author: Mr. Justice Huffman

text:
    Ernest E. Chappel and Romayne R. Chappel, Appellants, v. Walter E. Burwell and Carrie A. Burwell, Appellees.
    Gen. No. 8,728.
    Opinion filed January 19, 1934.

      Hyer & Gill, for appellants.
    Hinchcliff, Miller & Thomas, for appellees; L. C. Miller, of counsel.
   Mr. Justice Huffman

delivered the opinion of the court.

Appellants purchased a residence property in the City of Rockford, Illinois, from the receiver of the Rockford National Bank. The residence had been constructed by appellees and they were living in the property at the time appellants purchased same. Appellants claim that after their purchase of the premises from the said receiver, and without their knowledge, appellees removed, and were threatening to remove, certain built-in fixtures, which were an integral part of the house, and which were a part of and belonged to the premises as purchased by the appellants.

The principal items in controversy were electric light fixtures, water softener, screens, storm doors and windows, a built-in electric refrigerator, an incinerator, and gas furnace. The premises were purchased by appellants on December 19, 1932, from L. B. Achor, receiver of the Rockford National Bank. It was provided therein that appellants should have possession of the premises on or before January 3, 1933. Appellants state that appellees refused to vacate the premises, and were occupying same at the time of the filing of the bill herein, on March 23, 1933.

Appellants brought their bill as aforesaid, claiming that appellees were removing and threatening to remove certain fixtures that were a part of and belonged to the premises purchased, and asked for a restraining order on appellees against the removal of same. A temporary restraining order was granted. Upon a hearing the court entered its final decree making the temporary. restraining order permanent as to the screens, storm windows and doors, and the gas furnace; and dissolved the same with respect to all other items. Included among these other items were the electric light fixtures, water softener, built-in electric refrigerator, and the incinerator. From that decree of the circuit court of Winnebago county, the appellants prosecute this appeal.

The evidence discloses that appellee, Walter E. Burwell, was vice president of the said Rockford National Bank, and that he was owner of the lot upon which this residence property is located. The appellee desired to build a residence upon this lot. On November 3, 1930, he made application through the Northern Illinois Mortgage Co., of Rockford, for a loan of $13,500, from the Prudential Insurance Co. of America, for the purpose of constructing this home upon this lot. The application for this loan as made by appellee, after describing the character and nature of the house to be built, states that it is to contain certain “built-in and special features.” Among the special built-in features listed are gas furnace, electric refrigerator, water softener, and an incinerator.

Appellees secured the above loan and executed their mortgage therefor to the Prudential Insurance Co., on the premises in question, for $13,500. The house was built according to the architect’s plans, and the above built-in features were duly installed. Appellees secured another loan of $6,500 and executed a second mortgage for that amount upon the premises in question. The Rockford National Bank passed into receivership, holding the second mortgage. Appellees on or about December 2, 1932, in consideration of the release and discharge of their obligation of $6,500 to said bank, deeded the premises in question to L. B. Achor, receiver of the bank, subject to the $13,500 mortgage to the Prudential Insurance Co.

Mr. Chappel states that Mr. Burwell came to his office for the purpose of interesting him in the purchase of these premises; that he told Mr. Burwell he did not think he would be interested; that Mr. Burwell described the desirability of the premises, and stated to appellant that in ease he became interested in the purchase of the property, appellee would like to have the deal go through his hands as he had made an agreement with the receiver, giving him the right to sell the property, if he could find a buyer. Appellee at this time invited appellant out to inspect the property, and appellants did on December 17, 1932, go to the above premises for the purpose of inspecting them, as prospective purchasers. Appellees were present at the time. Appellants claim appellees showed them the electric refrigerator and called their attention to the manner in which it was completely built-in and inclosed by panels so that it appeared as a part of the wall; that they were shown the incinerator, gas furnace and water softener in the basement, and that the working of these appliances was explained; that Mr. Burwell went into detail to explain how the water softener must be looked after and that it needed attention only twice a year; and how the incinerator worked, and that after the material placed therein had been consumed, that it would automatically shut off the heat and required no attention. Appellants further claim that appellees in their conversation about the electric light fixtures stated they had been bought especially for this house, from a firm in Milwaukee. The evidence of the architect discloses that the electric fixtures were so purchased from the Milwaukee firm, and that the plans of this home as prepared by him provided for these special built-in features.

Mr. Seise, president of the Northern Illinois Mortgage Co., through which company appellees obtained the Prudential loan, states that the money was secured upon appellees’ application, and that from such money he, himself, paid for the electric light fixtures, electric refrigerator, incinerator, screens, windows, and practically all the items. Appellees do not deny that the mortgage money secured from the Prudential Insurance Co., as aforesaid, went to pay for the construction of this house and the installation of these special built-in features, which were included in the application for the loan, and which are now in controversy in this appeal.

It therefore appears that these items were contemplated and treated by the contracting parties as constituting a part of the mortgaged security to the Prudential Insurance Co. Appellees’ application for the loan discloses this, and the architect’s plans attached thereto, according to the testimony of the architect, disclosed the same. This Prudential mortgage stood in the same shape at the time appellees conveyed the premises to the receiver of the bank as it was when originally given.

Appellees had no interest of any kind in the premises after their deed to the receiver. They thereby divested themselves of all right, title and interest in the premises, and conveyed them to the receiver as they were then under mortgage to the Prudential Insurance Co. The receiver in taking this deed to the premises from appellees, subject to the Prudential mortgage, had no power to release to appellees any part of the mortgaged property, or to lessen or impair in any way the mortgage security. The receiver of the bank conveyed the premises to appellants subject to the same Prudential mortgage and with the mortgage standing as originally given.

The mortgaged property is the primary fund for the payment of the mortgage indebtedness, and a transfer of mortgaged property, subject to the mortgage, in equity, passes title to the purchaser in all particulars as mortgaged, and he is entitled to receive the premises and all the appurtenances thereunto affixed or belonging, which are a part of the mortgage security. A purchaser of mortgaged premises, in equity, is entitled to succeed to all of his grantor’s equity in the said premises, without having the same lessened or impaired by any act of his grantor.

Nothing has occurred since the application for the Prudential loan by appellees, and their mortgage on these premises given pursuant thereto, to change the status of these items of property involved herein. It clearly appears that they were considered and treated at that time as a part of the mortgage security. Appellees do not dispute this fact. Appellants are compelled to satisfy the mortgage indebtedness in order to protect their own interest in the property, and upon payment of such indebtedness, they are entitled to receive the property as mortgaged. The mortgaged property being the primary fund for the payment of the mortgage debt, is in all events charged with the satisfaction of such debt. Pomeroy’s Eq. Jur., secs. 1205-1209, Jones on Mortgages, secs. 736-740. The appellants, taking these premises subject to this mortgage indebtedness, are in equity entitled to receive them in the same manner and to the same extent as they are pledged for the payment of such mortgage indebtedness.

The mortgagor has only an equity of redemption in the mortgaged property. He may sell the same, and when he does, the purchaser acquires the mortgagor’s equity of redemption to all of the mortgaged property. The rights of the mortgagee are in no way affected by a conveyance of the mortgaged premises by the mortgagor. Jones on Mortgages, sec. 676. Thus it is manifest that a conveyance of the mortgaged premises in no way impairs or lessens the security of the mortgage indebtedness. Whether the purchaser personally assumes the payment of the mortgage indebtedness is not controlling, because, in all events, he has purchased the equity of redemption from the mortgagor, and the property being the primary fund for the payment of the debt, the purchaser is entitled to receive by such conveyance the mortgagor’s equity of redemption as it then existed, in all of the property to which the mortgage had attached.

Mr. Burwell invited appellants to visit the premises for the express purpose of trying to interest them in the purchase thereof. Appellees were both present when appellants called, and knew the mission of appellants, and pursuant thereto, showed the house to appellants with the object of interesting them in the purchase thereof, for a home. Appellees exhibited to appellants the items in question, explained their care and operation, and their conveniences and advantages. The gas furnace was properly attached and used for heating the house. The incinerator was attached in the usual manner with outlets to the flues and must have operated either by gas or electricity and been properly connected, or otherwise it would not have burned the garbage placed therein and then automatically shut itself off after performing such service. The water softener was attached to the plumbing system of the house and all water passed through it. The electric light fixtures were attached to the walls and ceilings.

An architect was secured to prepare the plans. The house was designed and constructed with proper provisions made in the plans for the • installation of the items in controversy herein. Appellees testified that they expected to make this their permanent home at the time it was built. These facts indicate an intention on the part of the appellees to malee the items in controversy permanent fixtures, and integral parts of the house; but irrespective of these facts, it is not disputed that they were embraced in the Prudential mortgage and that the mortgage money was used to pay for them.

Property once becoming subject to a mortgage indebtedness remains subject to such indebtedness until duly released therefrom. When appellants purchased the premises, appellees had already conveyed them to the receiver, and were then occupying the property as any other tenant might occupy the same. The appellants purchasing the property subject to the mortgage indebtedness were entitled to receive the premises as mortgaged, and without any impairment of the value of same and without any interference on the part of appellees with any of the property to which the mortgage had attached.

The appellees in the beginning were only vested with an equity of redemption. This they conveyed to the receiver of the bank, and in doing so they divested themselves of all rights in all of the property pledged as security for the mortgage indebtedness. We do not believe that it can be urged that the items in controversy herein were not a part of the mortgaged property. Nothing appears in the record to change the status of these items, after the giving of the Prudential mortgage. Appellants in purchasing the equity of redemption from the receiver, are entitled to receive same in full measure as such rights existed at the time they were conveyed by appellees to the said receiver.

