author: Mr. Presiding Justice G-ridley

text:
    The Northern Trust Company of Chicago, Complainant and Appellees, v. John R. Thompson et al. Defendants. Wallace R. Condict, Appellant.
    Gen. No. 31,473.
    1. Trusts — trustee’s discretion, in, permitting erection of new building on trust premises. Under a trust indenture giving a trustee full power over certain realty and the 99-year lease thereon and discretion in improving the property in ease the lease should be forfeited or upon its termination, the trustee has no discretionary power to consent to putting a new building on the ground by the lessee, in absence of forfeiture, or until the lease terminates.
    2. Trusts — right of lessee to erect new building on tmst property in absence of casualty. A clause in a lease which compels the lessee, to repair or rebuild in ease of loss or damage to the property from fire or otherwise does not permit the trustee, who holds the lease as part of his trust; to consent to the lessee tearing down the old building and erecting a new one without any fire or other casualty having occurred.
    3. Trusts — chancery power to modify. If exigencies arise, unforeseen by the creator of a trust, which only modifications of the trust can meet, chancery has power to modify the trust in such a way as to preserve the trust from destruction or to carry out the settler’s main purpose.
    4. Trusts — limits on chancery power to prevent destruction of trust property. To preserve a trust estate from destruction, it is not necessary that the court allow the trustee to consent to the lessee’s rebuilding on the realty merely because the buildings thereon are old or because the new building would bring somewhat more rental to . the trust, especially against beneficiaries’ objections.
    5. Trusts — extent of right of court to grant power to trustee. Under Cahill’s St. eh. 22, H50, providing the courts of chancery may grant trustees certain powers, such courts have no greater powers than heretofore over trusts, as given them under the decisions of our Supreme Court.
    6. Trusts — statutory power over trust created before enactment of statute. Cahill’s St. eh. 22, TT 50, providing for certain powers of chancery in trust estate matters, should not be applied to the settlement of questions concerning a trust estate which came into being many years before the statute in its amended form was enacted.
    7. Estoppel — effect of consent to interpretation of trust deed. A trustee, in its suit to interpret a trust deed, cannot rely upon a defendant’s preliminary consent to its interpretation of the trust deed, as an estoppel to defeat his later opposition, in view of its taking all the steps it would have taken if he had opposed from the start.
    8. Equity — cross-hill dismissed through dismissal of hiU. The Appellate Court’s reversal of a chancellor’s decree and remanding with directions to dismiss complainant’s bill carries with it the dismissal, though without prejudice, of a defendant’s cross-bill, even though the latter was not disposed of by the chancellor in his decree.
    9. Equity — cross-hill as pertinent to original hill. A cross-bill must be confined to the subject matter of the original bill and introduce only such new facts as are necessary for the court to have, to decide the questions of the original suit so as to do full justice to all the parties in respect to that cause of action.
    Appeal 'by defendants from the Circuit Court of Cook county; the Hon. Ira Ryner, Judge, presiding. Heard in the second division of this court for the first district at the October term, 1926.
    Reversed and remanded with directions.
    Opinion filed June 14, 1927.
    Rehearing denied June 28, 1927.
    Statement by the Court. By this appeal Wallace R Oondict, one of the defendants and one ■ of the bene- • ficiariés under a trust indenture (dated July 7, 1892,' and made by Caroline E. Haskell, a widow, with complainant as trustee), seeks to reverse a decree of the circuit court of Cook county, entered April 30, 1926, wherein the court approved and confirmed a certain written agreement dated December 16, 1925, between complainant, as trustee, and John B. Thompson, another of the defendants. This agreement will hereinafter be referred to as the “compromise agreement.” It is designated in the decree as the “supplemental or sub-lease.” Lucy Smith, a defendant and also one of the beneficiaries, has assigned cross-errors, which are substantially the same as the errors assigned by Con-dict, and she and Condict have here filed a joint brief in support of their contentions. Separate answering-briefs have been filed by complainant and Thompson, to which Lucy Smith and Condict have filed a reply brief, and the cause has orally been argued. Thompson, also, has assigned cross-errors, to the effect that the court erred in failing- to find and decree that he has a good title to, and is the owner of, the leasehold estate and the building on the premises. The cause was tried in open court before the chancellor and considerable evidence, oral and documentary, was introduced.
    In the bill, filed December 17, 1925, complainant alleges that on March 18, 1889, by written lease (copy attached) Frederick Haskell and Caroline E. Haskell, his wife, demised the premises for 99 years, commencing April 1, 1889, to Herman H. Kohlsaat and others, as lessees. The premises are L-shaped and partially surround but do not include other premises at the northwest corner of Dearborn and Madison Streets, Chicago (known as the “Field” property), and have two. frontages — one facing east on Dearborn and the other facing south on Madison. Immediately west and adjoining is the so-called “Freér” property, facing;' south on Madison: All three properties are improved with separate "buildings. : Complainant further alleges that, by the terms of the lease, the lessees agreed to pay as rent $30,000 per annum in quarterly instalments and all taxes and assessments, to keep the - building insured and in good repair, and, upon termination of the lease by forfeiture or otherwise, to yield up to the lessors the premises and building, and further agreed that, “in case of loss or damage by fire or otherwise to the buildings, now upon said premises or that may hereafter be erected thereon, to rebúild or repair the same within twelve (12) months thereafter, equal in value or condition to the building Or buildings so destroyed-or damaged.” There is no provision in the lease expressly granting to the lessees the right to remove--the building upon the premises, or to'rebuild it, except, possibly, the clause just mentioned as to loss or damage “by fire or otherwise,” nor is there any provision, authorizing the construction of one building covering said premises and any adjoining premises.' Complainant further alleges that, on April 8, 1896, Mrs. Haskell (who had become the owner of the premises subject to the terms' of the lease) demised by written léase to said lessees the “south ten inches” of a certain sublot in the' block. It appears that said- south ten inches were intended to be included in the original lease, but through error were not, and that by said other lease the same were demised for the term Of the original lease and subject to all of its provisions and conditions. Complainant further alleges that Thompson, by virtue of certain mesne conveyances and assignments, has become the owner of said leasehold estates and of the building located upon the land; that the leases are in full force and effect, and that, under dates of July 7, 1892, and April 15, 1896, Mrs. Haskell delivered to complainant two trust indentures (copies attached to the bill) conveying the premises, and also, as lessor, assigning to complainant the leases. The purpose of the making of the instrument of April 15, 1896, was merely to include in the trust property said additional ten inches.

      By the indenture of July 7, 1892, Mrs. Haskell (as party of the first part) conveyed to complainant (as party of the second part) the real estate described in the lease. of March 18, 1889, excepting the building and improvements thereon, but including in the con: veyance said lease, “to have and to hold the same with all the privileges and appurtenances belonging thereto, to the party of the second part, its successors and assigns, to its and their own use forever, but upon the following express trustsviz:
    “First: To collect the rents of said property at the times and in the manner provided in the lease, and after deducting the reasonable charges and expenses of said party of the second part to pay over the same to said party of the first part or to her order as the same shall be paid in for and during her natural life; and after her death to pay over, divide and distribute the same as the same shall be paid in, in manner following, that is to say:
    “One sixth (1/6) thereof to Louisa Condict of the village of Evanston, in the State of Illinois, sister of said party of the first part, for and during her natural life should she survive said party of the first part, and after her death, or after the death of said party of the first part should she survive said Louisa Condict, and up to the time of the final sale and distribution of the proceeds of said property as hereinafter provided, to the lawful heirs of the said Louisa Condict, per stirpes.

    “One sixth (1/6) thereof to Lucy Smith of Boston, in the State of Massachusetts, sister of said party of the first part, etc. * * *.
    “Five Twenty-fourths (5/24) thereof to Jennie Porter, of Michigan City, in the State of Indiana, niece of said party of the first part, etc. * * *.
    “Seven One hundred and Twentieths (7/120) thereof to Carrie Jones of Chicago, * * * niece of said-party of the first part, etc. * *
    (Then follow other clauses providing for the payment by complainant, as trustee, of various other fractional portions of the net rents collected, to other persons named and described, or to their lawful heirs.)
    “Second: At the expiration of twenty-one (21) years after the death of the last survivor of said party of the first part, said Louisa Condict, Wallace B. Con-dict, and Jessie Condict, children of said Louisa Condict, said Lucy Smith, L. W. Smith, Jr., and Lillian Smith, children of said Lucy Smith, said Jennie Porter, Louise H. Porter, Julia Porter and Jessie Porter, children of said Jennie Porter, and Edith J ones, daughter of said Carrie Jones, to grant, bargain, sell and convey the said real estate and leasehold interest for the best price the same will bring in cash, either at public or private sale, at the discretion of said party of the second part, and to make, execute, acknowledge and deliver all such conveyances thereof as may be necessary or proper to carry out and effectuate such sale, * * * and to divide and distribute the proceeds of such sale after deducting the reasonable charges and expenses of said party of the second part in manner following, that is to say:
    “One-sixth (1/6) thereof among the lawful heirs of the said Louisa Condict, per stirpes.

    “One-sixth (1/6) thereof among the lawful heirs of the said Lucy Smith, per stirpes.”

