text:
    The People of the State of Illinois ex rel. Oscar Nelson, as Auditor, etc., v. Exchange State Bank of Chicago et al. Appeal of Union Bank of Chicago, as Receiver in the Superior Court of Cook County, Case No. 472109, Appellant, v. William J. Rathje, as Receiver of Exchange State Bank of Chicago, Appellee.
    Gen. No. 34,738.
    Heard in the first division of this court for the first district at the October term, 1930.
    Opinion filed January 26, 1931.

      Edgar H. Schroeder, for appellant.
    Kirkland, Fleming, Green & Martin, for appellee.
   Mr. Justice O’Connor

delivered the opinion of the court.

■ By this appeal the Union Bank of Chicago, as receiver appointed by the superior court of Cook county, in a foreclosure suit, seeks to reverse an order of the circuit court of Cook county denying its petition, whereby it claimed $1,800 due at the rate of $300 a month from William J. Rathje as receiver of the Exchange State Bank of Chicago.

The record discloses that on February 28, 1928, the Union Bank of Chicago was appointed receiver of certain premises on which a mortgage was being foreclosed by the superior court of Cook county. Part of the premises for which the receiver was appointed were occupied by the Exchange State Bank of Chicago. During the pendency of the foreclosure proceeding the Auditor of Public Accounts of the State closed the Exchange State Bank and Rathje was appointed receiver under the statute. A few days thereafter the auditor filed suit in the circuit court of Cook county for the dissolution of the bank and on December 14, 1924, the circuit court approved the appointment of Rathje as receiver. Rathje took possession of the bank and occupied the premises in the building being foreclosed until May 19,1930, and it is to recover from Rathje as receiver, for the use and occupation by him of a portion of the premises that the receiver in the foreclosure suit filed its petition in the suit pending in the circuit court for the dissolution of the bank.

There is no dispute as to the amount claimed to be due lay the receiver' ¡in the foreclosure suit, but the defense interposed is that the mortgagor, the Allied Building Corporation, who owned the premises being foreclosed, was in financial difficulties in October, 1928, and was unable to complete the construction of the building, there being various contractors and material men to whom it owed money. Thereupon the mortgagor requested and authorized the Exchange Bank to pay the various contractors and material men so that the building might be completed and rendered tenant-able not only by the Exchange Bank but other tenants, and agreed that the amounts so paid by the Exchange Bank should be credited on the rent accruing under the lease which the Exchange Bank had with the mortgagor. It further appears that pursuant to this agreement the Exchange Bank from time to time paid out various sums aggregating $3,273.71. The court found, after hearing the evidence, that the amounts thus expended by the Exchange Bank inured to the benefit of the mortgagee, and further found that the creditors of the Exchange Bank, which was being liquidated, would not receive more than 50 per cent of their claims, and that in equity and good conscience the receiver of the Exchange Bank ought to be permitted and allowed to set off the advance paid out as above mentioned against the claim of the receiver appointed in the foreclosure suit.

The receiver in the foreclosure suit contends that the ruling was wrong because the mortgage involved in the foreclosure suit pledged the rents and profits of the building as security for the debt in addition to the land and that upon the appointment of the receiver by the superior court the receiver was entitled to collect the rents from that date from the tenants occupying the premises even though the rent might be considered to have been paid in advance by the Exchange Bank.

It is the law that where a receiver is appointed in a foreclosure proceeding, where the rents and profits .of the land are.conveyed by the mortgage, they constitute a primary fund equally with the land for the payment of the debt, and that where a receiver is appointed under such a mortgage a tenant may he compelled to pay the rent to the receiver although he has, prior to the appointment of the receiver, paid his rent in advance. Greenebaum Sons Bank & Trust Co. v. Kingsbury, 248 Ill. App. 321. And under this rule of law counsel for the receiver in the foreclosure suit contends that the prayer of its petition should have been allowed and the receiver of the bank required to pay the $1,800. But we think the rule of law is inapt here because it would be unjust, and unconscionable to require the Exchange Bank or its receiver to pay for the use and occupation when the bank had theretofore paid out at the request of the mortgagor, towards the completion of the building, more than the receiver in the foreclosure suit claims, and which it was agreed should be applied on the rent. The building could not have been completed without the advances made by the Exchange Bank and therefore no rent could have been obtained for the premises. We think in equity and good conscience the ruling was right. Printy v. Cahill, 235 Ill. 534. In that case the court said (p. 539): “Equity has original jurisdiction in matters of equitable set-off, independently of the statute authorizing set-offs in actions at law. (Hughes v. Trahern, 64 Ill. 48; Smith v. Billings, 170 Ill. 543.) ”

To the same effect is 34 Oyc. where it is said (p. 633):

“The power to compel a set-off of debts was exercised by courts of equity prior to any statute on the subject, and exists independent of those statutes, being allowed upon the general principles of equity and upon the equitable jurisdiction of the court over its suitors, and statutes allowing set-offs have not taken away the equitable jurisdiction. . . .”

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

Affirmed.

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


source: Caselaw Access Project

author: Mr. Presiding Justice Scanlan

license: Public Domain

text:
    Carroll, Schendorf & Boenicke, Inc., Appellee, v. Gertrude J. Hastings, Appellant.
    Gen. No. 34,444.

      Heard in the second division of this court for the first district at the June term, 1930.
    Opinion filed January 27, 1931.
    Rehearing denied February 7, 1931.
    Joseph F. Grossman, for appellant.
    Henry M. Hagan, for appellee; Alexander Paterson, of counsel.
   Mr. Presiding Justice Scanlan

delivered the opinion of the court.

On December 5, 1929, judgment for $480 was entered against defendant, Gertrude J. Hastings. On January 15, 1930, she filed a verified petition in which she prayed that the judgment be vacated. Plaintiff filed an answer to the petition. The trial court, after a hearing, denied the motion to vacate and entered an order to that effect. Defendant appeals from that order.

The petition of defendant alleges that on January 29, 1926, the case was reached for trial and on motion of plaintiff was continued to February 11, 1926; that thereafter it was continued from time to time, on plaintiff’s motion, with consent of defendant; that on September 27, 1926, on motion of plaintiff, an order was entered continuing generally the cause; that on September 19, 1929, “without notice first having been given to either the petitioner or her attorney,” the cause was called by one of the judges of the court and set for trial for December 4, 1929; that on the last date, without notice to the petitioner or her attorney, the cause was called for trial and continued to December 5,1929; that no notice of this continuance was given to the petitioner or her attorney; that on December 5, 1929, the cause was called for trial without the knowledge of petitioner or her attorney, an ex parte hearing was had, a verdict was rendered in favor of plaintiff for the sum of $480, and judgment was entered upon the verdict; that Henry M. Hagan, attorney for plaintiff, well knew petitioner and her place of business and was well acquainted with Joseph F. Grossman, her attorney of record; that when the cause was reached for trial, on December 5, 1929, Hagan knew that neither the petitioner nor her attorney had notice of that fact; that Hagan, fraudulently and in order to take advantage of the petitioner and her attorney, did not inform the trial judge that neither plaintiff nor its attorney had given the petitioner or her attorney any notice whatsoever that the cause would be called for trial on that day; that neither the petitioner nor her attorney had any knowledge or notice of the judgment entered on that date until January 7, 1930, when the petitioner was served with an execution issued on the judgment; that the execution was issued on December 12, 1929, “but that Hagan, fraudulently and with intent to keep from your petitioner and her attorney the information that judgment as aforesaid had been rendered until after thirty days had expired, so that said Municipal Court would lose jurisdiction in said cause, withheld said execution until January 6, 1930, when said execution was delivered by Hagan to the bailiff.” The petitioner further alleges that she has a meritorious defense to plaintiff’s claim.