The trial court erred in dissolving the temporary writ with reference to the water softener, electric refrigerator, incinerator, and such electric light fixtures as were attached to the walls or ceilings (not including floor lamps or table lamps, or other electric appliances that are attached to electric outlets by cords). Accordingly this cause is reversed and remanded with directions that the decree herein be modified to include the above mentioned items of water softener, electric refrigerator, incinerator, and such electric light fixtures as are attached to the walls or ceilings; and that the appellees be permanently enjoined and restrained from interfering with the right of possession and the enjoyment of appellants thereto.

Reversed and remanded with directions.


source: Caselaw Access Project

author: Mr. Presiding Justice Hall

license: Public Domain

text:
    Fred J. Lange, Appellee, v. Massachusetts Mutual Life Insurance Company, Appellant.
    Gen. No. 37,005.
    Opinion filed January 9, 1934.
    Eckert & Peterson, for appellant; Walter H. Eckert, Tom Deeming and Owen Ball, of counsel.
    Trowbridge, Lowrie, O’Donnell & Johnston, for appellee; Paul O’Donnell, of counsel.
   Mr. Presiding Justice Hall

delivered the opinion of the court.

This is an appeal from an order of the circuit court of Cook county, denying defendant’s motion to dissolve an injunction issued against defendant, restraining it from changing, impairing, beclouding or impeding the rights claimed by complainant under certain policies of life insurance issued by defendant to complainant. The injunction was issued without notice to defendant. It was upon this ground alone that defendant moved the court below to dissolve the injunction. It was not claimed that complainant’s bill was without equity, nor that upon the bill as presented complainant was not entitled to the relief prayed, and there is no such claim urged here.

The charge in the bill is that in April, 1923, defendant issued four policies of insurance to complainant in the sum of $2,000 each. The bill alleges that the policy year of each of the policies began on the 24th of March, 1923, and that the annual premium thereon was payable on or before April 24th of each year thereafter, said last mentioned date being the end of the 31 days of grace. The policies were payable to Bertha Lange, wife of complainant, and to Fred E. Lange, Wallace H. Lange, and Paul W. Lange, sons of complainant. The annual premium on each, as fixed by the policy, was $28.14. Complainant paid the annual premium on all of the policies on or before April 24th of each year to and including the year 1927. Each of the four policies contained the following provision:

“If the insured, before default in the payment of any premium under this policy and before the anniversary of the policy on which his age at nearest birthday is 65 years, shall furnish due proof to the Company at its Home Office that he has become wholly and permanently disabled so that he is and will be permanently, continuously and wholly prevented thereby from performing any work or engaging in any occupation for compensation or profit, the Company will waive the payment of all premiums becoming due under this policy after the expiration of the then current policy year.

“The amount of this policy payable at maturity shall not be reduced by any premiums waived under this provision.

“Provided that, notwithstanding proof of disability may have been accepted by the Company as satisfactory, the insured shall at any time, on demand, furnish due proof to the Company of the continuance of such disability, and if the insured shall fail to furnish such proof all premiums thereafter falling due must be paid in conformity with the conditions of this policy.

“Waiver of premiums by the Company under this provision shall not affect the right to any dividend or other benefit provided in this policy. Values provided under the ‘Non-Forfeiture Provisions’ shall continue with the same force and effect as if the premiums were duly paid.”

Before the annual premium became due in 1927, complainant furnished to defendant proof that he had become wholly and permanently disabled so that he was and would be permanently, continuously and wholly prevented thereby from performing any work or engaging in any occupation for compensation or profit; that upon such proof defendant refused to waive the premium and complainant paid the same under protest. In the year 1928, when complainant was 56 years of age, and before the premium for that year became due, complainant furnished defendant the same character of proof as was furnished for the year 1927. It is stated in the bill that defendant thereupon caused an examination to be made of complainant by a physician, and as a result of this examination, defendant waived the payment of the annual premium due on or before April 24, 1928, and refunded the 1927 premium theretofore paid. It is further stated that before the 1929, 1930 and 1931 premiums became due respectively, complainant again notified defendant that he was still disabled to the extent already claimed, and that defendant then waived the payment of all premiums due for said years; that again in 1932 complainant furnished defendant similar proof of disability ; that he was interviewed by a person claiming to be the agent of defendant; that after such interview defendant notified complainant that it refused to waive the premium for the year 1932, and demanded its payment. It is alleged that at that time, complainant was 60 years of age and had become a noninsurable risk and was unable to secure any additional insurance. It is further stated in the bill that by the provisions of the policies defendant had the right to forfeit the same and all rights thereunder for the nonpayment of premiums, and that further by the terms of such policies, complainant could not be reinstated because of his physical condition, as he would be unable to pass the required physical examination, and unless the premiums were paid as demanded by defendant, the policies would be forfeited. Thereupon, under duress, he paid the premiums for the year 1932 amounting to $301.52. The bill states that plaintiff is still suffering such permanent disability, which exempts him from the payment of the premiums on the policies, and that in the year 1933 he again notified defendant of such disability, but that without asking further proof as to complainant’s disability, defendant refused to waive the premiums due on April 24, 1933, and has made demand therefor, and threatens to forfeit the said insurance if the premiums are not paid. Upon the filing of the bill, complainant deposited with the clerk of the circuit court of Cook county the sum of $321.60, the total sum demanded by defendant as premiums on the policies for the year 1933, and agreed that it be paid defendant should the court find it entitled thereto. The prayer of the bill filed asks the court to restrain the defendant and its officers from changing, impairing, beclouding or impeding the rights which complainant now has under the policies, and restraining the officers and agents of defendant company from making any record or entry or document purporting to affect the lapsing or forfeiture of the said insurance policies, until the further order of the court.

The bill herein was sworn to on April 21, 1933; on April 22, 1933, the order of injunction appealed from was entered by the court without notice to the defendant, and without the defendant being in court, and with no showing that complainant would be unduly prejudiced if it were not issued. Appellee calls the attention of the court to certain facts, of which the court will take judicial notice, to wit: that April 21, 1933, was Friday, April 22, Saturday, and April 23, Sunday, and that because of the situation so represented, he was relieved of the necessity required by the statute of serving notice on the defendant of his intended application for the injunction on April 24, 1933. With this, we are unable to agree. The statute provides in terms that “No court, judge or master shall grant an injunction without previous notice of the time and place of the application having been given to the defendants to be affected thereby, or such of them as can conveniently be served, unless it shall appear, from the bill or affidavit accompanying the same, that the rights of the complainant will be unduly prejudiced if the injunction is not issued immediately or without such notice.” Cahill’s St. ch. 69, ¶ 3. It is apparent that defendant could have been “conveniently served.” While it appears from the record that the time for the payment of the premium for 1933 on the insurance policies mentioned expired on April 24, 1933, we are unable to agree with complainant that there is sufficient showing made by either the bill or. affidavit attached thereto, to justify the court in issuing this injunction without notice. The reason for the motion to dissolve the injunction, which motion was denied and from which order this appeal is taken, was distinctly restricted to the fact that no notice of the application for the injunction had been served on defendant, as required by the statute. Counsel for complainant calls this court’s attention to a great many cases in which the Supreme Court and Appellate Court have held that the motion to dissolve an injunction without notice waives the point that no notice was given; that such motion is in the nature of a demurrer to the bill. We have examined all the cases cited by both counsel, together with many others, and we find that in each case where there has been a holding that the motion to dissolve waives the point that the injunction was issued without notice, the motion to dissolve was predicated upon the showing made on the face of the bill, and not on the fact that no notice had been served.

In Williams v. Chicago Exhibition Co., 188 Ill. 19, the Supreme Court said:

“It is strenuously insisted by the defendants in error, that the injunction was dissolved because it was granted without notice to the defendants in the bill. The record does not show, that the injunction was dissolved because no notice was given, before it was granted, that it would be applied for. On the contrary, the final decree or order, entered by the court, recites that a motion was made to dissolve the injunction upon the face of the bill, and that this motion, after argument, was sustained by the court. If, however, there was any irregularity in the original issuance.of the injunction, such as failure to give notice, such irregularity was waived by the motion to dissolve upon the face of the bill, inasmuch as such motion operated as a demurrer to the bill.”

The order in this case" denying the motion to dissolve the injunction is as follows:

“This suit coming on to be heard upon the motion of the defendant, by Eckert & Peterson, its solicitors, to dissolve' the temporary injunction heretofore granted herein on the ground that said injunction was granted without previous notice of the time and place of the application therefor having been given to the defendant, and the Court having heard arguments of counsel and being fully advised in the premises, denies said motion, to which denial the defendant objects.”

We see no excuse for complainant’s failure to give notice as required by the statute, and are unable to agree with counsel, that the motion to dissolve in this case waived the notice.

For this reason, the order for injunction is reversed and remanded.

jReversed and remanded.

Wilson and Hebel, JJ., concur.


author: Mr. Presiding Justice Matchett

text:
    The People of the State of Illinois ex rel. Arthur Naylor, Appellee, v. Barney Cohen et al., Appellants.
    Gen. No, 36,968.

      Opinion filed February 5, 1934.
    Otto Keener, Attorney General, for appellants; George S. Lavin, Assistant Attorney General, of counsel.
    Prescott, Burroughs & Taylor, for appellee; Patrick B. Prescott, Jr., of counsel. '
   Mr. Presiding Justice Matchett

delivered the opinion of the court. .

This is an appeal by Barney Cohen, director of labor of the State of Illinois, and other State officials, respondents, from a judgment in favor of petitioner, Arthur Naylor, in an action of mandamus to restore him to his position under the civil service laws of the State.