    (Then follow other clauses providing for the payment out of said proceeds of sale of various other fractional portions to other named persons, or to their lawful heirs. And then follows a clause providing for payment of reasonable compensation to the trustee for its services, and for the repayment to it of all necessary outlays, including attorney’s and solicitor’s fees, etc. And then follow the clauses:)
    “That, in the performance of the trusts hereunder, the Trustee shall be held only to fair and reasonable diligence and discretion.

    “That if, for any reason the ninety-nine year lease above referred to should become forfeited or at an end, then and in that case the said Trustee shall have and is hereby given full power to manage, improve, control, lease, protect and. care for said trust estate and property, according to its best judgment and discretion in all things, but for the purposes and trusts hereinabove provided for.” . .
    The bill further alleges that Mrs. Haskell died on April 21, 1900; that some of the named beneficiaries are still living and that the time for the sale and distribution of the trust estate has not yet arrived; that since July 7, 1892, complainant, as trustee, has been in charge of the premises, collecting the rent and, since the death of Mrs. Haskell, paying the same to the beneficiaries, or to the heirs of such of them as have died; that the building located upon the premises is a 6-story brick building with stone facing, erected about 35 years ago, is old and in bad repair, “practically worthless” and “wholly inadequate” to the uses in its locality, and not as well adapted thereto as would be a building of more modern and fireproof construction, and that “it is to the best interests of said trust estate that said old and antiquated building should be removed and in its stead a modern structure erected”; that Thompson is also the lessee, under long-time ground leases, of the adjoining premises to the west (the Freer property) and of the adjoining premises to the south and east (the Field property), and desires to remove the building now on the premises (hereinafter called the Haskell premises) and to erect on all three properties “a first class, modern, fireproof building, not less than 12 stories in height, and to so construct the same that, while occupying all of the several tracts of land, it may easily be converted into a single building,” for use upon the Haskell premises, “through the construction of proper partition walls between floors, and with foundations and columns located upon the respective lot lines,” so that the building to be erected upon the Haskell premises “shall be capable of use as a separate building without structural alterations in the foundations and enclosing walls”; that, although in the leases in question there is no express provision authorizing the removal of the present building, or authorizing its use as a part of a building occupying the Haskell premises and the two adjacent premises (the Freer and Field properties), yet Thompson claims that, under the lease of March 18, 1889, properly interpreted, he has a right to remove the present building and to erect in its stead a building of greater height and value, which shall be connected with new structures or buildings upon the adjacent premises, all to be operated as a single building; that complainant “is in doubt and has questioned the right of Thompson” so to do without complainant’s express consent, and is “also in doubt as to its right to consent to a change in the terms of the leases whereby said terms shall be modified or enlarged”; and that, as the result of these divergent views and after negotiations, complainant in its capacity as trustee and Thompson, on December 16, 1925, executed an agreement, “subject to the approval and confirmation of a court of competent chancery jurisdiction.” . (A copy of the agreement is attached to the bill, hereinafter referred to as the compromise agreement.)
    This agreement contains numerous recitals including statements of the opposing contentions of the trustee and Thompson, and the statement that they “desire to adjust their differences in an amicable manner and to their mutual advantage.” Its more important provisions are in substance as follows: Complainant, as trustee, agrees:
    (1) That Thompson may demolish and remove the building upon the Haskell premises and appropriate the materials to his own use, upon condition that he procure to be delivered to the trustee an undertaking, binding him, his heirs, legal representatives and assigns, to erect and complete a building thereon, as hereinafter described, free from mechanics’ and other like liens.
    (2) That the trustee will join with' Thompson in executing a party wall agreement, providing for the sinking of caissons to bed rock or hard pan, standing one-half upon the Haskell premises and one-half upon the adjoining premises, and for the erection of steel structural members, placed one-half upon the Haskell premises and one-half upon the adjoining premises.
    (3) That the building to be constructed upon the Haskell premises may be so constructed as to be used in conjunction with, or as a part of new construction upon, the premises to the west (Freer) and to the south and east (Field), provided that said building shall be so constructed that it can be equipped, without structural alterations, for use as a separate building.
    (4) That Thompson, as lessee, or any subsequent lessee by assignment, may take down or destroy any new building, or any portion thereof, that may hereafter be erected upon the Haskell premises, for the purpose of replacing the same with another building, or portion thereof, upon certain named conditions, including inter alia a deposit of securities, as against mechanics’ and other like liens.
    And Thompson, in consideration of the foregoing, agrees:
    (1) Thát, beginning on April 1, 1926, or upon the commencement of the removal of the building upon the Haskell premises if commenced before that date, Thompson will pay, for the balance of the term of the lease of March 18, 1889, rental at the rate of $35,000 per annum (an increase of $5,000 per annum) in quarterly instalments.
    (2) That, at such time as he may elect, Thompson will remove the present building upon the Haskell premises and replace the same with a building or part of a building; that the new building shall not be less than 12 stories in height, and of first class, modern, fireproof construction; and that, if constructed in conjunction with or as a part of new structures upon the adjoining premises, it shall be so constructed as to.be capable of independent use as a separate unit without structural alterations, etc., provided that Thompson may alter, improve or enlarge the new building, but not in such way as to diminish the value thereof.
    (3) That Thompson will maintain the new building or any building which may be substituted therefor, in good condition and repair, and will keep it insured for not less than 70% of its fair insurable value above the foundations.
    (4) That Thompson will furnish the trustee with plans and specifications for the proposed new building, and of any structural alterations which may be proposed to be made, etc.
    And it is mutually agreed:
    That the original leases of March 18, 1889, and April 8, 1896, shall remain in full force and effect, except as herein modified; that the covenants contained in this agreement shall bind the successors, heirs and assigns of the respective parties; that any covenant herein contained to be performed on the part of Thompson may be performed by any sub-lessee of Thompson, with like effect as if performed by him; that “this agreement” is executed by the trustee in the exercise of every power and discretion vested in it under said deed from Mrs. Haskell (the trust indenture of July 7, 1892), but that the trustee is unwilling to warrant or represent the extent of its powers, etc., in that regard; that “this agreement” shall not become binding upon the trustee or the trust estate until the same shall have been confirmed and ratified by a court of competent, chancery jurisdiction; and that the trustee agrees forthwith, by proper proceedings, to seek to obtain a decree authorizing and ratifying “this agreement,” and empowering the trustee to bind the trust estate thereby, but that Thompson’s covenant to pay the increased rental shall not become operative until the decree shall be entered.
    The bill further alleges that complainant believes that it is for the best interests of the trust estate that “the proposed settlement of the difference or controversy between complainant and Thompson be made”; that it is a fair and equitable settlement and will result in substantial financial advantage to the trust estate and to the beneficiaries thereof; that, inasmuch as complainant is acting for the benefit of numerous beneficiaries who are widely scattered, and “as there is legal doubt as to complainant’s right to act,” it deems it expedient to apply to the court for the purpose of being advised respecting the final acceptance or rejection of the proposed settlement; that the present beneficiaries of the trust number upwards of 50; and that it is impracticable for it to ascertain the names, ages and relationships of the persons who will be heirs of the living beneficiaries in the event of their deaths. The bill then sets forth the names of the original beneficiaries (mentioned in the trust indenture) who are still living, arid alleges that Louisa Condict has died, leaving her surviving as her only heirs-at-law her children, said Wallace R. Condict and Jessie Condict Lee, and that they have been receiving between them the share to which Louisa Condict would have been entitled had she lived. The bill contains other allegations regarding the deaths, etc. of others of the originally named benéficiarie's, and further alleges that Catherine Condict Yates, wife of Lloyd Í). Yates and daughter of said Wallace R. Condict, is the immediate prospective heir-at-law of the latter; that the immediate prospective heirs-at-law of Jessie Con-dict Lee are John H. S. Leé, her husband, Elizabeth O.- Lee, Margaret B. Lee and John H. S. Lee, J-r., her children; and that “for the purpose of creating class representation” they are made parties defendant to the bill “to the end that the other unknown prospective heirs-at-law of said remaining living beneficiaries may be represented herein by class representation and may be bound to the same extent and in the same manner * * * as though they had been made parties defendant by name.”
    The prayer of the bill is that the court “determine and state whether or not complainant shall accept and carry out or reject said proposed offer of settlement and compromise so made by Thompson, by delivering and finally confirming the said supplemental or sublease, and that complainant may be fully instructed and advised as to its rights, duties and powers in the premises,” and that complainant have such other relief as to equity may appertain.
    Answers were filed by John B. Thompson, and by Jessie Condict Lee, her husband, and one of her daughters who had reached her majority, consenting to a decree in accordance with the prayer of the bill. As to the nonresident defendants service was had in the usual manner, and many of the defendants were defaulted and the bill taken as confessed as to them. On behalf of certain minor defendants a guardian ad litem was appointed and he filed a formal answer. Certain of the nonresident defendants filed appearances in which they admitted the allegations of the bill and consented to the entry of a decree as prayed for. On April 6, 1926,. two of the defendants, Wallace B. Condict and Lucy Smith (each a beneficiary), filed a joint and several answer to the bill. On the same day Condict filed a cross-bill. On April 12,1926, Lucy Smith filed a cross-bill, which, after being amended, was, on motions of complainant and said Thompson, stricken from the files by order of the court “for reasons apparent upon the face of the record.” Condict’s cross-bill was not put at issue until after the entry of the decree appealed from. The court refused to hear jhe original bill and'Condict’s cross-bill together, blit the court, in its decree, expressly retained jurisdiction of the cause for certain named purposes, including the future hearing and determining of the issues arising upon Condict’s cross-bill.
    In said answer of Condict and Lucy Smith, they admit the execution of the 99-year lease and the trust indenture as alleged in the bill, that the same are in full force and effect, and that the time for the sale and distribution of the trust estate has not yet arrived ; but they deny that the present building on the Haskell premises is practically worthless or inadequate to the uses of the locality, or that it is for the best interests of the trust estate that it be removed and a more modern structure erected in its stead, or that any compromise on the basis of the offer made by Thompson is wise or desirable. Other allegations are made, particularly as regards Condict’s interest in the rents and in the trust estate upon a final distribution, etc.
    In the decree the court made many findings which are in substantial accord with the allegations of complainant’s bill. Although finding that' Thompson claims to be the owner of the leasehold estate and. of the present building upon the Haskell premises, yet it is stated that “the court does not hereby pass upon the claims of said Thompson.” After finding that disputes had arisen between the trustee and Thompson, and that the latter had.made certain offers looking towards a settlement thereof, and after finding that the compromise agreement of December 16, 1925 (referred to by the court as the “proposed. suppler mental or, sub-lease”), had been executed, subject to the court’s approval and confirmation, the court found that, as a part of Thompson’s offer of settlement to complainant (afterwards accepted by complainant), Thompson caused his duly authorized attorney, Henry Russell Platt, to write a letter to complainant, under ■ daté of November 4, 1925, wherein the offer was made in substance that as soon as said compromise agreement had been ratified and confirmed by the court, Thompson would pay to complainant, as trustee, the costs and expenses of the suit, including a fee of $2,500 for the trustee, and the reasonable fees of its counsel and/or the counsel representing the beneficiaries (but not exceeding for counsel fees the total sum of $10,000) and also a guardian ad litem’s fee, but that in case such a decree should not be obtained by April 30,1926, said agreement might, at Thompson’s option, be regarded as inoperative. And the court further found that the building, which Thompson “or his sub-lessee or assignee” proposes to erect upon the Haskell premises, “is to be a.thoroughly modern fireproof building, and of a value far in excess of the present building now standing upon said premises, and that said building when completed will materially add to the security of said several leases, and that said premises will then be of a value greatly in excess of the value of said premises as the same are now improved.” And the court adjudged and decreed in substance as follows:
    (1) That the agreement of December 16, 1925, and the accepted offer from Henry Bussell Platt are fair and equitable and for the best interests of the trust estate, and of the present and all future beneficiaries thereunder, and of the present and future holders and owners of the underlying fee of the leased premises.
    (2) That, under the proper interpretation of the trust indenture of July 7, 1892, complainant had and now has the right and power to make said agreement of December 16, 1925, and to accept the offer evidenced by said letter of November 4,1925, and thereby bind the trust estate and all persons interested or who may become interested therein.
    (3) That said agreement of December 16, 1925, and the accepted offer contained in said letter are hereby approved, ratified and confirmed in all respects, and complainant, as trustee, is hereby directed immediately to deliver to Thompson the agreement, and forthwith carry out and perform the same in all respects.
    (4) That all of the acts, doings and conduct of complainant, and of its agents, with regard to the execution, delivery and carrying out of the agreement and the acceptance of said offer, and with régard to the bringing and conducting of this suit, are hereby in all respects and for all purposes approved; and that all defendants in this cause and all persons, whether now in esse or not, now or hereafter being or standing in like relation or interest as or in privity with said defendants are hereby forever precluded and barred from challenging or impeaching any of said acts, doings and conduct.
    McNab, Holmes & Long, Matthias Concannon and Mayer, Meyer, ■ Austrian & Platt, for defendants; Henry Russell Platt and M. Paul Noyes, of counsel.
    John J. Healy, for appellee Northern Trust Co. Owen Rall, for appellees John H. S. Lee et al. Roswell B. Mason, guardian ad litem, for infant appellees.
   Mr. Presiding Justice G-ridley

