author: Mr. Justice O’Connor

text:
    Charles Frenzel et al., Appellees, v. Lonnquist Company et al. Axel Lonnquist, Appellant.
    Gen. No. 40,763.

      Heard in the first division of this court for the first district at the June term, 1939.
    Opinion filed April 8, 1940.
    Charles J. Trainor, of Chicago, for appellant.
    Isador Becker, Frank A. Ramsey and Ben A. Stewart, all of Chicago, for appellees.
   Mr. Justice O’Connor

delivered the opinion of the court.

Plaintiffs filed their complaint in chancery against Axel Lonnquist and other parties to recover $15,000 paid for 150 shares of beneficial interest issued by a real estate trust. The basis of the suit was that the 150 shares were Class “D” securities which had been sold contrary to the provisions of the Illinois Securities law (ch. 121½, Ill. Rev. Stat. 1939). The case was referred to a master in chancery who took the evidence, made up his report and recommended that a decree be entered against Lonnquist and some of the other defendants for $15,000 and $3,000 solicitors ’ fees. A decree was entered substantially as recommended and Lonnquist alone appeals.

No contention is made that the shares involved did not come within the provisions of the Illinois Securities law and it is conceded that the law had not been complied with.

The record discloses that, for a number of years, defendant had been engaged in subdividing property in Cook county on a rather large scale and was the equitable owner of a number of lots located in Mount Prospect, a suburb of Chicago. James M. Boorman and William J. Coughlin were builders and had purchased lots from Lonnquist. It was decided that a building trust be organized known as the Boorman and Cough-lin Building Trust with the Home Bank and Trust Company of Chicago, as trustee. A number of lots were purchased from Lonnquist and title taken in the bank as trustee. January 11, 1929, a trust agreement was executed which recited that Boorman and Cough-lin desired to build one hundred houses at Mount Prospect; that the B and C Building Trust had been created with the bank as trustee; that beneficial trust certificates in the amount of $75,000 were to be issued, each certificate representing an investment of $100 in the trust. The $75,000 was subscribed during January and February, 1929, Joseph Frenzel subscribing for 150 shares of the certificates for $15,000 January 26, 1929. He was the eighth signer to the subscription. Afterward the $15,000 was paid in two instalments, the first $10,000 and the second $5,000. The project was a failure and nothing was realized by any of the subscribers. The certificates were tendered back to defendants and a demand made for the return of the $15,000 which was refused. Later the instant case was brought.

Plaintiffs’ case is predicated on the provision of sec. 37, ch. 121½, Ill. Rev. Stat. 1939 [Jones Ill. Stats. Ann. 13.48], which provides:

“Every sale and contract of sale made in violation of any of the provisions of this Act shall be void at the election of the purchaser, and the seller of the securities so sold, the officers and directors of the seller, and each and every solicitor, agent or broker of or for such seller, who shall have knowingly performed any act or in any way furthered such sale, shall be jointly arid severally liable, in an action at law or in equity, upon tender to the seller or in court of the securities sold, to: the purchaser for the amount paid, the consideration given or the value thereof, together with his reasonable attorney’s fees in any action brought for such recovery. ’ ’

Plaintiffs contend that defendant comes within the provisions of paragraphs 2, 4 and 6 of section 2 of the act, the pertinent portions of which are (par. 2): “Any natural person who acts as a promoter for and on behalf of a corporation, trust or unincorporated association or partnership of any kind to be formed shall be deemed to be an issuer.”

(Par. 4) “The terms ‘sale,’ ‘offer for sale’ or ‘sell’ shall include every disposition, or attempt to dispose, of a security or interest in a security for value. . . . The term ‘sell’ means any act by which a sale is made and the term ‘sale’ or ‘offer for sale’ shall include a subscription, an option of sale, a solicitation of sale, an attempt to sell, or an offer to sell, directly or by an agent, by a circular, letter or advertising, or otherwise; provided, however, that nothing* herein shall limit or diminish the full meaning of the terms ‘sale,’ ‘sell’ or ‘offer for sale’ as used by or accepted in courts of law or equity. ...”

(Par. 6) “The terms ‘solicitor’ and ‘agent’ shall include every natural person, other than dealer, broker or issuer, employed or appointed or authorized by a dealer, broker or issuer, to sell securities in any manner in this State, or who takes subscriptions for tEé sale of any securities.”

On the other hand, defendant’s position, as stated by his counsel, is that the uncontradicted evidence shows he “was not a trustee, officer, director, solicitor, broker, agent of or owner or holder of shares in the said B and C Trust ’ ’ and that ‘1 even if he had advised an officer or director of Frenzel Brothers Company, to purchase shares of beneficial interest in the Trust [which is not admitted], he would not thereby become liable. ’ ’

A further contention of defendant is that the evidence shows the 150 shares in question were subscribed for by Joseph Frenzel and not Frenzel Brothers Company ; that the shares were issued to him and, therefore, plaintiffs who sue as trustees of Frenzel Brothers Company, a corporation, cannot recover, and the decree is erroneous and should be reversed.

There is evidence from which the court might properly find that defendant Lonnquist, solicited Charles Frenzel, who was secretary of the Frenzel Brothers Company (a brother of Joseph Frenzel, whose name appears as a subscriber for the 150 shares), to buy the shares for $15,000. Lonnquist was the owner of the .lots which he sold Boorman and Coughlin or to the B and C Building Trust and title taken in the bank, as trustee. Part of the moneys derived from the sale of the certificates was to be used in paying off a mortgage of $500 per lot and Lonnquist was to be given a second mortgage on the lots for the balance of the purchase price. The master found that Lonnquist (and other defendants) was “an officer, director, solicitor, agent and broker of and for said B and C Building Trust, ’ ’ and that defendants “did counsel, advise, solicit and recommend to said Frenzel Brothers Company to buy 150 shares of beneficial interest in said B and C Building Trust; that during said period the said defendants did unlawfully offer for sale to said Frenzel Brothers Company 150 shares of beneficial interest,” in the Building Trust, and that Frenzel Brothers Company acted upon such solicitation, advice and recommendation of defendants and bought the 150 shares.

Much of the evidence, which was the basis of the finding by the master and by the chancellor, is directly contradicted by evidence offered on behalf of defendants and counsel for defendant who appeals, says that the findings are contrary to the manifest weight of the evidence. In addition to the evidence taken by the master, four witnesses testified before the chancellor, including Charles Frenzel and defendant Lonnquist, whose testimony in a great part was directly contradictory.

Upon a consideration of all the evidence in the record, we are unable to say the decree is against the manifest weight of the evidence. Under the facts, we think Lonnquist, who was interested in selling the lots (which could be brought about only by the sale of the certificates of interest), was a “promoter,” “issuer” and “solicitor” within the meaning of section 2 of the Illinois Securities law.

Defendant further contends that the 150 shares of beneficial interest in question were subscribed for by Joseph Frenzel; that the certificates were issued to-him and kept by him until the time of his death and therefore Frenzel Brothers Company cannot maintain this suit even if there were a violation of the law; that the right of action, if any, is in the representative of Joseph Frenzel, deceased. We think this contention cannot be sustained. There is evidence to the effect that while the subscription list shows Joseph Frenzel to be the subscriber, the subscription was in fact that of Frenzel Brothers Company and that it was their $15,000 which paid for the certificates.

A further contention is made that the objections filed to the master’s or special commissioner’s report were not considered by the commissioner; that defendant filed objections to the report which the court ordered to stand as exceptions and that such procedure is reversibly erroneous. The record discloses that the case was referred to Cornelius J. Harrington, a master in chancery of the superior court; that after he took the evidence and before he made up his report, he was elected judge of the circuit court of Cook county and thereafter was appointed special commissioner by the superior court to conclude the matter and make up his report. As special commissioner, he made up his report and, sometime thereafter, notified counsel that he had prepared and filed his report; that either party might file objections thereto in the office of the clerk of the superior court and they would be passed upon by the chancellor. The report was filed October 30, 1937, and on November 6, 1937, defendant Lonnquist filed his objections with the clerk of the superior court. More than a year thereafter, November 15, 1938, on motion of defendant Lonnquist, an order was entered giving him leave to file additional objections to the report and they were filed at that time. On the same date, defendant filed a motion that the report of the special commissioner “be set aside and declared for naught,” or in the alternative, if the motion were denied that the report be “vacated and set aside, and this Court hear the case upon the evidence previously taken before the Master. ’ ’ The motion was denied and November 25,1938, defendant called two witnesses who testified before the chancellor. November 28, plaintiff called a witness who gave testimony and on the same date, defendant took the stand and was further interrogated by counsel for both sides. November 28, an order was entered reciting that the matter came on to be heard upon the report of the special commissioner who at the time of the submission of his report, had been elected judge of the circuit court of Cook county; that the report was filed with the clerk of the superior court, accompanied, by notice to counsel to file objections with the clerk of the court, and that the matter, would be heard by the chancellor to whom the case might be assigned; that defendant filed objections as directed and additional objections; that Judge Harrington had informed the chancellor he did not care to hear the objections, and it was ordered, over defendant’s objections, that the objections and additional objections filed, stand as exceptions.

