text:
    Chicago Title & Trust Company, Executor of the Last Will of Ernest V. Johnson, Deceased, Appellant, v. Merchants Loan & Trust Company, Executor of the Last Will of William Grace, Deceased, Appellee.
    Gen. No. 31,265.
    1. Contracts — when agreement for transfer of stock is absolute and not as security. Agreements for the transfer of certain corporate stock “in full payment and satisfaction” of a debt due from the transferor to the transferee held not so ambiguous and uncertain, in view of the language of the instruments, the circumstances of their execution and the practical construction placed thereon by the parties, as to warrant the court in holding that the transfer was not intended to be absolute but was merely to secure the payment of the debt.
    2. Contracts — conduct of parties as showing intention to make transfer absolute and not as security. Where a controlling stockholder transfers certain shares “in full payment and satisfaction” of the transferee’s claim to a share in the profits under a previous agreement between them and causes a certificate for such shares to be issued in the transferee’s name and later thereon, after the transferee’s claim has been satisfied, issues to the transferee a written statement which recognizes the latter’s ownership, the practical construction thus placed upon the transfer by the parties shows their intention to have been that it should be absolute, and not by way of security.
    3. Contracts — aids to construction. In construing a contract the court may not only consider the circumstances surrounding the parties and the object had in view, but also the interpretation placed upon it by the parties in their performance of it.
    4. Evidence — weight to be given evidence as to admissions by testator. The evidence of a former employee of plaintiff’s testator, that defendant’s testator shortly before his death said that he would at a proper time turn back to plaintiff’s testator stock which stood in his name and which he had received in exchange for acknowledged rights to business profits, is entitled to little weight.
    5. Estates oe decedents — effect of failure to file claim in time. Under Cahill’s St. eh. 3, 1 71, the failure to make any claim to corporation stock standing in the name of defendant’s testator and inventoried as part of the assets of his estate or to file any suit for its recovery until nearly three years after letters testamentary were issued to the defendant, debars plaintiff from the right to make such claim.

      Appeal by plaintiff from the Circuit Court of Cook county; the Hon. Ira J. Ryner, Judge, presiding.
    Heard in the second division of this court for the first district at the October term, 1926.
    Affirmed.
    Opinion filed May 17, 1927.
    John F. Voigt, for appellant.
    William C. Asay and Wallace Streeter, for appellee.
   Mr. Presiding Justice Gridley

delivered the opinion of the court.

On October 23,1924, complainant, as executor of the last will of Ernest V. Johnson, deceased, filed its bill against defendant, as executor of the last will of William Grace, deceased, praying that it, as executor of Johnson’s will, be declared to be the true and lawful owner of 83 shares of the capital stock of the E. V. Johnson Company, an Illinois corporation, standing in the name of said Grace, and that defendant, as executor of Grace’s mil, having the possession of the certificate for the stock, be required to assign and surrender the same to complainant. After answer and replication had been filed the cause was referred to a master to take testimony and report his conclusions. Considerable evidence, oral and documentary, was introduced, resulting in the master filing a report in which he found that Grace in his lifetime held said certificate of stock as a trustee “as security against loss by him’ ’; that defendant now holds the same without any right whatever in equity; that it belongs to complainant and that defendant should be required to assign and surrender it. On the hearing before the chancellor certain exceptions to the master’s report were sustained, and, on May 12, 1926, a decree was entered, overruling the master’s report and dismissing complainant’s bill for want of equity, which decree it is sought by this appeal to reverse.

Ernest V. Johnson, who died testate at Chicago, Illinois, on April 29, 1924, was, during the year 1918, and prior thereto, engaged in business in Chicago under his own name, furnishing fireproof construction for buildings in that city and elsewhere. William Grace also was a contractor and builder and he and Johnson were friends. Being in need of additional money to carry on his business Johnson applied to Grace for assistance and Grace loaned him $20,000, which money was obtained by Grace’s signing or indorsing three notes aggregating that sum and discounting them at a Chicago bank. To secure Grace against his liability on these discounted notes Johnson and wife executed and delivered their two notes, aggregating $20,000, and severally secured by certain trust deeds and two life insurance policies. As a special inducement to Grace to discount the first-mentioned notes and loan $20,000 to Johnson, the latter verbally agreed to pay to Grace “one-third of all profits” which would accrue to him (Johnson) on account of the construction work then being carried on by him. About December 1, 1918, Johnson caused to be organized the E. V. Johnson Company, an Illinois corporation, with an authorized capital stock of $50,000, divided into shares of $100 each, of which $25,000 had been fully paid and issued, viz, 248 shares to Johnson, 1 share to Walter E. Maas, an employee of Johnson, and 1 share to John T. Richards, a Chicago lawyer. All of the assets of Johnson’s construction business were turned over to the corporation and it thereafter carried on said business in its name. Grace demanded that his one-third of the profits be secured to him. As a result of this demand two" agreements, introduced in evidence as Exhibits A and B, dated February 17, 1919, were executed — one between Johnson and Grace, and the other between Grace and the corporation.

In said Exhibit A it is recited that Grace “has heretofore made sundry advances” to Johnson to aid him in the carrying out of his building construction work “under an agreement that Grace should share in the profits arising from such building operations,” and that “all uncompleted contracts so undertaken by Johnson have been transferred and assigned to the E. V. Johnson Co., and Johnson desires to secure to Grace his interest in the profits which have resulted or may result from said advancements.” It then is provided that, in consideration of the premises, Johnson “agrees to transfer” to Grace “83 shares of the capital stock of said E. V. Johnson Co.,” now standing in Johnson’s name, “which said shares of stock, when so assigned, shall be in full payment mid satisfaction of the claims” of Grace against Johnson, personally, “for his (Grace’s) share of the profits growing out of the building operations herein mentioned, it being mutually understood and agreed that all dividends, which, shall be declared upon said 83 shares of capital stock, shall be paid” to Grace, his heirs or assigns. It is further provided that Grace will not sell said 83 shares to any person other than Johnson without first giving Johnson a 30-day option to purchase them at a price equivalent to any price which may be offered by any other person; that Johnson will not prevent at any time the declaration of dividends on the capital stock of the Johnson Company out of its net earnings without Grace’s consent; and that Johnson will not sell his remaining shares of the capital stock of the company without first giving to Grace a 30-day option to purchase the same at such bona fide price as any other person may offer therefor.

In said Exhibit B it is recited that Grace “has heretofore loaned and advanced to E. V. Johnson, president of the E. V. Johnson Co., the sum of $20,000, the payment of which has seen secured as hereinafter stated, that is to say” (certain securities then are mentioned). It is further recited that said sum of $20,000, so obtained by Johnson from Grace, “or property purchased by said E. V. Johnson therewith, has been paid over by said E. Y. Johnson in payment for capital stock” of the Johnson Company, and that said Johnson Company “is desirous of obtaining the assistance” of Grace “in the promotion of its business.” It then is provided that Grace “hereby agrees to extend the time of payment of said sum of $20,000' to October 1, 1920, and to grant to said E. Y. Johnson the privilege of the prepayment of the same or any part thereof”; that the Johnson Company agrees, “in consideration thereof and of the services to be rendered” by Grace to the Company, to pay to Grace “the sum of $200 per month, salary, beginning with the first day of March, 1919, continuing until said sum of $20,000 shall have been fully paid, — such payments (of salary) to be made on or before the 10th day of each and every month during said period”; that, in consideration of the payment of said salary to Grace by the company, Grace agrees to aid the company in securing contracts from time to time, in so far as he may consistently do so without interfering with his own business and at his discretion; that the Johnson Company further agrees that, until said indebtedness of Johnson to Grace shall have been paid, it will not pay to Johnson, as its president, a salary in excess of $300 per month, and that the company will furnish to Grace, on the 1st day of each and every month, a statement in detail showing all its receipts and disbursements, together with all its outstanding obligations, work in process of construction, etc.; and that this contract shall continue in force until all sums of money, owing by the company or by Johnson to Grace, shall be fully paid, etc. A third agreement, Exhibit C, executed about the same time between Grace and Johnson, declares that the $20,000 mentioned in Exhibit B “is the same $20,000” which Grace loaned to Johnson and which he (Grace) obtained for that purpose from the Chicago bank by his discounting said notes.