The judgment directed that respondents recognize and restore Naylor as placement clerk in and under the classified civil service and that he be placed on the pay roll of the department of labor; that he be paid the salary appropriated by the G-eneral Assembly for that position, and that he should be kept upon the pay roll as “Placement Clerk” until retired or removed as provided by law.

The petition of relator" was filed January 6, 1933. A general demurrer by respondents was overruled and a special demurrer as to certain special items in the bill was sustained. The relator thereupon filed an amended petition, which respondents answered. Relator filed a replication to the answer, to which respondents rejoined with a similiter. The cause was heard by the court without a jury and judgment was entered in favor of petitioner, as heretofore stated.

There is .practically no dispute as to the facts disclosed by the record, which in brief are that on January 18, 1919, Naylor took an original entrance examination under the civil service law for the position of “department clerk, rank 2.” He passed, was placed on the eligible list and was certified to the Chicago free employment office in the department of labor effective May 7, 1919. June 21, 1919, he took an original entrance examination for the classification of “Placement Clerk” and qualified. The parties are agreed that he served as “Placement Clerk” until September 1, 1928, on which date by direction of Cohen, then, as now, director of labor, he began to perform the duties of an assistant superintendent of free employment. The department superintendent, Mr. Oberbart, testified:

“In his (petitioner’s) position as Placement Clerk he assumed additional duties for I had to have somebody else to stay if I was not there or something. We had to have somebody in charge when I was not there. Those additional duties were not anything more than he was performing as a Placement Clerk. He was acting in that capacity as Assistant Superintendent just td have that little more authority than the other fellow. He remained at the same desk, did the same work and performed the same duties. He did not make an application for this promotion. I am responsible for his promotion. . . .

“All that I gave him as head of that department was just additional duties to perform. It was a matter of $5 a month. ’ ’

At that time Cohen signed a paper designated “request for 30 day permit. ’ ’ It was directed to the State civil service commission and was in substance a request made pursuant to section 10, paragraph 4 of the State Civil Service Law, Cahill’s St. ch. 126a, ¶ 12, certifying that a necessity existed for the employment of a person to perform the duties of assistant corporation superintendent at a compensation of $150 a month in the labor department, Chicago free employment office; that the employment was of a temporary and transitory nature; that the work to be performed was assisting and would continue 30 days. Cohen also notified the civil service commission that the appointment had been made with authority of the commission. These requests were renewed and granted each month, so that from September 1,1928, until July 31,1932, the relator continued to perform services under this kind of temporary permit.

July 27, 1932, the general superintendent of the department, Charles E. Palmquist, telephoned the department superintendent Oberhart and directed that Naylor be discharged from service,"'‘and thereupon Oberhart, as he says, beckoned to Naylor and said, “I guess you are through, fired. I am telling you, you can go now if you want to. ’ ’ Naylor replied, according to Oberhart, “No, I will continue my time out and stay the rest of the time until the 31st of August.”

Oberhart says that he asked Palmquist what was the reason and Palmquist replied, “That is orders.” Naylor, when told he was fired, handed in his key, took his personal things from the office and left. He made an unsuccessful effort to see Cohen, went to his office, but without avail, and wrote a letter to him without receiving any response. He never received any notification that his services as “Placement Clerk” had been terminated. He says he had no information as to the cause of his discharge nor as to whether it was occasioned by political, racial or religious reasons. No complaint had ever been made as to the work performed by him; he was never called before the civil service commission or the department officials nor charged in any way with any negligence or any wrongdoing. He has never made any application to the commission to be reinstated or protected in a civil service status as placement clerk. The records of the civil service commission do not show that he was dismissed or removed by the commission. A card in the original records kept by the civil service commission simply shows “left the service 7-31-32.”

Paragraph 14 of Cahill’s St. ch. 126a (Smith-Hurd’s Ill. Rev. Stats. 1931, ch. 24½, par. 14, sec. 12) provides :

“No employee in the classified civil service of the State shall be removed, discharged or reduced in rank or pay by the appointing officer, except for just cause. The term ‘just cause’ as used in this section — shall mean any cause which is detrimental to the public service other than political, racial or religious.

“In every case of removal, discharge or reduction, a statement of the cause therefor shall be set forth in writing, which statement shall be in duplicate, and shall be signed by the appointing officer. One copy of said statement shall be delivered personally to the employee and the other copy of said statement shall be filed in the office of the Civil Service Commission, with a notation thereon showing proof of service of a copy of said statement upon the employee. Upon the filing of a copy of said statement with the notation aforesaid, in the office of the Civil Service Commission, the removal, discharge or reduction shall immediately become effective.

“Whenever ap. employee who has been removed, discharged or reduced shall file with the Civil Service Commission, within five days after his removal, discharge or reduction, a statement in writing, alleging that his removal, discharge or reduction was made for political, racial or religious causes, and that he believes that upon a hearing he will be able to establish such a fact, it shall be the duty of the Commission to order a hearing. "The time and place of such hearing .shall be fixed by the Commission and due notice thereof given to the appointing officer and the employee.

“Upon such hearing the Commission shall determine and decide whether or not the removal, discharge or reduction was made for political, racial or religious causes, and the Commission shall have no jurisdiction or authority to review, consider or determine any other question.”

The statute further provides in substance that if upon the hearing the commission finds that the removal, discharge or reduction was made for political, racial or religious causes, it shall enter an order reinstating the employee in his former position and directing the payment of all back salary due; that if the finding of the commission is otherwise, it shall enter an order to that effect and the removal, discharge or reduction shall be final.

Respondents contend that by petitioner’s repeated acceptances of 30-day appointments to the position of assistant superintendent, he is now precluded and estopped from being reinstated to the position of placement clerk; that he was at the time of his removal only a temporary appointee and therefore not entitled to any written notice of discharge as provided by the statute. They further contend that as he failed to file a petition with the civil service commission within five days after removal as required by statute, he has not exhausted his remedy under the statute by applying to the civil service commission for reinstatement, and that his failure to file this petition clearly indicates his personal knowledge that he was not in the classified civil service of the State of Illinois. Apparently, respondents base their defense entirely upon the theory that through the acceptance of the 30-day appointments relator Naylor had abandoned his status as a civil service employee and his position as placement clerk, and their case must stand or fall with the validity of that contention.

There is no claim of any formal resignation or abandonment, but it is argued that one arises by implication of law, and in support of the contention respondents cite and quote from 46 Corpus Juris 980, sec. 137. The quotation in the brief is deleted. When the full statement of the text is considered it does not sustain respondents’ contention. It is as follows:

“Abandonment is a species of .resignation, but differs from resignation in that resignation is a formal relinquishment, while abandonment is a voluntary relinquishment through nonuser. Although the intention may be inferred, an office cannot be abandoned without an intention by the officer to relinquish it, and such a relinquishment is not produced merely by a temporary nonuser or neglect of duty.”

Webster’s New International Dictionary defines the word “abandon” as follows:

“To relinquish,or give up with the intent of never again resuming or claiming one’s rights or interests in; to give up absolutely; to forsake entirely; to renounce utterly; to relinquish all connection with or concern in; to desert.”

We search this record in vain for facts from which such intention on the part of this petitioner might be implied. He did not relinquish or give up the duties of his place. On the contrary, the evidence shows that during all the time, he continued to perform those duties, as well as other duties cast upon him. Respondents in their brief refer to the 30-day permits as requests for leaves of absence, and say in substance that this record shows clearly that petitioner received continuous leave of absence for 30-day periods from August 1, 1928, to the date of his discharge July 31, 1932. The rules of the civil service commission are in evidence, and the subject of leave of absence is covered by section 2 of rule 7. It provides:

“Subject to the approval of the commission leave of absence without pay may, with right to return to former position, be granted by the appointing officers.”

The reasons for leave of absence are stated to be physical disability or some special reason “which, in the judgment of the Commission, is sufficient to constitute good reason for giving such leave.” The rule further provides that leave with right to return shall not be given for a period to exceed one year except when engaged in military or naval service in time of war; that the acceptance of another position or engaging in other employment by the employee while on leave of absence, “except with the knowledge and approval of the commission, ’ ’ shall be deemed a resignation. The rule further provides that failure of an employee to report at the expiration of leave of absence shall be sufficient to separate the employee from the service.

It is apparent, we think, within this rule, that these permits did not have the qualities of a leave of absence. Relator here did not ask to be relieved from the work he was doing nor for permission to be absent from it. On the contrary he continued to do the same work he had been doing, sat at the same desk and was subject to the same superior officers. In substance, the only change made was that he took on some additional duties in the same department. The transaction would seem to have been more like a transfer than a leave of absence. The same rule provides that transfers may be made from one position to another in the same grade and in the same or different departments by direction of the heads of the departments concerned and with the approval of the commission; that transfers also may be made from one position to another, not in the same grade, where the duties are closely connected and experience in one fits the employee for the other, but in each such case a statement in writing of the circumstances shall be submitted to the commission, showing why the transfer is desired and showing the approval of both department heads concerned.

As the work Naylor continued to perform was not in a different department, it could not be consistently defined as a transfer. As already stated, the sum and substance of it all was that with the consent and at the request of his superiors, and with the consent of the civil service commission, he was permitted to do additional work in the same department, for which he received additional compensation of $5 a month.

There is a letter in the record written by Naylor to the civil service commission, in which in substance he asked that the temporary promotion be made permanent and stated he was performing the same duties as assistant superintendent as he did in his former position of placement clerk, and that he was eligible to the permanent appointment and certification through civil service examination. Respondents argue an intention to abandon his position, from this letter. We find nothing in the letter from which it might be inferred that he had relinquished or abandoned the position of placement clerk. On the contrary he positively asserts in this letter his status under civil service. The theory of respondents, therefore, that relator lost his civil service standing by accepting 30-day permits to do additional work at the request of his superiors cannot be sustained.