On the same day, November 28, 1938, defendant moved the court for leave to introduce additional evidence. The motion was supported by defendant’s affidavit and December 7, following, an order was entered in which is recited the coming on of defendant’s motion, supported by his affidavit; that defendant offered an exhibit which was received in evidence over plaintiffs’ objection and it was ordered that a photostatic copy be inserted in the record in lieu of the original, etc. December 16, the decree appealed from was entered.

Defendant at no time moved the court to re-refer the matter to the special commissioner. While the customary practice is to have the master pass upon objections filed to the report before it is filed, yet we think the procedure was not indispensable in view of the record before us. Brockman v. Aulger, 12 Ill. 277. Moreover, the master did not hear all the evidence. After the report was filed, on motion of defendant, additional evidence was taken. Obviously the master could not pass on evidence which was not heard by him.

Upon a consideration of what was done in the-case, the contention of defendant cannot be sustained. The decree of the superior court of Cook county is affirmed.

Decree affirmed.

Matchett, P. J., and McSurely, J., concur.


source: Caselaw Access Project

license: Public Domain

text:
    Samuel Strobl, Appellee, v. John Zidek, Jr., Appellant.
    Gen. No. 40,772.
    Heard in the first division of this court for the first district at the June term, 1939.
    Opinion filed April 8, 1940.
    Arthur Chittick and John A. Niemeyer, both of Chicago, for appellant.
    Clarence T. Morse, of Chicago, for appellee.
   Mr. Justice O’Connor

delivered the opinion of the court.

August 25, 1938, plaintiff brought suit to revive a decree entered January 7,1924 in the superior court of Cook county ordering that defendant pay plaintiff $12,782.07. After the pleadings were filed plaintiff moved for a summary judgment. The motion was allowed, a decree reviving the judgment entered, and defendant appeals.

The record discloses that July 18,1919, plaintiff and defendant entered into a written contract for the manufacture and sale of metallic wheels, etc., in accordance with letters patent. A few years thereafter, the parties disagreed and March, 1922, plaintiff filed his bill for an accounting and other relief, claiming defendant had breached the contract. After the issue was made up in that suit, the matter was referred to a special commissioner who took the evidence, made up his report and January 7, 1924, it was decreed that defendant pay to plaintiff $12,782.07.

On the day the decree was entered, Zidek, Jr., filed his petition in the United States District Court praying that he be adjudged a bankrupt. He scheduled the judgment entered against him in the chancery suit. Afterward Strobl filed his claim based on the decree and it was allowed but no dividend paid.

October 10, 1924, Strobl in the bankruptcy proceeding filed his verified objection to the discharge of Zidek, Jr., in which he swore he was a creditor of the bankrupt, had filed his claim; that it was allowed and unpaid, and that he would “be affected by the discharge of said bankrupt. ’ ’ The matter was referred to Referee Wean and September 30, 1927, he filed his report in which he recommended the bankrupt’s petition for discharge be allowed and March 26, 1928, the discharge was granted by the court. March 26, 1929, Strobl filed a petition to vacate the order of discharge. (The petition does not appear in the record.) The petition was referred to Referee Parkin and November 27, 1929, he filed a report in which he recommended that the petition to vacate the order of discharge be denied.

December 2, 1937, a memorandum opinion by Judge Wilkerson was filed, a part of which is:

“Objections were filed to the report of Referee Parkin, and there were numerous proceedings with reference to those objections which resulted in the entry of an order by Judge Carpenter on December 15, 1932, denying the motion to vacate the order of discharge. May 25, 1933, Strobl was granted permission to make a motion to re-open the case. This motion was set for hearing by Judge Carpenter and June 5, 1933, the motion to re-open the case was withdrawn. On December 31,1935, a motion was made by Strobl to reopen the case, and to set aside the order granting the discharge.
“The motion of Strobl to re-open the case and to vacate the order granting the petition for discharge based upon the report of Referee Wean and to vacate the order of Judge Carpenter affirming the report of Referee Parkin with reference to the re-opening of the case, has been considered by the Court. The proceedings before the Referee have been examined, and the Court is of the opinion that the motion of Strobl must be denied.
“The docket in this case shows that after Judge Carpenter entered the order on December 15, 1932, denying the motion to vacate the discharge, the objecting creditor made a motion on May 25, 1933, to re-open the case and reconsider the ruling, and that that motion was withdrawn on June 5, 1933. More than two years were permitted to elapse before any other proceeding was taken in the case. Notwithstanding that fact the Court has given consideration to the evidence which was presented to the Referee upon the objections to the discharge and the motion to set aside the order of discharge, and is of the opinion that upon the record now before the Court the order of Judge Carpenter was correct. The motion of the objecting creditor Strobl to vacate the order of discharge heretofore entered in this cause and to re-open the cause, therefore, must be denied. ’ ’

Plaintiff contends that since the damages awarded to him by the decree of the superior court were “for willful and malicious injuries by defendant to the property of plaintiff,” it was not dischargeable in bankruptcy and reliance is placed upon section 17 of the Bankruptcy Act, the applicable portion of which is: “A discharge in bankruptcy shall release a bankrupt from all of his provable debts, except such as . . . (2) are liabilities for . . . willful and malicious injuries to the . . . property of another.” On the other side, defendant’s position is that the $12,782.07 awarded plaintiff by the decree of the superior court was not for willful and malicious injuries to plaintiff’s property but the amount was reached in stating the account, and for damages for breach of the contract between the parties, which was the basis of the suit.

On this phase of the case the question therefore is whether the record discloses that plaintiff’s recovery in the chancery suit was based on defendant’s “willful and malicious injuries” to plaintiff’s property.

It seems to be conceded by counsel that the burden is on plaintiff to prove that the decree entered in the chancery suit is for “willful and malicious injuries” to his property. Defendant’s position is that the record is made up of the pleadings in the instant case, the pleadings in the chancery suit, the master’s report and the decree, and that the evidence taken before the master in chancery suit, which was made a part of the pleadings in the instant case, cannot properly be considered ; while counsel for plaintiff contends that the evidence taken before the master is properly a part of the record.

We do not stop to decide this question for the reason that we are of opinion that in either view, plaintiff cannot recover. A consideration of the record discloses plaintiff’s suit was based on his contention that defendant had breached the written contract entered into between them, and the report of the master and the decree are to the same effect. The method of accounting by the master, approved by the decree, awards plaintiff the amount due him under the accounting, and for damages he sustained by reason of the breach. No vindictive or punitive damages were allowed. The record discloses that on the day plaintiff filed his suit for an accounting, defendant Zidek brought two suits against plaintiff on notes executed by plaintiff to evidence moneys advanced by defendant to him under the contract, and after the judgments were entered in these two cases, Zidek caused a levy to be made on some of plaintiff’s property and it was sold. The master, in passing on this question said: “Whatever may be argued against the wisdom of the conduct of Zidek in bringing this series of suits from a business standpoint or one of morals I find that the defendant herein, John Zidek, Jr., was clearly within his legal rights in filing the suits in question and that they were not prematurely brought. The course of conduct of Zidek shown by the several suits at law proves, however, beyond doubt the repudiation by Zidek of the contract between Strobl and Zidek as set forth in paragraph 4 of this report and his determination to ruin Strobl. ’ ’ Counsel for plaintiff says this finding of the master is supported by the testimony of two witnesses and other evidence in the record; that one of the witnesses testified: “Mr. Zidek told me that he was going to take everything away from the Strobl Manufacturing Co. and put Strobl out of business so he won’t be able to make any more wheels,” and the other: “I heard Mr. Zidek say to Mr. Sparry that he was going to take all of the machinery away from Mr. Strobl and that it would be impossible for Mm to make any more wheels under his patent.” There is some contention between the parties as to the construction to be placed on the testimony of these two witnesses; plaintiff’s position is that it tends to show Zidek intended to ruin him— acted maliciously, while defendant contends this testimony refers to the time the levy was made on plaintiff’s property. A number of other matters are pointed out by counsel for plaintiff as indicating that defendant’s action was malicious, but we think it would serve no purpose to discuss these matters in detail because we are of opinion that his contention was not sustained by the master or by the chancellor.

Upon a consideration of the whole record, we think plaintiff has failed to show that the action of defendant was of such a character as would prevent his claim from being discharged in bankruptcy.