When said agreements were executed, John T. Richards was Johnson’s attorney, and William A. Either was Grace’s attorney. Both testified as to the circumstances of the drafting and execution of the agreements. Richards testified that he had a number of conferences with Johnson regarding the drafting of Exhibits A and B, at some of which Grace was present; that he made a draft of an agreement which contained a provision that “when all obligations upon which Grace was or should become liable had been paid, the 83 shares of capital stock should be returned to Johnson”; that Grace and Johnson took away copies of the draft in order that Either might be consulted; that he (Richards) never saw said copies again, nor did he see Exhibit A, until after it had been executed by both Grace and Johnson, “with the paragraph relating to the return of the stock eliminated”; and that when he found that that clause had been eliminated he was “very much surprised.” Either’s testimony is to the effect that the first draft of Exhibit A, prepared by Richards, was submitted to him by Grace and Johnson, that after conferences and discussion with them he made a new draft, with said clause relating to the return of said stock to Johnson eliminated, and that duplicate copies thereof afterwards were signed by both Grace and Johnson, in final form as Exhibit A, introduced in evidence. It thus appears that an important clause of the agreement between Johnson and Grace, viz, that Johnson was to transfer the 83 shares of stock to Grace, and upon this being done the same should be “in full payment and satisfaction” of Grace’s claim for his share of the profits mentioned, was incorporated in the agreement, after full discussion and not through error or inadvertence.

Thereafter Johnson, in accordance with his agreement contained in Exhibit A, transferred 83 shares of his holdings of stock in the Johnson Company (about one-third thereof) to Grace, and the latter held these shares continuously until his death, which occurred on November 6, 1921. The three notes which Grace had discounted at the Chicago bank, and upon which he was liable individually as maker or indorser, were all paid by others than himself, and canceled, by January 15, 1921, and all securities, trust deeds, insurance policies, etc., which had been given to protect him as against his liability on said three notes, were released, canceled or surrendered to Johnson. Up to this time, and not thereafter, Grace was paid by the Johnson Company the monthly salary of $200 — $4,600 in all. No dividends up to this time had been declared by the Johnson Company on its capital stock and no “profits” (except on the so-called “Blatt” contract, made and completed before the agreements, Exhibits A and B, were executed) were received by Grace by way of dividends or otherwise from the Johnson Company, although it appeared that it had made profits, not as large as expected, on contracts for construction work which it had obtained and had carried out. On January 22,1921, Johnson, individually, caused to be mailed to Grace a full statement (introduced in evidence as defendant’s Exhibit 14) showing the total amount which Grace had received through Johnson, by reason of the various dealings and transactions, including the “Blatt” contract. This statement was contained in a letter, signed “E. V. Johnson,” in which is written “also find enclosed statement of notes and interest paid on account of the $20,000 loan which I made from you in 1917, together with a summary of accounts on this transaction to date, all of which is submitted for your favorable consideration.” In this statement is set down as “profit to Wm. Grace” the total sum of $15,577.50, of which two items which make up that total sum are: (a) “Salary paid to Wm. Grace for 23 months, $4,600,” and (b) “E. V. Johnson Go. stock, 83 shares par value $100, $8,300.” Because of this item (b) the inference is compelling that at this time Johnson considered that Grace was the owner outright of said 83 shares of stock and was not holding the same merely as a trustee for Johnson’s use. Apparently, the mailing of this letter and statement was the last definite act of Johnson in connection with the transaction in question. There is no evidence showing that Johnson, thereafter during Grace’s lifetime, commenced any action against him seeking the return of said shares of stock.

Complainant’s counsel claimed before the master, and claims here, that the agreement, Exhibit A, taken in connection with Exhibit B, is ambiguous and uncertain. Because of this claim the master allowed, over defendant’s objection, certain testimony to be introduced in complainant’s behalf tending to show that it was not the intention of either Johnson or Grace that the latter should become the absolute owner of the 83 shares of stock, but only that the stock should be transferred to him, as security, for the purpose of thus more fully assuring the payment to him by the Johnson Company of one-third of its profits, and as further protection to him against any liability upon the $20,000 notes, which he had discounted for Johnson’s use. In our opinion some of this testimony was not properly admitted, and should not be considered. After carefully considering the provisions of Exhibit A, we cannot say that it is ambiguous or uncertain. By it, in consideration of the premises contained in the recitals, Johnson agreed to transfer the stock to Grace, and further agreed that, when such transfer was made, it should be “in full payment and satisfaction” of Grace’s claims against Johnson for his share of certain profits growing out of certain building operations. This language, as we read it, plainly indicates that Johnson was to sell the stock outright to Grace for the consideration mentioned, and that the stock was not merely to be held by Grace “as security against loss by him,” as the master found. And we do not think that other clauses in said Exhibit A, or in Exhibit B, militate against this construction. Furthermore, it appears that his particular clause was inserted in the agreement after much discussion and after both Johnson and Grace had agreed that a clause inserted in a prior draft, providing for the return of said stock to Johnson upon the happening of certain contingencies, was to be eliminated. It is well settled that it is not the province of courts to interpolate new terms into contracts against the evident intentions of the parties. (Robinson v. Stow, 39 Ill. 568, 572.) “In giving an interpretation to a written contract it is always proper, when the writing is not specific, to ascertain the circumstances surrounding the parties and the object they had in view to ascertain the true meaning, and effect will be given to the intention wherever it can be done without doing violence to the plain and obvious meaning of the language employed.” (Wolf v. Schwill, 289 Ill. 190, 192.) “The contentions of the parties to the contract are not the criterion which should guide the court in determining whether the written contract is a full expression of the agreement of the parties. The court must determine this from the writing itself.” (Armstrong Paint & Varnish Works v. Continental Can Co., 301 Ill. 102, 106.) Furthermore, in construing a contract, it is permissible to look to the interpretation that the parties thereto have placed thereon, in its performance, for assistance in ascertaining its true meaning. As said in Slack v. Knox, 213 Ill. 190, 195, “no extrinsic aid can be more valuable.” (See, also, Vermont Street M. E. Church of Quincy v. Brose, 104 Ill. 206, 212; Sholl Bros. v. Peoria & P. U. Ry. Co., 276 Ill. 267, 272.) Immediately following the execution of the agreements in question Johnson transferred and assigned the 83 shares to Grace, and the Johnson Company issued a new certificate to him, certifying that he was the owner of that number of shares in that company, and Grace kept the certificate in his possession until his death. There was no writing attached to the assignment or to the new certificate, or any other writing, showing that Grace held the stock merely “as security” and was not the absolute owner. Furthermore, Johnson’s statement (Exhibit 14) rendered to Grace on January 22,1921, nearly two years after he had transferred the stock to Grace, and after the $20,000 notes had been paid and canceled and Grace had been relieved of any possible liability thereon, clearly discloses that he then considered Grace as the owner of the stock. Complainant’s counsel places considerable reliance upon the testimony of Walter E. Maas, who before the organization of the Johnson Company had been a clerk for Johnson and afterwards was the secretary of the company, as to a claimed verbal admission against interest made by Grace to Johnson in the latter’s office shortly after the $20,000 notes had been paid and canceled, about January 15, 1921. According to Maas, Johnson demanded of Grace that he return the 83 shares of stock, and Grace replied: “Well, it ain’t worth anything to me anyhow. You will get it back at the proper time.” We do not regard this is an admission by Grace that Johnson was then the equitable owner of the stock, but rather a statement that Grace did not consider it of any particular value to him, and that Johnson might get it back at a subsequent time. Furthermore, the testimony of Maas, given after Grace’s death, that such a statement was made by Grace, should be received with caution and it is entitled to little weight. (Bragg v. Geddes, 93 Ill. 39, 60; Laurence v. Laurence, 164 Ill. 367, 377; Baker v. Baker, 161 Ill. App. 430, 437.)

Our conclusion is, on the merits of the present case, that the court properly dismissed complainant’s bill for want of equity.

