text:
    The People of the State of Illinois ex rel. Robert Malcom, Appellant, v. Lake Sand Corporation et al., Appellees.
    Gen. No. 32,988.
    . Hatchett, J., dissents.

      Heard in the first division of this court for the first district at the October term, 1928.
    Opinion filed February 11, 1929.
    McCulloch & McCulloch, for appellant; Grover C. McLaren and William D. Doggett, of counsel.
    Peden, Kahn & Murphy and Brown, Fox & Blumberg, for appellees; Harry A. Kahn, Jacob Logan Fox and Lionel A. Mincer, of counsel.
   Mr. Presiding Justice O’Connor

delivered"the opinion of the court.

Robert Maleom filed a petition against defendants to compel them to transfer to him upon the books of the Lake Sand Corporation 110 shares of the capital stock of that company. The case was tried upon a stipulation of facts and upon consideration the court decided in favor of the defendants and this appeal followed.

From the stipulation of facts it appears that the defendant J. T. McDonough was the owner of 110 shares of the capital stock of the defendant Lake Sand Corporation, and a stock certificate was issued by the corporation to him for the 110 shares; that he afterwards borrowed $7,000 from the petitioner, Maleom, pledging his certificate of stock as collateral security and at the time indorsing the certificate to Maleom; that Mc-Donough deposited the $7,000 to the credit of the Lake Sand Corporation, and afterwards by a check of the corporation and another check he paid Maleom on account of the loan, thereby reducing the balance due from him to Maleom to $5,000. Maleom still retained the certificate for the 110 shares. Shortly before Mc-Donough’s loan became due the defendant corporation learned that he had misappropriated large sums of its money to his own use, and about a month prior to the maturity of the balance of the loan of $5,000 the

corporation took an assignment from McDonough of all his right, title and interest in and to the stock certificate.

It further appears that in January, 1925, prior to the making of the loan, all of the stockholders of the corporation entered into a written agreement which was adopted by the corporation as a by-law. The material parts of that agreement, so far as the instant case is concerned, are contained in paragraphs third, third “A” and seven, and are as follows:

“Third: It is further mutually agreed between the parties hereto that we shall not buy or sell any shares of stock of the said Lake Sand Corporation, without the written consent of all the undersigned parties, except the parties hereto may buy or sell from one to the other without consent thereto first had; and should we desire to sell or dispose of our stock in said corporation, or any part thereof, then the purchaser or purchasers, before purchasing, shall first meet with the approval and consent of a majority of the parties here-do, and before accepting said purchaser or purchasers, he or they shall become a party to this agreement and be equally bound to the terms and provisions hereof, as well as the respective parties hereto, as if he or they had entered into the same originally.
“Third ‘A’: It is further mutually agreed between the parties hereto that the third paragraph hereof be printed in red ink upon the margin of the face of all stock certificates of the said Lake Sand Corporation. . . .
“Seventh: It is further agreed between the parties hereto that in the event it becomes necessary for any of the parties hereto to sell his or her stock of the Lake Sand Corporation, that it first submit the sale thereof to the corporation known as the Lake Sand Corporation, except as herein otherwise provided in Paragraph Three; the price of which stock shall be governed by the book value of the corporation and in the event the corporation declines to purchase such stock then the same may be submitted for sale to any of the parties hereto, as provided in Paragraph Three heheof, and in the event they decline to purchase, then the same may be sold to any one who desires to purchase the same. This paragraph in no wise to affect or alter Paragraph Three hereof.”

As stated, this agreement was signed by all the stockholders, including McDonough. At the maturity of the loan Maleom offered to surrender the certificate to the corporation upon payment of the amount remaining due to him from McDonough. The defendant corporation refused on the ground that Maleom had acquired no right in the certificate because paragraph three of the agreement above quoted was printed on the stock certificate and therefore Maleom took the certificate with notice that McDonough had no right to pledge or transfer it.

It further appears from the stipulation of facts that thereafter Maleom, after giving notice pursuant to the collateral clause in the $5,000 note, offered the certificate at public sale to the highest bidder; that defendant corporation was represented at such sale and when the stock was offered the defendants’ representative advised those present that any attempted sale would not pass good title to the stock on account of the restriction contained in paragraph three above mentioned. Maleom being the highest bidder at the sale, the stock was sold to him. Afterwards he tendered the certificate to the company and demanded that one be issued in his name for the 110 shares of stock. The demand was refused and the instant case was instituted.

It is conceded that under the law a restriction may be placed upon the sale of stock of a corporation which is not unreasonable and not contrary to law or public policy, provided it is printed upon the stock certificates. People v. Galskis, 233 Ill. App. 414; section 15. Uniform Stock Transfer Act, Cahill’s St. 1927, ch. 32, 1Í 243. Section 15 provides:

“There shall be no lien in favor of a corporation upon the shares represented by a certificate issued by such corporation and there shall be no restriction upon the transfer of shares so represented by virtue of any by-laws of such corporation, or otherwise, unless the right of the corporation to such lien or the restriction is stated upon the certificate.”

Printed across the end of the face of the stock certificate is the following:

“Pursuant to agreement dated January 2, 1925, between all the stockholders, the following is the Third Paragraph thereof:
“ ‘Third. It is further mutually agreed between the parties hereto that we shall not buy or sell any shares of stock of the said Lake Sand Corporation, without the written consent of all the undersigned parties, except the parties hereto may buy or sell from one to the other without consent thereto first had; and should we desire to sell or dispose of our stock in said Corporation, or any part thereof, then the purchaser or purchasers, before purchasing, shall first meet with the approval and consent of a majority of the parties hereto, and before accepting said purchaser or purchasers, he or they shall become a party to this agreement and be equally bound to the terms and provisions thereof, as well as the respective parties hereto, as if he or they had entered into the same originally. ’ ’ ’

The defendants contend that by virtue of this restriction printed on the stock certificate, the attempted pledging of the stock to Maleom was unauthorized and void.

The restriction printed on this certificate, if held valid, would authorize a majority of the stockholders of the company to absolutely prevent a stockholder from transferring Ms shares of stock in the company. It provides that no stockholder may buy or sell any share of stock in the corporation without the written consent of all the stockholders, except the sale is made between the stockholders themselves, which may be done without such consent; that if a stockholder desired to sell to anyone other than a stockholder, the purchaser, before purchasing, should first meet with the approval and consent of a majority of the stockholders. Similar restrictions have been held to be unreasonable and void. In the Galskis case, supra, we quoted from McNulta v. Corn Belt Bank, 164 Ill. 427, the following:

“Shares of stock in a corporation are as transferable as any other kind of personal property; and all unreasonable attempts to restrain the right to transfer such shares are void as being against public policy.”

We think that the restriction printed upon the stock certificate was void because a majority of the stockholders could prevent a sale.

But the defendants further contend that, since there was printed on the face of the stock certificate the following: “Pursuant to agreement dated January 2, 1925, between all the stockholders, the following is the Third Paragraph thereof:” (then follows the third paragraph), Maleom was put upon notice of the terms of the entire contract of January 2, -1925, including paragraph seven, and that by paragraph seven a stockholder might under the conditions named in that paragraph sell Ms stock to anyone desiring to purchase it and that since Maleom had notice of this provision, wMch is a valid and binding provision, the pledging of the stock to him by McDonough was illegal arid unauthorized. We are unable to concur in this contention. By paragraph seven it is provided, in effect, that if a stockholder desires to sell Ms stock he shall first offer it to the corporation, except as otherwise provided in the third paragraph (which provides that one stockholder might without any qualification sell to another) that if the corporation declines to purchase the stock, the owner may offer it for sale to any of the parties to the agreement, as provided in paragraph three, and if the persons to whom the stock is so offered refuse to buy, then the owner may sell it to anyone who desires to purchase it. But it will be noted that immediately following this provision is the following: “This paragraph in no wise to affect or alter Paragraph Three hereof.”

We think this contention is unsound and that all that Malcom was charged with notice of was the provision of the third paragraph, because that paragraph was the only one printed, on the stock certificate and it is complete in itself. Moreover, even if he were put upon notice of both these paragraphs, it would be unavailing because paragraph seven expressly states that that paragraph shall in no wise affect or alter the third paragraph, and since that paragraph was void for the reasons hereinbefore stated, the pledging of the stock by McDonough was not unauthorized.