The verified answer of plaintiff alleges that on April 16, 1929, the chief justice of the court entered the following general order:

“General Order No. 763.
“It Is Hereby Ordered, that the clerk of this Court prepare two calendars, one of first-class non-jury cases, and one of fourth-class non-jury cases, which were started before March 30, 1929, and which now stand continued generally or are not now set for certain future days for trial. Such cases shall, so far as convenient, be placed in numerical order. Such calendars shall be in typewritten form and be subject to public inspection at all times.
“It Is Further Ordered, that said first class calendar shall be called for trial in Room 921, City Hall, and said fourth-class calendar shall be called for trial in Room 924, City Hall; that the first two hundred cases on each of said calendars shall be set for trial at 9:30 A. M. on the 16th day of September, 1929; that the second two hundred cases on each of said calendars shall be set for trial 2:00 P. M. on the same day; that at 9:30 A. M. and 2:00 P. M. on each successive court day thereafter the next two hundred cases on each of said calendars shall be set for trial; that upon the calling of said cases they shall be tried; continued, set for trial at future days or otherwise disposed of as the Court shall elect,
“It Is Further Ordered, that the clerk of this Court prepare a calendar of first-class and fourth-class jury cases, which have stood continued generally since before January 30, 1927. That said calendar shall be called in Boom 921, City Hall, at 9:30 o’clock A. M. and-2:00 o’clock P. M. on September 16, 1929, and each successive court day thereafter until all such cases shall have been tried, continued or otherwise disposed of.
“It Is Further Ordered, that the clerk of this Court prepare for each branch court where criminal and quasi-criminal cases are pending a calendar of all pending criminal and quasi-criminal cases which are not now set for trial for days certain, placing said cases on said calendar in their numerical order.
“It Is Further Ordered, that the judges holding said criminal branches shall call for trial or other disposition all said cases, or as many thereof as the business of said branch courts will permit on September 16, 1929, and on successive court days thereafter until said calendars are entirely disposed of.
“It Is Further .Ordered, that this order be spread upon the records of this court.
“Dated, Chicago, Illinois, April 16, 1929, Harry Olson, Chief Justice.”

The answer further alleges that on August 7, 1929, this order appeared in the first column of the Daily Municipal Court Record under the word, in bold capitals, “ANNOUNCEMENT”; that said Record is a paper of general circulation in Chicago, generally subscribed for, delivered to and used by the lawyers of Chicago and “recognized and followed by all of the judges of the Municipal Court; ’ ’ that this order again appeared in this paper on August 8,1929, in the second column under the word, in bold capitals, “ANNOUNCEMENT”; and again, on August 10, 1929, in the first column under the same heading; that on August 20, 1929, there appeared in the said Record, in the second column, under the words “General Notices,” the following announcement: “The regular September calendar consisting of first class, non-jury cases, fourth class non-jury cases, first class jury cases and fourth class jury cases is composed of cases that have been continued generally or pending on motion to vacate, and et cetera, will be ready for inspection in Room 814 City Hall, Jas. A. Hearn’s office, Mr. Meehan’s window, on Monday, August 26th;” that said notice subsequently appeared in the issues of the Record of August 21, 22, 24, 28, 29, 30 and 31, and September 5, 6, 7, 9 and 10, 1929, in the first column, under the heading, in bold capitals, “ANNOUNCEMENTS”; and in the issues of the Record of August 23 and 27, and September 3, 4, 11 and 13, 1929, in the second column under the same heading. The answer further alleges that pursuant to General Order 763 and the announcements as aforesaid, a deputy clerk in the office of the clerk of said court prepared said calendars and that the above entitled cause “was on said calendar as No. 572;” that thereafter said calendar was called in Room 921 by Judge Fairbanks, on the 18th day of September, 1929, and set for trial for December 4, 1929, in Room 1114; that in the issue of the Record of December 3, 1929, the case appeared on the calendar of Judge Jonas, Room 1114, for trial on December 4, 1929, but that said case was not reached for trial on that day; that it again appeared in the Record on December 4, 1929, on the calendar of Judge Jonas, to be called December 5, 1929; that on December 5, 1929, the case was tried ex parte before Judge Jonas, and a jury, and a verdict was rendered and judgment had on the verdict on said date.

Rule 34 of the municipal court provides:

“Notice of Motions — How Given.
“Notice to the opposite party must be in writing, stating the motion, time and place of hearing, and designating the judge before whom the same is to be made. Notice of motion for leave to amend pleading or to file any petition, pleading or other document must be accompanied by a copy of the paper proposed to be filed.
“Notice- of all motions together with copies of all papers in support thereof must1 be served upon the opposite party or his attorney of record in any of the following methods:
“ (a) By delivering a copy thereof to the attorney of record for the opposite party before 4 P. M. of the business day next preceding the day mentioned in the notice for calling up the motion, or by leaving a copy thereof at his office with some person in charge thereof on his behalf. Such service on Saturday must be had before twelve o’clock noon. . . .
“(c) By depositing in the mail copies thereof, properly addressed to the attorney of the opposite party, or to the party if he have no attorney of record at least thirty-six hours before the motion is to be called up for hearing; in computing such time, Sundays and legal holidays shall be excluded. When notice is given by mail the motion by presentation to the court must be accompanied by the affidavit of the person who mailed the notice stating the time and place of mailing, together with the complete address appearing-on the envelope.”

Section 8 of the Municipal Court Act, Cahill’s St. ch. 37, H 396, provides (inter alia):

“The chief justice shall also superintend preparation of the calendars of cases for trial in said court, and shall make such classification and distribution of the same upon different calendars as he shall deem proper and expedient.”

Section 36, Cahill’s St. eh. 37,1f 424, provides:

“That cases in the Municipal Court shall be tried in such order and the calendars of cases shall be so arranged as may be determined by the chief justice or by rules of court adopted as herein provided. ’ ’

Defendant contends that “the petition discloses an error of fact in entering the judgment, which could be corrected at common law by a writ of error coram nobis and hence the judgment can be vacated by motion under section 89 of the Practice Act.” Defendant' argues that when the order continuing the case generally was entered, on September 27, 1926, it operated to divest the court of its jurisdiction, and that it was essential, to reinvest the court with jurisdiction, that a notice be given to defendant in accordance with rule 34 of the court, and that as it is admitted that no such notice was given, the court was never reinvested with jurisdiction and therefore the judgment of December 5, 1929, is invalid. In support of this contention defendant cites Jones v. St. Joseph & G. I. R. Co., 183 Mo. App. 224. In that case an order was entered continuing the cause by agreement until the next term. Three days later, in the same term at which the order was entered, the plaintiff’s counsel, without any notice to the defendant, had an order entered setting aside the order of continuance, and then judgment was entered against the defendant in its absence. The defendant filed a motion in the nature of a writ of error coram nobis to set the judgment aside, which the trial court overruled. The Kansas City Court of Appeals properly held that the judgment was open to attack by means of the said motion, but in its decision it used language to the effect that after the order for the continuance had been entered the court lost jurisdiction of the cause until the following term or until the order of continuance had been set aside, upon notice given. While the court was right in its conclusion that the judgment should be vacated, it was wrong in stating that the trial court lost jurisdiction of the cause when the continuance order was entered. We need cite only the Supreme Court of Missouri in support of our position. (See Papin v. Buckingham, 33 Mo. 454, 456; Curtis v. Curtis, 54 Mo. 351, 352.) In this State, under a record like that in Jones v. St. Joseph $ G. I. B. Co., supra, the judgment would be open to attack by means of a motion in the nature of a writ of error coram nobis, upon the principle that the judgment was based upon a mistake of fact. In defendant’s reply brief it is stated that McKee v. Ludwig, 30 Ill. 28, and Newell v. Clodfelter, 3 Ill. App. 259, ‘ ‘ announce the principle that a continuance divests the Court of jurisdiction according to its terms.” McKee v. Ludwig merely holds that where a party applied for and obtained a continuance, it is error for the court to set aside the order granting the continuance and dismiss the suit for want of prosecution without first giving a reasonable notice to the party at whose instance the continuance was granted. In that case the plaintiff sued out a writ of error from the order dismissing his suit. Newell v. Clodfelter holds that after a general order of continuance has been entered in a cause it is error to set aside such order in the absence of the opposite party, no notice having been given him of any application to set aside. An appeal was taken from the decree entered.

Jurisdiction is the power to hear and determine the matter in controversy between parties, and if the law gives the court power to render a judgment or decree the court has jurisdiction, and an erroneous decision cannot deprive it of that jurisdiction. Bouvier defines “continuance” as “the adjournment of a cause from one day to another of the same or a subsequent term. The postponement of the trial of a cause.” The half sheet in the instant case, which was introduced in evidence by defendant, shows, under the head of “Memoranda of Postponement,” ten postponements by agreement of the parties. It also shows, under the same heading, the following memorandum: “Sep. 27, 1926 Judge Charles F. McKinley Cont. gen.” Whether this last memorandum, upon which defendant bases her contention that the court lost jurisdiction, was entered on motion of one of the parties or by agreement does not appear from the half sheet. It is conceded, of course, that the court had jurisdiction of the subject matter and the parties on September 27,1926, when the memorandum of continuance was entered, and the entry of that memorandum did not deprive the court of its jurisdiction. The case was still pending and undetermined, and the trial of the same was merely postponed until such time as the parties or the court, by appropriate action, made it again subject to trial call.