And there is another reason why, in our opinion, the court’s action was proper. And that is, where it appears, as here, that stock of a corporation stands in the name of a deceased person and has been inventoried as a part of such person’s estate by the executor of his will, any person, claiming title to and ownership of the stock, is barred from enforcing his claim unless the same is presented to the probate court or some other court of competent jurisdiction, within one year after letters testamentary are issued to said executor, under the provisions of section 70 of the act concerning administration of estates. (Cahill’s St. 1925, ch. 3, 1[71.) We think that this proposition is sustained by the holdings and reasonings in the following decided cases: Morse v. Pacific Ry. Co., 191 Ill. 356, 361, 362; Levy v. Kuss, 219 Ill. App. 194, 198, 199; People v. Small, 319 Ill. 437, 447; Cone v. Dunham, 59 Conn. 145, 161. In the present case it appears that Grace’s will was probated in the county court of Lake county on December 12, 1921, and letters testamentary issued to defendant; that on April 3, 1922, defendant filed in said court an inventory of Grace’s estate, in which was listed the certificate for said 83 shares of stock; that on June 6,1922, the usual order of adjudication was entered; and that neither Johnson, prior to his death, nor complainant as executor, ever filed in said county court any claim against Grace’s estate as to said stock, nor did they or either of them ever file any suit in any court, seeking to establish title to or ownership in said stock, until complainant filed the present bill — nearly three years after letters testamentary were issued to defendant, as executor of Grace’s will. In Cone v. Dunham, supra, an action was commenced for the recovery of certain stock, and for an accounting for cash and stock dividends received, against the executors and devisees and legatees of one Austin Dunham, deceased. The plaintiffs, executors of the will of one Averill, deceased, prevailed in the lower court, but on appeal the judgment rendered in their favor was reversed. One of the grounds for the reversal was that, under a statute somewhat similar to the Illinois statute above referred to, the claim was barred by failure either to exhibit it or commence an action on it in apt time in a proper court. It is said in part in the reported opinion (p. 161):

“The failure to exhibit a claim within the time limited by the court of probate for the presentation of claims against a deceased person’s estate forever debars the demand. * * * However clear and indisputable the title, could the merits be inquired into, the limited time has elapsed, and the door of justice has closed. The language of Judge Story, quoted in the defendants’ brief, suggests a reason for the strict application of the statute. He says: ‘This statute of limitations as to executors and administrators is not created for their own security or benefit, but for the security and benefit of the estates which they represent. It is a wholesome provision designed to produce a speedy settlement of estates, and the repose of titles derived under persons who are dead.’ If it appears to work harshly in this case, the law is nevertheless so that, whenever this statute comes in, it applies, regardless of any hardships which it may work, and we must regard this claim as barred by the failure to present it against Mr. Dunham’s estate within the time limited by the court of probate.”

For the reasons indicated the judgment of the circuit court, dismissing complainant’s bill for want of equity, is affirmed.

Affirmed.

Fitch and Barnes, JJ., concur.


source: Caselaw Access Project

author: Mr. Presiding Justice Gridley

license: Public Domain

text:
    Rudolph-Christy Casket Company for use of John L. Janisch, Appellee, v. John Tancl, Appellant.
    Gen. No. 31,377.
    1. Appeal and error — when inclusion of referee’s report, etc., in hill of exceptions unnecessary. Appeal from a judgment based wholly upon the report of a referee and exceptions thereto and rulings thereon and the pleadings brings up for review the report, etc., without any necessity of setting them out bodily in the bill of exceptions, even though all the assignments of error are based upon the report, etc.
    2. Corporations — right to set off amount paid on canceled subscription against claim, of corporation. Where the president of a company agrees to cancel a stock subscription and credit the subscriber on his purchases from the company with the amount of his subscription, and this agreement is acquiesced in by stockholders and directors and acted on by the company, the subscriber is entitled to the credit as a set-off in an action by the assignee of the company for goods sold and delivered.
    3. Corporations — enforceability of subscription where Blue Shy Law not complied with. Under Cahill’s St. eh. 32, til 287, 289 and 290, a subscription to stock of a company which has not complied with the provisions of the Illinois Securities Law and is practically insolvent at the time of the subscription, is void and unenforceable against the subscriber and he is entitled to the amount paid therefor as a set-off to the claim of the company for goods sold him.
    Appeal by defendant from the Municipal Court of Chicago; the Hon. J. B. Lane, Judge, presiding.
    Heard in the second division of this court for the first district at the October term, 1926.
    Reversed with finding of facts and judgment here for $122.51.
    Opinion filed May 17, 1927.
    Charles Vlach, for appellant.
    Ekern & Meyers, for appellee; Luther F. Binkley, of counsel.
   Mr. Presiding Justice Gridley

delivered the opinion of the court.

On July 10, 1924, an action in assumpsit was commenced in the municipal court against the defendant, Tancl, to recover a balance claimed to be due for certain merchandise sold and delivered. After defendant had filed an affidavit of merits, in which he denied any indebtedness to the Casket Company, or to its assignee, Janisch, the cause was, on October 20, 1924, and upon plaintiff’s motion, referred to William H. Dellenback, as referee, “to take and state the account of the parties and return the same, with the objections, if any, to the court, pursuant to Section 68 of the Practice Act.” Considerable evidence, oral and documentary, was introduced before the referee, and his report, together with defendant’s objections and the transcript of the testimony and exhibits, was filed on February 17, 1926. By stipulation the original report, etc., are contained in the present record. Prior to their filing defendant by leave of court filed a claim of set-off. The referee found that there was a net balance owing from defendant of $1,222.51. There was a trial before the court without a jury upon the report and certain of defendant’s objections (treated as exceptions), resulting in the court’s allowing to defendant an additional credit of $100, and, on March 29, 1926, entering judgment against him for $1,122.51, and costs including $120.65 advanced by plaintiff for referee’s and stenographer’s fees. Defendant appealed.

After the transcript of the record had here been filed, plaintiff moved that certain parts be stricken and that the judgment be affirmed. Written suggestions in support of the motion as well as counter suggestions were filed, and the motion was reserved to the hearing. Plaintiff’s contention, as we understand it, is that, inasmuch as the referee’s report, etc., are not bodily contained in the bill of exceptions, and as all of defendant’s assignments of error are based thereon, there is nothing for this court to consider and the judgment should be affirmed. We cannot agree with the contention and plaintiff’s motion is denied. Both in the draft judgment order and in the bill of exceptions, the report, etc., are referred to as being the sole basis of the finding and judgment. In the former it is recited that, the cause coming on to be heard upon the report of the referee and the exceptions of the defendant thereto, and the parties having waived a trial by jury and having submitted the same to the court “for decision upon the report of the referee and the exceptions of the defendant thereto,” and the court “having considered said report and the exceptions thereto,” it is ordered, etc. In the bill of exceptions it is recited that the cause came on for hearing upon the pleadings filed herein “and upon the report of the referee filed herein,” and that “upon the exceptions, or objections, of defendant to the report of the referee,” the court finds, etc. We think that the referee’s report, etc., under the statute, were parts of the record, forming with the pleadings the issues which were tried by the court, and that the report, etc., and the court’s finding and judgment based thereon, are properly before us for review.

In defendant’s statement of set-off it is alleged in substance that in July, 1921, he made an oral agreement with the Casket Company to purchase 20 shares of its capital stock at $50 per share; that pursuant to this agreement he executed and delivered his note to the Casket Company for $1,000, which he afterwards paid, and the Casket Company received the benefit of the. proceeds of the note; that said stock never was issued to him nor was he ever given credit for said $1,000; that the Casket Company never considered him as a stockholder nor did he ever participate in its affairs as a stockholder; that his said agreement to purchase said stock was void and unenforceable, and thereafter was treated as such by the Casket Company, because, at the time he made such agreement to purchase the stock and delivered the note, (a) the Casket Company had failed to comply with the provisions of the Illinois Securities Law (Blue Sky Law), Cahill’s St. eh. 32, ft 254 et seq., in that it had not procured a license or permit to sell the stock or offer it for sale, and (b) the Casket Company was at the time insolvent and known to be such by its officers; that in February, 1923, he loaned $100 to the Casket Company which never was returned to him and for which he never was given credit (this $100. is the additional credit allowed by the court over the credits allowed by the referee as above mentioned); and that there is due from the Casket Company, or its assignee, Janisch, the sum of $1,100.