delivered the opinion of the court.

As grounds for a reversal of the decree, counsel for Condict and Lucy Smith here contend, as they strenuously urged before the chancellor, (1) that complainant, as trustee, under a proper interpretation of said trust indenture of July 7, 1892, has no'power, express or implied, to execute the compromise agreement of December 16, 1925; (2) that, if such power in the trustee be lacking, a court of chancery is not justified, over the objections of adult beneficiaries of the trust, in so modifying and enlarging the terms of the trust instrument as to approve and confirm said compromise agreement, especially where the evidence does not disclose any necessity for such modification or enlargement in order to preserve the trust estate from destruction or to carry out the main intentions of its creator; and (3) that the compromise agreement, as drafted, is not beneficial to the trust estate.

As to the first contention. In 26 R. C. L. 1372, § 232, it is said: “It is an elementary principle in the law of trusts that in the execution of a trust, the trustee is bound to comply strictly with the directions contained in the trust instrument, defining the extent and limits of his authority, and the nature of his powers and duties.” In 3 Pomeroy’s Eq. Juris. (4th Ed.), § 1062, it is said: “The trust itself, whatever it be, constitutes the charter of the trustee’s powers and duties; from it he derives the rule of his conduct; it prescribes the extent and limits of his authority; it furnishes the measure of his obligations.” In 2 Perry on Trusts (6th Ed.), § 475, it is said: “In a court of Imu, the trustee is the absolute owner of the estate, and he can exercise all the powers of ownership; * * * but in equity the cestui que trust is the owner, and the question in equity is, how far the trustee can act without exceeding his powers, and rendering himself responsible to the cestui que trust. * * * In trusts of a more particular and active kind, the general power of the trustee is limited to the exact performance of the duty imposed upon him. The duty and power given in such trusts must be strictly performed.” By the trust indenture Mrs. Haskell conveyed to complainant, as trustee, the real estate (excepting the building thereon) and said 99-year lease of March 18, 1889, and empowered the trustee “to have and to hold” both, with all privileges and appurtenances, upon certain mentioned express trusts, viz, (1) to collect the rents of the property, at the times and in the manner provided in the lease, and, after deducting the trustee’s reasonable charges and expenses, to pay over the same as specified, and (2), at the termination of the trust as specified “to sell and convey the said real estate and leasehold interest” for the best price the same will bring in cash, and, after deducting the trustee’s reasonable charges and expenses, to divide and distribute the proceeds of the sale as specified. It is also provided, in two separate clauses at the end of the instrument, that “in the performance of the trusts hereunder, the trustee shall be held only to fair and reasonable diligence and discretion” ; and that, if for any reason the said lease “should become forfeited or at an end,” then cmd in that case the trustee “shall have and is hereby given full power to manage, improve, control, lease, protect and care for” the trust estate and property, “according to its best judgment and discretion” but for the purposes and trusts provided for. Counsel for the trustee contended before the chancellor, and here contend, that, because of the language of these two clauses when read in connection with the other provisions, the trustee had at least the implied power to make with Thompson the compromise agreement. The chancellor Evidently agreed with the contention for, in delivering his oral opinion (contained in the transcript), he said in part, after quoting from the second of said separate clauses: “Of course, it may be said that under the ordinary rules of construction that' power is limited to — does not come into being until the contingency in question happens. But it occurs to me that the settlor had full knowledge of the fact that a forfeiture of the lease might occur, even within one year of the date of the execution of the instrument. If she was willing to give those large powers to the Trustee, in that event then it must have been her intention that the Trustee should have those general powers, at all events. I think that from that provision of the agreement the Trustee has an implied power to do these very things, because there is no reason for making the powers broader in the event of a termination of the lease, because that presents the same situation as it was at the outset.” We cannot agree with the contention of counsel for the trustee, or with the reasoning or conclusion of the chancellor in this regard. Inasmuch as by the trust indenture the said lease is made a part of the subject matter of the trust, and as the trustee is empowered “to have and to hold” the real estate and said lease until the termination of the trust and then to sell and convey the same, and as the trustee is directed and given full power (if the lease “should become forfeited or at an end”) to do the things mentioned according to its discretion, we think that it was the intention of Mrs. Haskell that such discretionary power in the trustee to do such things was to be exercised only in the event that the lease should become forfeited or at an end (neither of which contingencies have happened). And we think that the giving to the trustee of such discretionary power, only in such event, excludes the idea that Mrs. Haskell intended to grant to the trustee any discretionary power to amend, change or modify said lease, so long as it remained, in force (which the evidence shows was the case when the present bill was filed). And we think that the provision in the first of the two separate clauses (viz, that, in the performance of the trust, “the Trustee shall be held only to fair and reasonable diligence and discretion”) was intended only to be a limitation on the possible liability of the trustee, while acting as such within the limits of the powers. conferred upon it by the instrument. And we cannot believe that it was Mrs. Haskell’s intention, by the use of the words of said clause, to extend or alter the trustee’s power, granted by the other clauses of the instrument, so as to give it discretionary power to modify or change the lease (expressly made a part of the subject matter of the trust) and to make with Thompson such an agreement as the one in question, which the court refers to as a “supplemental or sublease.” It is well-settled law that “a deed should be so construed if possible as to give force to all its provisions.” (Walton v. Follansbee, 131 Ill. 147, 158.)