If the order of continuance had been set aside upon motion of plaintiff and without notice to defendant in accordance with rule 34, and if plaintiff had then procured the judgment order without the knowledge of defendant, the judgment might then be attacked by a motion in the nature of a writ of error coram nobis, but such is not the situation that is here presented. Rule 34 relates only to motions made by attorneys, and it is idle to argue that the court was without power to place the instant case upon a trial calendar until one of the attorneys served notice under rule 34 and had the order of continuance vacated. The instant case remained dormant for nearly three years and it is clear from the record that there were many other eases in a like condition. The statutory provisions, heretofore quoted, gave the chief justice the power to enter the general order of September 27, 1926. But, independently of the statute, the court would have an inherent power to dispose of cases like the instant one upon giving reasonable notice. It has always been the practice in this district for courts to take proper action to clear their dockets of old and dormant cases. The practice is a necessary one and has been found to work well. It is, of course, necessary that reasonable notice of such action be given to the bar. In giving notice the chief justice of the court was not bound, as defendant argues, by rule 34, and the record shows that he exercised more than ordinary means to notify the bar of the preparation of the several calendars and the kinds of cases that would be contained therein. The notices were given just prior to the commencement of the fall work of the court and at a time when attorneys in this district are carefully watching the orders of the courts in respect to the disposition of cases and the preparation of calendars, and it is surprising, indeed, that the experienced attorney for defendant failed to notice that the instant case was subject to trial call. Counsel for defendant does not attempt to defend himself against the charge of negligence, and he is necessarily driven to the position that the court was without jurisdiction to proceed in the cause after the entry of the order of September 27, 1926.

Defendant next contends that “the petition sets forth grounds for relief which would be sufficient to cause the judgment to be vacated in a court of equity, ’ ’ and that therefore the trial court erred in not vacating the judgment. In support of this contention defendant relies upon the following allegations in the petition:

(a) “Said Henry M. Hagan fraudulently and in order to take advantage of your petitioner and your petitioner’s atorney did not inform the Judge of the Municipal Court when said cause was by him called for trial on December 5, 1929, that neither the said plaintiff nor said attorney Hagan had given your petitioner or your petitioner’s attorney any notice whatsoever that said cause would be called for trial on December 5, 1929.”
(b) “Said Henry M. Hagan, attorney for said plaintiff, fraudulently and with intent to keep from your petitioner and your petitioner’s attorney the information that judgment as aforesaid had been rendered until after thirty days had expired so that said Municipal Court would lose jurisdiction in said cause, withheld said execution from the bailiff of the Municipal Court until January 6, 1930, when said execution was delivered by said Henry M. Hagan to the bailiff of said Municipal Court for demand upon your petitioner.”

Plaintiff strenuously argues that the evidence shows that counsel for defendant was guilty of such gross negligence that for that reason alone a court of equity would not be warranted in vacating the judgment, and therefore the municipal court, under section 21, would not be warranted in doing so. While this contention is a meritorious one we do not deem it necessary to base our decision upon it alone. It is not sufficient to charge fraud generally, but the complaining party must plead and prove the specific acts or facts relied on as establishing the fraud. (Langlois v. McCullom, 181 Ill. 195.) A general allegation of fraud, however strong in expression, is insufficient. The pleadings should point out and, state the particular facts and circumstances relied on as constituting the fraud. (Dickinson v. Dickinson, 305 Ill. 521, 527.) Allegations (a) amount to no more than .this, that plaintiff or its attorney was bound to notify the court when the case was called for trial, that they had not given defendant or her attorney notice that the case would he called for trial oh December 5, and that such failure constituted fraud on the part of the attorney. The case was not brought to trial on December 5 through any action of plaintiff and under the pleadings and facts of this case no such notification to the court was necessary. As to allegations (b): It appears that the judgment in question was entered December 5, 1929, and that execution issued December 12, 1929, and the mere fact that the attorney for plaintiff did not deliver the execution to the bailiff of the court until January 6, 1930, in our judgment, does not make out a prima facie case of fraud. Defendant cites, in support of her contention that the allegations relied upon make out a clear case of fraud, How v. Mortell, 28 Ill. 478, and Putnam v. Murphy, 53 Ill. 404. In the first case, which involved a bill in equity, it clearly appeared that an agreement between the attorneys and the parties was made, soon after the suit was commenced, that the case should not be tried without notice from each to the other, and that the agreement was violated by one of the attorneys in order to obtain an advantage over the other. The second case cited is like the first. In the instant case defendant has not alleged nor proved that counsel for plaintiff violated any agreement made with defendant or her attorney, or that he made any false representations to them.

The judgment of the municipal court of Chicago is affirmed.

Affirmed.

Gtbidley and Keener, JJ., concur.


text:
    Henry H. Doering, Appellee, v. L. A. Shadburne, Appellant.
    Gen. No. 34,468.
    Heard in the second division of this court for the first district at the June term, 1930.
    Opinion filed January 27, 1931.
    Frank N. Hillis, for appellant.
    Jambs B. Quinn, for appellee.
   Mr. Presiding Justice Scanlan

delivered the opinion of the court.

Henry H. Doering, plaintiff, sued L. A. Shadburne, defendant, in case. There was a trial before the court, with a jury, and a verdict returned finding defendant guilty and assessing plaintiff’s damages at the sum of $4,000. Judgment was entered on the verdict and defendant has appealed.

Plaintiff filed a declaration consisting of three counts, but dismissed as to the second and third. As respects the first count, in view of the nature- of the only contention raised by defendant, it is only necessary to state that it alleges (inter alia) that defendant “wilfully, fraudulently and maliciously converted to his own use and to defraud plaintiff, the sum of thirty-four hundred thirty dollars, the property of the plaintiff.” The sole contention of defendant is that there is a fatal variance between this allegation and the proof; that the proof shows that defendant obtained from plaintiff a check for $3,430, and that a charge that defendant converted to his own use money is not sustained by proof that he received a check. In support of his contention defendant cites Goodhue v. People, 94 Ill. 37, and like cases. These cases have no application to the instant one. The theory of fact of plaintiff was that he gave his check for $3,430, payable to defendant, to defendant; that the check was given upon the promise by defendant that he would purchase, with the proceeds of the check, certain securities, bonds, mortgages, etc., of the value of $3,430 and that he would deliver the same to plaintiff; that defendant obtained from the bank, upon the check, money to the amount of $3,430, but that he failed to purchase the securities, etc., and that he “wilfully, fraudulently and maliciously converted and appropriated to his own use the sum of $3,430 to defraud plaintiff. ’ ’ Even if this were a criminal case the contention of defendant would be without the slightest merit. “A conviction of embezzlement will not be sustained where there is a material variance between the description in the indictment of the property embezzled and the proof. Thus, under an indictment or information for embezzling money it is not permissible to prove the embezzlement of other property; such as a check. But if the check, or other evidence of indebtedness, was merely the meows by which the money alleged to have been embessled was procured, there is no variance.” (20 C. J. 478. [Italics ours.] See also State v. Brooks, 85 Ia. 366, 373; State v. Chapin, 74 Ore. 346, 354; People v. Crane, 34 Cal. App. 599, 608.) In the instant case defendant did not embezzle the check in question. His possession of the same was lawful, and he had a right to cash it in order to obtain the money to purchase for plaintiff certain securities, etc. As stated in the above text, the check was merely the means, by which the money alleged to have been embezzled was procured. Defendant’s conversion of the money obtained was the unlawful act. If plaintiff had charged in his declaration that defendant had embezzled the check, then, under the facts of this case, there would have been force in a claim of variance — in fact, plaintiff would have failed to make out a prima facie case, for the reason that his allegation that defendant embezzled the check would not have been sustained by the evidence.

Plaintiff has strenuously contended that this appeal is without the slightest merit and was taken merely for the purpose of delay, and that therefore statutory damages should be allowed him. While this contention is not without some merit, nevertheless, we are not satisfied that the appeal was taken merely for delay, and we have therefore concluded not to allow plaintiff statutory damages.

The judgment of the superior court is affirmed.

Affirmed.

Gtridlby and Kerhbr, JJ., concur.


author: Mr. Justice Gridley

text:
    Phillipina Simpson, Appellee, v. Augusta Heberlein, Appellant.
    Gen. No. 33,751.

      Heard in the second division of this court for the first district at the October term, 1929.
    Opinion filed January 27, 1931.
    Herman P. Scher and Cohon & Goldstein, for appellant.
    Ota P. Lightfoot, for appellee; Thomas F. Gilmore, of counsel.
   Mr. Justice Gridley

delivered the opinion of the court.

In a first class action in contract, commenced in the municipal court on November 7,1928, there was a trial without a jury in March, 1929, resulting in a finding and judgment against defendant in the sum of $3,129.40, and this appeal followed.