The following facts in substance, sustained by the evidence, are disclosed from the findings of the referee: The Casket Company was an Illinois corporation, organized in 1920, for the purpose of manufacturing and dealing in undertakers’ supplies. Defendant, TancI, a Chicago undertaker, commenced purchasing merchandise from it prior to 1922, but the purchases here involved were made during the period from June, 1922, to March 3, 1924. Prior to December, 1922, W. H. Eudolph was the president and managing head of the Casket Company. He was succeeded in that office by one Christy and later by Fred Burkhard. The company was always in financial difficulties, and “was practically insolvent from the time of its organization up to the time of its dissolution, or at the time all of its assets, including the accounts, were sold to John Janisch,” beneficial plaintiff, on April 3, 1924. Plaintiff claimed that there was due from defendant for merchandise purchased during the period above mentioned the net sum of $1,441.76, but the credits it allowed to defendant did not include certain discounts to which he was entitled. Giving credit for these discounts plaintiff claimed on the hearing the net sum of $1,222.51, for which sum the referee recommended that judgment be entered against defendant. In July, 1921, defendant made an oral agreement with an agent of the Casket Company to subscribe for 20 shares of its capital stock at $50 per share, and gave to it his note for $1,000, which it discounted and the proceeds were used by it. Subsequently defendant paid the note, but he never received a certificate for the 20 shares. Being present at a stockholders’ meeting of the company in February, 1923, he was nominated for one of the directors, but, because of objection made that he was not a stockholder, he was not elected as a director.

It appears from defendant’s testimony, corroborated by that of Rudolph, that, about a month after the Casket Company had received the money on the $1,000 note, defendant and Rudolph (acting as president and for the Casket Company) verbally agreed that defendant’s subscription for said 20 shares of stock be canceled, but that the money should remain with the company and defendant credited with the amount as against future purchases of merchandise, and that this agreement thereafter was acted upon by the company. Although the referee found in his report that Rudolph, as president, never received any express authority from the directors of the Casket Company to cancel defendant’s subscription for said 20 shares of stock, ■ or to make any agreement to credit defendant for the $1,000 paid therefor, we think that the evidence sufficiently discloses that said cancellation was made with the knowledge and acquiescence of the stockholders and directors and subsequently was acted upon by the company. Furthermore, it clearly appears that defendant’s original agreement to subscribe for the stock was void and unenforceable, because at the time it was made, as shown by a certificate of the secretary of State introduced in evidence, the Casket Company had not complied with the provisions of the Illinois Securities Law. (See sections 34, 36 and 37 of that law, Cahill’s St. 1925, ch. 32, fifí 287, 289 and 290.) And we think that the court erred in not allowing defendant an additional credit of $1,000 as against said balance of $1,122.51. Allowing this credit, there is a net balance remaining of $122.51.

Defendant also claims that he should have been allowed on the account further credits of $64 (payment made in December, 1923) and $128.52 (payment made in January, 1924), but we think that it sufficiently appears from the testimony of the bookkeeper of the Casket Company, supplemented by documentary evidence, that defendant was credited with these payments by the Casket Company and by the referee in his statement of account.

Our conclusion is that the judgment appealed from should be reversed and judgment entered here in favor of plaintiff and against defendant in the sum of $122.51. Inasmuch as it appears that in the trial court each party paid his own costs and each paid one-half of the referee’s and stenographer’s charges, we think it proper that neither party recover from the other any costs expended in the trial court, but as to the costs expended by the defendant (appellant) in this Appellate Court, the same shall be taxed against the plaintiff (appellee).

Reversed with finding of facts and judgment here for $122.51.

Fitch and Barnes, JJ., concur.

Finding of facts. We find as facts in this case that defendant, Tanel, in compliance with an oral agreement with the Casket Company to subscribe for 20 shares of its capital stock, paid to it $1,000 for said stock; that he never received said stock and never participated in the affairs of the Casket Company as a stockholder; that by his subsequent oral agreement with the Casket Company his said subscription was canceled and said $1,000 was retained by the Casket Company to be credited to him on merchandise to be subsequently purchased of it; that thereafter he purchased merchandise of the Casket Company, but was never given credit by it, or by its assignee, Janisch, for said $1,000 or any part thereof; and that he (Tancl) is indebted to plaintiff only in the sum of $122.51.


text:
    W. R. Wallace, Appellant, v. Albert B. Yudelson, Appellee.
    Gen. No. 31,441.
    1. Medicine and surgery — elements essential to recovery for malpractice. Before a patient can recover damages for injuries alleged to have been caused by negligent treatment by a physician he must show by affirmative evidence that, in the first place, the defendant was unskilful or negligent, and, secondly, that the defendant’s want of care or skill caused the patient’s injury.
    2. Medicine and surgery — when evidence insufficient to show malpractice. Without skilled medical and surgical expert testimony affirmatively showing that a physician’s treatment was improper or negligent, proof only that he was mistaken in his diagnosis will not warrant judgment for the patient.
    3. Medicine and surgery — when negligence of operating surgeon cannot he implied to attending physician. The possible negligence of a surgeon in operating in the wrong place cannot be imputed to a physician who, though present at the operation, took no part therein nor in selecting the point to operate nor had any part in employing the surgeon who operated, and therefore cannot be held bable in damages to the patient for the results of the operation.
    4. Evidence — inadmissibility of answer to hypothetical question as speculative. In an action for a doctor’s malpractice, the evidence of a medical expert in answer to a hypothetical question that if a bony growth removed at a third operation had been removed at the first the patient would have been all right is so highly speculative, in assuming the growth existed at the prior operation, of which there was no evidence, as to be incompetent.
    Appeal by plaintiff from the Circuit Court of Cook county; the Hon. Ben F. Anderson, Judge, presiding.
    Heard in the second division of this court for the first district at the October term, 1926.
    Affirmed.
    Opinion filed May 17, 1927.
    John F. Shea and B. H. T. Burritt, for appellant; John F. Shea, of counsel.

      Edward W. Rawlins and Hendrik Folonie, for appellee.
   Mr. Presiding Justice Gridley

delivered the opinion of the court.

On July 17, 1923, plaintiff commenced an action in case against two physicians, William E. Schroeder and Albert B. Tudelson. The former was a surgeon and chief of staff of the Wesley Memorial Hospital, Chicago, and the latter a specialist in neurology, practicing in Chicago. Subsequently Dr. Schroeder died and the cause was abated as to him, but came on for trial in June, 1926, before a jury against Dr. Tudelson as sole defendant. Plaintiff was a witness in his own behalf and several witnesses testified for him. Defendant also testified at considerable length. At the conclusion of all the evidence the court instructed the jury to find defendant not guilty. Upon said verdict being returned, judgment for costs was entered against plaintiff and this appeal followed.

The declaration consists of five counts, to which defendants jointly filed a plea of the general issue. In the first count it is averred that on, to -wit, August 18, 1921, plaintiff employed defendants in their professional capacity to ascertain, locate and diagnose the nature of a certain ailment or malady from which he then was suffering, and to treat him for the cure thereof, and, if they deemed it advisable, to operate upon him; that he fully informed them of the history of the ailment or malady, the location and character of his pains and the location and extent of the conditions of anesthesia with which he then was affected, etc.; and that defendants treated plaintiff for about a year, etc. It is then charged that during said time defendants “so carelessly, negligently and unskillfullv conducted themselves in that behalf, in attending and treating plaintiff, that, by and through the want of ordinary care and shill upon their part as physicians and surgeons, his said sickness, ailment or malady then and there continued and became greatly increased and aggravated, and he underwent great and unnecessary pain and anguish and was obliged to undergo several operations, and became and is an incurable paralytic and a cripple for life,” etc., to his damage, etc. The charge of the second count is substantially the same, though it is limited to defendants ’ negligent failure to correctly “diagnose” plaintiff’s ailment or malady. In the third count it is charged that defendants “negligently, unskillfully and incorrectly diagnosed plaintiff’s sickness, ailment and malady as a tumor on the spinal cord between the fifth and tenth dorsal vertebrae.” In the fourth count it is charged that they negligently failed “to locate said tumor at the right place” and to remove the same, etc. In the fifth count it is charged, in substance, that they negligently diagnosed the tumor to be pressing on the spinal cord between said fifth and tenth dorsal vertebrae, and negligently performed unnecessary operations for its removal in that region, whereas by the exercise of ordinary care they should have diagnosed it to be between the first and third dorsal vertebra and should have removed it.