A further contention is made that, even if it be held that Malcom did not have notice of the restrictions placed upon the transfer of the stock at the time it was pledged to him, he was put upon notice of such restrictions prior to the time the stock was sold at public sale; and that since Malcom in the instant case claims to be the owner of the stock he took it with notice of the restrictions. We think this argument is unsound. If the pledging of the stock to Malcom was legal and authorized (as we hold it was), Malcom having parted with his money, it would be going farther than the law would warrant to hold that he could not enforce his pledge by a valid sale of the stock because he learned in the interim that the pledging of the stock was unauthorized. Any notice brought to ' Malcom after the stock had been pledged could not defeat his lien.

The judgment of the circuit court of Cook county is reversed and the cause remanded with directions to award the writ of mandamus, as prayed for in the petition.

Reversed and remanded with directions.

McSurely, J., concurs.

Hatchett, J,, dissents.


source: Caselaw Access Project

author: Mr. Justice McSurely

license: Public Domain

text:
    The People of the State of Illinois, Defendant in Error, v. Waclaw Perlowski et al., Plaintiffs in Error.
    Gen. No. 32,614.

      Heard in the first division of this court for the first district at the April term, 1928.
    Opinion filed February 11, 1929.
    Levinson, Rein & Fink, for plaintiffs in error; Theodore E. Rein, of counsel.
    Robert E. Crowe, State’s Attorney, for defendant in error; Edward H. Taylor, Arthur Carlsten, James H. Mahoney and Mortimer C. Grover, of counsel.
   Mr. Justice McSurely

delivered the opinion of the court.

By this writ' of error reversal is sought of a judgment of the municipal court of Chicago entered upon trial by the court wherein defendants were charged with violating the Illinois Securities Law, generally known as the Blue Sky Law, Cahill’s St. ch. 32, ff 254 et seq. Frank Perlowski was found guilty and sentenced to 120 days’ imprisonment in the county jail and fined $1,000. Valentine and Waclaw Perlowski were each fined $500 and sentenced to 30 days’ imprisonment in the county jail. Zygmunt and Michael J. Perlowski were acquitted.

Defendants were charged with' having on March 13, 1923, sold to the complaining witness, Dr. T. M. Maturzynska, certain second mortgage gold bonds purporting to be secured by a trust deed conveying a leasehold interest and building on Clark Street between Madison and "Washington Streets, Chicago. The State charged that these bonds came under Class “D” of the Securities Law, and it was admitted that no statement was filed with the secretary, of state, which the statute requires as a condition precedent to the sale of securities in Class “D.” The defendants, on the contrary, claim that such securities are under Class “A” and therefore exempt from the provisions of the statute.

The record shows that defendants, who are brothers, acquired a 99-year leasehold on the real estate aforesaid, which lease was transferred to the Loop Office Building Corporation without any profits to the defendants. This corporation was capitalized for $250,000, each of the defendants subscribing for $50,000 of stock and paying upon their subscriptions about $137,000; $57,000 of the stock was placed in the hands of the contractor and architect as security for their claims. None of the defendants received any shares of stock or any bonds or any compensation whatsoever. A first mortgage was placed on the property to secure $550,000 of bonds. This entire issue was taken by a bond mortgage company of Detroit. A well-known architect was employed and the construction of the building was let to competent building contractors. The cost was estimated at between seven and eight hundred thousand dollars, but it was found necessary to raise an additional amount for the construction of the building, and on March 1, 1921, a second mortgage bond issue was created to the amount of $400,000 at 7 per cent. These junior bonds were secured by a trust deed dated March 1, 1921, executed and acknowledged April 13, 1921, and recorded in the recorder’s office of Cook county April 16,1921. The sale of some of.these bonds is the subject of the offense charged in the instant case.

The construction of the building proceeded until on or about May 1, 1922, when it was virtually completed, with some tenants, but by March 13, 1923 (the date of the alleged violation), the, building was completely erected and finished and with tenants to the extent of 90 per cent of its capacity. On March 12 or 13, 1923, at the instance of Waclaw Perlowski, Dr. Maturzynska, the complaining witness, purchased one of these $500 second mortgage bonds.

At the time of the issuance of these second mortgage bonds, the Securities Law, paragraph 7, section 4, being the law in force June 10, 1919, provided that any bonds secured on real estate or a leasehold in case it is not a first mortgage lien, “shall each bear a legend in red characters not less than one-half inch in height, indicating (1) that the mortgage is on a leasehold, if that be the case, and (2) that the mortgage is a junior mortgage, if that be the case. ’ ’ The bonds in question were in different denominations and each bore the required legend in red characters not less than one-half inch in height, reading: “Legend: Secured by junior mortgage on leasehold.” It also appears that on the preliminary certificates issued to subscribers was printed in red letters one-half inch in height the information that they were junior leaseholds bonds, and in all the literature advertising them for sale prospective purchasers were advised that they were junior mortgage bonds on a leasehold.

A large number of these bonds was subscribed for prior to July 1,1921, the date upon which the Securities Law was amended by the amendment of June 11, 1921, Cahill’s St. ch. 32, j[ 257, which changed somewhat the requirement with reference to bonds of this character. This amendment provided, in substance, that' when bonds were secured on a leasehold and the mortgage is a junior mortgage, the notes and bonds secured by the junior mortgage shall each bear across “the face and text thereof” a legend in red letters not less than one-half inch in height stating (1) that the mortgage is a junior mortgage and (2) that it is on a leasehold. It will be noted that before this amendment the legend in red letters could be placed anywhere on the bond, while the amendment provided that it should be “on the face and text thereof.”

When the building was completed and occupied the indebtedness was $550,000 on the first mortgage bonds, $250,000 on the second mortgage bonds, and there were judgments and claims in addition amounting to $52,000, or a total indebtedness of approximately $852,000. Witnesses estimated the value of the building and leasehold as between $1,250,000 and $1,500,000. Their testimony was not controverted. None of the defendants received any salary or profits out of the transaction. It was also in evidence that the issuance of these bonds was in accordance with the advice of defendants’ attorney, who advised that the issuance of the bonds complied with the Securities Law then in force — that is, before the amendment of June 11, 1921.

The State does not point out where in any particular the issuance of the bonds violated the statute in force at the time they were issued. The point seems to be that, because the bonds and trust deed securing them are dated March 1,1921, but the trust deed was not acknowledged until April 13 nor recorded until April 16, 1921, the bonds were not secured on a leasehold interest or anything else. There is no merit in this. The bonds composed a serial issue. Each contained provision that the trust deed and bonds were to be taken and considered together, as parts of one and the same contract. The promise to pay contained in the bonds dated back to March 1,1921, and the bonds drew interest from that date. It is the frequent method in issuing bonds on real estate to give them some date, which usually is prior to the date of the acknowledgment of the trust deed and of its recording. Under such circumstances the bonds are secured by the mortgage or trust deed as of the date of the delivery of the deed. The subsequent recording is for the purpose of notice. In Jones on Corporate Bonds & Mortgages, sec. 205, p. 229, it is said:

“Though the bonds are issued and sold at different dates, the whole issue is regarded as made of the date of the trust deed.”

In Commonwealth v. Susequehanna & D. R. Co., 122 Pa. St. 306, the court said:

“It has been held to be a presumption of law that all the bonds were issued at the same time which were secured by the same mortgage, and that the fact that they were numbered consecutively gave no priority to any, and interfered in no manner with the equality of their holders on distribution.”

To the same effect is Pittsburgh, C., C. & St. L. Ry. Co. v. Long Island Loan & Trust Co., 172 U. S. 493, where it. was held that the lien of a trust deed has its origin in the execution and delivery of the same.

“And when any of those bonds become the property of a bona fide holder, the lien given to secure them related back to the date of the mortgage. ’ ’

We have little difficulty in arriving at the conclusion that, when the trust deed was executed and delivered, the bonds secured thereby then acquired their legal character as securities in Class “A.”

Were these Class “A” bonds automatically transferred to Class “D” securities and subject to the provisions of the Securities Act by the subsequent amendment of June 11, 1921 ? The only detail, material to the present consideration, in which this changed the law was the requirement that the legend in red letters should be “on the face and text” of the bonds; the statute, before amended, did not designate any particular place.

