7 to Alfredo Togneri — $189.32; 1/3 of 1/7 to Fannie Bertolozzi — $189.33. The final account was signed and verified by Bonaldi, as administrator, and was approved in open court November 10, 1933, by John F. O’Connell, judge of the court.

It is argued by petitioner that by reason of the alleged visit of the decedent and his wife at Bonaldi’s home, where they stayed overnight, respondent had knowledge of the marriage of decedent and that the evidence disclosed no knowledge on the part of respondent of the subsequent divorce; and that by reason of the conversation related by respondent with reference to decedent having had immoral relations with a woman and the subsequent birth of a child, who had died, respondent “was put on notice that there had been a child born to the decedent.” We are unable to follow the logic of this argument. Respondent categorically denied that the decedent and his wife had ever visited in his home or that he ever knew that he had a wife, and the conversation with decedent about his having had immoral relations with a woman resulting in the birth of a child who had died, would not tend to put the administrator on notice that there was a child living.

The law is well settled that if fraud is exercised in procuring a judgment, the court has jurisdiction to vacate the same. (Ashkinzae v. Jacobson, 337 Ill. 141.) Where fraud is charged, however, the burden is upon the person alleging it to establish the charge by clear and convincing evidence. (People v. Hammond, 356 Ill. 581.) Respondent is entitled to the advantage of the presumption that he acted in good faith and with honest motives until the contrary is clearly established, and the court will not infer fraud on his part unless the facts and circumstances are inconsistent with an honest purpose and a pure intention. After a careful examination of the evidence, we have reached the conclusion that petitioner failed to establish fraud as charged. [Respondent was not one of the distributees, and evidently had no ulterior motive in malting false proof of heirship, as charged. The letter found in the safety deposit box furnished no clue to any heirs except the brothers, sisters, nephews and niece of the deceased, and there is no evidence from which the court could fairly find that fraud had been exercised by the administrator.

The opinion in this cause was written May 5, 1938, but before the filing'thereof the death of Bonaldi, administrator, was suggested and a motion made by appellee that any order entered on the appeal be entered nunc pro tunc as of a date prior to May 30, 1938. Under the circumstances, we are of the opinion that the judgment of the circuit court should be reversed nunc pro- tunc as of the date of May 5, 1938, and it is so ordered.

Reversed.

Scant,an and John J. Sullivan, JJ., concur.


text:
    United States Gypsum Company, Appellee, v. Barnet Faroll et al., Trading as Faroll Brothers, Defendants Below. Appeal of Chauncey J. Jones, Appellant.
    Gen. No. 39,909.

      Opinion filed June 21, 1938.
    Solomon & Borden, of Chicago, for appellant; John J. Enright, Jr., of Chicago, of counsel.
    Mayer, Meyer, Austrian & Platt, of Chicago, for appellees Barnet Faroll et al.; Frederic Burnham, David F. Rosenthal and Jacob X. Schwartz, all of Chicago, of counsel.
   Mr. Presiding Justice Friend

delivered the opinion of the court.

United States Gypsum Company filed an inter-pleader suit in the superior court to determine the ownership of 157 shares of its stock, as between Faroll Brothers, brokers, and Chauncey J. Jones, the original owner of the stock. The matter was referred to a master, who recommended a decree in favor of Faroll Brothers and against Jones, and a decree was entered in accordance with the master’s recommendations, from which Jones appeals.

The essential facts disclose that October 26, 1931, Jones was the owner and holder of record of three certificates representing a total of 157 shares of United States G-ypsum Company stock, which he had theretofore indorsed in blank. On that day one George F. Fay induced Jones to deliver to him the said certificates, so indorsed, upon the representation by Fay and his associates, Clark and Turek, that the certificates, with certain other securities delivered at the same time by. Jones, would be used by them as collateral in the purchase for Jones of stock in a corporation known as the Consolidated Carribean Oil Corporation. It appears that Jones had been led to believe at the time that if he purchased this stock it could be disposed of by him within a few days at an enhanced value. Instead of using the Gypsum stock as collateral Turek delivered the certificates to A. M. Bohr, a dealer in securities, who was related to Turek. Bohr was no stranger to Faroll Brothers, having been their customer for about eight months prior to October, 1931, and in fact from March 11,1931, to October 28th of that year Bohr had had some seventy-five unquestioned transactions with Faroll Brothers. October 27, 1931, Bohr delivered the Gypsum stock to Faroll Brothers, with instructions to sell the same, and on that day the stock was sold by Faroll Brothers through the New York stock exchange, of which they were members, at the current market price. On October 28th Faroll Brothers paid Bohr $3,971.50, the net proceeds of the sale after deducting the transfer tax and commission. In the meantime Jones had become suspicious of Fay and his associates, and under date of October 28, 1931, unknown to Faroll Brothers, sent United States Gypsum Company in Chicago a notice to stop transfer of the stock. When the certificates sold by Faroll Brothers were presented to the Gypsum Company’s transfer agent in New York, transfer was refused, and thereupon, complying with their obligations as members of the New York stock exchange, as well as with the custom practiced among brokers, Faroll Brothers replaced the questioned certificates with certificates of like ldnd and amount, which they purchased in the open market. Thereafter, November 3, 1931, one Marshall, who had been requested by Jones to trace his stock, learned of the sale by Faroll Brothers and on inquiry was advised that it had been sold for Bohr. This appears to have been the first time that Faroll Brothers had any notice that Jones claimed an interest in the stock. The original Gypsum stock certificates, which had been delivered by Bohr to Faroll Brothers to be sold, were retained by United States Gypsum Company, the plaintiff, after transfer was refused, and were in that company’s possession when the inter-pleader suit was filed.