The following facts in substance are disclosed from the evidence: In December, 1920, while plaintiff was in Brazil, South America, and riding in a street car,he received a severe blow on his back. He was about 60 years of age. On his return to Chicago, about April 1, 1921, he was suffering from severe pains “emanating near the spine and terminating around in the breast,” and he consulted Dr. Guy Van Alstine, who examined and treated him and suggested that Dr. Elliott, a specialist in lung diseases, be called in consultation. Dr. Elliott examined plaintiff, took X rays, and suggested that plaintiff be taken to a neurologist, and, on Van Alstine’s recommendation, plaintiff, on May 4, 1921, consulted the defendant, Dr. Yudelson. After making an examination Yudelson told plaintiff that, to properly diagnose his trouble, observation and study would be required, and advised his going to a hospital. Plaintiff went to the Wesley hospital on the following day, with the approval of Van Alstine, and daily during the following week he was observed and examined by Yudelson, who made various tests. He told Yudelson the history of his case and that his pains seemed to be “below the shoulder blades where he was hit, and about the ribs down to the pit of the stomach.” At this time plaintiff could walk, although “his gait was rigid and stiff and he scraped the floor with his toes.” Yudelson told him that, as a result of his examination and tests, he was of the opinion that plaintiff had “an approaching paralysis” but that he could not localize the trouble, and suggested further examinations and treatments, and, also, that an operation might have to be performed to remove a possible tumor, near or pressing upon the spinal cord. Plaintiff stated that he was obliged to leave town on important business, and, against Yudelson’s protests that he should not leave until the cause for his pains and condition had, if possible, been ascertained, left the hospital and went to a distant city. Yudelson made a full report to Dr. Van Alstine, whose patient plaintiff was. While plaintiff was away on his trip he noticed that his condition was becoming worse and that he “couldn’t guide his legs,” and he returned to Chicago sooner than he had planned. He again consulted Dr. Van Alstine who took him to Dr. Schroeder (former defendant). The latter, according to Van Alstine’s testimony (plaintiff’s witness) was a noted surgeon, “had done a great deal of neuro-surgery,” had “great ability in surgery for nervous diseases,” and who “generally operated where and when he thought it was necessary.” Schroeder examined plaintiff and made suggestions to Van Alstine for the making by the latter of certain tests and treatments, which suggestions Van Alstine followed. Van Alstine’s treatments extended over a period of about eight weeks. During the early part of August, 1921, at the request of both Van Alstine and Schroeder, Yudelson was again called into the case, and he made thorough examinations of plaintiff and made other tests. At this time plaintiff was in bed and said he was unable to walk, and, in response to his inquiry as to possible relief by an operation, Yudelson expressed doubt if plaintiff would ever walk again or if an operation would help his condition, giving his reasons therefor, based upon his recent examinations and tests, and further stating that any operation would be more or less of a “fishing expedition.” Yudelson testified on the trial that, after making said last examination and tests, the nearest he could come to it in the way of a diagnosis was that whatever there was on the cord, whether a tumor, a swelling or a disturbance of the bone, must be about the sixth, seventh and eighth dorsal cord levels or segments, which would be the fifth, sixth and seventh dorsal vertebrae. He made a written report at the time as to his findings and conclusions and turned the report over to Dr. Schroeder, who finally decided to perform an operation and invited Yudelson to be present and the latter attended it (in Wesley hospital on August 18, 1921) but took no part therein. Van Alstine, who acted as an assistant to Schroeder at the time, testified that “Dr. Schroeder selected the field of operation”; that he did not know just what vertebrae Schroeder opened, but that two or three were exposed and two small plaques were removed. There was apparently no improvement in plaintiff’s condition, and on May 15, 1922, Dr. Schroeder performed a second similar operation, at which both Van Alstine and Yudelson were present. Apparently, no improvement in plaintiff’s condition followed this operation, and he remained partially paralyzed in the lower part of his body. Prior to the operation Yudelson told plaintiff that in his opinion it would not improve his condition and Yudelson took no part in it. The testimony is not entirely clear as to just what vertebrae were opened at the first and second operations, although it is probable that the first operation extended as high as the fifth dorsal vertebrae, and the second, as high as the fourth or third. About the middle of July, 1922, a third operation was performed by Dr. Schroeder, at which Drs. Ralph Hamill and Van Alstine were present but defendant was not. This operation followed examinations and tests made by Dr. Hamill, who had been called into the case, and was probably in the neighborhood of the second and third dorsal vertebrae. It was higher up than the second operation, as the second had been higher than the first. Defendant protested against the performing of this operation, expressing the opinion that it would not materially improve plaintiff’s condition. According to the testimony of Dr. Hamill (plaintiff’s witness), at this third operation, a growth or thickening, described as a bony growth, was found, which, he said, had blocked the flow of the spinal fluid, and which was removed. According to the testimony of Dr. Van Alstine (plaintiff’s witness) there was a question at the operating table as to whether or not the laminae were unusually thickened and had exerted any undue pressure upon the cord. Apparently there was no material improvement in plaintiff’s condition after this operation, although plaintiff testified that in some respects he felt better and could do “many things he could not do before.” The paralysis or paraplegia, however, continued and plaintiff was unable to walk. Dr. Hamill further testified: “I have no idea what caused the paraplegia other than that there may have been many other causes. As a matter of fact the paraplegia did not disappear when the growth was removed, so obviously that was not the entire cause of the paralysis. * * * I have no opinion as to what the effect upon the paraplegia would have been if the growth had been removed in 1921. * * * I could not state how long the substance that was removed on the third operation had been growing. The only thing that would throw any light on it was that the spinal fluid flowed freely in the first operation.” Several physicians, claiming to be experts in neural and spinal troubles, but who had not treated plaintiff, were called as plaintiff’s witnesses and they gave testimony in •response to certain hypothetical questions, among them Dr. Henry Bridgeman, practicing his profession in the State of Michigan. In response to a hypothetical question he was allowed by the court to express the opinion, over defendant’s specific objections that the question was not proper under the evidence and any answer thereto would be entering the realm of speculation, that “if said bony growth had been removed at the first operation the patient'. would have been all right.”

Plaintiff’s counsel contend that the trial court erred in instructing the jury at the close of all the evidence to return a verdict in favor of defendant, and for the reason that there is contained in the present record some evidence of negligence on the part of defendant proximately causing plaintiff’s ailments and disabilities. The argument is, as we understand it, that defendant was guilty of negligence in his original diagnosis, in not ascertaining that the seat of plaintiff’s trouble was in the higher dorsal vertebrae and in not seeing to it that the first operation, to be performed by Dr. Schroeder, was performed in that region rather than lower down, and that plaintiff’s condition at the time the action was commenced and at the time of the trial was the result of defendant’s said negligence.