Courts will adopt, if possible, a construction of a statute that will not impair the validity of existing contracts. This is especially true when, as here, the amendment contains no retroactive clause. Under the Constitution no State has the power to pass any ex post facto law impairing the obligation of contracts. Section 10, Article I, Constitution of the United States. The rule is well stated in 6 R. C. L. 365:

“That the law in force at the time a mortgage is executed, with all the conditions and limitations it imposes, is the law which determines the force and effect of a mortgage; and hence it is that changes in the laws, imposing conditions and restrictions on a mortgagee in the enforcement of his right, and which affect its substance, are invalid as impairing the obligation, and cannot prevail. ’ ’

This is supported by Northern Pac. Ry. Co. v. State of Minnesota, 208 U. S. 583; VonHoffman v. City of Quincy, 4 Wall. (U. S.) 535; Bronson v. Kinzie, 1 How. (U. S.) 311; Brine v. Hartford Fire Ins. Co., 96 U. S. 627; Barnits v. Beverly, 163 U. S. 118. In our State it has been repeatedly held that no statute, however positive, is to be construed as designed to interfere with existing contracts and then not unless the intention to do so is expressly declared in the act. The court said in People v. McClellan, 137 Ill. 352:

“Courts will apply new statutes only to future cases, unless there is something in the very nature of the case, or in the language of the new provision, which shows that they were intended to have a retroactive operation. And although the words of the statute are broad enough, in their literal extent, to comprehend existing cases, they must yet be construed as applicable only to cases that may thereafter arise, unless a contrary intention is unequivocally expressed therein.”

The same thing is repeated in Dobbins v. First Nat. Bank of Peoria, 112 Ill. 553; Means v. Harrison, 114 Ill. 248; Anderson v. Baker, 175 Ill. App. 254; Conway v. Cable, 37 Ill. 82. We therefore hold that the statute of the bonds in question as Class “A” securities was not affected or changed by the subsequent amendment of June 11, 1921.

Upon the trial evidence of sales of other bonds made at other times was admitted over objection. Evidence of other transactions is held to be competent in People v. Love, 310 Ill. 558, for the purpose of showing that the particular transaction charged is not an isolated sale and therefore exempt under paragraph 1 of section 5 of the act, Cahill’s St. ch. 32, If 258. Such evideuce, however, should be wisely controlled and should be admitted only for the purpose indicated; otherwise, there would be a tendency to divert a court or jury from the particular instance of violation of the statute charged against a defendant.

We have not commented upon the provision of the amendment of June 11, 1921, touching the situation where the mortgage liens do not exceed the fair market cash value of the real estate and buildings, for the reason that it is uncontroverted that at the time of the alleged illegal sale the value of the securities was in excess of the liens.

For the reasons indicated the judgment must be reversed and, as under the law and the undisputed facts there can be no conviction of the offense charged, the cause will not be remanded.

Reversed without remanding.

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


author: Mr. Justice Matchett

text:
    Clarence W. Cady, Appellee, v. Grand Trunk Western Railway Company, Appellant.
    Gen. No. 32,796.
    Heard in the first division of this court for the first district at the June term, 1928.
    Opinion filed February 11, 1929.

      McCordio, Dent & Freeman, for appellant.
    H. H. Patterson,for appellee; Frank Johnston, Jr., of counsel.
   Mr. Justice Matchett

delivered the opinion of the court.

The defendant railway company is a common carrier engaged in interstate transportation. On December 2, 1923, plaintiff was in the service of the defendant as conductor of an interstate freight train carrying freight from Chicago, Illinois, to Battle Creek, Michigan. On or about that date, while so employed, he claims to have been injured at or near a place known as Oliver Yard near South Bend, Indiana. He brought suit under the 'Employers’ Liability Act, Cahill’s St. ch. 114, If 321 et seq., alleging negligence of the defendant company which resulted in his injuries. There was a plea of the general issue and a trial by jury, motions by defendant for an instructed verdict, which were denied, a verdict for $12,500, from which the plaintiff remitted $5,000, and the court entered judgment on the verdict for $7,500 after motions of defendant for a new trial and in arrest had been overruled.

It is argued for reversal that there was no negligence on the part of defendant; that plaintiff’s negligence was the sole cause of the accident; that plaintiff assumed the risk. It is urged that the court erred in refusing to give instructions requested by defendant and in requiring defendant to incorporate in a hypothetical question a fact which defendant then contended and now contends had not been proved, that the verdict is excessive and against the manifest weight of the evidence.

The case is unique. It rests almost entirely upon the uncorroborated testimony of the plaintiff.

Plaintiff had been employed by the defendant about 20 years. At the time of the alleged accident (which date he was unable to give with certainty but which the records of the defendant tend to show with reasonable certainty was December 2,1923) he was in charge of a freight train of about 40 to 50 cars bound eastward from Chicago, Illinois, to Battle Creek, Michigan. The train crew consisted of plaintiff, the conductor, Yankee, the engineer, Simmons, the fireman, Truxell,. and Smith, brakemen. The train dispatcher was one Kay. All of these testified.

The train arrived at Oliver Yard at 8 o’clock p. m., and it was then dark. The railway station was north of defendant’s tracks. There was a double track here, which a little farther east terminated in a single track. It was customary after the train was stopped at this place for the engine to go on the south track and pick up cars as directed. Next to the single track on the north was a side or “scale” track. Plaintiff testified:

“If one would come out of the office and go directly south to the track where our train was, he would have to cross one track. If one would go to the west from the office and then go over to the track where our train stood, he would have to cross one track and the termination of the double track.”

The tracks at this place ran practically east and west. Just opposite a point about 250 feet to the west of the railway station was a water spout which was used for taking water into the tanks attached to the engines. When the engine was about at this place plaintiff came out of the station office where he had called for his orders, and while the operator was getting these orders for him gave the engineer a signal to come ahead. The train moved in response to the signal. Plaintiff then stepped back into the office to get the orders which were handed to him by the operator, and when he came out with them the train was moving. As the train pulled up slowly he gave the fireman or engineer the orders and went back into the office for his bills, In a minute or a minute and a half he came out with the bills and started west to get on the rear end of the train. He says that he tried to go back far enough to get away from the tangle of the tracks so that he would have a good footing to get on the train; that between the office and where the engine had taken water there were two cross-overs or switches and that he got back beyond these cross-overs and between the two main tracks; that it was a dark place and the only light he had was a regular railway lamp which burned lard oil and which was used primarily for signal purposes. He says as he went to the rear of the train he had a lantern hanging on his right arm and he had the bills straightening them out to see if he had the proper cars and was putting these in his pocket ready to get on the train; that he put the bills in his pocket;, that he could not tell at what speed the train was moving at this time; that it appeared as if it were safe enough to try to get on. He says:

“As the caboose came up to me, I took hold of the hand railing on the extreme rear end to get on; I would naturally take a step as I went to get on, and as I took hold of the hand railing, I stepped into a hole and it threw me out of balance and at the same time the train surged ahead and it caused me to slip. I did not get my foot on, the end of my foot slipped off and I went to the platform and the lower part of my belly hit right on the top of the step. I fell on the step platform. As I took hold of this rail, I noticed the train was going faster than I thought it was because it seemed to move right ahead.”

He says that it was the custom to get on the train moving; that it would pull by until the rear end approached and the conductor would get on the rear end. Plaintiff says that the hole into which he stepped was opposite the water standpipe on the south side of the track; that sometimes the water would escape from the pipes in taking water into the engine. He says that the rear brakeman was on the rear platform of the caboose; that after a few seconds he, plaintiff, “did not know anything, but I realized he had hold of me helping me to get up and I did get up on my feet. I noticed that I was sick, something had twisted in the lower part of my abdomen; it seemed as though something was twisted right out of shape; I was sick at my stomach; I noticed this feeling in my abdomen just to the right side or about the middle, a little low on the right side just opposite the navel and possibly a little bit lower than the navel on the right side. After I was on my feet it hurt me and I had to hold myself; it seemed as though I was falling apart. From the rear platform the hind man helped me a little bit and I got inside onto the locker and partly sat down and partly laid down. ’ ’ He further says that the train did not stop; that after it had gone 8 or 10 miles he felt a little easier and partially fixed up some reports; that when he got to Battle Creek he went into the yard office, signed in and delivered his bills and stayed there probably an hour or better; that he did- not feel very good and just sat down and rested awhile. As he remembers, he did not say anything to anybody, but that he “did not feel very good.” He says he then walked home, about three-quarters of a mile; that he walked slowly; that he was holding his belly up a little bit; that when he got home he took a warm bath and that his right testicle was swelled; that by that time it was almost morning; that he lay down on a cot and did not go upstairs; that he stayed home the next day; that when he lay down and placed a cushion under him he would be quite comfortable; that he would put a cushion under the side of his abdomen; that he did not call a doctor the next day; that when the time came for his run back to Chicago he went out on the trip, which would have been the day after the accident. He says that it hurt him quite a bit to ride and made the pain come back quite a bit; that the pain was just a little . below the navel on" the right side; that his bowels would not move. He says that he did most of his regular work on the return trip; that when the train arrived at Chicago the crew laid over there about 10 or 11 hours and went back the next day; that when he got home that time he had quite a lot of misery because his bowels had not moved; that an enema gave him some relief. He does not know how many runs he made from that time on but thinks he made two or three; that the jar of the train kept him in misery all the time, but if he were quiet and would lie down the pain would not be so much and if he sat down it would practically leave him. He does not remember when he first saw a doctor but it was about the holidays when he went to see Dr. Dugan at Battle Creek. Dr. Dugan took plaintiff to see Dr. MacGregor, surgeon for the defendant company, who prescribed that plaintiff wear a belt in the form of a corset and take Squibbs’ oil frequently. He saw Dr. MacGregor just once and he never worked for the defendant company after he saw Dr. Dugan. In the latter part of March or the first of April Dr. Dugan arranged for him to see Dr. Harris, the owner of a private hospital at Battle Creek, and on August 12,1924, plaintiff was operated on by Dr. Harris, medical treatment up to that time having been cathartics and Squibbs ’ oil. In November, 1924, plaintiff moved to a farm near Nashville, Michigan, and ever since that time has done farm work.