Although there is no express provision in the lease granting to the lessees the right to remove the building upon the premises or to rebuild it, there is a covenant therein on their part that, “in case of loss or damage by fire or otherwise to the buildings, now upon said premises or that may hereafter be erected thereon,” they will “rebuild or repair the same within twelve (12) months thereafter, equal in value or condition to the building or buildings so destroyed or damaged.” And counsel for the trustee further contended before the chancellor, and further contend here, that, because of the language of the covenant, and particularly the words italicized, the right in Thompson (assignee by mesne assignments from the original lessees) to remove the present building and erect another in its stead, and the power in the trustee to execute with Thompson the compromise agreement, may properly be implied. We cannot agree. It seems clear to us that said clause, as regards rebuilding or repairing the building, has reference only to the contingency where the building is destroyed or damaged by fire or other casualty, and affords no basis for the claimed implied power on the part of the trustee. And we fail to see wherein the holdings in the case of Hawes v. Favor, 161 Ill. 440, cited by counsel, are at variance with these views.

After considering the provisions of the trust indenture, taken in connection with the provisions of the lease, we are of the opinion that the first contention of counsel for Condict and Lucy Smith is well founded, and that the trustee, as such, has no power, express or implied, to execute the compromise agreement with Thompson, particularly where objections to such execution are made by two of the present adult beneficiaries of the estate. This brings us to the consideration of the question, raised by counsel’s second contention, whether, considering the provisions of the trust indenture, of the lease and of the compromise agreement, and also considering the evidence contained in the present transcript, the circuit court was justified, under the authorities, in so modifying and enlarging the terms of the trust indenture as to approve and confirm said agreement, against said objections.

There are numerous decisions in this State to the effect that, when exigencies arise, unforeseen by the creator of a trust, which can only be met by modifications of the terms of the trust, a court of chancery has power to make such modifications as are required to preserve the trust estate from destruction, or to carry out the main intentions of its creator. Among the cases holding that the particular facts warranted the exercise of such power are: Curtiss v. Brown, 29 Ill. 201; Voris v. Sloan, 68 Ill. 588; Johns v. Montgomery, 265 Ill. 21; Marsh v. Reed, 184 Ill. 263; Cary v. Cary, 309 Ill. 330. In the Curtiss case (p. 230), it is said: “Exigencies often arise not contemplated by the party creating the trust, and which, had they been anticipated, would undoubtedly have been provided for, where the aid of the court of chancery must be invoked to grant relief imperatively required; and in such cases the court must, as far as may be, occupy the place of the party creating the trust, and do with the fund what he would have dictated had he anticipated the emergency.” In the Voris case (p. 592), it is said: “it is only in cases of the most urgent necessity that the terms of the trust will be changed.” In the Montgomery case (p. 25) it is said that, while the power is exercised “with great caution,” courts of chancery have not hesitated to direct “such necessary modifications as will preserve the trust estate for the use of the beneficiaries.” In the Marsh case (p. 274) it is said that the court should exercise the power “to change the directions of the donor as to the course to be pursued in the mere matter of managing the trust property, when it is clearly made to appear that conditions are so changed and different as to imperatively require the substitution of some other course of management in order the purpose of the creator of the trust may be conserved and accomplished. The evh dence in this case clearly demonstrates that without relief against the provision that the property shall not be leased for a longer period than ten years the trust property will be substantially unproductive and the .purpose of the donor to provide an income for his children out of the income of said trust estate wholly defeated.” In the Cary case (p. 335), it is said that the court will not authorize the modification “merely -for the purpose of enabling the beneficiaries to receive a greater income from the property or use it in what they may regard as a more profitable manner than that provided by the trust. (Johns v. Johns, 172 Ill. 472.) Where a contingency arises, however, such that the estate' may be totally lost to the beneficiaries of the trust, a court of equity will not permit such loss for lack of power to modify the terms of the trust.” Among the cases holding that the particular facts did not warrant the exercise of the power are: Johns v. Johns, 172 Ill. 472, 485; Johnson v. Buck, 220 Ill. 226; Stephens v. Collison, 274 Ill. 389; Gibbs v. Andrews, 299 Ill. 510; Outhet v. Follansbee, 218 Ill. App. 512. In the Buck case (p. 236) it is held that, while the court has full power to authorize the conversion of property contrary to the prvisions of a will, and differing from the purpose and plans of the testator, where there is a necessity for such conversion for the preservation of the estate, there must be some important and controlling reason for the action, and that it “is not justified by the mere fact that the court may conclude some other plan than that of the testator would have been better.” In the Gibbs case, supra, it was sought to obtain a decree authorizing the exchange of one piece of real estate, alleged to be more valuable, for another piece devised to the testatrix’s daughter, with remainder in fee simple to the heirs of her body. It was contended that the exchange should be allowed to be made by the court because it would be beneficial to the interests of all parties. This contention is somewhat similar to that of the trustee and Thompson in the present case wherein they urge that the court approve, because more beneficial to all parties in interest, the said compromise agreement, or “supplemental or sub-lease,” and authorize its substitution for the lease which was in force at the time of the creation of the trust, and which the creator of the trust directed should be held by the trustee until the specified time of sale and then be sold with the real estate. But our Supreme Court, in the Gibbs case, citing with approval the Johns v. Johns case, supra, affirmed the decree of the circuit court wherein it refused to authorize the exchange, and said (p. 516): “It is not necessary in this case to make any change in the property devised for its protection or preservation from loss or destruction or to preserve the interests of the parties in the estate or the estate itself, or any other necessity of the most urgent character, and under well settled rules the decree of the court was in accordance with the law, and it is therefore affirmed.” In the Collison case, supra, in which our Supreme court reversed a decree, wherein a certain compromise settlement had been ordered made, it is said (p. 394):

“The real question in this case for our decision is whether or not a court of equity has the power and the authority to entirely disregard the terms of a trust created by a will and to compel a party interested in the trust property to accept a compromise settlement of the trust estate against his will and against his interest where all the other interested parties are willing and desire the settlement. The court found and recites in the decree that it would be for the best interests of the estate of Josephus Martin and of all parties interested therein to accept the proposition of settlement submitted arid thus to end the litigation, which has been long continued and expensive. * ■ * '*■ It cannot be questioned that the effect of the compromise and approval thereof by the court, and its decree ordering the parties to execute the compromise settlement upon the terms proposed, is to ehánge the terms of the will of the testator, or, rather, to abrogate it altogether, and to vest title to the property devised by the will in trust, in the heirs and devisees according to the court’s judgment of what is just and best for them. * * * (p. 397.) ' In the instant case there are no facts presented, and the decree makes no findings of facts, which show a necessity for the court’s interfering with the plan of the trust as created by the testator. It is true,'no doubt, that the litigation has been long and expensive, and it may be absolutely true that all parties would save more money or property to themselves by this compromise than to continue the litigation to a final conclusion. Plaintiff in error, however, insists that he will be injured by the settlement, We do not think he will be injured to the extent he claims he will in his argument,- but we have no means of knowing or determining the extent of loss or benefit to anyone by the settlement. * * * This decision cannot rest upon the question whether or not any of the parties will be benefited or injured by the compromise. A trust created by a will cannot be altered or destroyed by a court of chancery on the sole ground that in the judgment, of the court it will be beneficial to the parties in interest. (Citing cases, among them the Johns v. Johns and Buck cases, supra.) The will in the instant case gave no authority to the trustees or to the court to authorize the compromise in question, and the court had no power or authority to order such a settlement.”

We regard the holdings and decision in said Collison case as particularly applicable to the controlling question in the present case, viz, the court’s power to alter certain provisions of the trust indenture (wherein the trustee is directed to hold the real estate and a specified lease, to collect the rents, etc., and at the termination of the trust to sell both the real estate and the lease) and compel all the beneficiaries, against the objection of two of them who are adults, to accept in substitution for the lease the compromise agreement (which is in effect a supplemental lease, containing provisions considerably different from those of the original lease), merely because the court, as well as the trustee, and as well as other beneficiaries (seemingly because of their default taken), are of the opinion that the execution of said agreement is for the best interests of the trust estate and all beneficiaries, but where the evidence does not disclose, and the court does not find, that there is any necessity for such action in order to preserve the trust estate from destruction or to carry out the main intentions of its creator.

Counsel for the trustee, as well as counsel for Thompson, to sustain the decree in question, especially rely upon the cases of Marsh v. Reed, supra; Packard v. Illinois Trust & Savings Bank, 261 Ill. 450; Denegre v. Walker, 214 Ill. 113; Gavin v. Curtin, 171 Ill. 640; and Hale v. Hale, 146 Ill. 227. The Marsh case has previously been referred to. In all of these cases the element of necessity for the court’s action was present. In the Denegre case all of the adult parties in interest consented to the execution of the proposed long-time lease. But in the present case, after considering the facts and circumstances in evidence, we fail to find that there is any necessity shown, requiring the execution and approval by the court, of the compromise agreement in order to preserve the estate from destruction or to carry out the main intentions of Mrs; Haskell; Although it may be true that, considering Thompson’s best interests and the highest and best uses that the land can be put to, conditions in the neighborhood have so changed as to suggest the advisability of erecting upon the land, and upon the adjoining land which he controls, a new and more modern building, still we do not think that the evidence discloses that said changed conditions are such as endanger the present trust estate. Although it is true, if the compromise agreement be approved, that the annual rental coming to the estate will be increased to the extent of $5,000, we think it is a matter of considerable doubt, under-the conflicting evidence, whether in the long run the approval and confirmation of the compromise agreement will be beneficial to the trust estate.