From evidence adduced upon the hearing before the master it appears that Fay and his associates came to Jones with letters of introduction from the Chase National Bank, which appear to have been forged. They knew that Jones owned some Consolidated Carribean Oil Corporation stock, and sold him for cash some 25,000 additional shares of that stock, but the certificates which were delivered to him for this stock were forgeries. Having persuaded Jones to acquire still more of the Consolidated Carribean Oil Corporation stock, he delivered to Fay the certificates for the Gypsum stock in question, together with certificates of United States Steel and Gillette Safety Bazor Company stock, all indorsed by Jones, to be held as collateral for the additional stock they had persuaded Jones to purchase. Immediately thereafter Fay and his associates began to sell the stock that had been received from Jones. United States Steel stock was delivered to Wayne Hummer & Company, the Gillette stock to John F. Clark & Company, and the Gypsum stock was delivered by A. M. Bohr to Faroll Brothers, with directions that it be sold.

It is argued by Jones that Faroll Brothers had actual notice of facts concerning Bohr’s character and reputation sufficient to place them on guard, and that if they had complied with the rules and regulations of the Few York stock exchange, of which they were members, they would have learned that Bohr bore a questionable reputation, would never have accepted him as a dealer, and would not have made a check payable to him in any transaction involving stock registered in the name of a third person.

The master found, however, that Bohr first commenced doing business with Faroll Brothers March 11, 1931; that they continued to handle his account for a period of eight or nine months thereafter; that during this period there were a total of seventy-five transactions which were consummated without any difficulty; and that although Bohr had been previously refused a license to deal in securities by the Illinois Securities Department because of his inability to furnish a satisfactory surety bond, and also because of his questionable reputation among brokerage houses in Chicago, Faroll Brothers had no knowledge at the time of the transaction of any facts which would have cast suspicion upon Bohr.

It also appears from the evidence that in March or April, 1931, when Bohr started doing business with Faroll Brothers, they made an inquiry at the Chicago Stock Exchange to determine whether that body had any information against Bohr, and were advised that the records of the stock exchange showed no charges or claims against Bohr at any time. In May, 1931, Faroll Brothers received a written report from a mercantile agency regarding Bohr and his financial responsibility, which showed that Bohr had a net worth between $50,000 and $60,000, which was regarded by Faroll Brothers as much better than the average investment dealer; that he was registered under the Illinois securities law to operate as a broker, that two banks had given him letters of recommendation; and that a stock exchange firm, which had made purchases and sales for Bohr over a period of three months, reported that its dealings with him had been satisfactory. These circumstances, together with the fact that Faroll Brothers had already been dealing with Bohr for some time and had no reason to suspect any of his transactions with them, evidently induced the master and the chancellor to find that Faroll Brothers were acting in good faith, without notice, when they sold the Jones stock for Bohr, and upon the record we are not disposed to question that finding.

The law appears to be well settled, irrespective of statute, that where an owner of stock has indorsed in blank the certificates therefor, and has entrusted them to an agent, and a broker, at the request of the agent, sells the securities, the broker is not guilty of conversion or accountable for the proceeds of the stock, even though the owner gave the agent no authority to sell. In Russell v. American Bell Telephone Co., 180 Mass. 467, plaintiff’s intestate entrusted a certificate of stock, indorsed in blank, to an agent, who instead of using it for the purpose for which it had been given to him, obtained an advance from the defendant by pledging the stock. Suit was brought to restrain the transfer of the certificate and procure the issuance of a new one. No statute was there involved.- The Supreme Court of Massachusetts had previously held in Scollans v. Rollins, 179 Mass. 346, that where a certificate of stock indorsed in blank had been entrusted to an agent, the latter could pass title to a bona fide purchaser for value, irrespective of the purpose for which the certificate had been delivered to an agent, but that a different rule would apply where the certificate, indorsed in blank, had been stolen from the owner, and in holding that the plaintiff in the Bussell case could not set aside the pledge, the court said (pp. 469, 470): “In order to avoid the intimations of Scollans v. Rollins, the plaintiff sets up that in this case only the possession of the certificate, not the property, passed to the agent and that, as the possession was obtained by fraud, it was obtained by larceny in judgment of law. In Scollans v. Rollins, it is admitted that the general principle there laid down would not apply to an instrument indorsed in blank and stolen before it had been transferred. . . . The qualification of the rule, as not applying when the instrument is stolen, is not based upon the name of the agent’s crime, but upon the fact that in the ordinary and typical case of theft the owner has not intrusted the agent with the document and therefore is not considered to have done enough to be estopped as against a purchaser in good faith. . . . But in a case like the present the agent has been intrusted with the converted property, and it is totally immaterial whether, by a stretch which extends larceny beyond the true field of trespass, his wrong has been brought within the criminal law or not. The ground of the estoppel is present and the estoppel arises.”

In National Safe Deposit, Savings & Trust Co. v. Hibbs, 229 U. S. 391, which arose in the District of Columbia where the Uniform Stock Transfer Act was not in force, a bank entrusted to a clerk certificates of stock which had been indorsed in blank and deposited with it as collateral. The clerk, in gross breach of his duty, sold the certificate through a broker, who paid over the proceeds to the clerk. The bank thereupon sued the broker for conversion. The Supreme Court, in affirming the trial court, said (pp. 394, 397):

“Stock certificates are a peculiar kind of property. Although not negotiable paper, strictly speaking, they are the basis of commercial transactions large and small, and are frequently sold in open market as negotiable securities are.” Then, quoting from First Nat. Bank v. Lanier, 11 Wall. 369, to the effect that, “whoever in good faith buys the stock, and produces to the corporation the certificates, regularly assigned, with power to transfer, is entitled to have the stock transferred to him,” the court concluded by adopting the rule laid down in Russell v. American Bell Telephone Co., supra, saying:

“We think this case [Russell v. American Bell Telephone Co.] correctly states the principle, and, applied to the case in hand is decisive of it. Here one of two innocent persons» must suffer and the question at last is, Where shall the loss fall? It is undeniable that the broker obtained the stock certificates, containing all the indicia of ownership and possible of ready transfer, from one who had possession with the Bank’s consent, and who brought the certificates to him, apparently clothed with the full ownership thereof by all the tests usually applied by business mep to gain knowledge upon the subject before making a purchase of such property. . . . The bank’s trusted agent, in gross breach of his duty, whether with technical criminality or not is unimportant, took such certificates, thus authenticated with evidence of title, to one who, in the ordinary course of business, sold them to parties who paid full value for them. In such case we think the principles which underlie equitable estoppel place the loss upon him whose misplaced confidence has made the wrong possible.”