Plaintiff says he did not know there was a hole along the track at the time he fell; that he had never mounted a train at that particular place before'; that when he got on he thinks the train must have been running 12 to 14 miles an hour; that the usual speed was about 5 or 6 miles an hour, and that he first knew the train was moving faster than that just as he started and got hold of it; that he saw the place where the accident happened on the next trip west, walked by it and saw where, the cinders and gravel were washed away as far down as the bottom of the ties,

Plaintiff was 54 years of age at the time of the accident. He did not report the accident nor the existence of the supposed hole to the railroad company, although the rules of the company made it his duty to do so. On August 8,1924, plaintiff consulted Dr. N. H. Adams of Chicago, who examined an X-ray plate and notified plaintiff’s attorney that he had sustained an injury which might make worse a latent appendicitis and that there was need of an operation which should not be delayed.

Dr. Harris, who performed the operation on August 12, 1924, states that upon making examination he found that the plaintiff’s great omentum (which is the large apron of fat hanging down from the lower border of the stomach and the lower border of the transverse colon, free in the abdominal cavity and in front of the small intestine and the colon) was long and heavily loaded with fat; that a little more than the left half of this great omentum completely rotated upwards in front of the transverse colon and the stomach, while the right half was very thick and crowded in folds partly in front of the transverse colon and partly below it, by which means the great omentum was twisted upon itself. In the opinion of the physician it had become necessary to remove plaintiff’s appendix. In response to a hypothetical question, Dr. Harris and Dr. Adams said the conditions making the operation necessary might have been caused by an injury such as plaintiff described.

It is the theory of plaintiff that the evidence tends to prove negligence of the defendant in two respects: (1) In that the engineer moved the train at a greater speed than was reasonable and necessary at the time plaintiff attempted to get on the caboose of the train, and (2) in that defendant'permitted the hole to exist at the time and place in question. It is urged that these conditions (namely, the existence of the hole and the speed of the train) were not the . ordinary risks of plaintiff’s employment, such as would make the doctrine of assumed risk applicable, and it is strenuously urged that the question of assumed risk, as well as contributory negligence of the plaintiff, was one for the jury under the rules laid down in Chesapeake & O. Ry. Co. v. De Atley, 241 U. S. 310; Davis v. Crane, 12 Fed. (2d) 355, and the cases cited in those opinions.

If we would regard the facts of the existence of the hole and the speed of the train as established, it would be a very close question upon the law as applied to the facts.

The defendant, however, contends that the verdict of the jury is against the manifest weight of the evidence, and in the view we have come to take of the case, after a very careful consideration of the facts and the law presented in the briefs filed, we think this issue of fact is controlling, and we are constrained to hold that neither the existence of the hole nor the excessive speed of the train is established and that the verdict of the jury, which moist have been based on these two supposed facts, is,clearly and manifestly against the preponderance of the evidence. Insofar as the hole is concerned, it seems highly improbable that an experienced trainman, as the evidence shows plaintiff to be, would choose to walk back several hundred feet to a dark place, the character of which he did not know, in order to board a train- when it was only necessary for him to stand where he was and board it in a place, the character of which he knew and could see to be safe. Indeed, if it were not for the further alleged fact of the rapidity at which the train moved, we would be compelled to say that, assuming all else plaintiff tells, his injuries were the result solely of his own negligence in choosing'to board the train in an unusual and negligent manner. A trainman ought to know that under ordinary circumstances it is not wise to take a step in the dark.

Moreover, the uncontradicted facts that plaintiff did not report the alleged accident although it was his duty to his. employer to do so; that, according to his own testimony, he saw the hole on the return trip but failed to report it, although it was his duty to do so; that he chose a dangerous way to board the train when a safe way was available; that he called no doctor for almost three weeks after the alleged accident, although he says he was suffering great pain; that he did not report his illness, insofar as the evidence shows, to anyone, tend to create great doubt as to the existence of the facts to which plaintiff testifies. Again, his testimony as to the speed at which the train was moving is improbable and at best is simply the opinion of an interested witness of a fact observed under such circumstances as to give to his testimony little, if any, weight. In addition to this, his evidence as to the speed of the train and the existence of the hole is contradicted by the evidence of the members of the crew, and so far as the speed is concerned the records of the defendant company kept in the usual course of business established to a reasonable certainty that the train did not proceed at a speed of more than 6 or 7 miles an hour. The evidence of plaintiff on these two points is in direct conflict with the .testimony of four disinterested .and unimpeached witnesses, who it is difficult to believe would testify falsely against the interests of their fellow employee. Plaintiff’s testimony, even if it were uncontradicted, would appear to be inherently improbable.

It is urged in plaintiff’s brief (in which we think nothing has been left unsaid in favor of his- cause) that plaintiff did not make out any reports .or fill out- any blanks concerning the accident because.-he did not realize at the time that he was hurt as badly -as he was, and that he did not wish to lose time.- It;is -suggested that the -fact that he made no report of the. hole after the accident is a circumstance of little or no evidentiary value because plaintiff did not know before the •accident that the hole was there, and that inherent improbabilities in plaintiff’s description of the manner in which he boarded the train are of little weight in the absence of any description in the record of the caboose or of the relative situation of the grab iron, which plaintiff took hold of. It is said that the reason plaintiff did not consult a doctor for 20 days after the accident was because he did not realize his condition, and it is said in his favor that when he did consult a physician he went-'to Dr. Dugan, who was a physician of the defendant company. The evidence as to that fact, however, is very doubtful on this record, plaintiff’s evidence being at one time that Dr. Dugan was the company’s doctor and at another that he had no connection with the company.

It is said that the testimony of Yankee, Simmons, Truxell and Smith is only negative testimony. That is true in a certain sense; but their negative testimony is rendered quite persuasive by the fact that as parties who were working with the plaintiff and in charge of the train with him at the particular time of the alleged accident, in the ordinary and usual course of things, they must have known of the accident had it in fact occurred.

We think, however, there can be no doubt of the duty of this court upon a record such as is presented here. As was said in Belden v. Innis, 84 Ill. 78:

“It is the duty of every judge of the circuit court to give careful attention to every part of the testimony in each case, and to consider it with as much care as if the case were tried by the court without a jury. And in all cases where the verdict is manifestly and palpably against the weight of the evidence, the judge of the circuit court should promptly take the responsibility of setting aside the verdict, without subjecting the parties to the delay and expense of an unnecessary hearing of such questions in this court.”

If this admonition of the highest court of the State were more cheerfully obeyed, the labors of the Appellate Courts would be very much reduced.

The conclusion at which we have arrived on this phase of the case makes it unnecessary to consider other points urged.

However, for the reason that the verdict is manifestly and clearly against the evidence, the court erred in not granting defendant a new trial, and for that error the judgment is reversed and the cause remanded.

Reversed and remanded.

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


text:
    Albert Levinson et al. for use of Morris Fleisher, Appellees, v. Home Bank and Trust Company, Appellant.
    Gen. No. 33,042.
    Heard in the first division of this court for the first district at the October term, 1928.
    Opinion filed February 11, 1929.
    Cheney & Peterson, for appellant; Albert Peterson, of counsel.

      Aaron Soble, for appellees.
   Mr. Justice Matchett

delivered the opinion of the court.

The appellant bank was summoned as garnishee in the trial court in proceedings brought for the use of Morris Fleisher upon a judgment obtained by him against Albert Levinson, Samuel Stein and Abraham Levinson. The garnishee bank answered there was nothing due, and this answer was contested.

Upon the trial it was made to appear that at the time of the service of the summons, namely, March 10, 1928, the garnishee had on deposit to the credit of Samuel Stein in a checking account the sum of $448.77.