There is another reason why the decree cannot stand. Plaintiff, in his verified objections to defendant’s discharge in the bankruptcy court, after setting up that his claim had been filed and allowed in the bankruptcy proceeding, said that his claim would be “affected by the discharge of said bankrupt” — i. e. that the claim would be released if the bankrupt were discharged. That question was litigated and re-litigated a number of times in the federal court, as shown by the opinion of Judge Wilkerson and adjudicated against Strobl. Therefore the same question cannot be re-litigated as was sought to be done in the instant case. Stoll v. Gottlieb, 305 U. S. 165. That case originated in a proceeding brought under 77B of the Bankruptcy Act. There the plan of reorganization provided, among other things, for the discharge of the personal, guaranty of the mortgage bonds. In the bankruptcy court it was objected that the guarantor of the bonds could not be discharged in such a proceeding but the court decided otherwise. Afterward suit was brought on some of the bonds in the municipal court of Chicago and it was contended the matter had been adjudicated in the federal court. The contention was overruled and judgment entered on the bonds. The judgment was reversed by this court, Gottlieb v. Crowe, 289 Ill. App. 595. The matter was taken to the Supreme Court where the decision of the Appellate Court was reversed, Gottlieb v. Crowe, 368 Ill. 88. Certiorari was allowed by the Supreme Court of the United States to review the judgment. In the opinions in each of the three courts of review the question of the power of the federal court in bankruptcy to discharge the guarantor is discussed. The Supreme Court of the United States held the judgment of the bankruptcy court was res judicata. One paragraph of the syllabus of the case as reported by the United States Supreme Court is: “In reaching this conclusion, the Court assumes that the bankruptcy court did not have jurisdiction of the subject matter of its order — the release, in reorganization, of a guarantor from his guaranty. The decision here is based on the fact that in an actual controversy the question of the jurisdiction over the subject matter was raised and determined adversely to the respondent. That determination is res judicata of that issue in this action, whether or not power tó deal with the particular subject matter was strictly or quasi jurisdictional.” The opinion was rendered by Mr. Justice Reed and after stating the facts and discussing some of the authorities, he referred to Vallely v. Northern Fire & Marine Ins. Co., 254 U. S. 348, and in distinguishing that case from the one before the court, said: “This decision is inapplicable here because there was not an actually contested issue and order as to jurisdiction. The case is also distinguishable because the motion to vacate was made in the same bankruptcy proceeding as the order,” and further on in the opinion said: “It is frequently said that there are certain strictly jurisdictional facts, the existence of which is essential to the validity of proceedings and the absence of which renders the act of the court a nullity. Examples with citations are listed in Noble v. Union River Logging R. Co. For instance, service of process in a common law action within a State, publication of notice in strict form in proceedings in rem against absent defendants, the appointment of an administrator for a living person, a court martial of a civilian. Upon the other hand there are quasi-jurisdictional facts, diversity of citizenship, majority of litigants, and jurisdiction of parties, a mere finding of which, regardless of actual existence, is sufficient. As to the first group it is said an adjudication may be collaterally attacked, as to the second it may not. We do not review these cases as we base our conclusion here on the fact that in an actual controversy the question of the jurisdiction over the subject matter was raised and determined adversely to the respondent. That determination is • res adjiidicata of that issue in this action, whether or not power to deal with the particular subject matter was strictly or quasi-jurisdictional.” The court in that case also said: “It is just as important that there should be a place to end as that there should be a place to begin litigation.” This statement is certainly applicable to the case at bar.

It is well established that in a bankruptcy proceeding* the federal court has the power and the right to pass on the dischargeability of a debt. Gilbert’s Collier on Bankruptcy, 4th Ed. par. 535; Hisey v. Lewis-Gale Hospital, Inc., 27 F. Supp. 20; Sims v. Jamison, 67 F. (2d) 409; In re Devereaux, 76 F. (2d) 522; Local Loan Co. v. Hunt, 292 U. S. 234.

For the reasons stated, the decree of the superior court of Cook county is reversed.

Decree reversed.

Hatchett, P. J., and HcSurely, J., concur.


text:
    Lila F. Haskell, Appellant, v. The Art Institute of Chicago et al., Appellees.
    Gen. No. 40,794.
    Heard in the first division of this court for the first district at the October term, 1939.
    Opinion filed April 8, 1940.

      Moses, Kennedy, Stein & Bachrach, of Chicago, for appellant; Walter Bachrach and Arthur Magid, of Chicago, of counsel.
    West & Eckhart, Dunbar & Rich, Sidley, McPherson, Austin & Burgess, Cassels, Potter & Bentley and Shortall & Murison, all of Chicago, for appellees; Percy B. Eckhart, Robert F. Spindell and Lewis C. Jesseph, all of Chicago, of counsel.
   Mr. Justice O’Connor

delivered the opinion of the court.

March 3,1937, Lila F. Haskell filed her complaint in chancery against the Art Institute of Chicago, a corporation, Frank F. Taylor, David 0. Dunbar and Continental Bank and Trust Company of Chicago, a corporation, as executors of the last will and testament of Frederick T. Haskell, deceased. Afterward, January 20, 1939, she filed an amended complaint .against the same defendants and a number of others named beneficiaries in the last will and testament of the deceased, praying that the transaction between Frederick T. Haskell and the Art Institute, as evidenced by two written documents, be decreed to not constitute a gift of 40 pictures from Haskell to the Art Institute; that the two documents be held fraudulent and void and that the executors inventory the paintings as a part of the assets of the estate. Defendants filed motions to dismiss the suit on the ground that the amended complaint did not state a cause of action. The motions were sustained, the suit dismissed and plaintiff prosecutes this appeal.

The allegations of the amended complaint are that plaintiff and Frederick T. Haskell, the decedent, were married December 19, 1919, and lived together until August 11, 1931, when there was a separation and plaintiff lived separate and apart from her husband continuously until his death September 13, 1935. September 22, 1931, she filed a suit against him for separate maintenance which was pending and undisposed of when he died. No children were born of the marriage or of any prior marriage of Mr. Haskell. Between June 1,1933 and September 13, 1935, there were no persons who, in case of Mr. Haskell’s death, would be heirs-at-law other than Mrs. Haskell, Frederick J. Flagg, his nephew, and Annette H. Flagg, his niece.

For some time prior to their separation and continuously until his death Mr. Haskell maintained an apartment at 1200 Lake Shore drive as his residence and an office on LaSalle street, in Chicago. He owned the 40 valuable paintings which he had accumulated over a period of years — 38 of them hung in Ms apartment and the other 2 in his office. On or about June 17, 1935, he was seriously ill in his apartment and under the care of nurses. He was 81 years old. Chauncey McCormick, vice-president of the Art Institute, was at the apartment and at that time a written agreement was entered into between the Art Institute, represented by Mr. McCormick, and Mr. Haskell, in which it is stated that Mr. Haskell “has assigned, transferred and delivered and by these presents does assign, transfer and deliver to the party of the first part [Art Institute] the paintings and other art objects described in the schedule hereto attached, and made a part hereof and designated ‘Schedule op the paintings and other art objects included in the gift op June 17, 1935, prom Frederick T. Haskell, to the Art Institute op Chicago,’ and the party of the first part [Art Institute] hereby acknowledges receipt of and accepts the said paintings and other art objects of the party of the second part [Mr. Haskell] and agrees with respect thereto as follows. ’ ’ Then follow provisions that the paintings shall be designated “The Frederick T. Haskell Collection” and such of the paintings as in the judgment of a committee of the Board of Trustees of the Art Institute are appropriate, shall be exhibited by the Art Institute as a part of its general collection and the paintings appropriately labeled. Those not appropriate in the judgment of the committee may be disposed of and the proceeds derived therefrom deposited by the Art Institute in a fund known as the “Frederick T. Haskell Fund” which shall be used, first, for the care, upkeep and maintenance of the paintings and other art objects in the Haskell collection and, second, for the purchase of other paintings or works of art for the Frederick T. Haskell collection which shall be also appropriately labeled as gifts of Frederick T. Haskell. The agreement was signed by Mr. Haskell and by Mr. McCormick, as vice-president and Mr. Harshe, as director of the Art Institute. Three days after the agreement was executed, Mr. McCormick as vice-president of the Art Institute, wrote Mr. Haskell the following letter: “June 20, 1935. At the meeting of the Board of Trustees of the Art Institute of Chicago today I was authorized as Vice-President to write you in connection with the forty paintings which you have given to the Museum and which the Board of Trustees has accepted in the terms and conditions of the contract signed by you and by me and by Dr. Harshe under date of June 17. The Board of Trustees has authorized me to say to you that we are entirely willing and agreeable to leave the forty pictures which now belong to the Art Institute in your care and custody, thirty-eight of them now being in your apartment on Lake Shore Drive, and two of them in your office at 231 South La Salle Street, for the period of one year from this date, provided and with the understanding and agreement that you will give these pictures the same care and protection which you have given them heretofore during the period they belonged to you and that from this date you will carry the same amount of insurance on them in the name of the Art Institute of Chicago which you formerly carried in your name.

“The Board expressed its great appreciation of the gift to which I would again like to add my thanks.”

At the bottom was written in longhand, “Will you please sign the duplicate and return to me at the above address.” Upon receipt of the letter and duplicate, Mr. Haskell signed his name to the duplicate, returned it to the Art Institute and retained the original. July 5, 1935, 15 days after the date of the letter, Mr. Has-kell executed his last will and testament which on October 29, 1935, was admitted to probate by the probate court of Cook county, and February 8, 1936, Mrs. Haskell renounced under the will and elected to take as surviving widow under the law.

A number of bequests are provided for in the will aggregating $456,000. In the 19th Article of the will the testator said: “I have heretofore at different times transferred by bill of sale and symbolical delivery, or by contract, to certain persons and to institutions, various articles of furniture, jewelry, china, silverware, tableware, linens, objects of art, painting and other household goods and effects which I am now using under the terms of certain leases thereof or have in my possession as custodian thereof.

“I hereby reaffirm and confirm each of said transfers and I hereby direct my Executors, ... to surrender and deliver all of said articles . . . paintings and household goods and effects to the persons and institutions to whom the same have been so transferred by me. In case any of said transfers shall have failed for any reason to have transferred the legal title and beneficial ownership of said . . . paintings ... to the persons and institutions named and designated in said transfers respectively, then I hereby specifically give and bequeath said . . . paintings ... to the persons and institutions respectively named in such transfer as the transferees thereof.”