Various other courts, upon pertinent facts, have generally followed this doctrine, in the absence of statute, holding that a broker, selling indorsed certificates at the request of an agent for the owner, to whom the certificates have been entrusted, is not guilty of conversion or accountable for the proceeds of the stock, even though the owner gave the agent no authority to sell the same. (Powers v. Pacific Deisel Engine Co., 206 Cal. 334, 274 Pac. 512.) In National City Bank v. Wagner, 216 Fed. 473; the court said (p. 480): “Even though only the bare custody thereof [the stock certificate] be intrusted to another who, in complete breach of his duty, disposes of them to an innocent purchaser, the title of the original owner is lost” (citing National Safe Deposit v. Hibbs, 229 U. S. 391), “and that, too, though this custody was obtained by deceit and fraudulent representations” (citing Russell v. American Bell Telephone Co., 180 Mass. 467). Otis v. Gardner, 105 Ill. 436, McCarthy v. Crawford, 238 Ill. 38, Johnson v. Milmine, 150 Ill. App. 208, and Patterson v. Fitzpatrick McElroy Co., 247 Ill. App. 81, all collected in 73 A. L. R. at p. 1405 et seq., sustain the general doctrine that an owner of a certificate of stock, who indorses it in blank and entrusts it to an agent under instructions which do not authorize the agent to sell, is bound by an estoppel which precludes him from recovering from a bona fide purchaser for value to whom the agent, in violation of his instructions, sells the stock.

Jones’s counsel cite and discuss cases decided in various jurisdictions dealing with the liability of stock brokers handling stolen securities, and they argue that the courts of this State have seen fit to hold the stock broker liable, even though he innocently handles such securities. Burns v. Shoemaker, 172 Ill. App. 290, and cases in Maine, Nevada and California are cited. It appears, however, that all of these cases involve securities which were taken from the owner without his consent and were not entrusted by him to the wrongdoer, as in the case at bar. Moreover, all of these cases were decided before the Uniform Stock Transfer Act was in force in any of the jurisdictions involved.

The rule hereinbefore discussed was adopted and incorporated in the Uniform Stock Transfer Act of this State in 1917, and by the State of New York, where the certificates were sold by Faroll Brothers in 1913. (Secs. 1, 5, 6, 7 and 20, ch. 32, Uniform Stock Transfer Act, Ill. Rev. Stat. 1937 [§§416, 420-422, 435; Jones Ill. Stats. Ann. 32.195, 32.199-32.201, 32.214].) It is urged by counsel for Faroll Brothers that in adopting the rule that an owner who entrusts a certificate of stock indorsed in blank to a person who violates his trust is estopped to claim title as against a bona fide purchaser of the certificates so indorsed, for value without notice, the legislature has gone further than the decisions preceding the enactment of the Uniform Stock Transfer Act, so as to embrace instances where certificates of stock were stolen or taken from the owner without his consent, and they cite vol. 6 of Uniform Laws, Annotated, containing notes of the commissioners who prepared the act, wherein the note to sec. 5 states that the act gives full negotiability to certificates of stock. Meyer, in his text on the law of stock brokers and stock exchanges, at p. 517, makes the following statement: “In New York and other States which have adopted the Uniform Stock Transfer Act, stock certificates which are assigned by their owner in blank have the qualities of negotiable instruments. A purchaser in good faith and for value of a certificate so assigned acquires good title as against the true owner, even if the transfer was without authority, and even if the certificate was obtained from the true owner’s possession by theft or other illegal means.”

In Peckinpaugh v. Noble & Co., 238 Mich. 464, plaintiff claimed to be the owner of stock under a certificate indorsed in blank and pledged as collateral security by one who had no right thereto, and he sought to replevin the stock from the pledgee. The court held, however, that the Uniform Stock Transfer Act, which was in force in Michigan, protected a bona fide purchaser, even though he had bought from a thief, and characterized the act as follows (p. 471): “The Uniform Stock Transfer Act is all-inclusive and admits of no exception, even in case of theft or felonious talcing from the owner, affecting the rights of a good-faith purchaser. If such exception should exist it will have to be so provided by legislation and not by way of judicial amendment.”

In Turnbull v. Longacre Bank, 249 N. Y. 159, the court, in discussing the Uniform Stock Transfer Act, said (pp. 164, 165): “It is evident that ... an innocent purchaser for value of certificates of stock indorsed in blank is fully protected. In that respect, though delivery was made by one who, being a thief, had himself neither right of possession or authority to transfer title, such certificates possess the attributes of negotiable instruments.” And in National City Bank v. Wagner, 216 Fed. 473, the court said that under the Uniform Stock Transfer Act “stock certificates . . . even though stolen . . . are made fully negotiable. ’ ’