Mr. Chief Justice Taft, when sitting as a circuit judge in the United States Circuit Court for the southern district of Ohio, said in his opinion in Ewing v. Goode, 78 Fed. 442, which was a case brought against a surgeon and oculist for damages because of alleged negligent and unskilful treatment to plaintiff’s eye (p. 443):

“Before the plaintiff can recover, she must show by affirmative evidence — first, that defendant was unskilful or negligent; and, second, that his want of skill or care caused injury to the plaintiff. If either element is lacking in her proof, she has presented no case for the consideration of the jury. * * * A physician is not a warrantor of cures. If the maxim, ‘Res ipsa loquitur,’ were applicable to a case like this, and a failure to cure were held to be evidence, however slight, of negligence on the part of the physician or surgeon causing the bad result, few would be courageous enough to practice the healing art, for they would have to assume financial liability for nearly all the ‘ills that flesh is heir to.’ ”

These principles have been stated in several decisions of the Appellate Courts of this State. (Sims v. Parker, 41 Ill. App. 284, 286; McKee v. Allen, 94 Ill. App. 147, 153; Moline v. Christie, 180 Ill. App. 334, 338; Phebus v. Mather, 181 Ill. App. 274, 277; Graiziger v. Henssler, 229 Ill. App. 365, 374.) In the Moline v. Christie case, it is said that" it seems to be settled that the proof óf the defendant’s negligence “can only be established by the testimony of experts skilled in the medical and surgical profession.” In the present case the record is barren of any affirmative evidence showing negligence or want of skill on defendant’s part. No physician or expert witness expressed the opinion that defendant, in and about his diagnosis of plaintiff’s condition or in his examinations of plaintiff, failed in any particular to exercise proper care or' skill. On the contrary the evidence shows that defendant was unusually diligent and painstaking. In the Sims v. Parker case, supra, it is said: “Proof of a bad result or of a mishap is of itself no evidence of negligence or lack of skill. * * * Before a recovery could be had against defendant, it must be shown that his treatment was improper or negligent, not merely that he was mistaken, or that his treatment resulted injuriously to plaintiff.” As to plaintiff’s counsel’s argument that defendant’s negligence consisted in not properly diagnosing and locating the seat of plaintiff’s troubles higher up in the spine than he did, and in not objecting at the first operation to the field of operation selected, one sufficient answer is, we think, that the undisputed evidence is that Dr. Schroeder, the surgeon, “selected the field of operation,” and that he was employed by plaintiff, through Dr. Van Alstine, independently of defendant. Furthermore, the undisputed evidence discloses that prior to the first operation the tests made by Dr. Van Alstine as to the flow and pressure of the spinal fluid indicated that the field selected was the probable proper field. Furthermore, if it could be held, considering the discoveries on the third operation as testified to by Dr. Hamill, that Dr. Schroeder was negligent in the first operation in not operating higher up on the spine, such negligence could not, under all the facts and circumstances in evidence, be imputed to defendant. (Brown v. Bennett, 157 Mich. 654, 657-658; Beckwith v. Boynton, 235 Ill. App. 469, 484.) After carefully reviewing the present record, and in the light of the authorities above referred to, we are of the opinion that there is no evidence tending to show that defendant was guilty of any negligence or want of skill as regards his diagnosis of plaintiff’s ailment or malady or in any of his treatments of plaintiff in connection therewith. And we are also of the opinion, as to the other element necessary for a recovery, that there is not in the record any competent evidence tending to show that plaintiff’s ailments and disabilities were the proximate result of any negligence or want of skill on defendant’s part. When defendant was first retained by plaintiff, through Dr. Van Alstine, plaintiff was suffering from severe pains in his back and some paralysis of the lower part of his body. This paralysis was progressing and had increased somewhat up to the time of the first operation. Following this operation there was no improvement. The paralysis kept on increasing, as it did after the second operation. Following the third operation, at which according to Dr. Hamill’s testimony a bony growth was found and removed, there was apparently no improvement as regards plaintiff’s paralysis, although plaintiff testified that in some respects he felt better. These facts do not reasonably tend to show, if the first operation had been performed where the third was performed, that there would have been any different result. Even Dr. Hamill (plaintiff’s witness) testified that he had no idea what caused plaintiff’s paralysis “other than that there may have been many other causes,” and he further testified, because plaintiff’s paralysis did not disappear after the third operation when the bony growth was removed from one of the higher up vertebrae, “obviously that was not the entire cause of the paralysis.” Of all of plaintiff’s expert witnesses, Dr. Bridgeman was the only one who suggested, in answer to a hypothetical question, that a different result might have been obtained, and plaintiff’s condition “would have been all right,” had the growth (which was removed at the third operation) been removed at the time of the first operation. This testimony assumes that the growth was there when the first operation was performed, of which there is no evidence, and is so highly speculative in its nature that it was not proper or competent to be considered by the jury.

For the reasons indicated we think that the trial court properly instructed the jury to find defendant not guilty and properly entered the judgment appealed from against plaintiff. Accordingly the judgment will be affirmed.

Affirmed.

Fitch and Barnes, JJ., concur.


author: Mr. Justice Barnes

text:
    Herbert A. Baker, Appellee, v. Fred A. Ellis, Appellant.
    Gen. No. 31,319.
    1. Vendors and purchasers — when lease and option constitute single instrument. A lease and supplemental agreement giving an option to the lessee to buy the leased premises upon certain conditions, signed by the lessee before delivery to the lessor who, after signing both at the same time returned them, constitute a single agreement.
    2. Vendors and purchasers — repudiation of contract by vendor as waiving necessity for complete tender by purchaser. After an optionee has offered to do, and shown his ability to do, all required of him in order to carry out his election to avail himself of the option to buy* certain premises on certain terms, and in accord therewith has presented a certified check for the amount of the cash payment called for in the option agreement, and the optionor has refused to perform and has repudiated the contract, it would be a vain requirement to call for actual and fully valid tender before the optionee can sue to recover damages for the optionor’s breach of the agreement.
    3. Vendors and purchasers — when purchaser’s inability to ascertain exact amount excuse for incomplete tender. An optionor who refuses to disclose figures solely in his possession and necessary to arrive at the amount needed to make a cash tender under an option for purchase of realty and refuses to take such tender if it is made, cannot demand the actual tender of the amount named in the option before the optionee shall have the right to sue for damages for the optionor’s breach of the agreement.
    4. Vendors and purchasers — lease and option as supported by one consideration. Where a lease of property and an option to the lessee constitute a single contract, it is not error, in an action to recover for breach thereof, to exclude evidence tending to show that there was no consideration for the option.
    5,. Appeal and error — when giving of erroneous instruction not ground for reversal. Although an instruction that the optionor in a land option was guilty of an “omission” to carry out his part of the contract was erroneous in that plaintiff claimed damage for refusal and not omission, the error was not reversible, as the jury could not have been mislead, in absence of any evidence or claim by optionee of liability from mere omission except as the result of the refusal to give a deed.

      6. Instructions — propriety of refusal where based, on wrong theory. Instructions offered were rightly refused as based on a wrong theory of the case, which were predicated on the necessity and failure to make tender by optionee under a land purchase option requiring a cash payment, whereas the optionee based his right to recover damages upon optionor’s breach of the contract irrespective of tender.
    7. Appeal and error — when improper argument is not ground for reversal. The statement of counsel to a jury as to what the Supreme Court had said about an attorney in a ease testifying for his client while improper is not such prejudicial error as to require reversal for overruling the objection thereto.
    8. Vendors and purchasers' — when evidence of value of other property inadmissible. In determining damages for refusal to convey realty, the admission over objection of evidence of the value of property five blocks away without proof of any similarity in location or character was erroneous.
    9. Vendors and purchasers — when listed price of property not proof of value. Evidence that a defendant, in a suit to recover damages for refusal to convey realty, had listed the same at a certain price with a broker should not have been received as showing an admission of the fair market price of the land.
    10. Appeal and error — remittitur as condition of affirmance. If improper evidence is admitted on the fair market value of land for refusal to convey which defendant was sued for damages, the Appellate Court will make remittitur on the verdict found by the jury down to a fair figure on penalty of reversing the judgment for plaintiff.
    Appeal by defendant from the Superior Court of Cook county; the Hon. Timothy D. Hurley, Judge, presiding.
    Heard in the second division of this court for the first district at the October term, 1926.
    Affirmed on condition of remittitur; otherwise reversed and remanded.
    Opinion filed May 17, 1927.
    Rehearing denied May 28, 1927.
    Taylor, Miller, Dickinson & Smith, for appellant; Preston Boyden, John S. Miller and James J. Magner, of counsel.
    Heth, Lister & Collins, for appellee.
   Mr. Justice Barnes

delivered the opinion of the court.

This is an appeal from a judgment for $10,623 for alleged breach of contract by defendant in refusing to carry out Ms agreement giving plaintiff an option to purchase certain real estate.