Counsel for the trustee also contend that, by section 50 of the Chancery Act, Cahill’s St. ch. 22, 50, as amended in 1911, additional power than that which theretofore existed was conferred upon courts of chancery, viz, to “hear and determine bills to * * * authorize trustees to lease, mortgage and sell, improve, exchange and invest any portion or all of any trust estate, or to do any other act or thing, or exercise any power and discretion which is necessary for the conservation, preservation, protection or betterment of said estate during any period of contingency pending a contingent remainder or executory devise or otherwise.” "We do not think that by the language of the amended portion of the section any greater power was conferred upon chancery courts over trustees than that which they theretofore had exercised, as sanctioned by the decisions of our Supreme Court above referred to. The necessity for the court’s action, mentioned in said decisions, is still made by the amended statute an essential condition of the right of the court to act. If it should be considered (and we do not think it should) that greater power was conferred by the amended statute upon chancery courts than that which they had theretofore lawfully exercised, and sufficient to warrant the entry of the present decree, it may properly be said, we think, that the amended statute should not be applied to a trust which came into being many years before said amended statute was passed. (In re Will of Tuller, 79 Ill. 99, 107; Richardson v. United States Mortgage & Trust Co., 194 Ill. 259, 267; Eddy v. Morgan, 216 Ill. 437, 447.)

We, therefore, are of the opinion that, as to the second contention of counsel for Condict and Lucy Smith, the same is meritorious, and that, under the evidence, and the law as disclosed by the above cited authorities, the circuit court was not justified in entering, over the objections of Condict and Lucy Smith, the decree appealed from.

In view of our holdings, we do not think it necessary to discuss in detail the mass of conflicting evidence bearing upon the question, whether the approval of the compromise agreement would be beneficial to the trust estate. Nor is it necessary for us to consider the further contention of counsel for Condict and Lucy Smith that complainant’s bill should be dismissed because of lack of necessary parties. Nor do we deem it necessary to consider the cross-errors assigned by Thompson to the effect that the court erred in failing to decree that he has a good title to, and is the owner of, the leasehold estate in question and the present building.

' It is contended by counsel for the trustee and for Thompson' that Condict is estopped by his conduct from raising the questions of the power of the trustee to execute the compromise agreement, or of the court to approve and confirm it. It is argued that the evidence discloses that, in the negotiations leading up to the execution of the agreement, Condict consented to its execution. While there is evidence tending to show that Condict in the earlier negotiations was in favor of the making by the trustee of some sort of a compromise agreement or supplemental lease with Thompson, we do not think that it is shown by a preponderance of the evidence that Condict ever consented to the terms of the agreement as finally drafted and executed. Complainant’s letter of December 19, 1925, written by its vice president in charge of trust matters (William S. Miller) to Condict, as well as to other beneficiaries, three days after said agreement was executed by complainant and Thompson and two days after the present bill was filed, militates against a contrary.view. In the letter addressed to Condict he is advised that notice will soon be served upon him of the institution of a suit against Thompson and the beneficiaries under the trust indenture and that the purpose thereof is to secure judicial consent to the execution of an agreement, which “modifies and changes in some respects the original Haskell leases.” After setting forth Thompson’s desires, etc., mentioning prior negotiations, recommending that Thompson’s offer be accepted and stating that in the trustee’s opinion the confirmation of the agreement would be beneficial to the estate and all beneficiaries, the letter concludes: “If yon desire to object to the arrangement you may do so in the pending suit and if you approve kindly let us know and we will send to you a form of appearance to be filed in court consenting to the acceptance of the offer.” Furthermore, according to Condict’s testimony, he first obtained a copy of the agreement on January 12, 1926, and before obtaining such copy he informed Miller he was going to oppose its confirmation by the court. But even if it can properly be considered under the conflicting evidence that Condict did consent to the terms of the agreement as finally drafted, and to its confirmation, still we do not think that he can be held to be equitably estopped from contesting its confirmation. The necessary elements of such an estoppel are lacking. Apparently the trustee placed no reliance upon Condict’s claimed consent and it neither did nor omitted to do any act, nor changed its position, because thereof. In Powers v. Wells, 244 Ill. 558, 570, it is said: “It is an essential element of an equitable estoppel that the person asserting it shall have done or omitted some act or changed his position in reliance upon the representations or conduct of the person sought to be estopped.” (See, also, Sutter v. People’s Gas Light & Coke Co., 284 Ill. 634, 639-640.) Furthermore, it does not appear from the evidence that Lucy Smith, the equitable owner of one-sixth of the trust estate, ever consented, either expressly or impliedly, to the confirmation of the agreement, and clearly no estoppel can be invoked as to her.

Our conclusion is that the circuit court erred in entering the decree appealed from over the objection of Condict and Lucy Smith, and our order is that it be reversed and the cause be remanded with directions to the circuit court to dismiss complainant’s bill. The effect of this order, as we understand the general rule, will be to carry with it the dismissal, though without prejudice, of the cross-bill of Wallace B. Condict (21 C. J. 514, § 616%; Glos v. People, 259 Ill. 332, 348.) And as to said cross-bill, we think such a result is proper, though complainant and other parties made defendants have filed answers thereto and the court by said decree retained jurisdiction of the cause and the parties to determine on a further hearing “all issues arising upon” said cross-bill, because, in our opinion, said cross-bill is not germane to complainant’s bill and the equitable relief prayed for therein. In Patterson v. Northern Trust Co., 231 Ill. 22, 26, it is said: “A cross-bill must be confined to the subject matter of the original bill, and cannot introduce new and distinct matters not embraced in the original bill. * * * Matters in the cross-bill must be germane to the matter involved in the original bill. The new facts which it is proper for the defendant to introduee thereby are such, and such only, as are necessary for the court to have before it in deciding the questions raised in the original suit, to enable it to do full and complete justice to all the parties before it in respect to the cause of action on which the complainant rests his right to aid or relief.” (See, also, Hurlbut v. Talbot, 273 Ill. 299, 306; Hollan v. Kepner, 297 Ill. 332, 336.)

Reversed and remanded with directions.

Fitch and Barnes, JJ., concur.


source: Caselaw Access Project

author: Mr. Presiding Justice McSurely Hatchett and Johnston, JJ., Mr. Presiding Justice HcSurely

license: Public Domain

text:
    Central Lime & Cement Company, Appellee, v. Leyden-Ortseifen Company and The Sanitary District of Chicago et al., Defendants. Appeal of The Sanitary District of Chicago, Appellant.
    Gen. No. 31,440.
    1. Mechanics’ liens — contract against lien on public property, Cahill’s St. ch. 82, 1121, providing a contract against liens shall be binding, does not apply to contracts for public improvements with agreements against liens.
    2. Mechanics-’ liens — on money coming to public works contractors as not on'public property. The lien provided by Cahill’s St. ch. 82, U 23, upon money coming to a public works contractor in favor of the subcontractor, is not a lien upon public property.
    3. Mechanics’ liens — provisions of contracts for public works against. The fact that no lien can be had on public property makes ineffectual the provisions of a public works contract against liens on such improvements.
    . 4. Mechanics’ liens — protection of subcontractors on public works. The purpose of Cahill’s St. eh. 82, If 23, is to protect subcontractors furnishing labor and material to the principal contractor of a public work.
    5. Public contracts — default not justifying seizure of contractor’s supplies and charging him completion cost. Provisions of a contract for public improvement excusing the contractor for unavoidable delay from strikes and other specified causes, of which ample evidence is given, makes inexcusable, without giving the notice of default required by the contract, the seizure of the contractor’s supplies under contract agreement on default and the charging against money coming to him the cost of completing the work.
    6. Saving questions for review — objection, first made on appeal. After a defendant in equity has gone to trial without objecting that a. claim for damages therein should be made only at law, he cannot object on appeal.
    7. Equity — adjudication of nonequitdble questions. Once equity has acquired jurisdiction, it will retain jurisdiction to pass upon all questions involved in the ease though some may involve legal rights otherwise beyond its scope.
    8. Mechanics’ liens — affirmative relief in equity. Equity will grant affirmative relief in a mechanics ’ lien suit to avoid a multiplicity of suits.
    9. Municipal corporations — liability for interest on money coming to public works contractor. Without express agreement for interest a municipality is not liable for interest on money coming to a public works contractor either as damages or as payment of the contract price.
    10. Mechanics’ liens — subcontractors’ rights to interest on money due for public work. Without sufficient data for computing interest, subcontractors will not be given it on amounts due under their mechanics’ liens upon money coming to a public works contractor, even conceding their right to the interest.
    Appeal by defendants from the Superior Court of Cook county; the Hon. Denis E. Sullivan, Judge, presiding. Heard in the first division of this court for the first district at the October term, 1926.
    Affirmed in part, reversed in part and remanded.
    Supplemental opinion filed June 15, 1927.
    Original opinion filed May 2, 1927.
    Hector A. Brouillet, for appellant.
    A. S. & E. W. Froehlich, for appellee Central Lime & Cement Co. and defendants. Rosenberg & Rosen- ' berg, Litsinger, Healy & Reid, William E. Mooney and Lewis, Adler, Lederer & Kahn, for defendants.
   Mr. Presiding Justice McSurely

delivered the opinion of the court.