The case proceeded to a hearing before the master upon the question whether Faroll Brothers were entitled to the Gypsum stock as bona fide purchasers for value, free and clear of all claims on the part of Jones. Faroll Brothers sold the Jones’s stock and purchased the stock with which to replace it in 1931. For approximately five years thereafter Jones made no offer to pay Faroll Brothers the sum of $2,987.81, paid by them for the replacement of the original Jones’s stock. The hearing before the master had put in issue only the question as to whether Jones or Faroll Brothers were entitled to the certificates in controversy. After a full hearing upon the complaint and original answer of the defendant, the master completed his report in April, .1935, to which objections had been argued and overruled, and then for the first time Jones’s counsel petitioned the court for an order to reopen the proceeding, and it was not until the month of May, 1936, that Jones, in his amended answer, for the first time indicated that he was willing that Faroll Brothers should be reimbursed to the extent of the $2,987.81 which they had so expended. His counsel now arg'ue that Faroll Brothers are not doing equity, because they seek to retain the stock, whereas Jones is doing equity because he offers to repay Faroll Brothers the amount which it cost them to buy the stock which they used to replace the Jones’s stock. It comes rather late in the proceeding, after litigating the merits of the cause on one theory for some four or five years, to file an amendment and then argue the question of equities. We think the litigation should be determined upon the basis of the pleadings and the evidence adduced before the master, and that question is not whether Faroll Brothers should be required to accept Jones’s tender, but whether Jones or Faroll Brothers, who are both claimants of the stock, are entitled to the certificates in controversy. Counsel for Faroll Brothers cite and quote from Gruntal v. National Surety Co., 254 N. Y. 468, and upon oral argument expressed the view that this case was controlling upon the issues here involved. Plaintiffs in that proceeding were stock brokers and members of the New York stock exchange. One of their customers at various times brought them certain stolen bonds to be sold. These bonds were sold by Gruntal, and the proceeds delivered to their customer. It does not appear whether the customer of the brokers was a party to the theft or not, but it is evident that the brokers had no knowledge of the fact that the bonds had been stolen. After sale the bonds were returned to the brokers as stolen bonds, and under the rules of the New York stock exchange Gruntal was required to and did replace them. This left them with the stolen bonds on hand, which they could not dispose of until title thereto had been cleared. As action was then brought by the insurance company which had insured the owners of the stolen bonds, to determine the title thereto. The court held that the brokers became bona fide owners for value of the stolen bonds when they replaced them in the hands of the persons to whom they sold them by bonds which they purchased in the open market, and that the owners of the stolen bonds had lost all title thereto. In discussing the question under consideration, the court said (p. 472):

“When the brokers took back the stolen bonds, as above stated, they paid value for them; they made good their delivery by substituting other bonds of like kind and nature. At that time they were not acting as agents for Katz and Lewin, but in their own right, and in fulfillment of their own obligations. The substituted bonds were their property. The agency for their customers had terminated. They, therefore had all the rights of these holders in due course, unless they came within the exception; that is, lucre parties to the fraud or illegality affecting the title to the bonds. . . . Both at common law and under the Negotiable Instruments Law, a holder in due course of negotiable paper takes good title even from a thief. . . . United States Government bonds, payable to bearer, and like bonds of corporations, circulate today as freely as money; title passes by delivery. A broker accepting such securities for disposition on behalf of a customer has little or no means of warning or inquiry, such as indorsements or other relationships might suggest. . . .We are inclined to the view that the plaintiffs in this case were not liable for conversion, when, in behalf of an apparently honest customer with whom they had had past dealings, and without any cause whatever for suspicion, they sold for his account negotiable corporate bonds payable to bearer. This being so, the plaintiffs, upon reacquiring the stolen bonds for value, became holders in due course and owners thereof.” (Italics ours.)

We regard this case as precisely in point. In fact Faroll Brothers stand in a better position than the brokers in the Oruntal case, because the certificates of stock were not taken from, the owner without his consent, but were entrusted by him to a person who proved unfaithful to his trust. The doctrine enunciated in Gruntal v. National Surety Co., supra, was approved, under similar circumstances, in Strassburg v. Montgomery, 56 Nev. 183, 47 P. (2d) 859.

In Meyer on Stock Brokers and Stock Exchanges, p. 523, the author states the principle of law involved as follows: “Under the rules of the New York Stock Exchange and of other stock exchanges, a broker who sells securities which were theretofore lost by or stolen from the true owner, or the title to which is called in question, must replace them with other securities of like kind and amount. If the securities have passed through the hands of several brokers the duty to replace them rests on the one who first introduced them into the market. The courts have held that a broker who is required to replace securities under these rules may, as a bona fide purchaser for value, retain the lost or stolen securities which he has been compelled to replace.” (Citing Gruntal v. National Surety Co., 254 N. Y. 468.)

After a careful consideration of the various questions of law and fact involved, we are of the opinion that the chancellor properly held that title to the 157 shares of United States Gypsum Company stock in question had vested in Faroll Brothers as bona fide purchasers thereof for value, and perceiving no reversible error in the proceedings the decree of the superior court should be and is hereby affirmed.

Decree affirmed.

Scanlan and John J. Sullivan, JJ., concur.


text:
    Sam Reisman et al., Appellants, v. Central Manufacturing District Bank et al., Defendants. Helen Shanahan, Executrix of Estate of David E. Shanahan, Deceased, Appellee. Howard K. Hurwith, Co-appellant.
    Gen. No. 39,927.

      Opinion filed June 21, 1938.
    Harold L. Perlman, Marvin J. Weleeld, Russell, Murphy & Pearson, McFarland, Morgan & Stearns and Irving Goodman, all of Chicago, for certain appellants ; Irving Goodman, of counsel.
    Max M. Grossman, of Chicago, for certain other appellant.
    Irwin N. Walker, of Chicago, for appellee; John R. Porter, of Chicago, of counsel.
   Mr. Presiding Justice Friend

delivered the opinion of the court.