Defendant and his wife are owners in joint tenancy of the real estate in question. Defendant leased the premises to plaintiff for a period of three years from May 1,1921. The lease was dated March 22,1921, and a “supplemental agreement to the lease,” bearing the same date, was attached to the lease as a part thereof. Said agreement gave plaintiff an option to purchase said premises at any time during the term of the lease, for the purchase price of $20,000, one-half to be paid in cash (subject to certain deductions) and the remainder in the form of a first mortgage, with interest at the rate of six per cent per annum. The agreement provided that defendant would clear the property at such time of any existing incumbrance so that the new mortgage executed by plaintiff would be a first lien on the premises, and it further provided as follows:

“It is further mutually agreed, in case second party (plaintiff) shall exercise said option to purchase, that he shall be allowed by said first party (defendant), on account of above mentioned cash payment of ten thousand dollars, an amount equal to the gross amount of rentals paid to date of purchase less the pro rata cost (to same date) to party of the first part of all taxes, insurance and the interest at the rate of six per cent per annum on the above mentioned purchase price of twenty thousand dollars.”

While the testimony bearing on plaintiff’s attempt to avail himself of said option is conflicting, the jury must be deemed to have construed it in plaintiff’s favor, and as there is no contention that the verdict is against the manifest weight of the evidence, the question of its sufficiency is not before us. Regarding the evidence, however, on review thereof, as sufficient to support plaintiff’s version of his attempt to exercise his option, and accepting such version on controverted questions of fact, we need consider only the points of law urged for reversal.

The first three points relate to the doctrine of tender and whether the necessity therefor was dispensed with under the facts of the case. They present the question whether plaintiff’s conduct constituted an election to avail himself of the option. The facts bearing on these questions are substantially as follows:

Both the lease and the supplemental agreement were signed by plaintiff before delivery to defendant, who returned them later, signing both at the same time, and show what we think cannot be successfully questioned, that they constitute one agreement. In January, 1924, plaintiff informed defendant that he wished to exercise his option and purchase said property, and was prepared to take care of all the requirements of the option. According to the testimony for plaintiff, defendant then stated that he was not going to convey the property, and that the option was of no value because it was not signed by his wife. Plaintiff expressed his surprise that any question was raised in respect of its validity, and if it was not valid he was willing “to go even farther than the option demanded.’’ Defendant said he would discuss the matter with his wife. In another conversation on February 9, 1924, in the presence of his lawyer and the broker in the transaction, plaintiff informed defendant that he wanted the property conveyed according to the terms of the option, that he was ready, able and willing to take care of all of its conditions, and even willing to do better, that he did not know what the net cost of the property would be under the terms of the option because he did not know what taxes had been paid nor what mortgage existed against the property, and asked defendant to figure it out exactly with him; whereupon defendant said: “I am not going to figure and I am not going to convey that title. * * * My wife won’t sign and I won’t convey the title.” On that occasion plaintiff told defendant that he was willing to assume the existing mortgage or give a new mortgage, or pay all cash if defendant desired, whereupon defendant told plaintiff that if he would come back in about a week he thought the deal could be closed, that he would look up the mortgage and interest and decide whether he wanted plaintiff to assume the existing mortgage or not. As per appointment plaintiff and his attorney went to defendant’s office on February 22, 1924, and met him with his attorney and his son. On that occasion defendant stated that the deal was not going to be closed, and defendant’s attorney stated that he had advised defendant that he was in no way responsible for carrying out the deal. Plaintiff then again informed defendant that he was ready, able and willing to meet all the terms of the option, including the signing of a new mortgage and the notes, and returned in the evening of the same day and again so informed him, and to evidence his ability to meet the cash requirements showed defendant a certified check for $10,000. Defendant refused to discuss the matter further and said the matter was in the hands of his attorney. On 'February 27, 1924, plaintiff wrote defendant a letter repeating in it what had taken place at these interviews, substantially- as above stated, and demanded performance of the contract according to its terms, assuring defendant that he was still ready, able and willing to carry out his obligations under the contract, and adding that he would wait one week from that date for a further response. None was received. Again on March 24, 1924, he went to defendant’s office with a witness, and again informed defendant of his readiness to meet the cash requirement of the option and to sign notes and mortgage and to carry out all the provisions of the option, and again showed defendant the certified check above mentioned, and demanded to know for the last time whether defendant would convey the title to him of the premises in question. Defendant again stated that he would not do anything, that the matter was in the hands of his attorney.

No question arises as to plaintiff’s ability to perform his part of the agreement, and upon these facts it must be held that after plaintiff gave notice of his election, and made an offer to perform accompanied by his ability to perform according to the terms of the contract, defendant not only refused to perform but absolutely repudiated the contract. The sole question, therefore, is whether on such a state of facts plaintiff is excused from going further and making an actual tender before he can recover as for a breach of contract. The declaration as amended is predicated on the theory he can, and not upon an actual tender by plaintiff. It was not demurred to, but issue was taken thereon, and we think it states a good cause of action.

Appellant argues in effect that such theory of the cause of action is untenable, that a complete tender of the amount of cash required and of executed notes and a mortgage for the balance was requisite to an exercise of the option, that such acts of tender were conditions precedent to such exercise. The cases cited by defendant on the point do hot present a state of facts where, as here, after the optionee had offered to do, and demonstrated his ability to do, all that was required of him in order to carry out his election to avail himself of the option, the optionor refused to perform, and repudiated the contract. Surely it would have been a vain, useless thing to have tendered the actual cash necessary and a mortgage and notes duly executed, when defendant in unmistakable language expressed his intention not to accept them. The principle that the law does not require a vain and useless act would seem to apply to such a state of facts. Had plaintiff merely given notice of his election without an offer to perform accompanied by his ability to perform, or if by the terms of the option agreement it was a condition precedent to the exercise of the option that the actual cash be paid and the notes and mortgage for the balance of the purchase price be executed and tendered, a different question might arise. But the facts are otherwise and we do not so construe the contract. The exact amount of cash to be paid could not be determined without ascertaining the sum plaintiff was entitled to have deducted from the $10,000, and the facts necessary to determine the amount were within defendant’s and not plaintiff’s knowledge, and he refused to disclose them. He alone knew what insurance he had paid.

Appellant has cited the cases of Longfellow v. Moore, 102 Ill. 289; Winders v. Kenan, 161 N. C. 628; Pollock v. Riddick, 161 Fed. 280; Lockman v. Anderson, 116 Iowa 236 ; Bundy v. Dare, 62 Iowa 295, and Killough v. Lee, 2 Tex. Civ. App. 260, 21 S. W. 970. But they are not strictly in point. In some of them the optionee was clearly in default when the optionor refused to convey. In others there was a mere notice of election without tender of payment, or the tender was too late, as was the case in Longfellow v. Moore, supra. No question of waiver of tender arose in those cases. Appellant concedes that the optionor can waive the necessity of tender by his" actions, but not where the optionee’s claim is based upon a mere notice of election and a statement of readiness, willingness and ability. The argument ignores the fact of defendant’s repudiation of the contract after an offer to perform accompanied with ability to perform, and defendant’s absolute refusal to convey the property regardless of any question of tender. There could hardly be a more complete waiver than indicated by such an attitude, and hardly a more useless act than an actual tender after such attitude was taken.

After plaintiff gave notice of his election accompanied by his ability to perform, the case was then practically one of mutual and concurrent promises. Plaintiff was to pay an amount of cash to be determined by information to be furnished by defendant and to execute notes and a mortgage. Defendant was to remove of record a prior mortgage and execute his deed. They were concurrent acts. Plaintiff offered to perform and demanded performance of defendant. The latter not only refused to perform, not questioning plaintiff’s readiness and ability, or relying on a want of sufficient tender, but repeatedly repudiated the contract. It must, therefore, be said that plaintiff’s offer coupled with his ability to perform constituted all the tender requisite in the face of such refusal and repudiation. (13 C. J. 662-3-4.) As said in Clark v. Weis, 87 Ill. 438:

“The word ‘tender,’ as used in such a connection, does not mean the same kind of offer as when it is used in reference to the payment or offer to pay an ordinary debt due in money, where the money is offered to a creditor who is entitled to receive it, and.nothing further remains to be done, and the transaction is completed and ended; but it only means a readiness and willingness, accompanied with an ability on the part of one of the parties, to do the acts which the agreement requires him to perform, provided the other will concurrently do the things which he is required by it to do, and a notice by the former to the latter of such readiness.”