This is an appeal by the Sanitary District of Chicago from a decree wherein it was found that there was due the Leyden-Ortseifen Company as principal contractor $151,226.47, with interest at 5 per cent from July 7, 1921, making a total of $186,516.68.

The bill of complaint was filed by the Central Lime & Cement Company, a subcontractor, and prays for an accounting and for a mechanic’s lien for moneys due it against the funds, moneys, bonds and warrants in the hands of the Sanitary District due or to become due to Leyden-Ortseifen. Thereafter various other subcontractors intervened and presented their claims for a lien on the money alleged to be due or to become due to Leyden-Ortseifen.

The Sanitary District filed an answer denying the principal allegations of complainant’s bill. Leyden-Ortseifen answered, admitting the principal contracts but denying the other principal allegations of the bill. September 19,1921, the cause was referred to a master in chancery to take proof and make his report with conclusions thereon. After the cause was at issue, that is, on July 7, 1921, the Sanitary District terminated the principal contracts with Leyden-Ortseifen and took possession of the material, machinery and apparatus of said work belonging to Leyden-Ortseifen and re-let the remainder of the work to other contractors.

Thereafter on April 10, 1924, and before the proofs had been closed before the master, by leave of court Leyden-Ortseifen filed its amended answer. The substance of this amended answer was not only to meet the testimony and proof already offered before the master but also alleged that the claims and defenses of Leyden-Ortseifen had been diligently prosecuted and that proof of same had been and was being offered before the master, which proof was not yet completed; that the length of time consumed in taking evidence was not the fault of Leyden-Ortseifen but due to the length of time necessary for the various subcontractors claiming liens to introduce their evidence. Said amended answer further asked for affirmative relief in that the Sanitary District be compelled to account to Leyden-Ortseifen for moneys due or to become due to it under the contract; alleged that the Sanitary District had wrongfully terminated the contracts between it and Leyden-Ortseifen and had wrongfully seized the machinery and apparatus of Leyden-Ortseifen on said work; that it had performed all the covenants and conditions of said contracts, and because of said wrongful termination of said contracts Leyden:Ortseifen claimed damages.

Subsequently on October 3, 1924, Leyden-Ortseifen was granted leave to file an amended and supplemental answer instanter for the purpose of making- Lewis, Adler, Lederer & Kahn, attorneys, parties to the suit because of an assignment of one-third interest of the claim of Leyden-Ortseifen to them since the filing of the amended answer.

The master’s report awarded the Leyden-Ortseifen Company and some twelve subcontractors various amounts and also set aside to Lewis, Adler, Lederer & Kahn one-third of the amount due Leyden-Ortseifen pursuant to the assignment to them. These sums with interest aggregate $186,516.68. Objections and exceptions were filed and overruled and a decree entered in accordance with the findings and recommendations of the master.

The Sanitary District first asserts in its brief that by the contracts Leyden-Ortseifen covenanted, contracted and agreed to do all the work and furnish all the materials called for by the contract “free from all claims, liens and charges whatsoever”; that therefore the subcontractors are not entitled to liens, and that, further, a mechanic’s lien cannot attach to the property of a municipal corporation. The brief cites section 21, chapter 82 of the Illinois Statutes on Mechanics’ Liens, Cahill’s St. ch. 82, fí 21, which provides in substance that if the legal effect of any contract between an owner and a contractor is that no lien or claim may be filed or intended, such provision is binding. A large number of cases are cited construing the provisions of this section.

We are of the opinion that this section is not involved in this proceeding, which is brought under section 23, chapter 82 of the Revised Statutes, Cahill’s St. ch. 82, If 23.

“Any person who shall furnish material, apparatus, fixtures, machinery or labor to any contractor having a contract for public improvement for any county, township, school district, city or municipality in this State, shall have a lien on the money, bonds or warrants due or to become due such contractor under such contract. ’ ’

It is conceded that the contracts were for a public improvement. The complainant, Central Lime & Cement Company, was claiming a lien only on the moneys due or to become due under such contracts. The statute is mandatory in its provision that—

“The person so claiming a lien shall, within thirty (30) days after filing notice with the State official, commence proceedings by bill in equity for an accounting, making the contractor to whom such material, apparatus, fixtures, machinery or labor was furnished party defendant, and shall, within the same period notify the official of the State of the commencement of such suit by delivering to him a certified copy of the bill filed.”

Section 21 provides for mechanics’ liens on private improvements. Section 23 relates to work and material furnished by subcontractors on public improvements and in substance provides that no party shall have a lien against public property, but only against the funds due the principal contractor. In West Chicago Park Com’rs v. Western Granite Co., 200 Ill. 527, it was held that this section gives no lien upon improvements to anyone, but only gives a lien to the subcontractor upon the moneys provided for the payment of the contractor; that it would be absurd to provide by law for a lien in favor of the contractor upon moneys to which he becomes entitled under his contract. Leyden-Ortseifen can have no lien on any of the property of the Sanitary District, and the contractual provisions that the work shall be done “free from liens” are in fact ineffectual. The purpose of section 23 was evidently to protect subcontractors furnishing labor and material to the principal contractor. This has been recognized in County of Coles v. Haynes & Lyons, 134 Ill. App. 320; National Bank of La Crosse v. Petterson, 200 Ill. 215. In Continental Portland Cement Co. v. City of Eldorado, 206 Ill. App. 387, it was held under similar circumstances that the subcontractors could not be deprived of their right of lien upon the funds.

Furthermore, the provisions of the contracts are that “all material, tools, labor and all appliances and appurtenances called for by this agreement” shall be free from all claims, liens and charges. None of the subcontractors is claiming any liens on any of these things, but as we have said, they are claiming a .lien, under section 23, upon the moneys in the hands of the Sanitary District due to Leyden-Ortseifen.

It is next argued that there was an abandonment of the works and contracts by Leyden-Ortseifen. There were three contracts for the erection and completion of what was known as the Desplaines River Sewage Treatment Works of the Sanitary District of Chicago at Broadview, Illinois. Each contained a provision, in substance, providing that if the work to be done under the contract should be abandoned by the contractor, or if there should be a failure to perform the work in the time specified, or if various other conditions should arise which are not now in question, or “if in the opinion of the engineer the said work has been or is being delayed by the contractor, or if in the opinion of the engineer the rate of progress is not such as to insure the completion of the work within the time specified,” or if it is unnecessarily or unreasonably delayed, then under such circumstances the Sanitary District “shall have the power and authority and may then immediately notify said contractor to discontinue all work or any part thereof, as may be designated by the engineer of said Sanitary District.” Under such circumstances the Sanitary District was given a lien on all the equipment, material, implements and tools of the contractor then on the premises, and was authorized to take possession of the same and to complete the work by letting a new contract, using the equipment, material and tools of the first contractor. It was also provided that the cost of fully completing the work should be charged to the first contractor and the amount of said cost deducted out of any moneys that might be due to said contractor.

As tending to support the Sanitary District’s theory that Leyden-Ortseifen abandoned the works, H. S. Ripley, an assistant engineer, testified that the last work done was in December, 1920, except the placing of a few yards of concrete in March, 1921; that at that time he had a talk with Mr. Ortseifen who said he could not start up the work with those prices; that he was trying to get increased prices before he started work; that he had several such conversations with Ortseifen; and that about the first of June, 1921, upon inquiring of Ortseifen when he was going to finish the contract, was told that he was not going to do anything further until he got an increase in prices. W. H. Fagett, another assistant engineer, testified that in February, 1921, and at another later time, Ortseifen said he did not intend to proceed with the job until he got better prices.

It is conceded that the Sanitary District seized the improvements and tools of the Leyden-Ortseifen Company and let the contracts to complete the work to other contractors and undertook to charge the extra cost to Leyden-Ortseifen, and that it cost the Sanitary District over $40,000 more to have the work completed by other contractors than the amount which was due Leyden-Ortseifen for work actually done before the alleged abandonment. It is therefore argued that there was no money, funds or warrants due or to become due to Leyden-Ortseifen against which any lien of subcontractors could attach.

Said contracts contained a provision for “Unavoidable delay” caused by failure of railroads to furnish cars or equipment or by the Federal Government or State councils of defense, or by a large number of specified conditions, including default or delay of other parties under contract with the Sanitary District, “or due to strikes or to any other causes which * * * in the opinion of the chief engineer are entirely beyond the control of the contractor, ’ ’ in which event the time fixed by the contract for the completion of the work should be extended for a period equivalent to the time lost by reason of any of said causes and that the contractor at the commencement of such delay should notify verbally the engineer in charge of the field and the chief engineer in writing. It was also agreed that the contractor should not be entitled to any damages on account of such delays resulting from the specified causes except compensation for wages for extra time and for extra premiums on its bond. It was also provided that the chief engineer should decide the number of days that the contractor had been delayed, which decision was to he final. Leyden-Ortseifen concedes that there were many delays in the progress of the workj but asserts that they were caused by strikes, shortage in railroad cars and materials, embargoes laid by the United States Government upon certain cars, changes in plans by the Sanitary District, and because of floods. A great quantity of proof in support of this claim was heard before the master. It is voluminous and ample in quantity. To detail it would unnecessarily extend this opinion.