Central Manufacturing District Bank closed its doors and went into liquidation June 24, 1932. Thereafter a representative suit was filed in the circuit court to enforce the liability of its stockholders. According to the records of the bank David E. Shanahan was the owner of 240 shares of the capital stock of the bank, upon which he became liable to the creditors of the bank in the sum of $24,000. To relieve himself of part of this liability he filed a verified petition in the circuit court, where the liquidation proceeding was then pending, representing that he was insolvent and unable to pay the full amount of his liability, and that if a decree were rendered against him it would be partially if not wholly uncollectible. Pursuant to this representation, the court on July 28, 1933, entered an order approving a compromise with Shanahan by which his liability to the creditors was satisfied for the sum of $6,300 and the assignment by him of certain deposits in the bank aggregating $7,200. After Shanahan’s death October 18, 1936, Helen Shanahan was appointed executrix under his last will and testament and filed an inventory in the probate court disclosing that at the time of his death Shanahan was the owner of various bonds totaling $145,000, common and preferred stocks valued at $151,100, mortgage notes of the value of $125,000, $251,714.87 in cash, and that he owned some twenty-three parcels of real estate in Chicago and vicinity. October 7,1937, various creditors joining with Howard K. Hurwith, who had been appointed receiver in the liquidation proceeding, filed a petition in the circuit court alleging that at the time of his death, and also at the time of the filing of the petition for the compromise of his stockholder’s liability, Shanahan was worth about $1,000,000; that the total claims filed against the estate amounted to approximately $2,100; that when Shanahan executed the petition for settlement of his claim he was not insolvent, but was well able to pay in full his stockholder’s liability; that the settlement theretofore made, July 28,1933, was an imposition and a fraud upon the court, which the court would never have approved had it been advised of the true facts of the case; that petitioners did not know and had no means of ascertaining the fact that Shanahan was solvent until approximately two months before the filing of the petition, when the inventory filed by the executrix disclosed valuable assets; and asking that the executrix be required to pay Shanahan’s full liability as a stockholder of the bank. Helen Shanahan, as executrix, filed a motion to strike the petition, on the ground (1) that it was in the nature of a bill of review and was not brought within the period of time allowed by law for the filing of such proceedings; (2) that the petition failed to set out sufficiently the proceedings sought to be reviewed; (3) that the petition involved the merits of the case and was filed after the expiration of the term in which the decree sought to be vacated was entered; and (4) that the petition sought, in effect, a rehearing upon the basis of newly discovered evidence, but failed to contain any allegations of facts which were not previously known or accessible to petitioners by the exercise of reasonable diligence. The court granted leave to file the petition instanter, sustained the motion to strike the same and entered judgment in favor of Helen Shanahan, executrix. This appeal by the various creditors and the receiver followed.

It is first urged as ground for reversal that since the court had no jurisdiction to approve a compromise of Shanahan’s liability, the order approving the settlement was void. This proposition is predicated upon sec. 11 of the Banking Act (Ill. Rev. Stat. 1937, ch. 16½, at p. 193 [Jones Ill. Stats. Ann. 10.11]) which contains the following provision: “Said receiver shall have authority upon the order of the court appointing him to employ such auditors and assistants as may be necessary to establish and recover the liabilities of the stockholders, and may, with the approval of the court enter into compositions with insolvent stockholders, if any.” (Italics ours.)

It is argued that the motion to strike being in lieu of a demurrer admits that Shanahan was fully solvent at the time the order of settlement was entered on July 28, 1933, and that since the statute hereinbefore set forth authorizes the court to approve compositions only with insolvent stockholders, jurisdiction was lacking for the entry of an order approving the settlement with Shanahan, who was alleged to have had valuable assets, both at the time the settlement was made and also at the time of his death, without proof of his insolvency. Whatever doubt may have formerly existed as to the soundness of this rule of law was dispelled by the decisions in the recent cases of Burket v. Reliance Bank & Trust Co., 367 Ill. 196, and Hillmer v. Graf, 294 Ill. App. 612 (Abst.). In the Burhet case it was held that a trial court had no power to discharge a stockholder of an Illinois bank from any part of the liability imposed by the constitution without proof by the stockholder of his insolvency, and that any order discharging him from liability upon the payment of a sum less than that imposed by law without such proof, is erroneous. The Eillmer case was likewise a proceeding to enforce a bank stockholder’s liability under the State constitution, and an appeal was taken from an order authorizing the receiver of the Chicago Bank of Commerce to accept from Graf a sum considerably less than the full liability in settlement of the creditors’ claim. The record in the Graf case showed that after issue had been joined, Graf’s offer of settlement was approved by the court without hearing any evidence as to his insolvency, and the court citing and following Burket v. Reliance Bank & Trust Co., supra, held that that part of the decree authorizing the receiver to satisfy Graf’s liability was erroneous, and the order was accordingly reversed. Gardner v. Au burn Park Trust & Savings Bank, 293 Ill. App. 107, is to the same effect.

The executrix argues that a motion to strike a complaint functioning as a demurrer under the old practice merely admits the allegations well pleaded, and it is urged that although the petition herein set forth alleges that Shanahan owned valuable assets at the time of his death, it is not sufficiently shown that these assets exceeded his liabilities so as to render him solvent, either at the time that the compromise was approved or at his death. We find, however, that the petition after specifically listing the stocks, bonds, notes and real estate o.wned by Shanahan at the time of his death, contains the following allegation: “. . . in addition to the foregoing assets that the said David E. Shanahan owned considerable other personalty, so that he [Shanahan] was worth at the time of his death and also at the time of the filing of the petition for settlement, about $1,000,000; that thus far the total claims filed against the said estate amount to the sum of Twenty One Hundred ($2,100) Dollars; that the said David E. Shanahan, at the time of executing the petition for settlement in the above entitled cause was not insolvent, but was well able to pay in full his stockholder’s liability.” These are not conclusions of the pleaders but sufficient allegations of fact, which when undenied constitutes an admission of Shanahan’s solvency at the time of the settlement, and bring the petition squarely within the provisions of sec. 11 of the Banking Act.