In plaintiff’s statement of claim she alleged in substance that in December, 1916, one George B. Klor loaned to defendant the sum of $1,800, for which defendant executed and delivered to him her promissory note for $1,800, dated Chicago, December 4,1916, payable to his order on or before two years after date, with 6 per cent interest per annum from date (copy of note set out in full in the statement); that subsequently said Klor, believing himself to be, and being, “in prospect and peril of death from a sickness and disease,” assigned and delivered the note unindorsed to plaintiff “for her own use,” with the understanding, however,'that should he recover from said sickness and disease the note should be his property; that thereafter on May 4, 1918, Klor died from said sickness and disease; that plaintiff, ever since she received the note from him has had it in her possession ; that no part of the money due thereon has ever been paid; and that although plaintiff has often requested payment of defendant she has refused to pay the note or any part thereof, to plaintiff’s damage in the sum of $5,000.

In the affidavit of claim, accompanying said statement it is stated that there is now due (November 7, 1928) to plaintiff on the note the total sum of $3,087, after allowing to defendant all just credits, etc.

In defendant’s affidavit o'f merits, filed November 27, 1928, she alleged in substance that plaintiff does not allege that Klor ever indorsed the note; that plaintiff is not the legal owner; that she did not pay any consideration for the note; that it never was assigned and delivered by Klor in his lifetime to plaintiff “for her own use,” as alleged; that there is a signature “George B. Klor” on the back of the note but the same is not his genuine signature; that the note was in plaintiff’s possession for a considerable time after Klor’s death and during that time it did not bear said signature or name on its back; that “the indebtedness evidenced by the note was by mutual consent and agreement with the payee, Klor, now deceased, canceled and extinguished”; and that defendant is not indebted, to plaintiff on the note in any sum.

On the trial defendant was called and examined under section 33 of the Municipal Court Act, Cahill’s St. ch. 37, Tf 421, and plaintiff testified in her own behalf and was cross-examined at great length. Defendant introduced a certified copy of Klor’s last will, admitted to probate in the probate court of Cook county on June 13,1918, and called as her witness John Leo Fay, an attorney-at-law and the executor of said will. Defendant also testified in her own behalf.

When defendant was on the stand under section 33 the original note was shown her and she stated that she signed it as maker and delivered it to Klor in his lifetime, and that she had never paid anything on the note to him or anyone. Plaintiff then' offered the note in evidence, and upon objection by defendant’s attorney the court said “I will withhold passing on the note for the present.” Thereupon a copy of the note was produced and it was stipulated by the parties that the same is a true and perfect copy of the original, and that said copy “may be inserted in the bill of exceptions in lieu of the original.” It is contained in the present transcript, and is substantially as set out in plaintiff’s statement of claim, as above stated, except that on its back is the name “George B. Klor,” written in ink in block letters.

On direct examination plaintiff testified in subr stance that Klor, during his lifetime and for about 18 years, owned and conducted a delicatessen store on Kinzie Street, Chicago; that she during most of the period conducted a rooming house nearby, was a frequent customer at Klor’s store and became well acquainted with him; that early in January, 1918, he informed her that he was seriously ill and had to go to a hospital and requested her to manage his store and business until he returned; that she did so until several months after his death at the hospital on May 4, 1918; that one Henry Heberlein also worked at the store as Klor’s employee, — she waiting on customers and Heberlein “taking out the orders”; that she did not receive any compensation for her services although when she was employed Klor stated that he would pay her therefor; that he was suffering from cancer and plaintiff frequently visited him at the hospital in the evenings and on Sunday afternoons and there talked with him regarding business at the store and other matters; that during her visits there in the latter part of January he several times told her that he had a note (the one sued upon) and some other papers which he desired to give to her and urged her to procure a “vault” or safety box in her name and put them in it; that she finally “rented a vault” and so informed Klor; that early in February, on a Sunday afternoon, he gave her a package of papers in which was the note and other papers and told her to put them in her vault; that “he, told me to keep them, and if he came out he wanted them back, and if he did not come out he wanted me to keep them”; that she put the papers in her vault, where they remained until after his death; that for a time she “did not do anything in reference to the note, because it was not due”; that after it became due she presented it to defendant and requested payment, but defendant refused to pay anything; that after Klor’s will had been probated and while his estate was being administered, she stated to Andrew J. Klor, brother of the deceased and chief beneficiary under the will, that she had a note signed by defendant, and that the deceased in his lifetime had made a gift of it to her.

On cross-examination plaintiff testified in substance that she was not related to Klor; that when he gave her the package of papers no one else was present; that there were three safes in Klor’s store which she never opened; that the note is now in the same condition as when she first saw it, except a stamp on its face and the name “George B. Klor” on the back; that when she first saw it after opening the package containing the note “there was nothing written on the back of the note”; that it has been in her possession ever since, except when she turned it over to a “ collector,” who returned it, and when she turned it over to her attorney when the present action was brought; that the name “George B. Klor” now on the back is not his signature and “is a fake”; that her first conversation with Andrew J. Klor regarding the note was had about seven or eight months after the deceased’s death; that she then told him “about getting the note,” and he “did not say anything,” except that he would see his attorney, Fay; that she first became acquainted with Fay after Klor’s death, and in April, 1928, spoke to him about the note; that Fay caused the safes in the store to be broken open, in which there were found large sums of money and other assets; that she continued to manage the store until about September, 1918; that she used the proceeds of the sales to pay bills “as I was told to do by Mr. Fay and Mr. Andrew , Klor”; that she never made or filed any claim against Klor’s estate for her services; that when Klor in the hospital delivered to her the package of papers, after having spoken about the note, “he told me if he died he wanted me to keep it and if he did not die, if he got over that, he would want it back”; that on several occasions at the hospital, before Klor’s death, both plaintiff and defendant and Klor visited together, but nothing was said about any note; and that at the time that Klor gave her the package of papers in the hospital she did not then examine the contents of the package and did not then know what was in it.

In Klor’s last will, executed by him four days before his death and introduced in evidence by defendant, he bequeathed to his brother, Andrew J. Klor, “all uninvested cash belonging to me” and bequeathed certain legacies to various named persons, including defendant, to whom he bequeathed “a legacy sufficient to pay the $5,000 mortgage from her and held by me and my said brother.” All the remainder of his estate he devised and bequeathed to his said brother, his heirs and assigns forever, and he appointed his friend, John Leo Fay, as executor of the will and to act without bond. No mention is made in the will of the said note signed by defendant.

Fay, called as defendant’s witness, testified in substance that he acted as executor of Klor’s will, and with the help of his assistant, Fogel, finally settled Klor’s estate and he was discharged as executor; that he has “no recollection” of having had any conversation with plaintiff about the note, while the estate was in process of settlement, although he several times saw her in his office; that the note “was not included in the inventory of the estate”; that at the time of Klor’s death the mortgages mentioned in the will were in his (Fay’s) possession; that he has since learned that the note was drafted in his office and by Mr. Fogel; that he was present when the safes in Klor’s store were broken into; that they contained much cash and many checksthat the contents were removed to his office; that Klor’s estate was settled and his final report as executor filed “nine or ten years ago”; that he first learned of the existence of the note sued upon in the present action “two or three years ago”; that he “did nothing ” regarding it and made no effort to have it put in the possession of the estate or have it administered upon; that Andrew J. Klor never asked him (Fay) to make any effort to have the note put into the possession of the estate; and that when final distribution of the contents of Klor’s store was made “the merchandise was turned over to Mrs. Simpson” (plaintiff).

Defendant,, called as a witness in her own behalf, testified in substance that, in March, 1918, shortly before Klor died, she had a conversation with him at the hospital; that no one else was present; that she asked him if he wanted her “to bring- the interest due on the note to him”;'that he said “no”; that he stated he had plenty of money with him for his needs, that if he wanted any interest he would ask her for it, and that she should “wait until he came to her house to get it”; and that that was “all he said.” This was the only testimony offered by defendant, in any way bearing upon her defense, as stated in her affidavit of merits, that her indebtedness to him, as evidenced by<said note, had by . mutual agreement “been canceled and extinguished.” And in our opinion it does not even tend to establish that defense.

In Telford v. Patton, 144 Ill. 611, 619, it is said: “There are three requisites necessary to constitute a donatio causa mortis: 1. The gift must be with a view to the donor’s death; 2, it must have been made to take effect only in the event of the donor’s death by his existing disorder; 3, there must be an actual delivery of the subject of the donation.” (See, also, Roberts v. Draper, 18 Ill. App. 167, 171; First Nat. Bank of Chicago v. O’Byrne, 177 Ill. App. 473, 477; Chicago Savings Bank & Trust Co. v. Cohn, 197 Ill. App. 326, 328; Ridden v. Thrall, 125 N. Y. 572, 579.) It is here conceded by counsel for defendant that a promissory note of a third person, payable to the order of and owned by a would-be giver, can legally be made the subject of a gift causa mortis, and that the giver’s indorsement of the note is not necessary; and such is the law of this State. (First Nat. Bank of Chicago v. O’Byrne, 177 Ill. App. 473, 479; Brown v. Hamsmith, 247 Ill. App. 358, 371; Rothwell v. Taylor, 303 Ill. 226, 229, 230.)