Respondents say that relator was a temporary appointee. That may in one sense be true; he was that, but more than a temporary appointee. He was a permanent appointee with a civil service status, who, at the request of his superiors and with the consent of the civil service commission was temporarily doing additional work. It would be contrary to the spirit and purpose of the civil service law to hold that an employee who through all the years had continued to give faithful service should thereby subject himself to arbitrary discharge as having abandoned his work. It follows that if he was to be deprived of civil service status, written notice should have been given as provided by the statute, Cahill’s St. ch. 126a, ¶ 14. The facts are not unlike those which existed in McArdle v. City of Chicago, 172 Ill. App. 142, also 216 Ill. App. 343, where it was held that the assignment of additional duties to a cement tester in the employment of the city without change in the quality of the duties he was to perform could not operate so as to deprive him of the position he held under the civil service law.

Respondents cite People ex rel. Thornton v. Whealan, 264 Ill. App. 28. In that case the rules of the civil service commission of Cook county provided that where an employee requested a leave of absence without pay and the head of the department and the commission approved, the commission should authorize the head of the department to grant the same for a period of not to exceed 90 days, and that the commission might in its discretion grant renewals of such leave of absence without pay, provided the total period of continuous leave should not exceed one year. The record showed that the petitioner had been given a leave of absence on March 5, 1929, for a period of 90 days; that it was renewed bn June 3, 1929, September 1st, and November 30th for like periods of 90 days; that on March 6, 1930, relator’s name appeared on the pay roll for one day and he was then granted leave for 90 days beginning March 6, 1930; that this leave was renewed for 90 days beginning June 3, 1930, again for a like period beginning September 1, 1930, and for a like period beginning November 30, 1930; that his name appeared on the pay roll during the month of February and two days during March, 1931. The answer of respondents asserted that this practice was a mere subterfuge and device to defeat or nullify the rules of the civil service commission; that it was not a bona fide and actual return to service, and that such practice, if permitted, would work an injustice on other civil service employees who would be removed to make a place for the petitioner who cared so little for his position. The only answer of the petitioner was that these leaves of absence were legal, and a number of witnesses were produced in his behalf who testified that they, too, were civil service employees and had been given similar leaves of absence. We there said:

“Thornton did not testify on the hearing and it is obvious from this record that he merely returned for one day with no intention of taking up his work again at the institution, but only for the purpose of again going through the form of securing further leaves of absence.” The judgment of the circuit court awarding the writ was reversed. It seems unnecessary to point out the clear distinction between that case and this one.

Respondents also contend that petitioner is not entitled to mandamus because he did not exhaust his remedy under the statute by applying to the civil service commission for reinstatement. This question was raised by the respondents on special demurrer which was overruled as to that point, and they answered over, which would indicate that the question was waived. Illinois Cent. R. Co. v. People, 143 Ill. 434; People ex rel. Mason v. Board of Supervisors of Vermilion County, 171 Ill. App. 46. However, we think the contention is without merit. The evidence here shows without contradiction that petitioner had no reason to believe that his removal was for racial, religious or political causes. That being the case, the civil service commission would seem to be without jurisdiction to consider the matter. Respondents cite Osborne v. Bradford, 346 Ill. 464, where it was held in substance that a petitioner who complained was not entitled to mandamus because of his failure to so apply to the civil service commission. However, the petition in that case (unlike this) expressly averred that the cause for removal was political.

Respondents also contend that petitioner is guilty of laches. This contention is based on the theory that petitioner lost his status as a civil service employee when he began to perform the duties of assistant superintendent under the 30-day permit. What we have already said disposes of this contention. It might be added that this point was also decided against respondents upon special demurrer, and that they waived it by answering over. The contention is wholly without merit. Petitioner was out of civil service standing-only a little more than five months before he actually brought suit. Under such circumstances he is not guilty of laches. People ex rel. Qualey v. City of Chicago, 203 Ill. App. 191; People ex rel. Aeberly v. City of Chicago, 240 Ill. App. 208.

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

Affirmed.

O’Connor and McSurely, JJ., concur.


author: Mr. Justice McSurely

text:
    Provus Brothers Incorporated, Trading as Provus Bros. Company, Appellant, v. Axel K. Sjolander and Anna C. Sjolander, Appellees.
    Gen. No, 37,029.
    Opinion filed February 5, 1934.
    Samuel & Frank, for appellant.
    Ernest A. Eklund and Frederick J. Bertram, for appellees.
   Mr. Justice McSurely

delivered the opinion of the court.

Plaintiff brought an action in trover to recover $385, the alleged value of 10 Murphy Roller Beds which plaintiff claimed defendants maliciously converted to their own use. Upon the trial the court instructed the jury to find for the defendants and plaintiff appeals from the adverse judgment.

A number of reasons are presented in support of the judgment but we shall note only one. The beds were sold under conditional sales contracts and plaintiff invokes section 23 of the Uniform Sales Act, ch. 121a, Illinois Statutes (Cahill, ¶ 26), which provides that :

“Subject to the provisions of this Act, where goods are sold by a person who is not the owner thereof, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller’s authority to sell.” The defendants invoke the latter part of the statute, which provides that the owner of the goods by his conduct may be precluded from denying the seller’s authority to sell. In Dayton Scale Co. v. General Market House Co., 335 Ill. 342, the judgment of the lower court was reversed because the trial court had sustained an objection to certain evidence tending to show that the conduct of the owner precluded him from denying the seller’s authority to sell. In Drain v. LaGrange State Bank, 303 Ill. 330, it was held that this estoppel does not depend upon where the actual title is, but rests upon the act of the real owner, “which precludes him from disputing the existence of a title which he has caused or allowed to appear to be vested in another.” In harmony with this is Sherer-Gillett Co. v. Long, 318 Ill. 432.

What was the conduct of the plaintiff which precludes it from asserting any title or claim to the beds as against the defendants 1 In the fall of 1929 the Hurlburt Towers Building Corporation was engaged in erecting an apartment building, to be equipped with ice boxes, stoves, in-a-door beds and other like conveniences ; these in-a-door beds are so constructed that they may be folded up and be placed in a closet so as to be out of the way during the daytime; sometimes they are actually fastened .to the structure of the building and sometimes not; the Murphy Boiler beds in this case were of the latter type. George M. Calas was president of the building corporation; plaintiff was furnishing certain equipment for the building among which were the roller beds in question; they were sold under the usual form of conditional sales contract where the title is retained in the seller until the goods have been paid for. The first sales contract was in October, 1929, for four beds; the next was in November for three beds, and the third was in January, 1930, for three beds, making 10 beds in all. In all of these contracts George M. Calas is the buyer; each contract provided for payment in monthly instalments, which would complete the payments within three months of the date of each contract, respectively.

Plaintiff delivered these beds to the building corporation at the building, knowing that they were to be placed in the bed closets in the various apartments to be used by tenants of the building; it also knew that the beds were so used by tenants. Plaintiff also knew that the title to the building was not in Calas, to whom the beds were sold, but in Hurlburt Towers Building Corporation. After the beds were installed in the building plaintiff inspected and checked them. In November, 1929, plaintiff received payment of $200 for carpets used in the building and at this time executed what purports to be waivers of all claims on account of labor and materials furnished to the building.

Defendants acquired title to the real estate and building from the Hurlburt Towers Building Corporation by warranty deed dated March 20,1930, which was duly recorded March 22, 1930; at the same time they were given an affidavit by Calas saying, in substance, that there were no unpaid outstanding claims in connection with the building. Plaintiff had not only constructive notice of this sale but there was evidence tending to show that it had actual notice. Plaintiff did not assert any claim against defendants under the conditional sales contracts until about three years after Calas had defaulted upon his contracts to pay for the beds, although plaintiff sought to show that it had sent a letter at an earlier date informing defendants that the beds had not been paid for. Defendants deny having received these communications. During all this time defendants were leasing apartments with the beds to tenants.

In Haines v. Doss, 269 Ill. App. 179, the plaintiff permitted the purchaser of an automobile under a conditional sales contract to retain possession for 10 months after the last payment became due and for seven months after the last payment was made; the defendant, Doss, recovered a judgment against the purchaser and caused an execution to be levied upon the automobile; the court held that the plaintiff could not recover from Doss as he had not asserted his rights under the conditional sales contract within a reasonable time after the expiration of the time of final payment. In its opinion the court suggests an analogy between the lien of a chattel mortgage and that under a conditional sales contract; that the lien under the chattel mortgage will expire if the mortgagee does not act within a reasonable time after the mortgage becomes due. The court then said: “Conditional sales contracts are secret or private liens of which the public can generally have no knowledge. We can see no reason why the secret liens of conditional sales contracts should be endowed with greater potency than liens provided by chattel mortgages. To hold that the vendor in a conditional sales contract should be protected with a perpetual lien until the article sold is completely paid for would open the doors to unlimited fraudulent, transactions and might extend its protection to the vendor and also to the vendee in such a contract against other creditors of the vendee for at least the period provided by the statute of limitations. It is our opinion that a vendor should assert his rights under a conditional sales contract within a reasonable time after the expiration of the time of the final payment thereunder. ’ ’ The decision in that case is said to be in conflict with Silverthorne v. Chapman, 259 Ill. App. 289. In this latter case the creditor levied upon an automobile which was in the possession of a purchaser under a conditional sales contract. It was held that as the last instalment had not become due under the contract when the seizure of the automobile was made, it was not incumbent upon the owner to exercise any rights until the full maturity of the debt. In American Type Founders Co. v. Metropolitan Credit & Discount Corp., 271 Ill. App. 380, the owner permitted the buyer under a conditional sales contract to retain possession of the property about four months after the indebtedness matured ; the buyer then made a chattel mortgage on the property. It was held that the evidence did not show an unreasonable delay on the part of the owner such as would preclude him from maintaining his claim under his contract.