It is next urged by petitioners that a judgment or decree obtained by fraud will be set aside by a court of equity at any time, and where the motion to strike admits the fraud, it is mandatory upon the court to vacate and set aside the order thus procured. The petition herein alleges facts which constitute fraud, and the authorities in this State and elsewhere have consistently; approved the maxim that fraud vitiates every transaction into which it enters and is applicable to judgments so procured. In Nelson v. Rockwell, 14 Ill. 375, it was held that (p. 376) “a fraudulent judgment is void in equity as' it regards the party defrauded, and cannot therefore preclude the exercise of equitable jurisdiction.”

In Elting v. First National Bank, 173 Ill. 368, it was said (p. 391): “When a judgment has been obtained by fraud, it is a mere nullity, and it may be attacked on account of the fraud in a collateral proceeding, and equity has jurisdiction to cancel and set aside such a judgment. ’ ’

In Moore v. Sievers, 336 Ill. 316, the court (at p. 322) reiterated the rule as follows: “A court of equity has always the power to grant relief against judgments and decrees obtained by fraud, and this power will be exercised to prevent the enforcement of a judgment or decree which is against conscience. . . . (Farwell v. Great Western Telegraph Co., 161 Ill. 522; Elting v. First Nat. Bank, 173 Ill. 368; Atlas Nat. Bank v. More, 152 Ill. 528; Wing v. Little, 267 Ill. 20.) ”

In Johnson v. Waters, 111 U. S. 640, the court gave its approval to this doctrine as follows: ‘ ‘ The most solemn transactions and judgments may, at the instance of the parties, be set aside or rendered inoperative for fraud. . . . The Court of Chancery is always open to hear complaints against it, whether committed in pais or in or by means of judicial proceedings. In such cases the court does not act as a court of review, nor does it inquire into any irregularities or errors of proceeding in another court; but it will scrutinize the conduct of the parties, and if it finds that they have been guilty of fraud in obtaining a judgment or decree, it will deprive them of the benefit of it, and of any inequitable advantage which they have derived under it.” The executrix does not dispute this rule of law, but seeks to treat the petition herein as a bill of review or a bill in the nature of a bill of review, which she says must be brought within the time allowed for perfecting an appeal or suing out a writ of error, and she also takes the position that the petition is defective because it does not set forth the decree and the proceedings in sufficient detail. However, we do not consider this a bill of review or a bill in the nature of a bill of review, nor do we think it was necessary for the petitioners to have filed such a proceeding. The liquidation suit was a representative action in equity against several hundred stockholders, and was still pending and undisposed of when the briefs herein were filed. If the allegations of the petition are to be taken as true, the act of fraud was committed upon the court in July, 1933, which caused the order, predicated upon such fraud, to become null and void and vested the court with jurisdiction to set aside the order when the fraud practiced upon the court, the creditors and the receiver was called to the court’s attention.

The remaining contention of the, executrix is that the lapse of four years between the time when the compromise was approved in 1933, and the date of the filing of the petition, prejudiced the adverse party and constitutes laches. It is clear, however, that the fraud charged was not and could not have been discovered prior to Shanahan’s death, and it was not until his safety deposit boxes were opened and the inventory filed that the true value of his assets was disclosed to his creditors. The petition was filed within a comparatively short time after these facts came to light, and it is alleged that petitioners “did not know, and had no means of knowing, that the said David E. Shanahan was not insolvent at the time of the filing of his verified petition for settlement”; that he [Shanahan] represented himself to be hopelessly insolvent and was borrowing money in order to permit him to enjoy the peace of his declining years without litigation. The doctrine of laches does not apply where parties act diligently and within a reasonable time after the facts upon which the fraud is predicated have been disclosed. In Messick v. Mohr, 292 Ill. App. 69, there was a delay of seven years in the enforcement of a right, but the court held that the doctrine of laches did not apply, and said (p. 74): “There is no fixed time that is held to apply in bar of actions in equity. Where it is necessary to prevent fraud or great hardship, courts of equity will grant relief, even after the statute of limitations applicable to actions at law has run, and in other cases, courts of equity may, in order to accomplish a proper result, bar the action in a shorter time than that prescribed by the statute. What is a reasonable time cannot well be defined, but must be left in large measure to the determination of the court in view of the facts presented. (Cory v. City of Hillsboro, 205 Ill. App. 49; Carlock v. Carlock, 249 Ill. 330.) ”

In Cummer v. Cummer, 283 Ill. App. 220, the court appropriately defined the rule as follows (p. 239): “However great the lapse of time, laches is not imputable to a party who had no knowledge of a judgment against him and it is only required of him to be diligent in seeking relief after he has notice of it. Laches is not mere lapse of time, but is unreasonable delay under the circumstances, generally involving injustice or injury to the opposite party. (34 C. J. 265, sec. 488.) ” The executrix has in no way been prejudiced by the delay, and under the allegations of the petition it appears that the receiver and petitioners acted diligently and within a reasonable time after the facts were disclosed.

For the reasons given, the order sustaining the motion to strike the joint amended petition to vacate the order of July 28, 1933, dismissing the joint amended petition and entering judgment in favor of the executrix, is reversed and the cause is remanded with directions to order the executrix to answer the petition, that a hearing he had thereon and for such other proceedings as are consonant with equity and not inconsistent with the views herein expressed.

Order reversed and cause remanded with directions.

Soanlan and John J. Sullivan, JJ., concur.


text:
    Aloysius Steindl and Hazel Steindl, Appellees, v. The New York Central Railroad Company, Appellant.
    Gen. No. 39,999.
    Opinion filed June 21, 1938.
    Sidney C. Murray and John B. Kneipple, both of Chicago, for appellant.
    Edward D. Lapperre, of Chicago, for appellees.
   Mr. Presiding Justice Friend

delivered the opinion of the court.