The main contention of defendant’s counsel is in substance that the finding and judgment are against the evidence, because it does not sufficiently appear that the note was delivered to plaintiff by Klor with the intent to pass the title to her in case Klor died from his said sickness and disease. In Rothwell v. Taylor, 303 Ill. 226, 230, it is said (italics ours): “It is now well settled by all the authorities that negotiable instruments are subjects of a valid gift without indorsement or written assignment by the payee, if delivered to the donee by the payee with intent to transfer the title. The burden of proof of the gift is on the donee to prove all facts essential to a valid gift. The essential facts are the delivery of property by the donor to the donee with intent to pass the title, and the great weight of authority is that the proof to sustain the gift must be clear and convincing. Mere possession by one claiming property as a gift, after death of the owner, is universally, we believe, held insufficient to prove a valid gift.” (See, also, Bolton v. Bolton, 306 Ill. 473, 486; Collins v. Ogden, 323 Ill. 594, 604; Peters v. Woods, 251 Ill. App. 374, 375.) We are of the opinion, however that in the present case something more than mere possession of the note in plaintiff was shown by her uncontradicted testimony, which was competent as against defendant. We think that her testimony was sufficiently clear and convincing that Klor intended to pass the title to the note to her in the event he died from his then existing sickness and disease, from which according to the evidence he did die. And it appears from the testimony of Fay that no claim ever was made by him, as executor of Klor’s will, or by Andrew J. Klor, chief beneficiary under the will (after they had knowledge of plaintiff’s claim of ownership) that said note was an asset of Klor’s estate. These facts tend somewhat to corroborate plaintiff’s testimony that the note was a gift causa mortis to her by Klor.

And we do not think there is any substantial merit in counsel’s further contention that the judgment should be reversed because it does not affirmatively appear that the court formally ruled that the note be received in evidence. It is apparent from the judgment that the court considered it to be in evidence, and it furthermore appears both parties tried and argued the case upon that theory.

Equally without merit in our opinion is counsel’s further contention that the judgment is excessive because the amount is larger than the amount stated in the affidavit accompanying plaintiff’s statement of claim. It is not larger than the ad damnum in said statement of claim (Keator Lumber Co. v. Thompson, 144 U. S. 434, 438) and the amount of the judgment in excess of the face of the note includes the accrued interest, at the rate as stated, from the date of the note to the date of the judgment.

Our conclusion is that the judgment of the municipal court should he affirmed and it is so ordered.

Affirmed.

Scanlan, P. J., and Kerner, J., concur.


author: Mr. Justice Gridlef

text:
    State Street Furniture Company, Appellee, v. Armour & Company, Appellant.
    Gen. No. 34,217.

      Heard in the second division of this court for the first district at the April term, 1930.
    Opinion filed January 27, 1931.
    Charles J. Faulkner, Jr. and Walter C. Kirk, for appellant.
    Kern, Stiefel & Stiefel, for appellee; Jacob J. Kern and Charles W. Stiefel, Jr., of counsel.
   Mr. Justice Gridlef

delivered the opinion of the court.

In a fourth class action in contract the court on January 11,1930, on plaintiff’s motion, struck from the files defendant’s affidavit of merits for the reason that in the court’s opinion it did not set forth any legal defense to plaintiff’s statement of claim. Thereupon, defendant refusing to plead further and electing to stand on its affidavit, the court defaulted defendant and entered a finding and judgment against it for $38, the full amount of plaintiff’s claim as sworn to. The present appeal followed.

The action is brought under section 18, as amended, of the Practice Act (Cahill’s St. 1929', ch. 110, If 18, p. 2018), which section, by present rule 22 of the municipal court of Chicago, is made to apply to cases in that court. (Hamill v. Watts, 180 Ill. App. 279, 282), and is in part as follows:

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

As originally enacted in 1907, section 18 did not have any proviso. (Hurd’s Stat. 1909, p. 1696.) The proviso first appeared by amendment of the section in 1915, and by a further amendment in 1925 the words above appearing in parenthesis were stricken out, and an additional clause, not here material, was added. (Cahill’s St. 1929, ch. 110, jf 18, p. 2018.)

In plaintiff’s statement of claim it is alleged that on February 2, 1929, Willie Stevens, then in defendant’s employ, assigned and transferred to plaintiff all wages and claims for wages, earned and to be earned, up to and including the last day of February, 1932; that said assignment was made as security for an indebtedness from said Stevens to plaintiff and of which assignment plaintiff is the bona fide owner and holder; that on March 19, 1929, plaintiff served a written notice of said assignment and a demand for payment upon defendant, but said demand was refused; that on August 21, 1929, plaintiff made a further demand for payment upon defendant, which demand also was refused; that said Stevens was in defendant’s employ on March 19, 1929, and has since remained in its employ; and that plaintiff’s damages amount to the sum of $38, etc.

In defendant’s affidavit of merits it is alleged that Stevens is now and has been for a long 'time an employee of defendant and that “prior to the date of the alleged assignment, as set forth in plaintiff’s statement of claim, to wit, on July 9,1928, Stevens entered into a written contract or stipulation with defendant, as follows:

“For and in consideration of my employment by Armour and Company, or any of its subsidiaries, I do hereby covenant and agree, as a part of my contract of employment, that I will not sell, transfer, set over or assign in any manner to any person or persons, co-partnership or corporation, any right to or claim for wages or salary, in whole or in part, due me or to become due me from Armour and Company, or any of its subsidiaries, under said contract of employment, without the consent in writing of Armour and Company ; that any right or claim I now have or may have to salary or wages, as aforesaid, shall not be assignable without the written consent of Armour and Company ; and that any attempted sale, transfer or assignment without such written consent shall be null and void. ’ ’

And defendant further alleged in substance that thereafter, to wit, on September 15, 1928, defendant “gave written notice” to plaintiff that, “because of having made such contracts with all of'its employees,” it would “no longer honor assignments of wages” made by any employee; that the alleged assignment of wages made by Stevens .was taken and received by plaintiff after Stevens had contracted with defendant as aforesaid and after plaintiff had received notice thereof; that on March 20, 1929, defendant received a notice from plaintiff to the effect that plaintiff held an assignment of the wages of Stevens, but defendant says that all wages earned by Stevens prior to and including the date of the alleged assignment was demanded from defendant by Stevens and paid to him before defendant had any notice of the alleged assignment ; that, however, after defendant received notice of said assignment, Stevens continued in its employ and “thereafter earned wages in excess of the amount for lohich plaintiff sues, all of which wages have been demanded by Stevens and have been paid to him by defendant”; that defendant “never consented to said Stevens assigning his wages to plaintiff”; that the assignment sued upon by plaintiff “was executed by Stevens contrary to the contract between him and defendant”; that, because of said contract, Stevens’ said assignment to plaintiff “is null and void,” and plaintiff “is not the equitable and bona ficle owner of any money earned by Stevens after notice to defendant of said alleged assignment”; and that defendant is not liable to plaintiff in any sum.