Raymond A. Graff, chief clerk of the defendant bank, testified to the foregoing facts as a witness for plaintiff, and in response to a question asked on cross-examination stated that he had a record of an indebtedness of Samuel Stein to the garnishee. The garnishor objected to this evidence as incompetent unless it was shown that the indebtedness, if any, between the parties was in force prior to the service of the garnishment. The attorney for the garnishee then stated that he wished to show there was an indebtedness to the bank on that date, and the court ruled that he might so show, whereupon the attorney for the garnishee further, stated that he wished to show by the witness that the bank had a note of Samuel Stein and that he (Stein) - was indebted to the bank at the time of the service of the garnishment summons in excess of the amount of his account. The court inquired whether he meant that it was due on that day, to which the attorney replied, “No, it was due some time after that and charged off,” whereupon the objection was sustained. The attorney for the garnishee then stated, “I want to show by this witness that on February 20, 1928, arid up to and including March 10, 1928, Samuel Stein was indebted to the Home Bank and Trust Company, on his note, in the sum of $500; and that on March 10, 1928, there was charged off on this deposit account, to the credit of that note, the sum of $448.77, and that left an indebtedness due to the bank at that time, in the sum of $51.23.” An objection to this evidence was sustained by the court, and judgment was thereupon entered against the garnishee for $448.77.

The question to be determined is whether a garnishee bank which holds a note of a depositor to become due at a later date may, in the absence of any provision of the note giving it authority so to do, apply the account of the depositor to the payment of the unmatured note after the service of summons in garnishment. The question requires a construction of section 13 of the Garnishment Act (Cahill’s St. ch. 62, If 13; SmithHurd’s Ill. Rev. St. 1927, ch. 62, p. 1498).

That section in substance provides that every garnishee shall be allowed to retain or deduct out of the property, effects or credits in his hands all demands against the plaintiff and all demands against the defendant, of which he could have availed himself if he had not been summoned as garnishee, whether the same are at the time due or not and whether by way of set-off on a trial, or by the set-off of judgments or executions between himself and the plaintiff and defendant severally, and that the garnishee shall be liable for the balance only after all mutual demands between himself and plaintiff and defendant are adjusted, not including unliquidated damages for wrongs and injuries. This section of the statute seems to have been in force in this State since March 9, 1872.

In Elzy v. Morrison, 180 Ill. App. 711, the Appellate Court for the third district held that a garnishee bank which held a note against the judgment debtor that was not yet due might not set the same off as against the judgment debtor, putting its decision upon the ground that numerous cases decided by the Supreme Court held that a bank could not withhold payment of a fund on deposit with it or refuse payment of a check drawn upon a fund deposited with it by the depositor on the ground that it held a note which would mature at some future date, and for the payment of which it sought to hold the deposit. It was said in substance that a garnishment summons was the same as a demand upon the bank for payment, and if the depositor would be entitled to a check on that account it followed that a bank could not retain money on deposit to the credit of a judgment debtor in answer to a garnishee summons to be applied on a note not yet due which it held, made and delivered by the judgment debtor. In support of that proposition the opinion cites Commercial Nat. Bank v. Proctor, 98 Ill. 558; Fourth Nat. Bank v. City Nat. Bank, 68 Ill. 398; Fort Dearborn Nat. Bank v. Blumenzweig, 46 Ill. App. 297; Merchants Nat. Bank v. Ritsinger, 20 Ill. App. 27. Without analyzing those cases in detail, it will be sufficient to say that an examination discloses that each and all of them sustain the general proposition that a bank may not refuse to pay a check of a depositor on account of an obligation not yet due, but no one of the cases cited in that opinion was in the nature of garnishment proceedings, nor is any reference made in the opinion to section 13 of the Garnishment Act, Cahill’s St. ch. 62, fí 13.

In Obergfell v. Booth, 218 Ill. App. 492, the garnishee set up as a defense that the judgment debtor had agreed with the garnishee, Central Trust Company, that the company might at any time apply any moneys which it had on deposit for the judgment debtor toward the payment of his indebtedness, whether due or not, and that upon the service of the writ the sum of $335.93 was in the judgment debtor’s checking account; that thereafter the garnishee, pursuant to the authorization, applied that sum upon the indebtedness of the judgment debtor, leaving a balance due from the debtor to the garnishee. The answer disclosed that the garnishee held certain stock of the judgment debtor as collateral on his indebtedness with authority to sell the same at any time and apply the proceeds thereof to his indebtedness. It appeared that after the service and pending the suit, the judgment debtor executed a renewal note, the terms of which were the same in material respects as those of the original note. The court held with reference to the deposit of the judgment debtor, the right which “the garnishee may have had, to apply it towards the payment of the note it held, was lost when the garnishee took the renewal note of November 22, even though we do not consider the taking of that note as a payment of the debt.”

In Paisley v. Park Fireproof Storage Co., 222 Ill. App. 96, it appeared that the judgment debtor was employed by the garnishee at the time of the service of the writ, and the garnishee set up that the debtor was a wage earner and head of a family, and further that it was not indebted in any sum whatever. The answer was contested, and it was made to appear that the judgment debtor held a clerical position as an estimator; that at the time of the service of the garnishment summons he was indebted to the company upon a demand note in the sum of $300, which was given for money advanced, and that the garnishee paid to the judgment debtor, its employee, after the service of the garnishment summons, his weekly salary of $41. The court held that upon the service of process the garnishee had the right to adjust the account between itself and the judgment debtor and apply the amount due for salary on his note, citing Obergfell v. Booth, supra, but that as it did not see fit to do so and paid out money after the service of the garnishment process, in so doing the garnishee admitted an indebtedness to that amount.

It will be observed that these cases are clearly distinguishable from the facts of the instant case: The one, in that the garnishee, after the service of the summons, elected to adjust its account with the judgment debtor as it might have done under the authority granted by the note; and the second, in that the indebtedness of the judgment debtor to the garnishee was represented by a note due upon demand which was declared due as of right upon the service of the writ. In the present case, it is uncontradicted upon the record that the note- representing the indebtedness of the judgment debtor to the garnishee was not yet due, and there is no proof tending to show authority to the garnishee to declare the same due prior to the date of its maturity according to its tenor and terms. On the date of the service of summons, therefore, the garnishee in this case could not “have availed himself” of this demand against the judgment debtor. The demand was not due by its terms, and the garnishee had no power to declare the same due so that it could avail itself of this demand by way of set-off. We are therefore constrained to hold that the garnishee is liable for the amount for which judgment was entered.

The garnishor also contends that the claim now made is inconsistent with the written answer that was filed, but in view of our construction of the statute it is unnecessary to consider that contention.

For the reasons indicated, the judgment is affirmed.

Affirmed.

O’Connob, P. J., and McSubely, J., concur.


text:
    Marshall Field & Company, Appellant, v. Harry Obeler, Appellee.
    Gen. No. 33,145.
    Heard in the first division of this court for the first district at the October term, 1928.
    Opinion filed February 11, 1929.
    Frank P. Leffingwell, for appellant.
    No appearance for appellee.
   Mr. Justice Matchett

delivered the opinion of the court.

Plaintiff sued for a balance due on account of goods sold and delivered at defendant’s special instance and request to the value of $1,672.89, for which it was alleged an account had been stated on March 28, 1925. The defendant filed an affidavit of merits, the facts are not in dispute, and the court found as a matter of law that there was no liability and entered judgment in favor of the defendant on this finding.

It is conceded the defendant was indebted for the amount as claimed, but the affidavit of merits avers and the facts establish that after incurring liability as set forth in the statement of claim, the defendant on or about April 28, 1925, executed an assignment for the benefit of his creditors to David J. Evans and Lester J. Michael as cotrustees, transferring to them jointly and severally all his right, title and interest in and to a certain stock of merchandise, machinery, tools and fixtures then located at 228 North Cicero Avenue, together with all cash on hand and in the bank or under his control, with the express intention to transfer and deliver all property of every kind and character owned by him or in which he had any interest “for the pro rata use and benefit of my creditors,” a list of the same with addresses and amounts due being attached, and providing that after the payment of costs and claims such as might be preferred under the laws of the State, the balance should be paid to his general creditors. The deed of assignment was executed under seal on April 28, 1925, and by its terms became effective on April 29,1925.