Aloysius and Hazel Steindl, plaintiffs, brought suit against the New York Central Railroad Company, defendant, for damages occasioned by defendant’s failure to deliver two pieces of baggage, transported from Chicago to Miami, Florida, in time to enable plaintiffs to fulfill a West Indies cruise. The cause was tried by the court without a jury, resulting in the assessment of damages against defendant' in the sum of $186.40, from which judgment defendant appeals.

The principal facts, with the exception of those pertaining to the question of damages, are shown by a written stipulation entered into between the parties, as follows:

“1. That the defendant, Cleveland, Cincinnati, Chicago and St. Louis Railway Company, having no interest in the above matter, may be dismissed without costs.

“2. That the defendant, New York Central Railroad Company, is a corporation incorporated under the laws of the State of Illinois and is empowered by its charter to operate as a common carrier of passengers and baggage for hire from and to various points in the United States, including the City of Chicago, State of Illinois, and that the said defendant was operating as such common carrier at all times hereinafter stated.

“3. That on or about December 11, 1936, the plaintiff, Aloysius Steindl, reserved passenger accommodations with a duly authorized agent of the defendant in the City of Chicago, County of Cook and State of Hlinois for transportation of himself and his wife, Hazel Steindl, also plaintiff herein, from Chicago, Hlinois, to Miami, Florida, via the lines of the defendant and its connecting carriers for March 11, 1937; that on said date, or prior thereto, plaintiff, Aloysins Steindl, had made reservations for himself and his wife on a certain vessel scheduled to leave Miami, Florida, at 3:30 P. M., on March 13, 1937, and he so informed defendant’s agent.

“4. That on March 11, 1937, plaintiff, Aloysius Steindl, called upon defendant at Chicago, Illinois, and thereupon paid defendant the legally published tariff charge for transportation for himself and his wife and their baggage from Chicago, Illinois, to Miami, Florida. The defendant issued plaintiff certain tickets or contracts of carriage in the usual form and in accordance with the terms thereof agreed to transport plaintiffs and their baggage from Chicago, Illinois, to Miami, Florida, via the lines of defendant and those of its connecting carriers.

“5. That on March 11,1937, plaintiffs checked with and turned over to defendants at Chicago, Illinois, certain baggage consisting of two pieces of hand luggage and at the same time exhibited to defendant their passenger tickets or contracts of carriage and instructed the defendant to transport said baggage to Miami, Florida, in accordance with the contracts of carriage.

“6. That at said time plaintiff advised defendant that he and his wife had procured reservations on a steamship leaving Miami, Florida, on March 13, 1937, at 3:30 P. M. and that it would be necessary that said baggage be shipped on the same train with the plaintiffs in order that proper connections be made with said steamship; that plaintiffs’ transportation was routed via Hampton, Florida, and that thereupon when checking plaintiffs’ baggage, defendant’s agent marked plaintiffs’ baggage ‘Via Hampton’ and issued a baggage check or receipt to plaintiffs.

“7. That on said date of March 11, 1937, at approximately 11:45 P. M., plaintiffs left Chicago, Illinois, on a train then operated by the defendant and destined to Miami, Florida, via Hampton, Florida, and that plaintiffs’ baggage that had been checked as aforesaid was placed on the same train on which plaintiffs were then passengers and that on arrival of said train at Cincinnati, Ohio, baggage car containing the plaintiffs ’ baggage was switched from said train to another train, without plaintiffs ’ baggage being removed therefrom, which train traveled over another route and via Jacksonville, Florida, and which did not arrive in Miami, Florida, until approximately 7:30 P. M. on the night of March 13, 1937, and that by reason of this fact the plaintiffs were without their baggage at the time their steamship was scheduled to sail and that they therefore canceled their reservations on said steamship which departed from Miami, Florida, at 3:30 P. M. on March 13, 1937.

“8. That at all times hereinafter mentioned, the defendant was a party to a certain tariff known as Baggage Tariff BGr No. 7, which was legally on file with the Interstate Commerce Commission and it stipulated that defendant may introduce into evidence a certified copy of said tariff, together with the effective supplements thereto which were in effect during the month of March, 1937, without further proof.

“9. It is further stipulated and expressly understood that the plaintiffs herein reserve the right to introduce such testimony as they may deem advisable concerning damages which they may have sustained if any and either of the parties hereto may further introduce such testimony as may be necessary to the trial of the issues herein which is not in conflict with the facts stipulated hereto. ’ ’

In addition to the stipulated facts, Aloysius Steindl testified that prior to leaving defendant’s station on March 11, 1937, he had a conversation with Robert Ward, defendant’s baggage agent; that he told Ward of his contemplated cruise from Miami, Florida, and wanted the baggage to arrive in Miami on the same train, and was advised that it would be so transported; that upon their arrival in Miami on March 13th the baggage was not there, and after locating it, but too late to make connections on the proposed cruise, the steamship reservations to the West Indies were canceled. Steindl also testified to the following items of damage claimed by him: Expense in locating the baggage — $10 or $15; round trip rate and Pullman rate from Chicago to Miami — $136.40; four days ’ hotel expenses in Miami — $24; meals on the train — $16.

On behalf of defendant, Robert Ward testified that he was employed in the baggage department in defendant’s station in Chicago; that he often received requests to forward baggage on a particular train, but was not permitted to testify as to the practice of the railroads regarding* such requests.