By the 24th Article of the will, the testator provided that, after the payment of his debts, taxes on his estate and on the various bequests and the payment of costs and expenses of administration, “I give and bequeath to my wife, Lila Frances Haskell, if she shall survive me and be my wife at the time of my death, one-half, (%) of my net estate then remaining” in lieu of all statutory rights of dower, homestead and widow’s award which she might have in his estate.

The 25th Article disposes of the residue of the estate.

It is further alleged in the amended complaint that the execution of the agreement of June 17, 1935, by Mr. Haskell and the Art Institute and the letter of June 20, were to make it appear that title to the 40 pictures had passed to the Art Institute, whereas the actual intent of the parties was that Mr. Haskell retain title to the paintings for life as well as the possession, use and enjoyment thereof, the purpose of which was to prevent Mrs. Haskell, in the event she survived him, from sharing in the value of the paintings as a part of the estate.

. Plaintiff contends that the claimed gift of the paintings by Mr. Haskell to the Art Institute which “purported to pass title and dominion to the Art Institute but was in fact subject to a secret agreement and understanding between the parties that Mr. Haskell should retain title, dominion, possession and enjoyment until his death, was a colorable and illusory transfer, and may be set aside by plaintiff as having been made with a fraudulent intent to deprive her of her legal rights as surviving widow in the personal estate left by Mr. Haskell on his death. ’ ’ The law is well settled that a husband may dispose absolutely of his property during his lifetime even though he intended to deprive his wife of her right to take one-half of such property where she renounces the provisions of the will. If the gift or disposition of the property, however, is but a scheme of the husband to deprive the wife of her property rights, at the same time retaining the benefits of the property himself during his lifetime, the transaction may be set aside. Padfield v. Padfield, 78 Ill. 16; Blankenship v. Hall, 233 Ill. 116; Patterson v. McClenathan, 296 Ill. 475.

In the Padfield case, the widow filed her bill in chancery alleging that her late husband, in his lifetime, for the purpose of, evading the statute and to deprive her at his death of any share in his personal estate, transferred notes to his son, William. The court there said: “it us urged that this transaction was void as to plaintiff in error; that, under our statute, a husband has no power to dispose of his personal property so as to deprive his wife of her distributive share therein, and that the demurrer admits the allegation that this transfer was made for the purpose of evading the statute, and preventing her from sharing in his personal property. The doctrine is correctly stated in Kerr on Fraud and Mistake, 220, in a note. It is there said: ‘There can be no doubt of the power of a husband to dispose absolutely of his property during his life, independently of the concurrence, and exonerated from the claim of his wife, provided the transaction is not merely colorable, and be unattended with circumstances indicative of fraud upon the rights of the wife. If the disposition of the husband be bona fide, and no right is reserved to him, though made to defeat the right of the wife, it will be good against her. ’ . . .

“It is true that, where a husband still retained the right to control the property, and resume the same at pleasure, such a gift was held to be in fraud of the rights of his wife. But there, the transfer was only colorable, the title still being in the husband, and, being thus entitled, the wife could claim and recover her share, on the death of the husband.” In the instant case, if the title to the paintings passed from Mr. Has-kell to the Art Institute regardless of what his intentions were, there was no fraud — “there can be no fraud where no right of any person is invaded. ’ ’ (Newman v. Dore, 275 N. Y. 371.)

Counsel for plaintiff say: “It is not the form of the conveyance, assailed as colorable, which is controlling, but the actual intent of the parties thereto ’ ’; that the amended complaint “explicitly charges that Mr. Has-kell did not actually intend to divest himself of the ownership of the paintings; that he and the Art Institute had an understanding and agreement for the retention by Mr. Haskell of title, dominion, possession and enjoyment until his death” and that the documents of June 17 and 20, 1935, were prepared for the purpose of concealing the true intention and understanding of the parties to make it appear that a completed disposition inter vivos had been made. “The charge of fraud is predicated upon the existence of the secret understanding not to make a present transfer of title, dominion and control, and upon the concealment of the true understanding by the preparation of the colorable documents.” That the allegation of a “secret agreement and understanding, standing alone, is a well pleaded averment of ultimate fact”; that other allegations are that the paintings were Mr. Haskell’s personal collection and form a part of the furnishings and decorations of his home and office; that he desired to continue in the possession, use and enjoyment of the paintings during his lifetime. He was 81 years old, in a bad state of health, under the care of nurses and believed his death was imminent; that his wife had a separate maintenance suit pending against him; that he did not wish her to share in the value of the paintings as a part of his estate and yet he was unwilling to denude his house and office of the paintings while he lived; that he was having his will prepared at the time and informed Mr. McCormick that he was going to make a specific bequest of the pictures to the Art Institute.

The substance of the charge made in the amended complaint is that Mr. Haskell and the representative of the Art Institute entered into a fraudulent agreement. In 10 E. C. L. p. 415, in discussing the sufficiency of the allegations of fraud it is said: “An exceptionally high degree of certainty in the allegations of the bill is required in those cases where the cause of action is based on fraud”; that general averments of fraud are wholly inadequate. “In making allegations of fraud, good pleading requires that the plaintiff should state specifically the inculpatory facts in order that they may carry their own conviction of fraud and in order that the wrong-doing may thereby be made more clearly to appear.” In Dickinson v. Dickinson, 305 Ill. 521, the court said: “A general allegation of fraud, however strong in expression, is insufficient. The bill should point out and state the particular facts and circumstances relied on as constituting the fraud.” No general rule can be laid down as to when it is sufficient to plead an ultimate fact and what allegations are sufficiently specific, but the facts in each ease must be considered.

In the instant case, in the agreement of June 17, it is specifically stated that Mr. Haskell had transferred and delivered the paintings to the Art Institute and that the Art Institute had accepted them. It further provides how the paintings are to be labeled and displayed and if some of them are thought by a committee of the Art Institute not to be suitable for display, they may be sold and the proceeds realized from such sale, deposited in a fund known as the “Frederick T. Has-kell Fund” which is to be used in the care, upkeep and maintenance of the remaining pictures and, secondly, to purchase other works of art which should also be labeled as gifts of Frederick T. Haskell. Likewise, the letter of June 20, from the Art Institute to Mr. Has-kell, advises him that the Art Institute has accepted the 40 paintings under the terms and conditions of the agreement of June 17, and that the Art Institute is willing to leave the 40 pictures “which now belong to” it in Mr. Haskell’s care for one year with the understanding that he shall take the same care of the paintings as he did while they belonged to him. And in the" will made July 5, 1935, Mr. Haskell states that at different times he had transferred “by bill of sale and symbolical delivery” some of his personal property, including paintings some of which he was then using under the terms of certain leases; that he confirmed each of the transfers and directed his executors to deliver all of such articles, including the paintings, to the persons and institutions to whom he had transferred such paintings, etc., and as a precaution, the testator stated that in case the transfers failed for any reason, he specifically gave and bequeathed them, including the paintings, to the persons and institutions named in such transfers. From these documents it is clear Mr. Haskell intended to and did transfer the title to the .40 pictures to the Art Institute and they were accepted. He agreed to such acceptance and it was further specifically agreed that he should retain the pictures for one year, provided he took care, etc., of them, as he did before the gift was made. The will again mentions the gift having been made. The agreement was made June 17, the letter written three days later, June 20, and the will July 5. In each of these, the language is clear and specific and shows that Mr. Haskell intended and did make a gift of the paintings to the Art Institute which was accepted. In these circumstances, we think the allegations were not specific enough to require an answer to the complaint.

Plaintiff further contends that the purported gift of the 40 paintings may be set aside under the provisions of sec. 4, of the Statute of Frauds (sec. 4, ch. 59, Ill. Rev. Stat. 1939 [Jones Ill. Stats. Ann. 55.04]). In stating this point, counsel say: “Being injuriously affected in her property rights by reason of the color-able transfer made with a fraudulent intent, plaintiff is entitled to invoke the provisions of Section 4 of the Statute of Frauds which declares that transfers of property (gifts of chattels included) made with the intent to defraud creditors, purchasers and other persons may be set aside as fraudulent and void,” and “The purported gift of the paintings is further conclusively fraudulent under Section 6 of the Statute of Frauds, because possession of the paintings was not given to the Art Institute (as is required in the case of a verbal [oral] gift of chattels), but remained with Mr. Haskell during his entire lifetime, nor were the documents of June 17 and June 20, 1935, either acknowledged or recorded (as is required in the case of a deed of gift of chattels).”

The pertinent part of section 4 provides: “Every gift, grant, conveyance, assignment or transfer of, or charge upon any estate, real or personal, . . . made with the intent to disturb, delay, hinder or defraud creditors or other persons, . . . shall be void as against such creditors, purchasers and other persons.” Counsel contend that “other persons” mentioned in sec. 4 is applicable to Mrs. Haskell and since the purported gift was made by Mr. Haskell with the intent to hinder, delay or defraud her, it is void under the statute, and Tyler v. Tyler, 126 Ill. 525, is cited. In that case, the injury complained of was to the right of the wife to separate maintenance which was an existing legal right. The court there said: “If the wife be not, technically, a ‘creditor,’ she surely comes within the language ‘other persons,’ and she is, obviously, as much injured by such a conveyance as any creditor can be. ’ ’

Since “there can be no fraud where no right of any person is invaded” as said by the New York Court of Appeals (Newman v. Bore, 275 N. Y. 371), we think it clear that sec. 4 is inapplicable to the facts in the instant case. Moreover, since we hold that the transfer of the paintings was not colorable but valid, plaintiff’s contention cannot be sustained.