Courts do not look with favor upon secret liens, and we are inclined to be in accord with what was said by the court in Haines v. Doss, supra.

Certainly in the instant case to wait for three years before plaintiff asserted its claim for the beds, while permitting the defendants during this time to believe that they had bought them with the building and owned them, and to exercise the rights of ownership in renting them in apartments, was an unreasonable delay which amounts to conduct precluding plaintiff’s right.

Moreover, when plaintiff delivered the beds to the building corporation for use in the building, while its secret conditional sales contracts were with Calas, it enabled the building corporation to commit a fraud upon the defendants, who bought the building with the equipment free from any and all claims. The building corporation was not a party to the sales contracts but it was given possession of the beds and was permitted to hold itself out as the owner of them. A tenant of the building corporation using one of the beds could not be held answerable for such use to the plaintiff. Neither can the defendants, who bought from the building corporation, be held answerable under a secret contract made with another party. Gordon Motor Finance Co. v. Aetna Acceptance Co., 261 Ill. App. 536, is applicable to the instant case. There the vendor sold to one Monroe an automobile under a conditional sales contract; Monroe delivered possession to the company of which he was president, which was engaged in selling automobiles; the vendor knew this. It was held that in so doing the vendor gave the buyer an opportunity to perpetrate a fraud upon an innocent purchaser; that section 23 of the Uniform Sales Act, Cahill’s St. ch. 121a, ¶ 26, was intended to protect vendors under conditional sales contracts who could not reasonably foresee or anticipate a resale of chattels before they were fully paid for, and who, through no act of theirs, could make possible the perpetration of a fraud on an imiocent purchaser. In the instant case the acts which we have referred to made possible the perpetration of a fraud upon the defendants. A somewhat similar state of facts was involved in Frick v. Frigidaire Corp., 119 Cal. App. 707, 7 Pac. (2d) 321, where the holding was against the vendor “who sells property on a conditional sales contract knowing that it is to become a part and parcel of a building belonging to a third person who has no notice of a conditional sales agreement.”

For the reasons above indicated, we hold that the plaintiff is precluded from asserting any claim against the defendants under its conditional sales contracts, and the judgment is therefore affirmed.

Affirmed.

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


text:
    Central Republic Trust Company (Formerly Named Central Republic Bank and Trust Company), Trustee, Appellant, v. 33 South Wabash Avenue Building Corporation, Defendant. John Griffiths Building Corporation, Intervening Petitioner, Appellee.
    Gen. No. 37,079.

      Opinion filed February 5, 1934.
    Poppenhusen, Johnston, Thompson & Cole, for appellant; James W. Hyde and Frederick Mayer, of counsel.
    Campbell, Clithero & Fischer, for appellee.
   Mr. Justice McSurely

delivered the opinion of the court.

The Central Republic Trust Company, hereafter called the complainant, appeals from an order that the receiver in a foreclosure proceeding pay taxes on the real estate involved.

In 1924, John Griffiths became the lessor and Von Lengerlce & Antoine the lessee in a 99-year lease of the real estate known as 29-35 South Wabash avenue, Chicago; subsequently the interest of the lessor became vested in the John Griffiths Building Corporation, hereafter called intervening petitioner, and the interest of the lessee became vested in 33 South Wabash Ave. Building Corporation, hereafter called defendant. February 10, 1928, the defendant executed its trust deed to The Bank of America, succeeded by Central Republic Trust Company, complainant, conveying the leasehold to secure an issue of bonds amounting to $280,000.

August 31, 1931, complainant filed its bill to foreclose this trust deed. The bill alleged that the trust deed provided that the mortgagor (the lessee) would pay all ground rents under the lease and all taxes and assessments levied and assessed against the premises, and also that a receiver might be appointed in case of foreclosure to collect the rents, issues and profits, “and said receiver should have the power out of the rents and profits coming into his hands ... to pay all rents, taxes and special assessments”; also that the 99-year lease provided that the lessee should pay all taxes and assessments of every kind and nature charged or imposed upon the demised premises; the bill also alleged that unless a receiver was at once appointed to collect the rents, to be applied upon the payment of taxes and upon the ground rental under the 99-year lease, the lease will be canceled and annulled and complainant and the bondholders represented by it would cease to have any lien thereon.

September 2, 1931, on motion of complainant, the. Chicago Title and Trust Company was appointed receiver with full power to take possession of the leasehold estate, premises and property, collect and receive all rents therefrom, to pay all rentals and other charges due under the lease “and to pay all taxes which have become or may become due and payable upon or against said property” and all necessary and ordinary running expenses. The receiver took possession and subsequently paid certain instalments of the ground rental, also on December 4, 1931, paid $16,050.50 on account of the 1929 taxes.

John Griffiths Building Corporation (the intervening petitioner herein) had filed in the circuit court of Cook county its bill to enforce the covenants of its 99-year lease and on July 29, 1932, an order was entered in the foreclosure suit for the extension of the receivership to the circuit court proceedings.

October 14, 1932, The People of the State of Illinois filed its petition in the foreclosure suit, alleging that there were general taxes due on the premises involved for the years 1928,1929 and 1930, and that these taxes were a prior and first lien upon the real estate and ‘ a paramount claim” against the income and proceeds thereof, and asking that the receiver be directed to pay these taxes. Complainant filed an answer to this and a hearing was had upon the petition and the answer; briefs were submitted to the court by various parties, including the intervening petitioner; January 19, 1933, the court found that the general taxes were not a lien upon the rents and dismissed the petition of The People.

January 26, 1933, the receiver filed a petition in which it recited the unpaid taxes and that it had funds in its hands and asked for instructions with reference to the payment of taxes; on the same date the lessor, the intervening petitioner, filed its petition setting forth, among other matters, the obligation of the lessee under the 99-year lease to pay the taxes, and asked the court to direct the receiver to pay the unpaid instalments of the ground rent and the general taxes.

May 11, 1933, the receiver filed a second petition, referring to its previous petition of January 26th, upon which no order had been entered, and showing that the taxes were still unpaid and again asked the court’s instructions with respect to the application of the funds in its hands to the payment of taxes; answers were filed by complainant to these petitions.

June 3, 1933, after hearing, the court entered an order that the receiver pay “out of the first moneys which have come into its hands as receiver” such amounts as will make a payment of 75 per cent on the taxes for the years 1928, 1929 and 1930; This appeal by the complainant is from this order..

Complainant first says that the order of January 19, 1933, dismissing the petition of The People is res judicata and is binding and conclusive upon the instant intervening petitioner. We do not so conclude. To apply the doctrine of res judicata there must be identity of parties, subject matter and the cause of action. People v. Louisville & Nashville R. Co., 350 Ill. 274. The only parties to the petition filed by The People were The People and the complainant. The fact that a brief was filed by the present intervening petitioner upon the hearing of the former matter did not make the present intervening petitioner a party to that petition.

Moreover, in the petition on behalf of The People a blanket paramount lien of taxes was asserted as a matter of law on all rents, issues and profits. That was the only issue presented as the ground for an order directing the receiver to pay taxes. The court found against this assertion and the prayer of the petition, logically, was denied. The present intervening petitioner asserts a contractual right under the provisions of the 99-year lease to have not only the taxes but also the ground rent paid out of the funds in the hands of the receiver. The order dismissing the petition of The People is not binding upon the present intervening petitioner. Pillsbury v. Early, 324 Ill. 562.

The order of dismissal of the petition of The People made no disposition of the funds in the hands of the receiver, and, while the court may have been of the opinion that the State did not have a paramount blanket lien upon the rents, it could dispose of the funds as equity might require.

When the receiver accepted the appointment it was put to an election whether or not it should adopt the provisions of the lease. After the lapse of a reasonable time of occupancy by a receiver he will be held by implication to have accepted the lease and become bound by its covenants. Spencer v. World’s Columbian Exposition, 163 Ill. 117; DeWolf v. Royal Trust Co., 173 Ill. 435; Link Belt Machinery Co. v. Hughes, 174 Ill. 155. Here the receiver took possession in September, 1931, and has continued in such possession ever since; it paid the ground rent in arrears and also the current rent for nine months; it also made payment on account of taxes in accordance with the terms of the lease, as by the order of its appointment it was authorized to do; it was also authorized to continue to pay the rent if it had funds on hand, without further order of court. The bill of complaint is predicated upon the theory that the receiver must make these payments in order to preserve the leasehold estate, without which the security conveyed by the trust deed would be lost. All considerations involved support the order of June 3, 1933, that the receiver should make payment on account of the taxes.

Complainant says that it makes no claim to any funds which came into the hands of the receiver after July 29,1932, the date on which the receivership in the foreclosure proceeding was extended to the separate suit brought by the lessor. The argument seems to be that complainant as a junior mortgagee, having filed its bill to foreclose, was entitled to the rents until the receivership was extended. We think this misconceives the position of the parties. The intervening petitioner is not, a senior mortgagee; it is the owner of the fee which is under a lease, which the receiver has affirmed and adopted. One of the obligations of the lessee is to pay taxes, and the receiver is bound by this covenant; to preserve the security and to secure to the bondholders an interest of any value, the obligations of the lease must be met. Failure to pay the taxes is a sufficient ground for cancellation of the lease by the intervening petitioner.