The master found that immediately upon the execution of the contracts Leyden-Ortseifen entered upon its performance and proceeded with all possible haste and due diligence, but was delayed from time to time by circumstances contemplated by the contracts; that it duly notified the Sanitary District of all such delays in accordance with the provisions of the contracts; that it completed a substantial portion of the work and delivered and furnished a substantial portion of the materials required under the contracts; that the. time lost and the delays were caused through no fault of Leyden-Ortseifen; that if the time had been properly extended, it would have been able to comply with all the terms and conditions of the contracts and complete the same as therein provided; that the Sanitary District did on July 7, 1921, without any previous notice and without any default on the part of Leyden-Ortseifen, seize said sewage works and prevented said Leyden-Ortseifen from completing its work under said contracts. Against the overwhelming amount of proof in this respect, the Sanitary District cannot take refuge in any unofficial conversation Ortseifen may have had with some of its subordinate employees. The finding of the master that the delays in the work were such as were contemplated by the terms of the contracts and that they should not be charged against Leyden-Ortseifen is not seriously controverted in the brief of the Sanitary District.

It follows that, if the termination of the contracts by the Sanitary District was wrongful, the re-letting of the remainder of the contracts was wrongful and the Sanitary District cannot rightfully charge the cost thereof against the moneys admittedly due Leyden-Ortseifen. This was the theory of the master’s finding and of the chancellor, and it is justified by the record.

It is next argued that Leyden-Ortseifen cannot assert any claim for damages in this proceeding, as its rights, if any, to recover such damages are in an action at law. Undoubtedly an action for damages for loss of profits would usually be at law and not in chancery. However, the Sanitary District went to trial upon this issue and introduced evidence before the master opposing such claim. It has been held that, if a defendant makes no objection to the hearing of a cause and participates in it himself, he must be regarded as consenting to the jurisdiction and in case of defeat cannot make objection. Central Elevator Co. v. People ex rel. Moloney, 174 Ill. 203.

That a court of equity has jurisdiction of complainant’s bill is apparent. Having taken jurisdiction and the court being clothed with authority to adjudicate all the rights between the parties, both legal and equitable, the decree should not be set aside on the ground that part of the relief awarded might have been adjudicated in an action at law. The rule is well established that, where equity acquires jurisdiction, it will retain the cause and settle all questions incident to the relief sought, even if it is necessary to pass upon purely legal rights which would otherwise be beyond the scope of the court’s authority. Stickney v. Goudy, 132 Ill. 213; Grand Tower & Cape G. R. Co. v. Walton, 150 Ill. 428; Fleming v. Reheis, 275 Ill. 132; Patterson v. Patterson, 251 Ill. 153; Miller v. Rowan, 251 Ill. 344. Equity will grant affirmative relief in a mechanic’s lien suit to avoid a multiplicity of suits. Longshore v. Longshore, 200 Ill. 470; Thielman v. Carr, 75 Ill. 385.

The account, as stated by the master, does not seem to be seriously questioned except as to the allowance of interest. The court allowed the claim of Leyden-Ortseifen for $151,226.47 and interest on this from July 7, 1921, at the rate of 5 per cent, making a total of $186,516.68. Interest on the amount of damages was improper. Brownell Improvement Co. v. Critch field, 197 Ill. 61; Laughlin v. Hopkinson, 292 Ill. 80. We also hold that no interest should have been allowed on any of the claims. It has been held in many cases that a municipal, corporation is not liable for interest on its indebtedness in the absence of an express agreement to pay interest. County of Pike v. Hosford, 11 Ill. 170; City of Pekin v. Reynolds, 31 Ill. 529; City of Chicago v. People, 56 Ill. 327; City of Chicago v. Allcock, 86 Ill. 384; South Park Com’rs v. Dunlevy, 91 Ill. 49; Shoenberger v. City of Elgin, 164 Ill. 80. This may be said to be the established rule. The cases cited in opposition have to do with private parties. The Sanitary District is a public corporation and in the absence of any express agreement to pay interest, it is not liable therefor.

For the above reasons the decree of the superior court is affirmed except as to- the allowance of interest, in which respect the decree is reversed. The cause is therefore remanded to the superior court for further proceedings-in harmony with what we have said in this opinion.

Affirmed in part, reversed in part, m%d remanded.

Hatchett and Johnston, JJ.,

concur.

Mr. Presiding Justice HcSurely

Delivered the Sup-

plemental Opinion of the Court Upon Rehearing.

The subcontractors claim that they are entitled to interest as the fund found due Leyden-Ortseifen Company was in excess of the amounts due the subcontractors with interest, citing West Chicago Park Com’rs v. Western Granite Co., 200 Ill. 527.

It may be conceded that upon a proper showing interest' should be allowed the subcontractors, but the prinicpal contractor, Leyden-Ortseifen Company, says that the subcontractors have not shown that it is liable to pay interest to them on their contracts, nor does it appear from the abstract or any of the briefs when the money due the various subcontractors was to become due or to be paid, and therefore there is no basis for the computation of interest. Contrary to our rules, we have allowed the subcontractors to file a reply to give them the opportunity to point out where this court may find a basis for allowance of interest, but in such reply no such data or basis is given. The case is, therefore, in substance, like Haynes & Lyons v. County of Coles, 234 Ill. 137, 145, where the court said: ‘‘Sufficient data should be furnished us by counsel to justify us in holding that an error was made in this regard. The trial court, so far as we are advised from the abstract and briefs, may have taken this interest question into account in making up the amounts due these claimants. ’ ’

Under these circumstances we are unable to modify or change our original opinion and judgment, and that opinion is refiled with this supplemental opinion.

Original opinion refiled.

Hatchett, J., concurs.


author: Mr. Presiding Justice Barry

text:
    American National Bank et al., Appellees, v. Fred Holsen et al., Appellants.

      Banking — who not a creditor entitled, to enforce stockholders’ liability for bank debts. Where a national bank by contract takes over such of'the assets of an insolvent state bank as it is lawfully permitted to do, and assumes the liabilities of the state bank except the liability of that bank to its shareholders, the contract providing for no liability against the state bank other than its guaranty of the payments of the assets taken over and except that an indemnity bond is given to the national bank to save it from loss for assuming the liabilities, the national bank is not a creditor of the state bank and is not entitled to enforce the constitutional and statutory liability of the state bank stockholders for the. debts of that bank, the contract being silent as to such liability of the stockholders, and it not appearing but that the national bank received full payment on the assets taken over.

      Appeal by defendants from the Circuit Court of Wabash county; the Hon. C. H. Miller, Judge, presiding. Heard in this court at the October term, 1926.
    Reversed.
    Opinion filed April 15, 1927.
    Rehearing denied July 29, 1927.
    P. J. Kolb and M. J. White, for appellants.
    Geo. W. Lackey, Gee & Gee, C. F. Brian and Ben H. Townsend, for appellees.
   Mr. Presiding Justice Barry

delivered the opinion of the court.

Appellees, as alleged creditors of the First State Bank of Mount Carmel, Illinois, filed a bill against appellants and the other stockholders of the said bank to enforce their constitutional and statutory liability for the debts of the corporation. Hereafter we will refer to that bank as the State Bank, and to appellee, American National Bank, as the National Bank. The bill avers that on October 30,1923, the State Bank was insolvent and unable to meet its obligations to its depositors and creditors; that on November 7, 1923, its stockholders adopted a resolution to the effect that the condition of its business was such that it was better to discontinue business and liquidate its affairs. The bill avers that the National Bank submitted a proposal to take over so much and such parts of the assets of the State Bank as were permissible under the banking laws and the regulations of the Comptroller of the Currency and to assume the liabilities of the State Bank, except its liability to its shareholders, and to assist in the liquidation of its affairs through representation on a liquidation committee to be composed of the cashier of the State Bank, the president of the National Bank and a third member to be appointed by the directors of the State Bank from its shareholders.

The bill avers that the stockholders of the State Bank adopted a resolution reciting the terms of the proposal of the National Bank; that the same should be accepted upon the . terms and conditions contained therein; that the hoard of directors be and are hereby authorized and directed to enter into a proper contract with the National Bank for the assumption of the liability of the State Bank to its depositors and other creditors, according to the tenor of said proposal, the transfer to the National Bank of such of the assets as it has proposed to accept, in the way and manner provided in said proposal, and to guarantee on behalf of the State Bank the payment of all notes, bonds and other securities so transferred; to enter into bond or contract on behalf of the State Bank and its shareholders, guaranteeing the National Bank against and agreeing to save it harmless from any pecuniary loss or damage on account of the assumption by it of the liabilities of the State Bank; that the board of directors be authorized to assent to the appointment of the liquidating committee, as provided in said proposal, and to appoint such committee to be composed of members, as provided in said proposal, with full power and authority to carry out the provisions of such contract as may be entered into with the National Bank for the taking-over of the permissible assets and assuming the liabilities of the State Bank to the extent and upon the conditions contained in said proposal; to authorize the conveyance of the real estate of the State Bank to such liquidating committee, to be held by it as trustee for both banks for the purpose of giving effect to the provisions of said proposal and to the end that the affairs of the State Bank may be fully and speedily liquidated and the liabilities of it. and those of its shareholders fully discharged.