As to the contention that sec. 6 of the Statute of Frauds [Ill. Rev. Stat. 1939, ch. 59; Jones Ill. Stats. Ann. 55.06] renders the purported gift of the paintings conclusively fraudulent. That section provides: “Every conveyance of goods and chattels on consideration not deemed valuable in law shall be taken to be fraudulent, unless the same be by will duly proved and recorded, or by deed in writing duly acknowledged or proved, and recorded as in the case of deeds of real estate, or unless possession shall really and bona fide remain with the donee.” Counsel say that since there was no consideration for the pictures, and since the documents of June 17 and June 20 were neither acknowledged nor recorded as in the case of deeds, and since the paintings remained in the possession of Mr. Haskell, the attempted gift, under the statute, is conclusively deemed fraudulent.

What we have said in reference to the nonapplica-bility of sec. 4, we think applies to the contention now made. Since we hold that the title to the paintings passed by the two documents of June 17 and 20 and the paintings remained in Mr. Haskell’s apartment and office by virtue of the letter of June 20, for one year, and since in his will he stated the paintings were in his possession by the terms of a certain “lease,” we think the delivery was sufficient and sec. 6 therefore inapplicable.

From what we have said it follows that the contention of plaintiff that “Apart from any question of colorability and fraud, or of the applicability of sections 4 and 6 of the Statute of Frauds, the reservation by Mr. Haskell of the right of possession and enjoyment for one year (or for life) rendered the transaction testamentary in character,” cannot be sustained. The gift being complete upon execution of the two documents, the paintings did not pass under the will.

The judgment of the circuit court of Cook county is affirmed.

Judgment affirmed.

Matchett, P. J., and MoSurely, J., concur.


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    Myrtle M. Salzman, Appellant, v. William E. Boeing et al., Trading as E. A. Pierce and Company, Ap-pellees.
    Gen. No. 40,802.
    Heard in the first division of this court for the first district at the June term, 1939.
    Opinion filed April 8, 1940.
    Rehearing denied April 22, 1940.
    Fyffe & Clarke, of Chicago, for appellant; John Harrington and Albert J. Smith, both of Chicago, of counsel.

      Levinson, Becker, Peebles & Swiren, of Chicago, for appellees; Benjamin V. Becker and Harold M. Keels, of Chicago, of counsel.
   Mr. Justice O’Connor

delivered the opinion of the court.

Plaintiff brought suit against defendants who were brokers and members of the Chicago Board of Trade, to recover $21,525.05 which she claimed to have lost in the buying and selling* of wheat. She predicates her right to recover by virtue of the provisions of par. 330, sec. 132, ch. 38, Ill. Rev. Stat. 1939 [Jones Ill. Stats. Ann. 37.260]. At the close of plaintiff’s case, on motion of defendants, the court found in favor of defendants, judgment was entered on the finding, and plaintiff appeals.

The record discloses that plaintiff, a housewife, had operated a moving picture theater a number of years and after coming to Chicago, leased and managed an apartment house; that about July, 1936, she heard that E. A. Pierce & Company were reputable brokers dealing in stocks and bonds, wheat, etc., on the stock exchange and Board of Trade in Chicago. Some time in July, 1936, plaintiff went to defendants’ office in Chicago with $3,000 which she desired to invest. She there met Mr. Palke, a “customer’s man” and explained her business to him. Palke’s duties were to accept orders from customers to buy and sell and to furnish them with information. Between July, 1936 and July 23, 1937, plaintiff purchased and sold through defendants, securities in the amount of $118,445.64. From July 9, to July 17,1937, she purchased and sold 100,000 bushels of wheat through defendants, the purchase price of which was approximately $130,000. None of these transactions are involved in this suit and are only mentioned to show a course of dealing, etc. between the parties.

The evidence further shows that between July 17 and 20, 1937, plaintiff, through defendants, bought 140,000 bushels of wheat for future delivery at a cost of more than $180,000. All of this wheat was sold from July 27 to August 4, for a little more than $159,000. In the meantime, plaintiff had deposited with defendants more than $20,000, which was substantially all of her assets and when defendants sold the last of the wheat there was a balance due them of $156.97. Plaintiff claims the amount of her losses was $21,525.05, for which she sues. The facts of the purchases and sales of the 140,000 bushels of wheat as above stated were stipulated.

Plaintiff testified she went to defendants’ place of business in July, 1937, and talked to Mr. Smith, one of defendants and a member of E. A. Pierce & Company, about her business with defendants. There is other evidence in the record as to the dealing between the parties but since we have reached the conclusion the judgment must be reversed and the cause remanded for trial, we think it unnecessary to mention it further.

Par. 328, sec. 130, and par. 330, sec. 132, ch. 38, Ill. Rev. Stat. 1939 [Jones Ill. Stats. Ann. 37.258, 37.260], provide: (Sec. 130.) “Whoever contracts to have or give himself or another the option to sell or buy, at a future time, any grain, or other commodity, . . . where it is at the time of making such contract intended by both parties thereto that the option, whenever exercised, or the contract resulting therefrom, shall be settled, not by the receipt or delivery of such property, but by the payment only of differences in prices . . . shall be fined not less than $10 or more than $1,000, or confined in the county jail not exceeding one year, or both; and all contracts made in violation of this section shall be considered gambling contracts, and shall be void. ” (Sec. 132.) ‘ ‘ Any person who shall, at any time or sitting', by playing at cards, dice or any other game or games, or by betting on the side or hands of such as do game, or by any wager or bet upon any race, fight, pastime, sport, lot, chance, casualty, election or unknown or contingent event whatever, lose to any person, so playing or betting, any sum of money, or other valuable thing, amounting in the whole to the sum of $10, and shall pay or deliver the same or any part thereof, the person so losing and paying or delivering the same, shall be at liberty to sue for and recover the money, goods or other valuable thing, so lost and paid or delivered, or any part thereof, or the full value of the same, by any appropriate civil action from the winner thereof, . . . No person who accepts from another person for transmission and transmits, either in his own name, or in the name of such other person, any order for any transaction to be made upon, • or who executes any order given to him by another person on, any regular board of trade or commercial or stock exchange, shall, under any circumstances, be deemed a ‘Winner’ of any moneys lost by such other person in or through any such transactions.”

“To constitute a gambling transaction it must be made to appear that neither party intended the commodity purchased to be delivered but both intended the transaction should be settled on differences.” Ehrlich v. Rothschild, 292 Ill. App. 511; Pelouze v. Slaughter, 241 Ill. 215. It is also the law that the intention of the parties may appear from all the circumstances in evidence. Ehrlich v. Rothschild, supra; Riordon v. McCabe, 341 Ill. 506.

The provision of sec. 132, which we have above quoted, by which it was sought to exempt “board of trade or commercial or stock exchange ’ ’ from liability, and which was added as an amendment to the section in 1913 was declared unconstitutional. Miller v. Sincere, 273 Ill. 194. Afterwards in 1935, the legislature again amended sec. 132 and other sections of the Criminal Code so as to bring that code in harmony with the Civil Practice Act which became effective Jan-nary 1,1934. But the legislature did not eliminate from the amended section that part which had been declared unconstitutional in the Sincere case but re-enacted it in its entirety. Counsel for defendants say, in effect, that public opinion has changed since that case was decided in its attitude towards boards of trade and stock exchanges and that this was the view of the legislature in re-enacting that part of the section which had theretofore been declared unconstitutional. Sec. 13 of art. 4, of the Constitution of Illinois of 1870 provides: “no law shall be revived, or amended by reference to its title only, but the law revived, or the section amended, shall be inserted at length in'the new Act.”

Whether counsels’ contention is correct or whether the legislature overlooked the fact that part of the section had been declared unconstitutional, is unnecessary for us to determine. While the precise contention now made does not seem to have been heretofore considered, yet we feel that what was said by our Supreme Court in City of Altamont v. Baltimore & Ohio R. Co., 348 Ill. 339, is controlling. In that case the city council passed an ordinance requiring* railroad companies to maintain flagmen at street crossings. Prior to the passage of the ordinance, the railroad company, in obedience to an order of the Illinois Commerce Commission, had installed flash lights at the crossings and refused to comply with the ordinance. The city brought an action against the railroad company to recover the penalty prescribed by the ordinance. The court pointed out that the Cities and Villages Act required railroad companies to keep flagmen at grade crossings of streets, which remained unchanged until the passage of the Public Utilities Act in 1913, which act authorized the Commerce Commission to regulate railroad crossings at grades. In 1929, the legislature amended the Cities and Villages Act which included the provision of the act which had been rendered nugatory by the passage of the Public Utilities Act. In passing on the question the court said: ‘1 The appellant contends that the amendment of 1929 restored the power to the city-council to require railroad companies to keep flagmen at street crossings and that the ordinance is therefore valid. The contention is without merit. By section 2 of the act entitled ‘An act to revise the law in relation to the construction of the statutes,’ (Cahill’s Stat. 1931, p. 2687; Smith’s Stat. 1931, p. 2838), ‘The provisions of any statute, so far as they are the same as those of any prior statute, shall be construed as a continuation of such prior provisions, and not as a new enactment. ’ When the General Assembly amends a statute and no change is made in parts of it, the repeated portions, either literally or substantially, are regarded as a continuation of the existing law and not as the enactment of a new law upon the subject. . . . Section 27 of article 5 of the Cities and Villages act, with respect to the power here claimed, was therefore a continuation of the provision as originally enacted and left sections 57 and 58 of the Public Utilities act unaffected and unimpaired.”