Complainant cannot assert any superior diligence which would entitle it to the fund in question. By its bill it asserted that the rents should first be applied to the payment of taxes and next to the rentals, and that anything over and above these obligations should be applied to the indebtedness upon the bonds which it represented. The order appealed from was in accordance with the prayer of its bill so that its diligence was consistent and in line with the order about which it now complains.

The intervening petitioner was not guilty of laches in failing to collect the rentals promptly. A short time after the receiver was appointed all of the accumulated ground rent with interest had been paid and also a substantial amount on account of taxes. Before a second instalment of ground rent became due, and no more payment on account of taxes having been made, the intervening petitioner filed its bill to enforce the covenants of the lease.

In the recent case of Verst v. Foreman-State Trust & Savings Bank, 270 Ill. App. 484, we held that the taxes should be paid by the receiver as part of the costs and expense of receivership. In many respects the facts in that case are similar to those now under consideration. We there said: “It will thus be seen that the receiver was appointed for the specific purpose, among others, of paying the taxes out of any rents and profits coming to his hands. The order extending the receivership to the first mortgage foreclosure proceedings shows that the receivership was not for the sole benefit of the second mortgagee. This being so, it was proper for the receiver under the order of court to apply the funds in his hands to the payment of taxes. ’ ’

Other considerations might be suggested in support of the order of the chancellor. The circumstances presented justified the order of June 3, 1933, and it is affirmed.

Affirmed.

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


author: Mr. Justice MgSurely

text:
    The People of the State of Illinois ex rel. William H. Luthardt, Appellant, v. The Retirement Board of the Policemen’s Annuity and Benefit Fund of Chicago et al., Appellees.
    Gen. No. 37,109.

      Opinion filed February 5, 1934.
    Rehearing denied February 19, 1934.
    Cressy, Hoover & Clements, for appellant; Morton S. Cressy and Preston Clark, of counsel.
    William H. Sexton, Corporation Counsel, and George F. Mulligan, Assistant Corporation Counsel, for appellees; George F. Mulligan, Assistant Corporation Counsel, of counsel.
   Mr. Justice MgSurely

delivered the opinion of the court.

Relator, William H. Luthardt, a police officer of Chicago, applied to the Retirement Board of the Policemen’s Annuity and Benefit Fund of the City of Chicago for the payment of a pension covering a period when he was retired from service; his application was denied; he applied for a writ of certiorari in the circuit court, asking that the order of the Retirement Board be vacated and that it be directed to allow him this pension; the writ was issued, and after hearing it was ordered that the writ of certiorari be quashed and the petition dismissed. The relator appeals from this order.

June 30, 1915, Luthardt applied for and received a pension as a retired police officer; he continued to draw this up to September 1, 1930, at which date he was appointed an assistant corporation counsel of Chicago; he accepted the appointment and performed his duties as such assistant from September 1, 1930, until July 1, 1932; during this period his pension was suspended by the Eetirement Board. While he was an assistant corporation counsel he received from the city a salary of $500 a month; at the termination of this employment his pension was restored. In addition to this salary he now claims the right to collect the pension covering the same period that he was employed in the corporation counsel’s office. This pension at $75 a month, for 22 months, amounts to $1,650.

The respondents say that Luthardt is not entitled to this pension by reason of the statute passed June 29, 1921, and also because he has signed a waiver which estops him from claiming the pension payments for the period covered by the waiver.

The provision of the statute is as follows:

“If any policeman who shall be a pensioner of any police pension fund in operation, by authority of law, in such city at the time this Act shall come in force and effect therein shall re-enter the service on or after the date upon which this Act shall come in force and effect in such city, payment of the annuity or pension granted to such policeman from such police pension fund shall be suspended while such policeman shall be in the service and shall be resumed when such policeman shall resign or be discharged from the service.” Ch. 24, ¶ 914(35), sec. 35, Illinois Statutes (Cahill) 1931.

Counsel for the respondents argue that the provision that the pension shall be suspended “while such policeman shall be in the service” should be.construed as meaning in the public service, including service in the office of the corporation counsel. The relator contends that these words mean in the service as a policeman. Without developing the point, we are inclined to hold that the latter construction is the proper one.

The respondents stand on much firmer ground when they rely upon the waiver signed by Luthardt. June 10,1931, the city council passed an order that no person in the service of the city who was drawing a pension should at the same time draw compensation from the city by virtue of employment in any of the departments of the city, and that no such person should be so employed unless such pensioner should execute and file a waiver of his pension payments during the period of his employment by the city.

Pursuant to this order, Luthardt on July 6, 1931, signed a waiver which recites that, in view of his appointment in the corporation counsel’s office, he waived payment of his pension during the time he received a salary from the city. The relator argues that this waiver was invalid because it was signed under compulsion and duress. There was no duress in the matter. Luthardt was not compelled to sign the waiver. There was simply put up to him a choice as to which of two sources of income from the city he would prefer to receive, and he evidently preferred to retain his salary of $500 a month as assistant corporation counsel. Both his pension and salary were collected from the taxpayers. It was unreasonable for him to receive both. He very wisely chose to accept the larger amount and is estopped to claim the smaller sum also. Luthardt must have understood this, and in executing the waiver exercised his free will. When a waiver or release is understandingly executed it is legally binding and furnishes a complete bar to action. Woodbury v. United States Casualty Co., 284 Ill. 227; Papke v. Hammond Co., 192 Ill. 631.

Counsel for relator argue that as the waiver was not signed until July 6, 1931, it can -be valid only as to the pension from that date forward and cannot relate back to the date of his appointment as assistant corporation counsel. The waiver by its terms waives payment of pension during the time the relator receives a salary from the City of Chicago. This covers the entire period.

The order of the city council did not amend any act of the legislature. The Cities and Villages Act gave to the city council the power to regulate the employees of cities. Ch. 24, ¶ 65(71), Illinois Statutes (Cahill) 1929. The order of June 10, 1931, which was executive in character, intended to govern the several departments and the appropriations of the compensation to the employees of those departments. Such an order is valid. Anderson v. Village of Berwyn, 135 Ill. App. 8.

We are in accord with the argument of counsel for the respondents, that the payment of the pension to the relator during the period of his employment in the corporation counsel’s office of the city is against public policy. The public policy of a State may be found in its constitution, statutes, judicial decisions and constant practice of the government officials. Zeigler v. Illinois Trust & Savings Bank, 245 Ill. 180. Our constitution has no provisions relating to pensions, as, at the time of its adoption in 1870, pension funds for public officers did not exist.

The statute above quoted indicates the public policy. It forbids the payment of a pension to a policeman while at the same time he receives a salary as policeman. This policy of the State is also shown in sections 34 and 35 of the statute relating to Firemen’s Pension Fund, where it is provided for the suspension of pension funds of firemen who re-enter the service. Ch. 24, ¶¶ 941(34), 941(35), Illinois Statutes (Cahill) 1931.

We are told that it has been the uniform practice of officials supervising pension funds to confine the payment of pensions solely to persons who are retired, and not to pay a pension to one who has re-entered the public service. Pensions are universally construed as rewards for long, continued service, paid upon retirement from such service. All pensions of public employees are paid upon their retirement. To permit a retired public servant to receive a pension and reenter the public service, collecting both his salary and his pension, is contrary to the spirit and purpose of all pension legislation.

For the reasons indicated the judgment order of the circuit court was proper and it is affirmed.

Affirmed.

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


author: Mr. Justice O’Connor

text:
    City of Chicago, in Trust for Use of Schools v. Joseph B. McDonough, County Treasurer, Appellee. Chicago Title and Trust Company, Appellant.
    Gen. No. 36,641.

      Opinion filed February 5, 1934.
    Enoch J. Price, for appellant.
    John A. Swanson, State’s Attorney, for appellee; Edgar B. Elder, Assistant State’s Attorney, of counsel.
   Mr. Justice O’Connor

delivered the opinion of the court.

February 8, 1929, the City of Chicago, in trust for the use of schools, filed its petition to condemn 48 lots for a school site. November 1, 1930, judgment of condemnation was entered on the verdict of a jury, the award being fixed at $49,530.25, and it was ordered that this be paid within 90 days to the county treasurer of Cook county for the benefit of the owner or owners of the property. January 12, 1931, the money was paid to the county treasurer and afterward was paid out by him except $2,323.94, which he retained, claiming he had a right to apply it to the payment of general taxes levied on the property condemned for the years 1929 and 1930, and that he also was entitled to retain $265.15 to pay the fees of the county clerk of Cook county for canceling certain tax sales certificates on the property, and also the sum of $5 for costs of recording quitclaim deeds executed and delivered by parties claiming some interest in the premises.

January 19, 1932, the defendant, Chicago Title and Trust Company as trustee, the owner of the premises prior to the condemnation proceedings, by leave of court filed its petition praying that an order be entered requiring the county treasurer to turn over the $2,323.94 to it. The county treasurer answered the petition, there was a hearing before the court without a jury, and an order entered ordering the county treasurer to pay the balance in his hands to the Chicago Title and Trust Co. as trustee, after deducting the amount required to pay the taxes for 1929 and 1930, the $265.15 and the $5, from which order the Chicago Title and Trust Co., as trustee, prosecuted an appeal to the Supreme Court where, upon consideration, the cause was transferred to this court. City of Chicago v. McDonough, 351 Ill. 200.