On June 8, 1925, plaintiff received a check on account of the first dividend from the trustee for the sum of $138.24, which was paid through the Chicago Clearing House. Upon the back of this check is a statement to the effect that it is accepted in accordance with the trust arrangement “to which we have or hereby become a party.” On July 15, 1925, plaintiff received a check for the sum of $54.05 from the trustee which was paid through the Chicago Clearing House with a similar indorsement on the back of it. On August 27, 1925, plaintiff received another check from the trustee for $57.68, which was paid through the Chicago Clearing House, and the following indorsement appears on the back of this check:

“Received of David J. Evans, Trustee, the amount of this check as our pro rata of the net proceeds realized from the insolvent estate of Harry Obeler and in consideration thereof hereby release said insolvent and said Trustee from further liability.” This indorsement is signed by the plaintiff.

The sole and only question to be determined is whether the acceptance of these checks, and receiving-payment of the same with indorsement thereon, has amounted to a release of defendant from his liability to plaintiff on the balance of the indebtedness set up in the statement of claim; or in other words, the controlling question is whether the affidavit of merits sets up a good and valid defense to the statement of claim.

The defendant has not appeared in this court to support the judgment entered in his favor, and we regret the necessity of deciding the matter without any assistance from him. In Howlett v. Mills, 22 Ill. 341, the court held that the mere assent by a creditor that his debtor might make an assignment for the benefit of his creditors could not have the effect to release and discharge the debt; that it at most could only be held to require him to look to the fund for the portion to be applied on his claim and leave him to collect the remainder out of the debtor." The highest courts of other States have announced a similar rule, which seems to have been generally accepted. Little v. Sturgis, 127 Iowa 298; Limbocker v. Higinbotham, 52 Kan. 696; 5 C. J. 1302; 2 R. C. L. 667.

The indorsements on the check may well be construed as a release of the trustee from any obligation under the terms and provisions of the deed of assignment, and perhaps of the defendant, from any alleged liability on account of having delivered said assignment, but may not, we think, be properly construed as a release from defendant’s obligation to pay the remainder of his indebtedness. Here there was no condition in the assignment that defendant should be released. There was no intimation that a release would be reguired when checks other than the last were delivered.

On this record, we hold as a matter of law defendant is liable to plaintiff in the amount of $1,672.89, and for the reasons indicated the judgment is reversed and judgment will be entered here in favor of Marshall Field & Company, a corporation, and against defendant, Harry Obeler, for the sum of $1,672.89.

Reversed with judgment here in favor of appellant for $1,672.89.

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


author: Mr. Presiding Justice Gridley

text:
    Harry Arms et al., Appellees, v. City of Chicago et al., Appellants.
    Gen. No. 32,975.
    Heard in the second division of this court for the first district at the April term, 1928.
    Opinion filed February 14, 1929.
    Rehearing denied February 27, 1929.
    Samuel A. Ettelson, Corporation Counsel, for appellants ; Leon Hornstein and Ruth C. Nelson, Assistant Corporation Counsel, of counsel.

      Charles P. Schwartz, for appellees; William Jaffe. of counsel.
   Mr. Presiding Justice Gridley

delivered the opinion of the court.

Several years ago Harry Arms and a number of other master electricians and electrical contractors filed a bill in the circuit court of Cook county to enjoin the City of Chicago and certain of its officers from enforcing an ordinance of the city providing for the licensing of electricians and electrical contractors, and prohibiting the installation of wires or other electrical apparatus unless the work be done under the supervision of a licensed electrician, etc. The motion for a preliminary injunction was denied and the bill dismissed for want of equity. The chancellor certified that the validity of an ordinance was involved and allowed an appeal to the Supreme Court. On October 28, 1924, the Supreme Court held the ordinance to be void, reversed the decree of the circuit court and remanded the cause. (Arms v. City of Chicago, 314 Ill. 316,. 326.) After reinstatement, complainants, on April 30,1925, filed an amended bill, the real purpose of which'was to endeavor to secure the return of moneys paid by them (under duress or compulsion, as alleged) to the city by virtue of the ordinance which had been adjudged to be void. The essential prayer of this bill was “that defendants may be required to account to complainants as to any and all moneys paid as fees under the terms of said ordinance for licenses and/or permits to engage in the electrical business and/or do electrical work in said city.’’ Defendants’ special demurrer to the bill was overruled and they filed an answer. . Thereafter complainants filed an amendment to the bill setting forth the respective sums claimed to have been paid by each of them to the city, as fees, aggregating $156,179.91. Thereafter defendants filed a plea to the effect that these sums had been paid by complainants acting as agents of the parties that owned the buildings in which the work was done, and that complainants had been reimbursed for their outlays. This plea subsequently was withdrawn by defendants, and the point waived by them.

The cause came on for hearing before the chancellor in December, 1927, and the parties stipulated in open court that a trial be had upon the amended bill, as amended, and defendants’ answer; that the cause be submitted to the court “upon one issue, namely, whether or not the payments alleged in the bill to have been made (the amount of which is stipulated to be $156,179.91) were voluntarily made, or made under circumstances which in equity and good conscience should require them to be repaid to complainants”; that no proof need be offered by either party, save this, that it is stipulated that, at the times the payments were made, the city officials “received the moneys in the belief that the ordinance, . . . which they had been attempting to enforce, with the various sections thereof, was valid”; that, “with the exception of the sole issue submitted to the court, as hereinbefore recited, all other facts alleged in the bill should be treated as proved, should the court find that complainants are entitled to recover a decree in this case”; and that “no question shall be raised as to the disbursement of the fund after the same was collected by the city.”

The certificate of evidence discloses that, just before the stipulation was incorporated into the record, counsel for complainants said: “We contend that the very existence of this ordinance amounts to the payments made being involuntary. That is all there is to the bill.” And, during the hearing, in referring to the one question to be decided, counsel for complainants stated it to be: “Whether or not the existence of this ordinance and payment under it was tantamount to duress and obviated the necessity of protest.” The court held with complainants, and on January 13,1928, entered a decree that they recover back the several amounts, as stipulated to have been paid by them respectively to the city under the ordinance. From this decree defendants appealed to the Supreme Court, but on June 23, 1928, the cause was transferred to this Appellate Court. (Arms v. City of Chicago, 331 Ill. 56.) The Supreme Court said in the opinion (pp. 57-58): “The question of the invalidity of the ordinance has been already adjudicated in this case. . The single question on the record is whether the facts shown established payment under duress. The payments involved do not relate to the revenue within the meaning of section 118 of the Practice Act, . . . ”

A copy of the ordinance was attached to the amended bill and made a part thereof. The provisions of most of its sections are outlined in the opinion in Arms v. City of Chicago, 314 Ill. 316, to which reference is made. Section 1641 of Article II of the ordinance, referring to “Electrical Installations,” is as follows:

“1641. Penalty. Any person, firm or corporation that shall violate any of the provisions of this article, or that shall furnish or use any electrical current or install any electrical wires or apparatus within the city, in violation of any of the provisions of this article, shall be fined not less than fifty dollars nor more than one hundred dollars for each offense, and each day’s use thereof contrary to the provisions of this article shall constitute and be a separate and distinct offense. Said commissioner of gas and electricity may, for any violation of or failure to comply with the provisions of this article, also order and compel the cutting off and stopping of such current until the provisions of this article are fully complied with.”

It is alleged in the amended bill that complainants and each of them have been for a long time and now are electricians, engaged in the business of (1) contracting for the installation and equipment, and (2) installing and equipping buildings of all sorts with electrical wires and apparatus for electric lighting purposes in the City of Chicago, and their supervision; that they have no other means of subsistence or occupation ; that they and each of them have from time to time “been compelled,” in order to follow their trade and do electrical work in said city, to pay, and have paid, various sums of money in license fees to the city; that they have made such payments “involuntarily” and “only because compelled by said ordinance and the defendant officers of the city,” who were charged with the duty of enforcing the ordinance and “compelling” the payment of fees by complainants; that the defendant officers had no discretion under the ordinance to waive any of the requirements thereof; that “while in many instances complainants made formal protest” against the execution of the fees, “said protests were of no avail and useless”; and that complainants and each of them are entitled to recover back any and all fees paid under the ordinance, and to have an accounting for payments made during the years 1920 to 1924, inclusive. It will be noticed that the charges that the payments of fees were made involuntarily, or by compulsion, are mere conclusions. No facts are stated, save that the ordinance was in existence, showing wherein there' was any compulsion or duress. It will also be noticed that complainants do not allege that in all instances they made protests against the payment of the fees, but it is alleged that protests “were of no avail and useless.” It is further alleged that defendants “threaten to and will arrest” complainants, and any person employing them, if attempts be made to do electrical work'or supervise the installation thereof without a license or permit; and that defendants also “threaten to and will destroy and demolish” any electrical work done or supervised without such license or permit. It will also be noticed that it is not alleged that the claimed threats were made before or at the time complainants paid the license fees, or that any fees were paid because of them.