Following the holding in that case, we are of opinion that the part of sec. 132 declared unconstitutional by our Supreme Court in the Sincere case, was not again put into the section by the amendment of 1935. It follows therefore that defendants are not exempt from liability by the provisions of sec. 132.

Our Supreme Court having declared part of the section unconstitutional, the question is no longer debatable and this court has jurisdiction.

Counsel for defendants, in support of their contention that the judgment should be affirmed, say: “The record supports the trial court’s finding that the defendants did not have the specific intent required by the statute, and any intent the agent Palke may have had not to deliver or receive the grain in question may not be imputed to the defendants.” This was the sole ground on which the court based its decision. In rendering Ms opinion, the court, in deciding the case said: “In addition to the penalty for the violation, there is a civil remedy also provided for. But the act is penal in its character, and even though the action is a civil one, it is a civil action based upon a penal statute, a statute which clearly prescribes the penalty for, and declares it to be a crime for any broker to do the things prohibited by that statute.

“You deal with the subject of agency, and involved in that subject is whether or not the agent had either express authority or implied authority. The implied authority might come from the acts committed that are within the apparent scope of his authority.

“Now, his authority, express authority, has been defined here, about which there is no dispute. Mr. Smith [one of the defendant partners] testified precisely to what Palke’s authority was as a customer’s man, or salesman. . . . There is never any implied authority to an agent to commit a crime. ’ ’

We think the holding was wrong. Defendants cannot escape liability on the ground that plaintiff dealt with their agent and not directly with one of the members of the firm. Palke’s knowledge was imputable to defendants, his employers. Powell v. McCord, 121 Ill. 330; Weare Commission Co. v. People, 209 Ill. 528; Ohlendorf v. Bennett, 241 Ill. App. 537; Lamson v. West, 201 Ill. App. 251; Hyman & Co. v. Hay, 277 Fed. 898. We think the evidence shows that what Palke did in connection with his dealings with plaintiff was what he was hired to do.

In Richter v. Empire Trust Co., 20 F. Supp. 289, the Umted States District Court of New York held that sec. 132 was not penal but remedial in its nature. The court there said: “Although the Illinois statute is part of the penal law of that state, it is not penal but remedial in character in so far as it gives the loser the right to recover back the money lost at gaming. As the Supreme court has said in Huntington v. Attrill, 146 U. S. 657, at page 667,13 S. Ct. 224, 227, 36 L. Ed. 1123:

“ ‘Penal laws, strictly and properly, are those imposing punishment for an offense committed against the state, and which, by the English and American constitutions, the executive of the state has power to pardon. Statutes giving a private action against the wrong’doer are sometimes spoken of as penal in their nature, but in such cases it has been pointed out that neither the liability imposed nor the remedy given is strictly penal.
“ ‘The action of an owner of property against the hundred to recover damages caused by a mob was said by Justices Willes and Buller to be “penal against the hundred, but certainly remedial as to the sufferer.” Hyde v. Cogen, 2 Dougl. 699, 705, 706. A statute giving the right to recover back money lost at gaming, and, if the loser does not sue within a certain time, authorizing a qui tarn action to be brought by any other person for three-fold the amount, has been held to be remedial as to the loser, though penal as regards the suit by a common informer. ’ ”

For the reasons stated, the judgment of the circuit, court of Cook county is reversed and the cause remanded, for further proceedings in accordance with the views herein expressed.

Reversed and remanded.

Hatchett, P. J., and HcSurely, J., concur.


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    Norman Cohen et al., Appellants, v. North Avenue State Bank et al. First National Bank of Chicago, Appellee.
    Gen. No. 40,806.
    Heard in the first division of this court for the first district at the October term, 1939.
    Opinion filed April 8, 1940.
    Rehearing denied April 22, 1940.

      Jacobson, Merrick, Nierman & Silbert, Isidore Brown, Decker & Golden, Owen, O’Malley, Mc-Keown & Allen, Harold- L. Perlman, Marvin J. Wel-eeld and Irving Goodman, all of Chicago, for certain appellants; Irving Goodman and David- Silbert, of counsel.
    McCarthy & Toomey and Isador Becker, all of Chicago, for certain other appellants; Isador Becker and James C. O’Brien, Jr., of Chicago, of counsel.
    Amberg, Ott, Dahlin & Livingston, of Chicago, for appellee; Ralph J. Mohan and Frank L. Paul, both of Chicago, of counsel.
   Mr. Justice O’Connor

delivered the opinion of the court.

Certain creditors of the North Avenue State Bank brought suit in equity on behalf of themselves and other creditors against former and final stockholders of the bank to enforce the statutory and constitutional liability of the stockholders. The bank was being liquidated by the Auditor of Public Accounts who had filed a suit for that purpose in the circuit court of Cook county. Cohen v. North Ave. State Bank, 291 Ill. App. 558. February 25, 1937, a decree was entered finding the respective amounts due from the stockholders (82 in number) and decreeing that payment be made by them to Milton Johnson and A. A. Mueller, as receivers. Thereafter execution was issued against each of the stockholders held liable and returned by the sheriff “No part satisfied.” Afterward, November 10, 1938, an affidavit for garnishment made by one of the attorneys for the creditors was filed which set up the entry of the decree against 48 of the defendants, and the amount for which each was held liable. It further set up the return of the executions; that the 48 defendants had no property within the knowledge of the affiant liable to execution but that he had just reason to believe certain banks, naming 27 different banks located in Chicago and Evanston, including the First National Bank of Chicago, as garnishees, were indebted to the 48 mentioned defendants. By the affidavit affiant apparently sought to follow the provisions of sec. 1, ch. 62, Ill. Rev. Stat. 1939 [Jones Ill. Stats. Ann. 109.284]. Garnishee summons was issued and apparently served on the 48 garnishees, one of which was the First National Bank of Chicago. November 28, interrogatories to the garnishees were filed and December 7, 1938, the First National Bank of Chicago filed its motion to quash the garnishment summons and to discharge it as garnishee. March 3, the court sustained the motion, discharged the First National Bank, as garnishee, and the plaintiff creditors and receivers appeal.

Counsel for the garnishee contend (1) that the garnishment proceeding is based on 48 separate and distinct judgments against 48 defendants and in different amounts and therefore is not authorized by the Garnishment statute (sec. 1, ch. 62, Ill. Rev. Stat. 1939); and (2) that “The affidavit filed for the issuance of garnishment ... is in the nature of a discovery and does not appear to be predicated upon such reasonable belief as is required by Section 1, Chapter 62” of the Garnishment Act.

(1) The liability imposed by the constitution of Illinois upon stockholders of a State bank is an individual liability on the part of each stockholder to each creditor of the bank. Golden v. Cervenka, 278 Ill. 409. Counsel for the garnishee say, “The question arises whether or not this decree constitutes one judgment against all the defendants, or a separate judgment against each of the defendants.” Counsel contend that the decree so far as it is involved in this garnishment proceeding, constitutes 48 separate and distinct judgments and that sec. 1 of the Garnishment Act only authorizes garnishment proceedings where there is but one judgment. That section, so far as pertinent here, provides: “Whenever a judgment shall be rendered by any court of record, . . . and an execution against the defendant or defendants in such judgment shall be returned by the proper officer ‘No property found,’ on the affidavit of the plaintiff, or other credible person, being filed with the clerk of such court . . . that said defendant or defendants has or have no property within the knowledge of such affiant, in his or their possession, liable to execution, and that such affiant hath just reason to believe that any other person is indebted to such defendant, or defendants, or to either or any of such defendants, or hath any effects or estate of such defendant, or defendants or of either or any of such defendants, in his possession, custody or charge, it shall be lawful for such clerk ... to issue a summons against the person supposed to be indebted to, or supposed to have any of the effects or estate of said defendant, or defendants, or of either or any of such defendants, commanding him to appear before said court ... as a garnishee; and said court . . . shall examine and proceed against such garnishee or garnishees, in the same manner as is required by law against garnishees in original attachments. If the garnishee is indebted to or has any effects or estate of a part only of such defendants, judgment shall be against the garnishee in favor of such part of the defendants for the use of the plaintiff. ’ ’

In Levinson v. Home Bank & Trust Co., 337 Ill. 241, 243, the court said: “It has been uniformly held by this court that the garnishment process is purely a creature of statute. (Siegel-Cooper & Co. v. Schueck, 167 Ill. 522.) Therefore, in'order to determine the extent and scope of such process it is necessary to resort to the statute which creates it.” To the same effect is Wheeler v. Chicago Title & Trust Co., 217 Ill. 128,135, where the court said: ‘ ‘ The remedy by garnishment is purely legal and every case must be brought within the scope of the statute, and whatever the effect may be the words of the statute must control. ’ ’

In the Siegel-Cooper & Co. case, decided in 1897, it was held that a judgment creditor of two individuals could not maintain garnishment on his judgment and reach a debt due from the garnishee to one of the judgment debtors because it was not authorized by sec. 1 of the Garnishment Act, but after the decision in that case that section was amended in 1923 so as to permit a judgment creditor who had a judgment against several defendants to garnishee a person or corporation that owed money to any one of the defendants. (See sec. 1, above quoted; Boska v. Buchaniec, 245 Ill. App. 602.) That section has not been changed since that time.