The record discloses that the 48 lots in question were vacant and unoccupied, except three of them which were rented to the board of education, at a rental of $30 a month for the erection of three portable school buildings, and this rent was paid until the money was deposited with the county treasurer January 12, 1931. The Chicago Title and Trust Co., trustee, who will be referred to as the petitioner, contends that as owner of the lots condemned it was not liable for the taxes for 1929 and 1930, because these taxes became a lien on the property on April 1,1929' and 1930, respectively, which was after the petition to condemn the property was filed, viz., February 8, 1929, and that in the condemnation proceeding the land is regarded as taken for public use at the time of filing the petition, and the compensation is measured by the value of the land at that time. City of Chicago v. Collin, 302 Ill. 270; Public Service Co. of Northern Illinois v. Leatherbee, 311 Ill. 505.

In the Collin case a petition was filed to condemn lots for school purposes and praying the court to cause to be ascertained the compensation to be paid for the property. After judgment was entered and the money paid to the county treasurer, a controversy arose as to who was entitled to the money, and in discussing the nature of such a proceeding the court said (p. 274): “In this case the nature of the proceeding and the provisions of the act concerning eminent domain must be considered. In ordinary litigation the rights of parties are determined when the judgment is entered, but there are material differences in case of taking private property for public use by condemnation proceedings. It is a condition to the exercise of the right that the authorities seeking to appropriate the property shall first attempt to agree with the owner on the compensation, and it is only upon a failure to agree that a petition may be filed. If there had been such agreement in this case the owner of the property would be entitled to the full compensation. The lien of the State for taxes is paramount and superior to any other lien or any property right, . . . The City of Chicago and the owners of the property not being able to agree upon the amount of compensation to be paid, the City filed its petition to have the amount determined. In law the land was regarded as taken for the public use at that time, and the compensation was measured by the value of the land on the day the petition was filed. ... A petitioner may dismiss the petition, and in case of such dismissal or failure to make payment must pay costs, expenses and attorney’s fees, but if payment is made, as it was here, the money represents the value of the land when the petition was filed and liens or claims are transferred to the fund. ’ ’

In the instant case the petition praying that the just compensation for the lots be ascertained was filed February 8, 1929. The value of the land was fixed as of that date and all liens that were against the lots at that time were transferred to the fund when paid to the county collector. It is conceded that all of such liens have been properly paid. But the question for decision is whether the general taxes, which became a lien on the lots after the filing of the petition, should be borne by the owner of the lots. It is true that the right to enter and take possession of the lots is conditioned upon the payment of the compensation awarded. On failure to pay, the proceeding is, under law, considered as abandoned. Forest Preserve Dist, v. Kean, 303 Ill. 293; City of Winchester v. Ring, 315 Ill. 358. In this proceeding the title which vests in the City for the use of schools is the title as it existed when the petition, to have the compensation fixed for the lots, was filed. And the compensation awarded is to be paid to those persons who had an interest in the premises as of the same date.

In Sherwin v. Wiggelsworth, 129 Mass. 64, which was a proceeding brought by the United States to condemn property for a post office site in Boston, it was held that while the title to the property did not vest in the United States until payment of the award, yet the title taken was that which existed when the petition for condemnation of the land was filed, and that the owner of the land was not chargeable with taxes assessed against it while the proceedings were pending. In that case a petition was filed April 16, 1873, on behalf of the United States for the condemnation of land for a post office site. Final judgment was not rendered until August 16, 1876, when the award was paid. Taxes were assessed on this land by the City of Boston May 1, 1875, and May 1, 1876, and the question arose whether the owner of the land at the time the petition was filed should pay the taxes for these two years, and it was held that he was not liable. The court there, speaking by Cray, C. J., said: “The title in land taken for the post office in Boston does not vest in the United States until the assessment and payment of the damages thereby occasioned to the owners of the land. But the title which is purchased by and vests in the United States is the title as it existed when the petition for the valuation of the land was filed. . . . The time necessary to complete the judicial proceedings does not change the subject or the measure of compensation, or the parties who are entitled to it. In theory of law, although the compensation cannot be paid until it has been estimated, nor the title pass until the compensation is paid, yet both the compensation paid and the title acquired have relation back to the inception of the proceedings for the condemnation of the land to the public use. It has already been adjudged that the measure of damages to be awarded to the owners is the value of the land at that date, and interest thereon. . . . And it would be most unjust to charge the owners of the land with . . . taxes imposed after it has been designated and set apart for the public use, and while they cannot enjoy, nor improve it, nor obtain compensation for any increase in its value. ’ ’

In the instant case the petition having been filed February 8,1929, the compensation for the lots having been fixed as of that date, the parties entitled to the compensation being* those who were interested in it at that time, and the liens on the property on that date having been transferred to the funds when paid to the county treasurer, we think any liens which attached to the land after the filing of the petition must be borne by the City of Chicago for'the use of schools. Whether the City will be required to pay the taxes in question, or whether the property will be considered as exempt by virtue of section 3 of article 9 of the Constitution of 1870, and section 2, eh. 120 of Cahill’s Revised Statutes, obviously is not before us.

But counsel for the county treasurer in the instant case contends that the question before us has been decided by our Supreme Court in People v. Price, 282 Ill. 519. While some language is used in the opinion that tends to sustain the contention, yet we are of the opinion that the question before us was not decided. In that case an appeal was taken from a judgment and Order of sale for failure to pay taxes on certain lots located in Chicago, which had a depth of 71 feet, 68 feet of which were taken in eminent domain proceedings to widen 12th street. The taxes.were levied on the whole of the lots after the petition in the condemnation proceeding was filed. Part of the cost of the improvement was to be paid by special assessment and the proceedings were under the Special Assessment Act of 1897. The taxes were levied against the entire lots, 68 feet of which it will be noted were to be taken for the widening of the street. It was held that the law required taxes to be assessed against an entire lot and not part of it, and that the remedy to cure this wrong was in the legislative branch and not in the courts. All of the lots were ordered sold, including the 68 feet, and the judgment was affirmed. The court there said (p. 522): “The judgment of the county court will be affirmed as to these taxes on this property, including that taken by the eminent domain proceedings.” In that case Price was the owner of the property at the time of the eminent domain proceeding and was willing to pay the proper proportion of the taxes assessed, but objected to paying it on that part of the property condemned. No contention was there made that he was not liable for that portion of the taxes levied against the part of the lots which was not taken by condemnation. 'The court there said (p. 521): ‘ ‘ The tax levy complained of was against all the property, including that condemned as well as the strip not condemned. Appellants assert that .they are willing to pay the proper proportion of the taxes assessed on the property not taken but should not be required to pay on the property taken. . . .

“Appellants contend that the petition for condemnation having been filed long before this tax was levied, which proceeding destroyed, in a large measure, the rental value of the property, a tax upon the basis of the original frontage or amount of property should not be collected; that the value assessed for taking property is always required to relate back to the time of filing the petition. . . . They argue that even though the owner is not deprived of the legal title until the money is actually paid, he should not, in equity, be required to pay taxes on the property under circumstances such as here attempted to be shown when the rental value of the property has been greatly injured by the filing of the condemnation proceedings. The rule is that the title to property condemned does not vest until damages awarded by the judgment are paid.” The court then said that the “tax lien is not divested by condemnation proceedings.” What the court there actually decided was that the lien of the taxes which attached to the property after the petition for condemnation was filed was not divested by the condemnation proceeding, which is obviously true; but the court did not hold that such taxes should be paid out of the moneys awarded in the condemnation proceeding. That question was not decided because it was in no way involved.

In the instant case we hold that the general taxes for 1929 and 1930, which became a lien after the petition for condemnation was filed, are not payable out of the compensation awarded.

It is also the law that the filing of a petition to condemn property for public use is in one sense the taking of the property at the time of the filing of the petition, but possession of the property cannot be taken until the compensation is ascertained and paid. South Park Com’rs v. Dunlevy, 91 Ill. 49; Sanitary Dist. v. Chapin, 226 Ill. 499; City of Winchester v. Ring, 315 Ill. 358. In the Dunlevy ease the court held that in a proceeding to condemn land for public use, it would be a trespass to take possession of the property before the damages were ascertained and paid; that the owner has the right to use the land until the damages are paid and therefore is not entitled to interest on the value of the land from the commencement of the suit to the trial. In the instant case the compensation was, under the law, fixed as of the date of the filing of the petition. No interest was allowable on the amount of the award, but the owner of the land was entitled to the use of it until the judgment was paid. • In these circumstances he has a right to the rents collected for the three lots- above mentioned.

We are also of opinion that the county collector was not authorized to retain the $265.15, the cost for canceling the tax sales certificates, nor the $5 for the recording of quitclaim deeds.

The judgment of condemnation gave good title to the City for the use of schools and it was unnecessary, when all liens including taxes were paid, to have the tax sales certificates canceled by the county clerk; the owner of the property should not be put to the expense of paying for the cancellation of these certificates. Nor do we think a quitclaim to the property from the owner was required to perfect the City’s title to the land. But if such deed was obtained from the owner, we think the cost should be borne by the city and not by him.

The order of the circuit court of Cook county is reversed and the matter remanded with directions to the county treasurer to pay the entire amount in his hands to the owner of the property, the Chicago Title and Trust Company, trustee.

jReversed, and remanded with directions.

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


text:
    The National Bank of the Republic of Chicago, Appellant, v. Uptown State Bank of Chicago, Appellee.
    Gen. No. 37,023.
    Opinion filed February 5, 1934.
    Rehearing denied February 19, 1934.
    Lord, Lloyd & Bissell, for appellant; John S. Lord, A. C. Wetterstorm and Graydon H. Ellis, of counsel.
    Ernest A. Eklund, for appellee; Eugene P. Kealy and Fay Warren Johnson, of counsel.
   Mr. Justice O’Connor

delivered the opinion of the court.