The bill then avers that on November 10, 1923, the board of directors of the State Bank authorized the execution of the contract referred to in the resolution aforesaid and said contract is set out in full. It is too lengthy to quote in this opinion, but it provides for the transfer to the National Bank of all of the assets of the State Bank, which under the National .Banking Laws and Regulations of the Comptroller of the Currency it will be allowed to carry, being all of the assets of the State Bank except its real estate, furniture and fixtures, and such .of its notes, bonds and other securities which may be considered worthless or not sufficiently secured; that all of the assets which are not transferred to the National Bank shall be transferred to the liquidating committee composed of the three named persons who shall dispose of the same and the money received shall be applied by such committee to the discharge of the liabilities of the State Bank, in so far as may be necessary and when all such liabilities have been so discharged, the residue shall be paid over to the State Bank for its shareholders; that such committee shall hold such assets as are transferred to it as trustee for the two banks, for their use, according to their rights.

. The contract further provides that in consideration of the transfer and delivery to the National Bank of the assets of the State Bank as aforesaid, and of the transfer of the other assets to said committee to be held in trust as aforesaid, and in consideration of the agreement therein contained for the indemnification of the National Bank, it agrees to assume, and does assume, all of the liabilities of the State Bank, except its liabilities to its shareholders, and agrees to assist in liquidating the affairs and business of the State Bank without compensation, only that it shall be permitted to charge the State Bank for any and all expenses actually and necessarily paid out in connection with its work in liquidating such business.

The contract further provides: “And it is understood and mutually agreed that all assets that are transferred to the National Bank hereunder shall be received by it and credit given the State Bank therefor at the full face value thereof; also that all the negotiable paper so transferred shall be endorsed in blank by said bank, and assignments properly made of all securities that are not negotiable, and the title to which does not pass by delivery, and that the full payment of all of such assets is hereby guaranteed by the State Bank; also, that there shall be made an equitable adjustment of the matter of interest,” etc.

The contract provides that with the transfer of the assets to the National Bank, there shall also be delivered to it all books of account, files, records, canceled drafts, certificates of-deposit, cashier’s checks, customers’ checks, and all correspondence relating to the business of the State Bank as the same has been conducted.

It further provides that the State Bank shall furnish to the National Bank an indemnifying bond or contract of indemnification, to be signed by enough of its stockholders to satisfy the National Bank, indemnifying it against any and all pecuniary loss that it may sustain on account of the assumption by it of the liabilities of the State Bank and the talcing over of the business and assisting with the liquidation thereof, under the contract. The bill avers that a satisfactory indemnifying bond was executed and delivered to the National Bank and it is set out in full.

The bill avers that after the transfer of such assets of the State Bank to the National Bank as were permitted by the National Banking Laws, the National Bank has assumed, taken over and liquidated by and through the terms of said contract, and has become responsible to an amount of $126,466.44 over and above such assets as were taken over and credited on the liabilities of the State Bank to its depositors and creditors ; that there still remains in the hands of the liquidating committee about $30,000 worth of assets in value to be applied on the liquidation of said liabilities of the State Bank, all other remaining assets being worthless and of no value.

The bill avers that under section 6, art. XI of the Constitution and section 6 of the Banks Act of the State of Illinois, Cahill’s St. ch. 16a, 6, every stockholder in a banking corporation or institution shall be individually responsible and liable to its creditors, over and above the amount of stock held, to an amount equal to his or her respective shares, for all its liabilities accruing while he or she remains such stockholder. The bill avers that on May 6, 1924, the board of directors of the State Bank levied an assessment upon all of the stockholders and that the sum of $48,770 has been collected by reason of such levy; that after allowing’ credit therefor there still remains a deficiency in the sum of $48,689.44 due the National Bank; that about $22,330 of said assessment has not been paid and the stockholders liable therefor are insolvent.

The bill sets out the names of the stockholders and the number of shares held by each, etc., and prays that the National Bank may be subrogated to the rights of the depositors and creditors of the State Bank to enforce the constitutional and statutory liability of the defendants as shareholder in the State Bank and for general relief. Issues were joined and the cause referred to the master to take and report the evidence.

Upon the hearing appellees did not undertake to prove that the National Bank was entitled to subrogation. The court entered a decree on the theory that the evidence proved that appellees were creditors of the State Bank and as such were entitled to enforce the constitutional and statutory liability of the defendants as shareholders in the State Bank.

Appellants contend that while the bill avers that appellee, the National Service Bureau, is a creditor of the State Bank, yet there is no evidence in the record tending to prove that averment. Appellees make no reply to that contention. The record is voluminous and the abstract contains 164 pages. If appellees offered any proof in support of that averment they should have directed our attention to that portion of the abstract where it may be found. Having failed to do so, we will assume that there was no proof in that regard.

Appellants contend that under the law and the evidence the National Bank is not a creditor of the State Bank and is not entitled to a decree against the shareholders of the State Bank under the constitution and the statute relied upon. It will be observed that the proposal made by the National Bank to the stockholders of the State Bank was to take over such of the assets as would be permissible under the National Banking Law and the Regulations of the Comptroller of the Currency and to assume the liabilities of the State Bank, except the liability of that bank to its shareholders. So far as the record shows there was nothing in the proposal to indicate that the State Bank or its shareholders were in any way to be held liable to the National Bank except that the State Bank was to guarantee the payment of all notes, bonds and other securities transferred to the National Bank, but not those to be transferred to the liquidating committee; and except that a bond or contract was to be given to the National Bank to save it harmless from any pecuniary loss or damage on account of the assumption by it of the liabilities of the State Bank. The resolution of the stockholders was to the effect that the transfer of one portion of the assets to the National Bank and the remainder to a liquidating committee was for the purpose of giving effect to the provisions of the proposal of the National Bank to the end that the affairs of the State Bank may be fully and speedily liquidated and the liabilities of the bank and its shareholders fully discharged.

The contract which was executed by the two banks pursuant to the resolution of the stockholders of the State Bank and the proposal of the National Bank provides for no liability whatever against the State Bank other than its guarantee of the payment of the particular assets which the National Bank would be permitted to take over under the National Banking Law and the Regulations of the Comptroller of the Currency. The contract is silent as to the constitutional and statutory liability of the stockholders of the State Bank. It required the execution of an indemnifying bond to the National Bank to save it harmless from any loss or damage for having assumed the liabilities of the State Bank and such a bond, satisfactory to the National Bank, was executed and delivered to it.

We find no evidence in the record tending to show that the National Bank was unable to collect on any of the assets which it was permitted to receive from the State Bank under the National Banking Law and the Regulations of the Comptroller of the Currency. If the National Bank received full payment on those assets, and in the absence of proof to the contrary we must assume it did, then there is nothing in the proposal,.the resolution of the stockholders or the contract which would make the National Bank a creditor of the State Bank and for which there would be a constitutional and statutory liability against appellants as stockholders of the State Bank.

The Metropolitan Bank of Buffalo, New York, was a State Bank and was in financial trouble. The German Bank of the same city undertook to take over its assets and liquidate its affairs under the terms of a written contract. The provisions of that contract were somewhat like those in the case at bar. The contract was silent as to the liability of the Metropolitan Bank and as to the liability of the stockholders of that bank. It required the Metropolitan Bank to procure and deliver to the German Bank a proper guarantee of certain of its directors and stockholders against any and all loss which it might in anywise sustain by reason of any-advance by it made pursuant to the agreement. In liquidating the affairs of the Metropolitan Bank the German Bank paid out more money than it realized from the assets. In a well-considered opinion the New York Court of Appeals held that the German Bank was not a creditor of the Metropolitan Bank and was not entitled to enforce the liability of the shareholders of that bank for the debts of the corporation. Assets Realization Co. v. Howard, 211 N. Y. 430, 105 N. E. 680.

The cases relied upon by appellees in support of their contention to the contrary are: Golden v. Cervenka, 278 Ill. 409; Hightower v. American Nat. Bank of Macon, 263 U. S. 351, and Wyman v. Wallace, 201 U. S. 230. The question involved in the Golden case was entirely different and does not support appellees’ contention. In the Hightoiver case the two banks were under the National Banking Law and the contract contained the following provision: “And it being further distinctly agreed and understood that neither the resolutions of said boards of directors of said associations nor this contract shall relieve the shareholders of the Commercial National Bank from their legal liability as shareholders to respond, in the event it may be necessary to have recourse upon such shareholders’ liability, for any deficit which may remain after exhausting the other assets of said association in the payment of its liabilities.” That contract was executed on August 11, 1914, and was ratified and approved by the stockholders of the Commercial National Bank on September 30, 1914. The conclusion of the court in that case was based upon the provision of the contract aforesaid and the ratification of the same by the stockholders. It is not applicable to this case. The Wyman case does not throw any particular light on the question here involved.

We are of the opinion that appellees have failed to prove that the National Bank was a creditor of the State Bank and entitled to enforce the constitutional and statutory liability of appellants. Other questions are discussed and contentions made, but in our view of the case it is unnecessary to further extend this opinion in a consideration of the same. The decree as to appellants is reversed.

Reversed.