It has often been said that the garnisheeing judgment creditor stands in the shoes of the judgment debtor; that the judgment debtor is really the plaintiff and according to the approved practice, when judgment goes against the garnishee it is entered in favor of the judgment debtor for the use of the garnisheeing creditor. Bartell v. Bauman, 12 Ill. App. 450. Obviously this is so, but it is also often said that one of the tests whether the garnishee is liable is: Could the

judgment debtor maintain an action against the garnishee? This is still the rule where there is but one judgment debtor (Siegel-Cooper & Co. v. Schueck, 167 Ill. 522), but since the amendment to sec. 1 of the Garnishment Act in 1923, that rule does not apply where there is more than one judgment debtor and the garnishee is indebted to but one of them. Boska v. Buchaniec, 245 Ill. App. 602; Alexander v. Live Stock Nat. Bank, 282 Ill. App. 315.

In support of the garnishee’s contention that sec. 1 of the Garnishment Act does not authorize garnishment where there is more than one judgment, counsel cite Walker v. Montgomery, 236 Ill. 244; Hoier v. Kaplan, 313 Ill. 448, where it was held that “a judgment at law is a unit. A decree in equity may have the effect of several separate decrees,” and that in the instant case there are several (48) separate judgments in the decree ; that sec. 1 of the Garnishment Act only authorizes garnishment where there is “a judgment” and not several judgments.

These two cases are cited to the proposition that there is a distinction between a judgment at law and a decree in equity. No question of garnishment was involved in either case. We think it clear that if there were several separate judgments entered in separate actions the judgment creditor in those actions could not maintain garnishment in one proceeding but would have to bring separate garnishment in each case in which the judgment was rendered. The contention of counsel for the garnishee that garnishment will not lie on several separate judgments rendered in separate actions is sound. But that does not answer the question before us.

It is conceded, as indeed it must be, that in the instant case, garnishment would lie if a separate affidavit for garnishee summons, and separate interrogatories were filed as to each stockholder against whom the decree ran. That would require the filing of 48 separate affidavits for garnishee summons and 48 sets of interrogatories, and the First National Bank, the garnishee, would be required to answer 48 different times. This ought not to be unless such procedure is compelled by sec. 1 of the Garnishment Act. We think such procedure is not required by that section as applied to the facts in the instant case.

And we might add the fact that counsel for plaintiffs had a separate execution issued against each stockholder held personally liable by the decree is of no importance because there is no reason why one execution could not have been drawn in which all of the stockholders might be named, and the amount of their several liabilities stated.-

Here there was but one suit brought against stockholders of the bank and but one decree entered finding each stockholder liable for a specific amount, depending upon the number of shares held and the unpaid liabilities of the bank which accrued during the period the stock was held by each stockholder.

It has been held that the word “judgment” as mentioned in sec. 1 of the Garnishment Act includes not only a judgment in the technical sense, but also includes a decree for the payment of money entered in a chancery suit as well. Ihorn v. Wallace, 88 Ill. App. 562. In that case, Ella and Joseph Ihorn and others brought a suit in chancery against John H. Ihorn and others in the circuit court of Monroe county resulting in a decree which awarded Ella Ihorn $75 and Joseph $335 against John H. Ihorn. An execution was issued for the collection of the two amounts and returned by the sheriff, “No property found.” Afterward Ella and Joseph Ihorn instituted garnishment proceedings based on the decree against Coke B. Wallace who was claimed to be a debtor of John H. Ihorn. Wallace, the garnishee, answered admitting he was indebted to John H. Ihorn for $344.50. The court discharged the garnishee for the reason, apparently, that it was not based on a “judgment” as mentioned in the statute but on a decree in favor of two defendants for distinct amounts'. On appeal the judgment of the trial court was reversed and the cause remanded with directions. The court there said: ‘ ‘ The first question arising upon this record is whether the decree rendered in the chancery proceeding is such a judgment as may be collected by garnishment. Sec. 1, Chap. 62, of our statutes, provides that ‘whenever a judgment shall be rendered by any court of record . . . and an execution against the defendant in such judgment shall be returned . . . “no property found” ’ then, upon the filing of a proper affidavit, garnishee summons may issue. The decree is a money decree, in personam, for specific amounts, and ordered collected by general execution. The garnishment act is remedial in its character and should receive a liberal interpretation, so that the remedy may be promoted and its purposes subserved. Luton v. Hoehn, for use, etc., 72 Ill. 81. A party has a right to the same remedies to enforce the collection of decree in chancery in personam for a specific sum of money, as he has to enforce collection of a judgment at law. Weightman et al. v. Hatch, 17 Ill. 281. We can perceive no reason why a personal money decree rendered by a court of equity is not a judgment of a court of record, within the meaning of the word ‘judgment’ as used in the garnishment act.” The judgment of the circuit court was reversed with directions to enter judgment against the garnishee for the use of Ella Ihorn for the $75, the decree in favor of Joseph Ihorn for $335 having been settled in the meantime.

We think plaintiffs were authorized to institute garnishment proceedings based on the decree by virtue of sec. 1 of the Garnishment Act, and the court erred in holding to the contrary.

(2) Does the affidavit on its face show that the “affiant hath just reason to believe that the 27 banks (naming them), are indebted to said defendants herein for the estate or effects of said defendants in their hands.” The 27 banks named in the affidavit are: (1) Aetna State Bank, (2) American National Bank & Trust Co. of Chicago, (3) Austin State Bank, (4) Chicago City Bank & Trust Co., (5) City National Bank & Trust Co. of Chicago, (6) Continental-Illinois National Bank & Trust Co. of Chicago, (7) Cosmoplitan National Bank of Chicago, (8) Drexel State Bank of Chicago, (9) First National Bank & Trust Co. of Evanston, (10) First National Bank of Chicago, (11) Harris Trust & Savings Bank, (12) Lake View Trust & Savings Bank, (13) Lake Shore Trust & Savings Bank, (14) Lawndale National Bank of Chicago, (15) Live Stock National Bank of Chicago, (16) Madison Crawford National Bank, (17) Main State Bank, (18) Merchandise National Bank, (19) Mid-City National Bank of Chicago, (20) Milwaukee Avenue National Bank, (21) National Security Bank of Chicago, (22) The Northern Trust Co., (23) The North Shore National Bank of Chicago, (24) Pioneer Trust & Savings Bank, (25) The South East National Bank of Chicago, (26) Uptown State Bank, and (27) Upper Avenue National Bank of Chicago. The affidavit avers the affiant “has just reason to believe” that these 27 banks (which are located throughout Chicago except one which is in Evanston) are indebted to the 48 persons found liable by the decree.

The area in which the 27 banks are located contains a population of about 3,500,000 and we think it is so self-evident that even the court will take judicial notice of the fact that one practicing lawyer in Chicago did not have just reason to believe that the 27 banks were indebted to the 48 persons. We agree with the statement of counsel for the garnishee: “we can justly conclude that the legislature did not intend that garnishment be used for discovery or ‘fishing expeditions.’ ” We think the court did not err in sustaining the garnishee’s contention on this ground.

Plaintiffs contend that the garnishee’s motion to quash was fatally defective because it was not supported by an affidavit. The contention cannot be sustained. Sec. 48 [172] Civil Practice Act [Ill. Rev. Stat. 1939; Jones Ill. Stats. Ann. 104.048].

For the reason that the affidavit on its face shows the affiant did not have reason to believe the 27 banks, or some of them, were indebted to the judgment debtors, as above stated, the judgment of the superior court of Cook county is affirmed.

Judgment affirmed.

McSurely, J., concurs.

Hatchett, P. J.: I concur in the result.


text:
    Norman Joseph Popadowski, Minor, by Joseph Walter Popadowski, His Father and Next Friend, Ap-pellee, v. Rene Bergaman et al., Trading as Orchid Flower Shop, Appellants.
    Gen. No. 40,813.
    Heard in the first division of this court for the first district at the October term, 1939.
    Opinion filed April 8, 1940.

      Delmar J. Hill, Cedric C. Herrmann and Cyrus L. Garnett, all of Chicago, for appellants.
    Alfred Boy Hulbert and Leo Waxman, both of Chicago, for appellee.
   Mr. Justice O’Connor

delivered the opinion of the court.

Plaintiff brought suit against defendants to recover damages for personal injuries claimed to have been sustained by reason of the negligence of defendants in driving an automobile which struck and injured plaintiff. There was a jury trial, a verdict and judgment in plaintiff’s favor for $3,500. Defendants appeal.