Courts of law, as well as courts of equity, long ago recognized the right to assign an entire chose in action. In 1 Williston on Contracts, Ed. 1920, sec. 410, p. 758, the author says: ‘ ‘ Equity also held that the assignee would be protected in his right as against an assignee in a subsequent bankruptcy of the assignor; and at the end of the eighteenth century the same decision was made by a court of law, which held that it would take notice of the doctrines of equity in regard to assignments and apply them. (Citing Winch v. Keeley, 1 T. R. 619.) At the present time so fully have courts of law adopted the principle that assignment of choses in action will be protected, that where an absolute and total assignment of a chose in action is made, application to a court of chancery is not often necessary; ...” In Chapman v. Shattuck, 3 Grilm. 49, 52, decided in 1846, it is said: “The doctrine is now well settled that courts of law will recognize and protect the rights of the assignee of a chose in action, whether the assignment be good at law, or in equity only. If valid in equity only, the assignee is permitted to sue in the name of the person having the legal interest, and to control the proceedings. . . . After the debtor has knowledge óf the assignment, he is inhibited from doing any act which may prejudice the rights of the assignee. Payment by him to the nominal creditor, after notice of the assignment, will be no defense to an action brought for the benefit of the assignee. Any compromise or adjustment of the cause of action by the original parties, made after notice of the assignment, and without the consent of the assignee, will be void as against him. ... A partial assignment, however, of the chose in action, will not suffice to bring the case within the principle. The whole cause of action must be assigned.” (See, also, Morris v. Cheney, 51 Ill. 451, 454.) When section 18 of our Practice Act as originally enacted was in force the Appellate Court for this district in Ensign v. Illinois Cent. R. Co., 180 Ill. App. 382, 388, an action at law, said: “While section 18 of our Practice Act allowed plaintiff in error (Ensign) to sue in his own name on the bills of lading on compliance with the terms of that section; yet, the statute simply declares the principles of the common law that are applicable to suits by assignees on non-negotiable instruments, and it changes the common law in no particular, except that at common law the suit on such an instrument by an assignee had to be brought in the name of the assignor.” In Ginsberg v. Bull Dog Auto Fire Ins. Ass’n, 328 Ill. 571 (reversing the judgment of the Appellate Court in 237 Ill. App. 656) it is decided in substance that where one is insured against loss by theft of an automobile and a loss occurs and after the loss he assigns his claim under the policy to a third party, such third party, by virtue of section 18 of the Practice Act, can maintain an action in his own name against the association and recover for the loss, notwithstanding it was provided in the policy that “no assignment of interest under this policy shall be or become binding upon the association unless the written consent of the attorney is endorsed thereon and an additional membership fee is paid.” It appears from the opinion of the Supreme Court that “the entire defense was based upon the failure to comply with the terms of the policy above quoted with reference to the assignment,” and the court said in part (pp. 572-3-5):

“There is a distinction between the assignment of a policy of insurance before loss and the assignment of a claim for loss after the loss has occurred. In the case of an executory contract, whether it be a policy of insurance or any other contract, the rule is well settled that the contract generally is not assignable without the consent of both parties thereto, where the personal acts and qualities of one of the parties form a material and ingredient part of the contract. (Citing authorities.) . . .
“After the contract has been fully executed and nothing remains to be done except to pay the money a different rule applies. . . . The claim becomes a chose in action, which is assignable and enforcible under section 18 of the Practice Act. In Sloan v. Williams, 138 Ill. 43, on page 46, it is said: ‘It is true, that after the contract has been executed by the person agreeing to perform such personal services or exercise such personal skill, he may assign the right to recover compensation. ’ (Citing other authorities.) . . .
“When the automobile was stolen and defendant refused to pay, á cause of action arose in favor of the insured. It became a chose in action and the policy became the evidence of the debt. The insured had the right to assign this debt, and when he did so, plaintiff in error had a right to begin this suit.”

And it is the well settled law in Illinois that “an assignment of wages to be earned in the future under an existing employment, even though the employment is for an indefinite time, is not against public policy, and is valid if made for a valuable consideration and untainted with fraud.” (Monarch Discount Co. v. Chesapeake and Ohio Ry. Co., 285 Ill. 233, 239; Mallin v. Wenham, 209 Ill. 252, 254.) In the Monarch Co. case it is said (p. 238): “The right of the assignee of the salary or wages of an employee to institute suit to reach such salary or wages is the same as that of the employee.” In the Mallin case, in discussing the question whether an assignment of wages earned or to be earned is against public policy, it is said (p. 256): “The citizens of the State have a right to contract, and there is no law forbidding one from selling or assigning any property he may have. A person has the same right to assign his wages that he has to mortgage his homestead or to mortgage personal property that is exempt from execution.” And it is further said (p. 258):

“We cannot see that there,is anything intrinsically vicious in an assignment of wages. The assignor, in such case, simply draws upon his future prospects to supply present needs, which may be of the most urgent and pressing character. There is no law in this State to prevent a poor person from mortgaging or pledging any or every article of property he possesses, as security for his debts, and such a privilege may be of great value. On the whole, we see no reason or right for holding the assignment in question here void as against public policy.”

It is contended by defendant’s counsel in the present, case that the court erred in striking defendant’s affidavit of merits from the files and in entering the judgment appealed from. In the municipal court a motion to strike such a pleading has the effect of a demurrer thereto (Harmon v. Callahan, 286 Ill. 59, 61); and, as it appears from the court’s order that said affidavit was stricken on the ground that it did not set forth a legal defense to plaintiff’s statement of claim, the action of the court is here preserved for review without any bill of exceptions. (Citizens Securities & Investment Co. v. Olson & Co., 234 Ill. App. 552, 555.) The main question on this record, therefore, is whether, admitting all the well pleaded facts as alleged in the affidavit to be true, said affidavit states a legal defense to plaintiff’s claim. Those well pleaded facts are, in substance, that prior to July 9, 1928, Stevens (plaintiff’s assignor) was, and still is, an employee of defendant; that on July 9‘, 1928, Stevens entered into a written contract with defendant, wherein he agreed, in consideration of his employment, that he would not thereafter transfer or assign to anyone any claim for wages, due or to become due to him, without defendant’s written consent, and that any such attempted transfer or assignment without such consent should be null and void; that about two months after the making of said contract, to wit, on September 15,1928, defendant notified plaintiff in writing that, “because of having made such contracts with all of its employees,” it would “no longer honor assignments of wages” by any of its employees; that the assignment of wages sued upon (given by Stevens to plaintiff on February 2, 1929) was made by Stevens and received by plaintiff after the date of Stevens’ said contract with defendant and after plaintiff had received said notice of September 15, 1928; that defendant never consented to Stevens assigning his wages to plaintiff; that on March 20, 1929, defendant received notice from plaintiff that plaintiff held an assignment of wages given by Stevens; and that thereafter Stevens remained in defendant’s employ and earned and was paid by defendant on his demand wages “in excess of the amount for which plaintiff sues.” It will be noticed that it is not alleged that plaintiff was a party to the contract of July 9,1928, or that plaintiff ever was given notice that Stevens had entered into the particular contract with defendant. The allegation is, in substance, that, before the assignment of wages sued upon was given by Stevens, plaintiff received written notice that defendant would “no longer honor assignments of wages,” or, in other words, that it would no longer consent to any such assignments being given by any of its employees. In view of the provisions of section 18 of the Practice Act, Cahill’s St. ch. 110, If 18, and of the legal principles, holdings and decisions above mentioned, and of the other authorities hereinafter referred to, we are of,the opinion that defendant’s affidavit of merits did not state a legal defense to plaintiff’s claim and that, defendant electing to stand by its affidavit, the court was warranted in entering the judgment appealed from.

In 2 Puling Case Law, sec. 31, page 624, it is stated: “Where the assignment is of the entire claim, the consent of the debtor is not required. If the rule were otherwise it would be a practical denial of the assign-ability of choses in action, because the right to assign would depend entirely on the will of the debtor. ” In 1 Williston on Contracts, sec. 422, p. 790, the author says: “But a provision in a contract of service that an assignment of wages would subject an employee to immediate dismissal does not make an assignment ineffectual” (citing Wabash R. Co. v. Smith, 134 Ill. App. 574, 578.) In Bank of United States v. Public Bank of New York City, 151 N. Y. S. 26, 28, it is decided that although the rule of a bank requires a depositor to appear in person to withdraw his account, the relation of debtor and creditor still exists, and that where the depositor assigns his bank account, such rule will not justify the bank’s refusal to pay to the depositor’s assignee. In Eaves v. Chicago, B. & O. R. Co., 200 Ill. App. 380, it is decided in effect that a rule of a relief department of a railroad company, that an assignment of a claim of a member of the department cannot be made without the approval of the department’s superintendent, is not a bar to an action based upon an assignment of the member’s entire claim. In Stern v. Gelder, 224 Ill. App. 89, 92, it is said: “Although a contract may be such that it is not assignable, nevertheless, money which has become due under it may be assigned.” In In Re Wright, 157 Fed. 544, 546, it is said: “There is a difference between an absolute assignment of a contract and an assignment of rights under a contract. The personal confidence which precludes the transfer of rights arising out of a contract must be involved in the nature of the rights themselves. . . . It is not ordinarily involved in the right to receive moneys due or to grow due under a contract, and this right is generally assignable without the consent of the other party” (citing Fortunato v. Patten, 147 N. Y. 277, 282.)

One of the contentions of counsel for plaintiff is that the contract between Stevens and defendant, as set forth in defendant’s affidavit of merits, should be considered void as being against public policy. As to plaintiff, even with such notice as it is alleged he received, we think that there is substantial merit in the contention. In Massie v. Cessna, 239 Ill. 352, 358, it is said that “the right to labor for and to render services to another, and the right to dispose of the compensation to be received for so doing, are property rights” within the meaning of section 2 of article 2 of the constitution of Illinois. The agreement in question is an attempt to restrict Stevens’ right to alienate his property and to assign a chose in action. We think that the policy of the law is opposed to such restrictions. (Section 18, Practice Act, Cahill’s St, ch. 110, If 18; Ginsburg v. Bull Dog Auto Fire Ins. Ass’n, 328 Ill. 571, 573; Monarch Discount Co. v. Chesapeake and Ohio Ry. Co., 285 Ill. 233, 239; Spare v. Home Mutual Ins. Co., 17 Fed. 568, 571; John D. Park & Sons Co. v. Hartman, 153 Fed. 24, 39.)