In defendants’ answer to the bill they alleged in substance that, since the decision of the Supreme Court adjudging the ordinance to be void, the city has not attempted to enforce the provisions thereof or to collect any license fees thereunder; denied that the license fees, which had been paid by complainants and are sought to be recovered back, were paid by them or any of them involuntarily, or under any compulsion save that of the provisions of the ordinance itself, or because of any threats as charged;.and further alleged that, although by virtue of the ordinance complainants paid to the city the license fees, the same “in every instance were paid voluntarily and without protest”; that in every instance the licenses were issued in response to applications voluntarily made by complainants; that defendants never undertook to coerce complainants in any manner; that in every instance, where permits were applied for, inspections were made by the city at complainants’ requests and urgent demands; and that portions of the fees now sought to be recovered back were in fact paid by complainants for inspections, which were made.

In Dillon on Municipal Corporations, Fifth Edition, Volume IV, section 1617, the author says that actions against a municipal corporation to recover back money upon the ground of the illegality of the tax or assessment are, upon principle and weight of authority (where there is no statute enlarging the liability), only maintainable when (1) the authority to levy' the tax is wholly wanting or the tax itself is wholly unauthorized; (2) the money has been actually received by the municipality for its own nse; and (3) “the payment by the plaintiff must have been made upon compulsion, as, for example, to prevent the immediate seizure of his goods or the arrest of the person, and not voluntarily. Unless these conditions concur, paying under protest will not, without statutory aid, give a right of recovery. The same principles are applicable to actions for the recovery back of money paid for illegal license taxes or fines imposed by a municipal court.”

The author further says:

Sec. 1619. “Money paid by a person to prevent an illegal seizure of his person or property by an officer claiming authority to seize the same, or paid to liberate his person or property from illegal detention by such officer, may be recovered back in an action for money had and received, on the ground that the payment was compulsory, or by duress or extortion.”

Sec. 1620. “The coercion or duress which will render a payment of taxes involuntary must in general consist of some actual or threatened exercise of power possessed, or assumed to be possessed, by the party exacting or receiving the payment, over the person or property of another, from which the latter has no other means or reasonable means of immediate relief except by making payment. ”

Sec. 1621. “Money voluntarily paid to a corporation under a claim of right, without fraud or imposition, for an illegal tax, license, or fine, cannot without statutory aid — there being no coercion, no ignorance or mistake of facts, but only ignorance or pure mistake of the law — be recovered back from the corporation, either at law or in equity, even though such tax, license fee, or fine could not have been legally demanded and enforced.”

In a comprehensive note to the section last quoted it is said:

“The doctrine of non-liability has been applied to the case of money paid under an unconstitutional act of the legislature and ordinances passed in pursuance thereof, the court adopting the principle .that money voluntarily paid under a mistake of legal right cannot be recovered back, and that mere apprehension of an impending distress warrant did not make the payment a compulsory one.” (Citing Baltimore v. Lefferman, 4 Gill (Md.) 425; Taylor v. Philadelphia Board of Health, 31 Pa. St. 73.) “Where a person, on his own motion, goes to the city clerk and pays money as a price of a license, under an ordinance afterwards judicially declared void, the payment is voluntary, and not upon compulsion, although the ordinance imposed a fine and imprisonment as a penalty for not obtaining a license; hence, in such cases, the money cannot be recovered back in an action against the corporation. ’ ’ (Citing Town Council of Cahaba v. Burnett, 34 Ala. 400; Town of Ligonier v. Ackerman, 46 Ind. 552.)

These principles of law, as stated in the textbook mentioned, have received the approval of our Supreme Court in numerous cases. In the case of Illinois Glass Co. v. Chicago Tel. Co., 234 Ill. 535, it is said (p. 541) that “It has been a universally recognized rule that money voluntarily paid under a claim of right to the payment and with knowledge of the facts by the person making the payment cannot be recovered back on the ground that the claim was illegal”; that (p. 545) “The circumstances of different cases are so diverse . . . that, as before stated, no very precise rules can be laid down which will fit every case ’ ’; that ‘ ‘ Ordinarily, protest is the best evidence of compulsion or unwillingness to pay,” but that “where protest would be useless it is superfluous”; and that “Compulsion may appear from the circumstances and not from any expression of unwillingness or protest against a payment; but that has no effect on the rule that a payment which is voluntary, and not compulsory, cannot be recovered back.” The writer of the opinion (Mr. Chief Justice Cartwright) reviews many prior decisions, among them two of the earlier cases between the City of Chicago and the owners of property who had paid illegal special assessments, saying (p. 542) :

“In Bradford v. City of Chicago, 25 Ill. 411, it .was held that a property owner could recover an assessment for the purpose of opening a street where the assessment was void and payment was made to a collector who had a warrant in his hands authorizing him to levy upon and sell the goods and chattels of the property owner. On the other hand, in Elston v. City of Chicago, 40 Ill. 514, where the assessment was void but the payment was made when there was no precept or execution in the hands of an officer by which the collection of the assessment could be enforced, it was held that the payment was not compulsory. The doctrine of that case, which is adhered to by practically all courts, is that a payment made with full knowledge of all the facts and circumstances, and in ignorance only of legal rights, cannot be recovered back. In order to render a payment compulsory, such a pressure must be brought to bear upon the person paying as to interfere with the free enjoyment of his rights of person or property, and the compulsion must furnish the motive for the payment sought to be avoided. Proof that one party is under no legal obligation to pay the money and that the other has no right to receive it is of no consequence unless the payment was compulsory, in the sense of depriving the one making the payment of the exercise of his free will.”

In the majority opinion in the recent case of School of Domestic Arts and Science v. Harding, 331 Ill. 330, 332, the same doctrine is again enunciated. In the opinion in said Chicago Tel. Co. case (234 Ill. 535), the writer also reviews two other decisions of our Supreme Court, saying (p. 544):

“In City of Chicago v. Northwestern Mutual Life Ins. Co., 218 Ill. 40, an owner of property was adjudged to have rightfully recovered from the city of Chicago water rates unlawfully exacted and paid under protest to prevent the city from carrying out a threat to shut off the water supply. The payment was deemed compulsory. In Yates v. Royal Ins. Co., 200 Ill. 202, it was held that although a statute imposing a tax was unconstitutional and the tax illegal, it could not be recovered back if it was paid voluntarily. It was considered of no importance that the tax was illegal where it was paid under a mistake as to legal rights but with knowledge of all the facts.”

In the present case it does not appear from the allegations of facts in the bill, which under the stipulation were to “be treated as proved” in case the court found in favor of complainants, that any of the payments of fees sought to be recovered back were made under compulsion or duress, pertaining to the person or property of any of the complainants, or that any of the payments were made because of threats by the officers of the city that in case of nonpayment any of the penalties of the ordinance would be exacted. And, the sole question for us to decide is, as stated by complainants ’ counsel upon the hearing, whether the mere existence of such an ordinance as the one in question, and the making of the payments under it as stipulated, was “tantamount to. duress,” entitling complainants to recover back said payments from the city.

We are not aware of any decision of the Supreme Court of this State passing upon the question under any similar void ordinance, where payments of license fees were received in the belief of the validity of the ordinance and the payors of such fees subsequently sought to recover them back. But, in view of the legal principles relating to voluntary or involuntary payments, as above set forth, the decisions above mentioned, the stipulation and the facts of the present case, we are of the opinion that complainants are not entitled to recover back any of the moneys paid to the city for license fees under the ordinance, that complainants ’ amended bill is without equity, and that the court erred in entering the decree appealed from. Reference may be made to the following additional cases as sustaining these holdings: Michel Brewing Co. v. State, 19 S. D. 302; Virginia Brewing Co. v. Commonwealth, 113 Va. 145; Wolff v. City of New York, 92 App. Div. 449, 87 N. Y. Supp. 214, aff’d 179 N. Y. 580; United States v. New York & Cuta Mail S. S. Co., 200 U. S. 488; Union Pac. R. Co. v. Board of Com’rs of Dodge Co., 98 U. S. 541; Chesebrough v. United States, 192 U. S. 253. During the oral argument had in this court in the present case complainants’ counsel cited the case of Chicago & E. I. R. Co. v. Miller, 309 Ill. 257, as supporting his sole contention. We do not think that it does. It appears from the opinion in that case (p. 259) that the money, deposited as a fee and sought to be recovered back, was deposited with the State treasurer, as trustee, under protest and under an agreement that said treasurer “should hold the money as trustee pending the determination of the right of the .State to demand and collect this fee.”