As ground for reversal it is first urged that since defendant’s lawfully published tariff, on file with the Interstate Commerce Commission governing the transportation of baggage, expressly reserves to the carrier the right to forward baggage on a following or preceding train, it was impossible for defendant to waive its right thereunder. At the outset it must be conceded that the rights and liabilities of the parties herein depend entirely upon the provisions of the Interstate Commerce Act and the provisions of defendant’s tariffs. Defendant was an interstate carrier, and the transportation of plaintiffs and their baggage was interstate. Under the circumstances, the decisions of the Supreme Court of the United States are controlling. (Hartford Live Stock Ins. Co. v. Railway Express Agency, Inc., 274 Ill. App. 585.)

Defendant’s tariff contained the following rule: “Rule 2. Delivery of baggage or property for checking and forwarding, (a) Baggage or property to be transported, when checked at station or steamship wharf must be presented with ticket to baggage agent sufficiently in advance of departure of the train or boat to permit agent to record, weigh, measure and to issue the necessary checks; otherwise, it will be forwarded on first convenient train or boat, subject to the usual free allowance, and also subject to collection at destination of any accrued tariff or other charges. The carriers reserve the right to forward it upon a preceding or following train or boat or via another route over which ticket held by passenger may be valid.” (Italics ours.)

Plaintiffs ’ right of action is dependent upon the provisions of the Interstate Commerce Act (U. S. C. A. Title 49, 1937, Cumulative Annual Pocket Part, sec. 20, par. 11) and the so-called Elkins Act (U. S. C. A. Title 49, sec. 6, par. 7). The Elkins Act expressly forbids any special advantage, and the federal courts have consistently held that the principal purpose of the Commerce Act was to compel the establishment of reasonable rates and their uniform application. ‘ ‘ That purpose would be defeated if sanction be given to a special contract by which any such advantage is given to a particular shipper. ... To guarantee a particular connection and transportation by a particular train, was to give advantage or preference not open to all and not provided for in the published tariffs.” (Chicago & Alton R. Co. v. Kirby, 225 U. S. 155, 166.) The Supreme Court of the United States has broadly interpreted the Elkins Act as intending* to require that all shippers be treated alike, and to proMbit any and all means that might be resorted to to obtain or receive concessions from rates duly posted and published. (Armour Packing Co. v. United States, 209 U. S. 56.)

In Atchison, T. & S. F. Ry. Co. v. Robinson, 233 U. S. 173, the shipper sued to recover the value of a race horse. The evidence disclosed that he had made an oral arrangement with the agent to have the horse shipped on a certain train. Nothing was said about value, but the plaintiff signed a written contract limiting the value to $100, as provided by tariff. The court said, “To give to the oral agreement upon which the suit was brought, the prevailing effect allowed in this case by the charge in the trial court, . . . would be to allow a special contract to have binding force and effect though made in violation of the filed schedules which were to be equally observed by the shipper and carrier. If oral agreements of this character can be sustained, then the door is open to all manner of special contracts, departing from the schedules and rates filed with the Commission. ... To maintain the supremacy of such oral agreements would defeat the primary purposes of the interstate commerce act, so often affirmed in the decisions of this court, which are to require equal treatment of all shippers and the charging of but one rate to.all, and that the one filed as required by the act.” (Italics ours.)

In Davis v. Henderson, 266 U. S. 92, the carrier’s tariffs provided that orders for cars must be placed in writing with the local agent. In an action against the carrier for failure to furnish cars within a reasonable time after notice, plaintiff was permitted to testify that written notice had been waived. In reversing the judgment of the lower court Mr. Justice Brandéis, speaking on behalf of the court, said:

“There is no claim that the rule requiring* written notice was void. The contention is that the rule was waived. It could not be. The transportation service to be performed was that of common carrier under published tariffs. The rule was a part of the tariff. Georgia, Florida & Alabama Ry. Co. v. Blish Milling Co., 241 U. S. 190, 197; Missouri, Kansas & Texas Ry. Co. v. Ward, 244 U. S. 383, 388; Davis v. Cornwell, 264 U. S. 560, 562.”

In Davis v. Cornwell, 264 U. S. 560, an action was brought against the carrier for failure to supply cars. The evidence indicated that defendant’s agent had promised to furnish cars on a certain day. The tariffs did not provide for' such a contract. In holding the contract not binding, the court said: “The obligation of the common carrier implied in the tariff is to use diligence to provide, upon reasonable notice, cars for loading- at the time desired. A contract to furnish cars on a day certain imposes a greater obligation than that implied in the tariff. For, under the contract, proof of due diligence would not excuse failure to perform.”

Under these and various other decisions, cited in defendant’s brief, some of which deal with rates not specified in the published tariffs of the carrier and others with special agreements not specified in the tariffs, the federal courts have consistently held that where the tariffs impose no obligation on the participating* carriers, such obligation could not be established by parol agreement. In the case at bar plaintiffs rely entirely upon an oral understanding with Ward, the baggage man, to ship the two pieces of luggage on the same train. Under the decisions this agreement was not binding* upon the carrier. There is nothing in the record to show that the baggage was unreasonably delayed, and under the provisions of the tariff the carrier had the right to ship the baggage on the following train, which it did. The leading case of Chicago & Alton R. Co. v. Kirby, supra, appears to be controlling of the issues here involved. It is fairly impossible to reconcile the decision of the trial court in the case at bar with that of the Kirby case, for if the plaintiffs here had the right to rely on the assurance of defendant’s agent that their baggage would be forwarded and would arrive on a particular train, despite the fact the tariff reserved in defendant the right to forward it on a following or preceding train, then certainly Kirby had the right to rely on the carrier’s guaranty that his horse would be transported on a particular train, despite the fact that the tariff contained no such provision.

In view of our conclusion on the question of liability, it becomes unnecessary to discuss the remaining point relating to damages. We are of the opinion that the municipal court erred in assessing damages and entering the judgment in favor of plaintiffs, and therefore the judgment is reversed.

Judgment reversed.

Scanlan and John J. Sullivan, JJ., concur.