Plaintiff brought an action of trover claiming that the defendant had converted to its own use four bonds of $1,000 each, made by the Bethlehem Steel Corporation, which belonged to plaintiff. The case was tried before the court without a jury. At the conclusion of plaintiff’s evidence the defendant rested, and there was a finding and judgment in defendant’s favor, and plaintiff appeals.

Plaintiff’s theory of the case was that it owned five bonds of $1,000 each, issued by the Bethlehem Steel Corporation, which were stolen from it, and that four of the bonds were in the possession of the defendant. Defendant’s theory was that the bonds were negotiable and that it was a bona fide holder in due course. The court sustained the defendant’s contention and judgment was entered accordingly.

The record discloses that on March 21, 1930, the Cosmopolitan State Bank of Chicago delivered to plaintiff five bonds of $1,000 each, made by the Bethlehem Steel Corporation, and received credit on that day of $5,250, the value of the bonds. On the same day they were stolen from the plaintiff bank, but this fact was not discovered until some days later when the Cosmopolitan Bank found that it had not been credited by plaintiff for the bonds. April 4, 1930, after plaintiff had learned the bonds were stolen from it, there is evidence to the effect that the Protective Department of the Illinois Bankers’ Association, to which a number of banks belonged, including plaintiff and defendant banks, mailed out a typewritten bulletin, the third item of which stated that the five Bethlehem Steel bonds were reported to have been stolen, and to communicate with the Bankers’ Association in case anyone sought to dispose of them.

June 23, 1930, George L. Farry, who was president and owned most of the stock of the Fidelity Motors Company, a corporation, and had for many years done business with defendant bank, applied for a loan for the Motors Company from defendant bank, but his collateral was not acceptable and the loan was not. made at that time. Afterward, June 30th, he again took the matter up with the cashier of defendant bank, who refused to make the loan without collateral; thereupon Farry went downstairs to the safety deposit vaults in defendant’s bank building, got the four bonds in question out of his box and pledged them as collateral to his personal note for $4,000, due 30 days after date. Upon the execution of the note defendant bank executed its cashier’s check payable to Farry for $3,980, being the proceeds of the note; Farry indorsed the check personally and also indorsed it in the name of the Fidelity Motors Company, of which he was president, and the money was deposited in the defendant bank, to the credit of the Fidelity Motors Company. Shortly thereafter, on the same day, defendant bank learned that the bonds had been called for payment at 105, notified Farry of this fact, and by agreement with him defendant sent the bonds for collection to the Guaranty Trust Company of New York City. Upon receipt of the bonds by the Guaranty Trust Company it, on July 2nd, notified defendant that the bonds had been stolen and returned them to defendant. Defendant, upon being notified by the New York Bank that the bonds had been stolen, advised Farry of this fact, and July 3rd it made entries on its books debiting the Fidelity Motors Company $3,980, and crediting Farry’s account $4,000, but the note was not canceled. A few days thereafter plaintiff notified the defendant that the bonds had been stolen from it.

July 7th, Farry objected to the fact that the money had been charged against the Fidelity Motors Company, and after some conferences, at which counsel was present, the Motors Company was again credited with the $3,980. Plaintiff made demands on defendant for the bonds, which were refused, defendant claiming that it was the bona fide holder for value in due course. March 7, 1931, the Bethlehem Steel Corporation paid the defendant the amount of the bonds at the rate of 105 or a total of $4,200, and apparently the bonds were surrendered by defendant to the Bethlehem Steel Corporation.

Plaintiff contends that the judgment was wrong and should be reversed because (1) the evidence fails to show that the bonds were negotiable within the meaning of the Negotiable Instruments Law; (2) that several months before the defendant made the $4,000 loan to Farry or to the Fidelity Motors Company and obtained the four bonds in question as collateral, defendant was advised by¡ the Illinois Bankers’ Association through the mail that the bonds had been stolen and therefore defendant was not a bona fide holder in full; and (3) that since the defendant had not paid out the proceeds of the $4,000 loan and had not disposed of the bonds before it knew they were stolen, defendant was not a holder in due course.

We think the first and second contentions made by plaintiff cannot be sustained. A reading of the record discloses the fact that the case was tried on the theory that the bonds were negotiable within the meaning of the Negotiable Instruments Law and it is elementary that plaintiff cannot shift his position in a court of review. The bonds were not in evidence, so their provisions cannot be ascertained, but the evidence shows they were held by the Cosmopolitan Bank; that they were delivered by it to the plaintiff bank and later accepted by defendant bank as collateral for the loan; they were payable to bearer and there is other evidence all to the effect that they were considered by all parties as negotiable in every sense. And, as stated, there was no suggestion on the trial that the notes were anything but negotiable instruments. (2) There' is evidence in the record that the Illinois Bankers’ Association mailed to its members, including plaintiff and defendant, a typewritten bulletin under date of April 4, 1930, the third item of which stated that it had been reported that the bonds in question had been stolen. But the evidence does not show specifically that a copy was mailed to defendant. But even if the evidence might be held sufficient on this point, defendant’s cashier, who had the transaction with Farry, testified that he did not know anything about the bulletin and had received no information that the bonds were stolen. Obviously he would not have taken the bonds as collateral if he had been advised that they had been stolen. It is clear that defendant, through its cashier, acted in good faith in accepting the bonds as collateral. This is all the law requires. Bradwell v. Pryor, 221 Ill. 602; Chicago Auto Sales v. Peters, 221 Ill. App. 363; Chicago Bank of Commerce v. Kraft, 269 Ill. App. 295; secs. 52 and 56, ch. 98, Cahill’s 1933 Statutes, ¶¶ 72, 76.

(3) Was the defendant a holder of the bonds in due course, it having received actual notice that the bonds were stolen while it had the bonds in its possession and before it had paid out any of the proceeds of the loan? We think it was not. Sec. 54, ch. 98, Cahill’s 1933 Statutes; First State Bank & Trust Co. v. First Nat. Bank of Canton, 314 Ill. 269.

Section 54 of our negotiable Instruments Act, provides, “Where the transferee receives notice of any infirmity in the instrument or defect in the title of the person negotiating the same before he has paid the full amount agreed to be paid therefor, he will be deemed a holder in due course only to the extent of the amount theretofore paid by him.”

In the First Nat. Bank case, supra, it was held that where a bank has paid a portion of a forged check and opened an account with the payee for the balance, it is not, after notice that the check was forged, a holder in due course as to the amount of the deposit. In that case a person opened an account by presenting a check for more than $800. The excess amount of the check over $500 was paid to the payee and he was credited with $500 as a depositor. It turned out that the name of the drawee was forged. The bank on which the check was drawn paid the check through mistake, through the local clearing house to the bank of deposit. It afterward brought suit against the bank in which the deposit was made and recovered $500. In that case the court said (p. 272): “Where the holder of a forged check has not suffered or may avoid loss, he ought not to be permitted to profit by payment to him by the drawee.” The court then quotes section 54 of the Negotiable Instruments Act¿ and continuing said (p. 273): “A bank is not a holder in due course of a negotiable instrument if it has given nothing of value therefor beyond a credit to the former holder as a depositor, and has not honored his checks upon or in any way bound itself to account to someone for the deposit. (Warman v. First Nat. Bank, 185 Ill. 60.)” And the judgment for $500 in plaintiff’s favor was upheld.

In the instant case defendant’s cashier testified that on June 23, 1930, George L. Parry, who was president and owned practically all of the stock of the Fidelity Motors Company, applied to defendant bank for a loan, which was refused on account of the collateral offered; that on June 30th Parry again applied but was told he must furnish collateral. Parry thereupon went to the safety deposit vaults in the basement of defendant’s bank building, obtained the four Bethlehem Steel bonds and made his personal note for $4,000, for the reason, as the cashier- testified, that the bonds belonged to Parry and not to the Fidelity Motors Company. The bonds were put up as collateral, the cashier’s check drawn to Parry’s order, who immediately endorsed it in its own name and in the name of the Fidelity Motors Company, and the proceeds of the loan, $3,980, were deposited in the defendant bank to the credit of the Fidelity Motors Company. Farry and the Fidelity Motors Company were, for all practical purposes, one and the same. Moreover, when defendant learned that the bonds had been stolen, it still had the bonds and the $3,980 on deposit, and it then charged the account of the Motors Company with the amount of the deposit and credited Farry. This was a mere bookkeeping entry. After this occurred, the Fidelity Motors Company was embarrassed because checks it had drawn on defendant bank were not honored. Afterward, on July 12th, defendant’s cashier wrote a letter to the Commercial Credit Trust Co., which had apparently been given a check for more than $2,900 by the Fidelity Motors Company, and which defendant bank refused to pay, explaining that it had taken the matter up with Farry’s attorney and would reinstate the Motors Company’s credit because Farry had been a satisfactory customer of defendant and had agreed to co-operate with defendant in taking up the matter with defendant’s Surety company. Whatever was defendant’s reason in subsequently paying out the $3,980, it would have no effect because it could have protected itself; not having done so, it is not a bona fide holder in due course, under the authorities above cited.

The judgment of the circuit court of Cook county will be reversed with a finding of fact and judgment entered in this court in favor of plaintiff and against defendant for $4,200 with interest thereon at 5 per cent from October 29, 1930, the date plaintiff made written demand on defendant for the return of the bonds.

Judgment reversed with a finding of fact and judgment entered in this court.

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

Finding of fact: We find as a fact that defendant, having in its possession the proceeds of the loan of $3,980, and the four bonds at the time it was notified that the bonds were stolen, is not a holder in due course of the bonds.