The decree of the circuit court of January 13, 1928, is reversed and the cause is remanded with directions that complainants’ amended bill, as amended, be dismissed for want of equity.

Beversed and remanded with directions.

Soanlan and Barnes, JJ., concur.


author: Mr. Presiding Justice Gridley Mr. Justice Scanlan

text:
    George Petrovic, Administrator of the Estate of William Petrovic, Deceased, Appellee, v. City of Chicago, Appellant.
    Gen. No. 32,983.

      Barnes, J., dissents.
    Heard in the second division of this court for the first district at the October term, 1928.
    Opinion filed February 14, 1929.
    Samuel A. Ettelson, Corporation Counsel, and William D. Saltiel, City Attorney, for appellant; Stanley C. Armstrong, George D. Mills, Assistant City Attorneys, E. Marshall Amberg and Roy S. Gaskill, Assistant Corporation Counsel, of counsel.
    Anton Pecival and H. H. Patterson, for appellee.
   Mr. Presiding Justice Gridley

delivered the opinion of the court.

In an action against the City of Chicago to recover damages for negligently causing the death of William Petrovie, a boy of 8 years of age, on the evening of October 15, 1926, a jury returned a verdict finding it guilty and assessing plaintiff’s damages at $10,000. On May 19, 1928, judgment in said sum was rendered against it and this appeal followed.

To plaintiff’s declaration, consisting of two counts, the city filed a plea of the general issue and a special plea that at the time of the accident it “did not own, possess, control or have custody of the instrumentality that caused the injury.” In both counts plaintiff alleged in substance that the city had possession and control of Allport Street, a public street, including the public sidewalk portion thereof that passed immediately in front of and flush with a certain building, known as 1808 Allport Street; that attached to the front of the building, and extending out and over the sidewalk, at a height of about 4 feet, there was a certain concrete receptacle or box for holding flowers, which had been there for about two months prior to the accident, and which during all of the time was loose, not securely fastened, and liable to fall down upon the sidewalk; that prior to the accident “children of tender years, when pedestrians upon the sidewalk or at play there, would and did. frequently come in contact with said receptacle and swing upon and take hold of it”; and that the city during said time knew, or in the exercise of ordinary care should have known, of all of these facts and conditions. In the first count plaintiff charged that on said day, the boy, William Petrovie, 8 years of age, was upon the .public sidewalk immediately in front of the building and in the exercise' of due care for his own safety; that the city, not regarding its duty, “negligently and carelessly allowed and permitted said receptacle to be and remain extending and protruding out, into and over said sidewalk”; and that, by reason thereof, said receptacle, as the boy came in contact with it, fell upon him and so injured him that he shortly thereafter died. In the second count the charge is that the city “negligently and carelessly failed and omitted to cause said receptacle to be removed from said sidewalk or to be securely fastened to said building.” In both counts plaintiff further alleged that the boy left him surviving, as his only heirs at law and next of kin, George Petrovie, his father (duly appointed administrator, etc.), Helen Petrovie, his mother, and John Petrovie, his brother, who have sustained pecuniary damage by reason' of the death, and each of whom, at and before the time of the occurrence, was exercising due care for the boy’s safety.

On the trial seven witnesses, called by plaintiff, testified as to the details of the accident. The city’s motion for a directed verdict in its favor was denied, and, it electing not to introduce any evidence, the case was submitted to the jury solely on plaintiff’s evidence.

The evidence disclosed the following facts in substance: The building, No. 1808 Allport Street, was erected flush with the concrete public sidewalk. Its main floor was used as a restaurant, which had a window looking out over the sidewalk. Underneath the sill, and extending out over the sidewalk for about 1% or 2 feet, and át a height or distance from the sidewalk of about 4 feet, was a heavy box, made of concrete and used for holding flowers. It was about 8 feet long, about 1 foot high, narrower at the bottom than at the top, and was empty at the time of the accident. It rested upon iron brackets attached to the building but was not fastened either to the brackets or the building. Outer portions of the box extended beyond the outer edges of the brackets. Many pedestrians passed over the sidewalk and children were accustomed to play thereon near the building and box. Three witnesses testified that they frequently had seen children in their play taking hold of the box with their hands and swinging back and forth, and also climbing upon it so as to look into the restaurant through the window. These conditions had existed for 7 or 8 weeks prior to the accident, which occurred between 8 and 9 o’clock on the evening of October 15, 1926. At that time the deceased, aged 8 years, with his brother, John Petrovie, aged 11 years, was walking on the sidewalk near the building and box. They had not been there before. The deceased, seeing the box, took hold of it with both hands and, as he started to swing or climb up, it fell down upon him and he received injuries from which he shortly thereafter died.

The main contention of counsel for the city is in substance that, under the facts disclosed, there is. no liability on the part of the city for the deceased’s death. We cannot agree with the contention. The box, insecurely fastened to the building and extending out over the sidewalk, was a dangerous obstruction in a public street, particularly to children who, being rightfully upon the sidewalk and yielding to their childish instincts, might attempt to swing or climb upon the box. In Hanrahan v. City of Chicago, 289 Ill. 400, 405, it is said:

“The cities in Illinois hold their streets and alleys in trust for the public use, and they have no power to alien or otherwise incumber their streets and alleys by permitting the construction of permanent awnings or balconies over the same. (Hibbard & Co. v. City of Chicago, 173 Ill. 91; McCormick v. South Park Com’rsf 150 id. 516.) The weight of authority in this country is, that where the duty of keeping the streets in reasonably safe condition for travel by pedestrians using-due care is vested in incorporated villages and cities, such duty requires such. municipalities to remove all obstructions and dangers below, on and above the surface of the streets» that are dangerous to travellers thereon, and that such obstructions include dangerous awnings and other overhead structures or fixtures. For failure to exercise due care in discovering and removing the same such municipalities are liable for personal injuries occasioned thereby.”

We think that under the evidence in the present case it was for the jury to say whether the city was guilty of negligence in permitting the box to remain where if was and in an insecure and dangerous condition for such a period of time as shown. And it is immaterial, as affecting the city’s liability, that the box may have been owned and constructed by the owner of the building or the party who was conducting the restaurant business therein. (Stedwell v. City of Chicago, 297 Ill. 486, 490.) And we think that the question whether the deceased, aged 8 years, was guilty of contributory negligence in attempting to climb upon the box, was peculiarly within the jury’s province to determine, they taking into consideration his age, capacity, intelligence and experience. (Maskaliunas v. Chicago & W. 1. R. Co., 318 Ill. 142, 150; Deming v. City of Chicago, 321 Ill. 341, 343.) There was no evidence tending to show that either of the boy’s parents, or his said brother, was guilty of any contributory negligence.

And, in our opinion, there is no merit in counsels’ further contention that the verdict and judgment are manifestly against the weight of the evidence.

And we do not think that the amount of the verdict, which is the maximum allowed by the statute, indicates that the jury were actuated by passion and prejudice, as counsel also contend. It does not appear that anything improper occurred upon the trial that might tend to arouse the passions or prejudices of the jury. Our Supreme Court and this Appellate Court have affirmed judgments upon verdicts in the same amount in similar cases. (Deming v. City of Chicago, 321 Ill. 341; Swan v. Boston Store, 177 Ill. App. 349, 351.) We cannot say that the damages awarded are excessive.

Our conclusion is that the judgment appealed from should be affirmed and it is so ordered.

Affirmed.

Scanlan, J., concurs.

Barnes, J., dissents.

Mr. Justice Scanlan

specially concurring: The question as to whether the plaintiff would be a trespasser on private property, if the owner of the premises were the defendant in the instant case, is not before us for determination. The city is the sole defendant, and certainly the boy, in swinging on the flower pot in his play, was not a trespasser as to it. So far as the city was concerned the plaintiff was rightfully swinging on the flower pot. (Stedwell v. City of Chicago, 297 Ill. 486, 490.)

Mr. Justice Barnes dissenting: It was unquestionably the duty of the city to remove the box as an encroachment on the street if it was chargeable with notice thereof. But it does not follow that its mere neglect to remove the same was the proximate cause of the injury. The injury did not result from the box being an obstruction to the ordinary use of the sidewalk nor from its falling upon a pedestrian by reason of defective construction. The accident apparently would not have happened had the boy not taken hold of the box, to swing on it. It was his act in so doing that caused the unfastened box to fall upon him. The proof does not show that it otherwise would have fallen. In taking hold of the box he was a trespasser on private property unless it can be said that the box in that position and condition was an attractive nuisance to a child of his age which the city negligently permitted to exist. It is seemingly only upon such a theory that the judgment can stand, but the writer has found no authorities that warrant the extension of the doctrine of attractive nuisance thus far.