The record discloses that plaintiff, a child a little more than seven years old, was lying on his stomach on a sled which was being pushed by his uncle, a boy thirteen years old, east in the alley a short distance north of North avenue, when one of defendants’ trucks, driven south in Hermitage avenue, collided with the sled, as a result of which plaintiff was severely injured. The accident occurred between 4:00 and 4:30 o’clock in the afternoon of January 26, 1937. It was daylight but somewhat dusky or dim. The pavements and alleys were “icy, wet and slippery.” The roadway of Hermitage avenue, a north and south street, was 38 feet wide. Wabansia avenue, an east and west street, is one block north of North avenue, and 337 feet north of the alley in question. The alley is 16 feet wide and intersects Hermitage avenue 124 feet north of North avenue. Both sides of the street are built up with residences and apartment buildings except immediately south of Wabansia avenue and east of Hermitage, where a convent and school are located. A short distance north of Wabansia avenue was a “school zone” sign.

On the day in question, the school closed at 3:30 o’clock in the afternoon and at the time of the accident a number of boys, estimated at from 10 to 25, were playing hockey in the street. Some witnesses testified the game was being played at from 100 to 150 feet north of the alley where the accident occurred, while the testimony of others is to the effect that it was from 167 to 237 feet north of the alley. Bene Bergaman, a licensed chauffeur, was driving the truck. His helper, William Bisante, 36 years old, was in the seat beside him.

As is usual in such cases, the testimony of the witnesses as to the speed of the truck varied. Some of the witnesses for plaintiff said 25 to 30 miles an hour, while the chauffeur testified that they were driving at from 14 to 16 miles and his assistant 10 to 15 miles. The evidence is also variant as to the point of contact between the sled and the truck — some testified on behalf of plaintiff to the effect that the sled struck the right front wheel of the truck, while evidence on behalf of defendants is that the sled struck the right hind wheel. Plaintiff was severely injured and no complaint is made that the verdict is excessive.

Defendants contend that “The court erred in not directing a verdict for defendants at the close of plaintiff’s case,” and the argument is that this court should consider only the evidence of plaintiff in passing on this question. The difficulty with counsels ’ contention is that the motion was waived when they put in evidence on behalf of defendants. Where a defendant makes a motion at the close of plaintiff’s case for a directed verdict, if he desires to save his point, he must introduce no evidence. But if he puts in his evidence and desires a directed verdict, he must make a second motion for a directed verdict. The court in passing on the second motion, must do so in view of all the evidence. (Cook v. Aevermann, 244 Ill. App. 644 (Abst.); Joliet A. & N. Ry. Co. v. Velie, 140 Ill. 59; Fowler v. Chicago & W. I. R. Co., 182 Ill. App. 123.) Some opinions inaccurately state the law to be that where a defendant moves for a directed verdict at the close of plaintiff’s case and the motion is overruled and defendant then introduces his evidence, he must “renew” his motion at the close of all the evidence. In such case the motion made at the close of plaintiff’s case cannot be renewed. It is out of the case for all time and, as stated, if defendant desires to have the court of review pass on the question whether plaintiff has made out a prima facie case, at the close of all the evidence, he must make a second motion based on all the evidence.

Defendants further contend that the court erred in admitting evidence over objection — that the court permitted witnesses to testify that defendants’ truck, as it was being driven south in Hermitage avenue, when it passed the boys in the street who were playing hockey nearly struck one of them. We think there is no merit in this contention. As above stated, the boys were playing in the street a short distance north of the place of the accident. A number of these boys testified as to the speed at which the truck was traveling at the time; that there was no horn sounded and that one of the boys had to jump out of the way to prevent being struck. The chauffeur, who was driving defendants’ truck and his assistant both testified they saw no boys in the street. The evidence was clearly admissible as tending to show how the truck was being driven and it was for the jury to decide, in view of all the evidence, whether defendants were guilty of negligence.

Defendants further contend that the verdict and judgment are against the manifest weight of the evidence. We have carefully considered all the evidence in the record and the argument of counsel and are clearly of opinion that whether plaintiff was in the exercise of ordinary care and whether defendants were guilty of the negligence charged, were questions for the jury.

Complaint is also made to the giving of plaintiff’s instructions numbers 1, 2, 3 and 5. By instruction 1 the jury were told in substance that if they found from the greater weight of the evidence, under the instruction of the court, the driver of the truck knew or by the exercise of ordinary care could have known that plaintiff was sliding on a sled out of the alley and the driver, by the exercise of ordinary care on his- part, could have avoided the accident, then it was his duty to exercise ordinary care, and if the jury found he had not exercised such care, etc., and found plaintiff was in the exercise of such care for his own safety as would be expected of a child of his age, with the same intelligence, experience and capacity, then it would be proper to find for the plaintiff. A number of objections are urged to this instruction but we think they are all hypercritical. The issue was plain and simple and we think the instruction could in no way mislead the jury. Instruction 2 told the jury that under the law, a child under seven years of age was incapable of being negligent and that between the ages of seven and fourteen a child was required to exercise such care as would be expected of other children of the same age, intelligence, experience and capacity, etc., and that if the jury believed from the greater weight of the evidence and under the instructions that plaintiff was seven years, one month and nine days old, then it was the duty of plaintiff to exercise such degree of care, etc. Counsel for defendants, in support of their objection to this instruction say: “To base the standard of care on what would be expected of other children of like age, etc., is completely misleading. . . . The real standard is based on what they should do.” We think there is no merit in the objection made, as stated. The jury were fully instructed, the issue was simple, and we think the jury were in no way misled.

By instruction 3 the jury were told that if they found from a preponderance of the evidence that the exercise of ordinary care on the part of the driver required him, as he approached the place of the accident, to look out for the boys playing in the street and to have the truck under such control that in the exercise of ordinary care he could have checked the speed and avoided the collision, and if they found that the greater weight of the evidence shows that the driver did not look out for persons in the street and did not have the truck under control, and his failure to do so, if he did so fail, was negligent, and the proximate cause of the injury, if they found that plaintiff was in the exercise of ordinary care for his own safety, then it would be proper for the jury to find for plaintiff. Counsel say “This instruction is vicious. It contains assumption after assumption that plaintiff’s evidence was true and ours was not”; that it improperly refers to “the boys playing in or near the street,” etc. What we have said in reference to the objections made to instructions 1 and 2, we think applicable here.

By instruction 5 the jury were told that the driver of a truck in a public street is bound to know that members of the public, including children, have a right to the lawful use of the street and that it is the driver’s duty to exercise ordinary care to avoid injuring children who may be lawfully using the highway. It is said this instruction is erroneous in that it assumes that plaintiff was lawfully using the highway; that as a matter of fact, plaintiff was violating a city ordinance which provided that it was unlawful for any person to go upon the roadway of any street upon a sled, other than a crosswalk. Defendants offered an instruction number 18, which the court refused, by which it was sought to have the jury told there was a city ordinance which made it unlawful for any person to go upon any roadway other than a crosswalk, on a sled. The tendered instruction then continued: ‘£ The plaintiff at the time of the occurrence complained of, was too young to be charged with a duty to observe said Ordinance, but, until such time as the driver should or could by the exercise of ordinary care see that there was on the roadway, or about to come upon it, a person too young to observe said ordinance, the driver had a right to proceed along the street on the assumption that all persons would observe said ordinance.”

In support of defendants’ contention that instruction 5 was erroneous counsel say: 1 ‘ Even though the plaintiff, being under ten years of age, was too young to be charged with either civil or criminal responsibility for violating the ordinance, still that fact merely excused plaintiff from the penalty that would otherwise follow. The objective violation nevertheless existed and the use was certainly not lawful. . . .

“As the instruction described plaintiff’s use of the street (and inferentially his conduct) as lawful, and pointedly failed to describe the driver’s conduct and use of the street in like terms, but, instead, spoke sharply of his duties, the jury were left with the misleading impression that the court was here quite plainly suggesting to them where the responsibility lay.” In Morrison v. Flowers, 308 Ill. 189, the court said: “A person operating a motor vehicle along the streets of a city is bound to recognize the fact that children will be found playing in the street and that they may sometimes attempt to cross the street unmindful of its dangers, and the driver owes the children the duty of reasonable and ordinary care under the circumstances.”

Counsel say that the court should have given its refused instruction 18, which presented defendants’ theory.

No case has been called to our attention and we think none can be found where the facts are at all similar to the facts in the case at bar that holds the giving of instruction number 5 was reversibly erroneous, and we think this result follows from defendants’ refused instruction number 18 where it sought to have the jury instructed that the ordinance did not apply to plaintiff.

Complaint is also made to the refusal of the court to give defendants’ instructions numbers 16, 16-A, 17, 18 and 19. We have already disposed of refused instruction 18. We think it would serve no purpose to discuss the other refused instructions because we are of opinion that the jury were fully instructed on all phases of the case. At the request of defendants, the jury were told that if they believed the driver, as he approached the place of the accident, was operating the truck with ordinary care and that by the exercise of ordinary care he did not know or have a reasonable opportunity to learn or to anticipate that plaintiff was sliding or about to slide into the street, then the verdict should be for defendants; that before plaintiff could recover, he must prove by a preponderance of the evidence that he was in the exercise of ordinary care for his own safety, considering his age, etc.; that the driver was guilty of the negligence charged and that such negligence, if any, was the proximate or direct cause of plaintiff’s injuries, and that if plaintiff had failed to prove any one of them, they should find defendants not guilty.

The court gave 6 instructions for plaintiff, most of which were stock instructions and 16 offered by defendants. The issue was simple and easily understood and we think the jury was not misled in any way.

The judgment of the superior court of Cook county is affirmed.

Judgment affirmed.

Hatchett, P. J., and Me Surely, J., concur.