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

Affirmed.

Scanlan, P. J., and Keener, J., concur.


text:
    Katherine F. Hayes, Appellant, v. Harold C. Hayes et al., Appellees.
    Gen. No. 34,326.
    Heard in the second division of this court for the first district at the October term, 1929.
    Opinion filed January 27, 1931.
    Hugh J. Daly, for appellant.

      Sylvanus George Lee, for appellee Harold C. Hayes. Sherman C. Spitzer, Edmund J. Reynolds and Brown, Fox & Blumbebg, for Chicago Title & Trust Company, as Trustee, and Wollenberger & Company, appellees. Hummer & Hummer, for Progressive Bond & Mortgage Company, Trustee.
   Mr. Justice Gridley

delivered the opinion of the court.

On February 14, 1929, complainant filed a bill in the superior court of Cook county against Harold C. Hayes, Wollenberger & Co., a corporation, Chicago Title & Trust Co., a corporation, and Progressive Bond and Mortgage Co., a corporation, praying that a first mortgage trust deed on certain described premises in Chicago, dated July 1,1927, and recorded July 5, 1927, “be set aside and decreed to be void,” in that it “fraudulently deprives or attempts to deprive” complainant ‘ ‘ of her inchoate right of dower ’ ’■ in the premises. All four defendants filed general demurrers to the bill. On May 13, 1929, after argument, they were sustained and, upon complainant electing to stand by the bill, the court dismissed it for want of equity. She prayed and perfected an appeal to the Supreme Court but subsequently the cause was transferred to this court on the ground that a freehold was not involved. (Hayes v. Hayes, 338 Ill. 345, 346.) Of the printed briefs of appellees, here filed, one set is by counsel representing the three corporations, and the other by counsel representing Harold C. Hayes.

In the bill complainant alleged inter alia that she resided in Brookline, Massachusetts; that on July 28, 1920, she lawfully married Harold C. Hayes in Massachusetts, and for a time lived with him as his wife; that on May 1, 1921, their one child, Virginia Gertrude Hayes, was born; that subsequently Hayes deserted complainant and his whereabouts were unknown to her for several years; that on May 24, 1924, he, without being divorced from her, “went through a marriage ceremony” with one Maurine Geinzer in Chicago ; that about February 15, 1927, he purchased certain improved real estate, known as the Metropole Hotel, at 2300 South Michigan Avenue, Chicago, and which consisted of two parcels; that Hayes took title in fee simple to one parcel (describing it) by' a trustees ’ deed, dated February 15, 1927, and recorded in the recorder’s office of Cook county on February 25, 1927; that the other parcel was a certain leasehold estate (describing it) for 99 years, ending April 30,1989, which was assigned to Hayes by written assignment, dated February 15, 1927; that the purchase price of the two estates and building was $205,000; that Hayes executed and delivered a purchase money mortgage, dated and recorded on said dates, to the Chicago Title & Trust Co., as trustee, which was released of record on August 25, 1927; that on July 1, 1927, he executed and delivered a trust deed (recorded July 5, 1927) on said estates and building to said company, as trustee, securing a bond issue of $210,000, which bonds “were offered for sale and sold to various investors” by Wollenberger & Co.; that said trust deed also was executed by Maurine Geinzer, who purported to sign the same as "Hayes’ wife and to release her dower and homestead rights in the premises; and that at that time, although complainant was the lawful wife of Hayes, she did not sign the deed and did not have knowledge of any of the above mentioned transactions.

Complainant further alleged that she continued to be the lawful wife of Hayes until she obtained a decree of divorce (copy attached and made a part of the bill) on the ground of his adultery, entered February 27, 1928, by a Massachusetts court; that in the divorce proceedings, instituted October 17, 1927, Hayes appeared by counsel and subsequently signed and filed in the cause a certain stipulation or alimony agreement (copy attached, etc.); that in the divorce decree it was provided that it should become final, and it did become so, on August 27, 1928; that therein complainant was awarded the care and custody of said minor child; that therein it was provided that Hayes should pay to complainant $4,500, “in full settlement of all claims for alimony, past, present and future, counsel fees and court costs,” and said sum was paid; that therein it was provided that Hayes also should pay to complainant certain monthly sums for the care, support and education of said minor child until the latter became of age, to wit, until May 1, 1942; and that neither the agreement nor the decree released or purported to release or waive “any dower rights or inchoate dower rights” of complainant in any real estate owned by Hayes.

Complainant further alleged that the trust deed of July 1, 1927, conveying the real estate to the Chicago Title & Trust Company, as trustee, to secure said bond issue, is “fraudulent and void, in that it represents that dower rights of the wife of said Hayes have been released,” and in that it “fraudulently attempts to deprive complainant of her inchoate right of dower in said premises”; that when said deed was executed Hayes knew of the existence of complainant’s inchoate right of dower; and that he “fraudulently attempted to deprive” complainant of her said right “by permitting or procuring’ the signature of said Maurine Geinzer to said deed as his legal wife.” And complainant further alleged that Hayes executed a second mortgage trust deed, dated July 12,1927, and recorded August 25, 1927, conveying said freehold and leasehold estates to the Progressive Bond and Mortgage Co., as trustee, to secure an indebtedness of $62,800; and that he also fraudulently permitted or procured said Maurine Geinzer to sign the same, “thereby fraudulently purporting to release complainant’s inchoate right of dower in the premises.”

Complainant’s counsel contends that the' court erred in sustaining defendants’ general demurrers to complainant’s bill and in dismissing it for want of equity because the first mortgage trust deed of July 1, 1927, on the premises involved, is void, it having been executed in fraud of complainant’s dower right therein (the same not having been relinquished by the divorce decree of February 27, 1928), even though such right is inchoate. Although admitting in substance that “a wife’s inchoate right of dower before it has been consummated by her husband’s death-is a mere intangible, contingent expectancy, and not only is not an estate in land but does not even rise to the dignity of a vested right” (Bennett v. Bennett, 318 Ill. 193, 197; Taylor v. Taylor, 223 Ill. 423, 426), and cannot be asserted during the husband’s lifetime (Haller v. Hawkins, 245 Ill. 492, 494; Lohmeyer v. Durbin, 213 Ill. 498, 500), yet counsel argues that such an inchoate right may be made the basis of a suit to set aside a deed “executed in fraud of her marital rights.” As applied to such well pleaded facts as are alleged in complainant’s bill, we do not think there is any merit in the contention or argument. While it has been decided in this State that a deed made by one on the eve or in contemplation of marriage, which if uncanceled actually would deprive the wife or husband (as the case may be) of dower rights, may under certain circumstances be set aside as in fraud of marital rights (Freeman v. Hartman, 45 Ill. 57, 59; Higgins v. Higgins, 219 Ill. 146, 151), the present bill does not allege such a case. It therein appears that the trust deed sought to be set aside was executed and delivered by Hayes long after complainant’s marriage to him in July, 1920, and before her divorce from him, and that he obtained title to both the freehold and leasehold estates in February, 1927. When he obtained that title her inchoate right of dower immediately attached to the freehold estate, and only to that estate. (Section 1, Dower Act, Ca-hill’s St. 1925, ch. 41, H 1, p. 937; Thornton v. Mehring, 117 Ill. 55, 59.) It is further alleged that complainant, then Hayes’ lawful wife,- did not join in the trust deed of July 1, 1927, and that she never released or relinquished her inchoate right of dower in said freehold estate. If so, she still has her inchoate right of dower therein. And she does not allege in her bill any facts showing that the execution and delivery of the trust deed by Hayes actually deprive her of such inchoate right. Practically all that is alleged is that Hayes, in executing the deed, and in procuring Maurine Geinzer as his purported wife to join therein, “fraudulently attempted to deprive” her of such inchoate right. Furthermore, it is the law of this State, as well as in other States, that a husband has the legal right to convey or mortgage any of his real estate without the wife joining in the deed to release her inchoate right of dower, and'that, as against the wife, no fraud can be predicated upon the exercise by the husband of such legal right. (Haller v. Hawkins, 245 Ill. 492; McLanahan v. Griffin, 168 Ill. 31; Deke v. Huenkemeier, 260 Ill. 131; Weyer v. Barwell, 327 Ill. 214; Schackleford v. Morrill, 142 N. C. 221;-King v. Chandler, 213 Ala. 337; Warner v. Trustees of Norwegian Cemetery Ass’n, 139 Iowa 115.) In the Haller case the husband conveyed by deed certain real estate to Hawkins, and in the deed and certificate of acknowledgment were the false statements that the grantor was “unmarried.” The wife did not join in the conveyance and did not have knowledge- of it at the time or of said false statements, and the court held (p. 494) that during the husband’s lifetime she “could not have asserted her right of dower,” and that after the husband’s death (she then being living), neither said false statements in the deed and certificate of acknowledgment “nor any other fraud of her husband, not. participated in by her, could prejudice her right of dower.” In the Deke ease (p. 137) it is said: “The law is well settled that a husband may convey his real estate without his wife joining him, and if there be no homestead, the conveyance will vest the grantee with a fee simple title, subject only to the dower of his wife, should she survive him.” In the Weyer case (p. 217) it is said: “It is settled in this State that the husband cannot without her consent deprive the wife of the inchoate right of dower conferred by the Dower Act, although the fee in an estate may be disposed of subject to that right. . . . Such inchoate right ripens into a legal vested right on the death of the husband.” In both the North Carolina and Alabama' cases, cited above, the husband had executed a mortgage- on his real estate, without the wife joining in the deed or without any release by her of her dower right. The wife claimed, as here, that the mortgage was void as being in fraud of her marital rights, but in each case it was held that the mortgage was valid subject to the wife’s dower right.

Other points are made by counsel for the three defendant corporations, as reasons for the action of the court in sustaining the demurrers to complainant’s bill and in dismissing the bill for want of equity, but, in view of our foregoing holdings and decision, we deem it unnecessary to discuss them.

For the reasons indicated the judgment of the superior court is affirmed.

Affirmed.

Scanlan, P. J.,. and Keener, J., concur.


author: Mr. Justice Kerner

text:
    Christine S. Eastman, Appellant, v. State Bank of Chicago (now Foreman State Trust and Savings Bank) and Eunice Eastman, Appellees.
    Gen. No. 34,213.
    Heard in the second division of this court for the first district at the April term, 1930.
    Opinion filed January 27, 1931.
    Austin L. Wyman, for appellant.'
    Gann, Secord & Stead, for appellees; Guy Van Schaick, of counsel,
   Mr. Justice Kerner

delivered the opinion of the court.

This was a bill by Christine S. Eastman, complainant, against the State Bank of Chicago as trustee, and Eunice Eastman, defendants, to construe a will, involving a trust, seeking an interpretation holding complainant a life tenant entitled to certain stock dividends and to compel the transfer to complainant of 319% shares of the W. F. Hall Printing Company, held by the State Bank of Chicago as trustee under the will of Calvert S. Eastman. The bill was dismissed for want of equity, the chancellor holding the dividend to be capital and not income, and this appeal followed.

By the will of Calvert S. Eastman the State Bank of Chicago was designated as executor and trustee, and the widow, Christine S. Eastman, was given the entire net income for life, and the remainder, upon her death, to Eunice Eastman, a niece of the testator. No provisions appear in the will with reference to allocation of stock dividends or any other definition of what shall constitute “entire net income.” The principal asset of the estate on January 10, 1929, consisted of 6,490 shares of the capital stock of W. F. Hall Printing Company. December 28, 1928, the board of directors of the printing company declared the regular 2% per cent cash dividend and at the same time the board resolved that a dividend of 5 per cent be declared upon the common stock of the company, payable in shares of the common stock of the company J anuary 31, 1929, the close of the fiscal year, to stockholders of record at the close of business J anuary 10, 1929. There was not in the resolution declaring the stock dividend any other statement by the board of directors as to its intention in declaring such dividend but in .announcing the dividend the president of the corporation, by printed notice addressed to the stockholders, and by order of the board of directors, advised the stockholders that upon his recommendation the board of directors have adopted the policy of paying 5 per cent stock dividend in addition to the usual cash dividend, for any year when the earnings are sufficient to warrant it and the needs of the corporation require the retention by it of an unusual proportion of the earnings; that the business was growing and expanding rapidly, and that the board of directors had considered the probable requirements for financing this growth for the next two or three years and that it would be better to meet these needs by the application of earnings rather than to borrow the necessary funds; that if this was done it would not be possible to pay cash dividends, and that this policy be adhered to until such time as the rate of growth became normal.

Complainant contends that the character and nature of this dividend and the expression of the president of the corporation as to the purpose of the dividend, combined to take this case out of the general rule applicable to stock dividends, and that the will should be construed to direct the payment of the dividend to the complainant, the life tenant.

In determining the rights as between the life tenant and a remainderman, the intention of the testator is the controlling consideration (Reed v. Head, 6 Allen [88 Mass.] 174, 178; Rhode Island Hospital Trust Co. v. Peckham, 42 R. I. 365); and if he makes a gift of income without defining what he intends the word to mean, or prescribing the method by which the gift is to be determined, he must have had in view the rules adopted by our courts as generally applicable to such cases. (Mayberry v. Carey [Mass.], 167 N. E. 281; Lanston v. Lanston, 290 Fed. 315; Gibbons v. Mahon, 136 U. S. 549.) There is nothing in the will of Calvert S. Eastman that indicates any intention on his part that the provisions for the benefit of the complainant should be interpreted as giving to her the stock dividends in question. The principles of law heretofore applied by our courts in determining whether divi¿Lends received by a trustee constitute net income payable to the life beneficiary or capital which belongs to the remainderman are in accord with those followed by the Supreme Court of Massachusetts. (DeKoven v. Alsop, 205 Ill. 309; Blinn v. Gillett, 208 Ill. 473; Billings v. Warren, 216 Ill. 281.) The leading Massachusetts cases are Minot v. Paine, 99 Mass. 101; Leland v. Hayden, 102 Mass. 542; Rand v. Hubbell, 115 Mass. 461; D’Ooge v. Leeds, 176 Mass 558; Lyman v. Pratt, 183 Mass. 58. Briefly, the rule is that whether a dividend is to be regarded as income, and, as such, property of a life tenant, or as capital belonging to the remainderman, is to be determined by the substance and intent of the action of the corporation. In the declaring of the dividend, it rests primarily upon the principle that, when acting in good faith, a corporation is clothed with power to treat its gains and profits from time to time as income, to be distributed in the form of cash dividends to its stockholders, or as an addition to its capital to be apportioned among them, and for which stock dividends are issued to them and that the action of the corporation itself with reference to such gains and profits is determinative of the question as to whether as between the tenant for life and the remainderman, they shall be regarded as income, or as part of the corpus. The Minot v. Paine case, supra, laid down the general rule that cash dividends, however large, are income, and stock dividends, however made, are capital, which rule was adopted by the Supreme Court of the United States in Gibbons v. Mahon, supra. The DeKoven v. Alsop ease, supra, decided that stock dividends belong to the corpus of the estate and are not net income. This rule controls even though the stock dividend be declared out of the earnings accumulated since the inception of the trust. (Lanston v. Lanston, 290 Fed. 315; see also Eisner v. Macomber, 252 U. S. 189.) In the recent case of Lloyd v. Lloyd, 252 Ill. App. 495, 502, we said; “Had the' directors declared a dividend of shares of stock in the Tribune Company there would be no doubt that the dividend would constitute capital.” We adhere to this statement.

Complainant does not argue against the general application of the rule laid down, but claims that the particular facts of the instant case should be considered, and that in determining the nature of a dividend the substance rather than the form should be considered (Gray v. Hemenway [Mass.], 168 N. E. 102), and that there are unusual circumstances in the instant case, which affect the intention of the testator; that the resolution declaring the dividend did not designate it as a stock dividend. In the Gibbons v. Mahon case, swpra, the court said, quoting from Williams v. Western Union Telegraph Co., 93 N. Y. 162:

“When a corporation has a surplus, whether a dividend shall be made, and if made, how much it shall be, and when and where it shall be payable, rest in the fair and honest discretion of the directors uncontrollable by the courts.” “Whether they shall be made in cash or property must also rest in the discretion of the directors.” (p. 565.)

The complainant does not question the good faith •of the board of directors of the printing company in declaring that a dividend of 5 per cent be paid in shares of the common stock of the company. We have given consideration to the argument of the complainant but are compelled to the conclusion, as said in the Lloyd v. Lloyd case, 341 Ill. 461, 470, that: “The corporate intent as expressed by resolution is unmistakable, and under all the circumstances here shown that intent must be given effect.”

We are of the opinion that the chancellor did not err in the decree entered and it is affirmed.

Decree affirmed.

Scanlan, P. J., and G-ridley, J., concur.