This rule has been frequently followed. (Manistee Lumber Co. v. Union Nat. Bank of Chicago, 143 Ill. 490; Osgood v. Skinner, 211 Ill. 229; Kopeyka v. Woodstrom, 305 Ill. 69.) Referring to the rule in Osgood v. Skinner, supra, the court said:

• (tThere miist be an actual tender or offer to perform unless the other party has refused to perform, when an actual offer need not be proved and a mere readiness and willingness to perform is sufficient.” (p. 235-6.)

The court further said what is applicable here:

“The notice of plaintiffs’ election was a condition precedent, but that was given according to the contract, and we regard the offer of performance, coupled with ability to perform, as sufficient to put the defendant in default.” (p. 236.)

Under the circumstances, we are obliged to hold that the necessity of actual tender was waived. It is obvious that an actual tender would have produced no different result, and the law does not compel the doing of a useless act. (Osgood v. Skinner, supra; Scott v. Beach, 172 Ill. 273; Shultz v. Hamilton, 223 Ill. App. 64.)

Appellant urges that the court erred in rejecting his offer to prove a conversation had before the instruments in question were drawn and before there was a talk about an option, in which plaintiff said he. would pay the amount of rental afterwards provided for in the lease. The contention is that such evidence would tend to show there was no consideration for the option. As before stated the instruments unquestionably constitute one contract and the consideration for the lease furnished the consideration for the option (Hayes v. O’Brien, 149 Ill. 403; Stanwopd v. Kuhn, 132 Ill. App. 466), and as all preliminary talk was merged into the written contract the offer was properly rejected.

Appellant urges that two given instructions disregard the questions of tender, election, and waiver of tender, arguing that tender was necessary, thus raising the same point already discussed. The instructions are expressly predicated on the theory of the action, namely, notice of- election, ability of plaintiff to perform, and prevention of performance by defendant. Plaintiff did not claim to have made a tender, and hence it was unnecessary to refer specifically to the question of waiver thereof in addition to what the. instruction contains. It contains all the elements of the cause of action as declared upon. The prevention referred to therein, however, was that of “refusal, inability or omission” to give a deed. The instruction should not have contained the word “omission.” But it could hardly have misled the jury as there was no evidence or claim of liability from a mere omission otherwise than as the result of the refusal to give a deed.

Appellant also complains of the refusal to give two instructions offered by him. But they are predicated on a wrong theory of the cause of action, viz, the necessity and failure to make tender, and ignore the real issue in the case. As before stated the action is based on defendant’s refusal to perform after plaintiff’s notice of election coupled with his ability to perform, and plaintiff did not pretend that he had made a tender. The instructions were properly refused.

Under the sixth point in appellant’s brief he has grouped 19 instances of alleged error in the court’s rulings, urging that they, at least collectively, should require reversal of the judgment.

We think it unnecessary to consider those bearing on the subjects of tender and consideration in view of what we have already said on those subjects. We shall refer to only such other rulings as are questionable.

One was in overruling an objection to the argument by appellee’s counsel to the jury as to what the Supreme Court had said respecting an attorney testifying in the case for his client. While we think the remark should not have been made we do not think it so prejudicial as to make the ruling reversible error.

There were, however, rulings bearing on the question of the market value of the property objected to, the propriety and effect of which are more doubtful. In one instance one of plaintiff’s expert witnesses on value was permitted to testify over objection that a piece of property five blocks away sold for $32,500 in 1924. There was inadequate proof to show that the property so sold was similar in locality and character to the property-in question. (O’Hare v. Chicago, M. & N. R. Co., 139 Ill. 151; Chicago & S. L. Ry. Co. v. Mines, 221 Ill. 455.) If the jury took its value (which was the highest testified to) into consideration in fixing the value of the property in question it might account for the size of the verdict. While appellant does not specifically argue that the verdict was excessive, the consideration of such an improper valuation might have had that result.

Nor do we think the fact proven over objection, that appellant listed his property with a broker in 1923 at $28,000, was tantamount to an admission that that was a fair market price thereof. It is not unusual for persons desiring to sell their property to list it at a higher price than they expect to get, intending to accept a lower price. The evidence should not have been received. A real estate man familiar with the property in question testified for defendant that its maximum value was $25,000. As figured out by appellee’s counsel after making the deductions from the purchase price called for in the agreement, the jury must have estimated the value at $28,408.68 to reach the verdict of $10,623. While there was other evidence for plaintiff that the market value of the property was approximately $30,000, we think in view of the improper evidence received on value that there should be a remittitur down to $7,500, and if the same is made within ten days herefrom the judgment will be affirmed, otherwise it will be reversed and the cause remanded.

Affirmed in case of remittitur; otherwise reversed and remanded.

Gridley, P. J.,and Fitch, J., concur.


text:
    The People of the State of Illinois, Appellee, v. Milwaukee Dairy Company, Appellant.
    Gen. No. 31,456.
    1. Debt — action to recover fine as civil proceeding. An action of debt for recovery of the fine, provided by Cahill’s St. eh. 56b, 1144, for misbranding food, must be deemed a civil action to which the rules of criminal procedure do not apply.
    .2. Debt — statement of claim in action to recover fine. A statement of claim in action of debt for recovery of a fine for misbranding a food product as provided by Cahill’s St. ch. 56b, U 44, properly comes under the rules of the fourth-class eases of the municipal court of Chicago, Cahill’s St. ch. 37, If 390, and if it shows the nature of the demand it is proper though inartifieially drawn.
    3. Appeal and ERRORr — necessity for preserving rules of municipal court in record. If the rules of the municipal court of Chicago are not preserved in the record, the Appellate Court cannot determine whether the procedure on trial was in conformity with the rules thereof or not.
    4. Appeal and error — when hearing in trial court not presumed.If a bill of exceptions indicates that no hearing was had to assess the fine for misbranding food provided by Cahill’s St. ch. 56b, If 44, in an action of debt upon default of defendant to plead as required, the Appellate Court cannot presume that the trial court did its duty to conduct a hearing.
    5. Debt — necessity for hearing to fix amount of fine. Defendant’s default in a proceeding under Cahill’s St. eh. 56b, If 44, to recover a fine for misbranding food does not permit the court to fix the amount of the fine without hearing.
    6. Debt — when affidavit of merits not excused in action for fine. Cahill’s St. ch. 56b, If 44, provides two methods, in the alternative, for punishing misbranding of food, and in the civil action in debt for the fine, which excludes thereby the criminal action, the defendant cannot excuse failure to file an affidavit of merits on the ground he would incriminate himself.
    Appeal by defendant from the Municipal Court of Chicago; the Hon. Daniel P. Trude, Judge, presiding.
    Heard in the second division of this court for the first district at the October term, 1926.
    Reversed and remanded.
    Opinion filed May 17, 1927.
    Gallagher, Shulman, Abrams & Henry, for appellant.

      Robert E. Crowe, State’s Attorney, for appellee; Edward H. Taylor, Assistant State’s Attorney, and Arthur L. Israel, of counsel.
   Mr. Justice Barnes

delivered the opinion of the court.

Appeals from three different judgments against appellant in favor of the People for violation of section 9 of the Illinois Food Law, Cahill’s St. ch. 56b, If 9, have been consolidated for hearing, the records in each being practically the same and presenting the same questions for consideration. The judgments were taken by default on failure of defendant to file an affidavit of merits after it had been ruled and had refused to do so.

The statement of claim is as follows:

“Plaintiff’s claim is that the defendant in the City of Chicago, County of Cook, and the State of Illinois, on to-wit, the 5th day of February, 1926, did sell to one, James Marcenhkus, 314 Kensington Avenue, Chicago, a bottle of butter cream which was misbranded under Sec. 9, of the Illinois Food Law, in that it was not labeled with the address of the dealer and also bore the name and address of other than the actual packer or dealer. Further, said corporation which was other than the rightful owner thereof did use a container marked with the name and address of another corporation which was the rightful owner, contrary to the form of the Statute in such case made and provided, and against the Peace and Dignity of the People of the State of Illinois.
“Further, said defendant has been previously fined for other violations of the same laws, contrary to the form of the Statute in such case made and provided, and against the Peace and Dignity of the People of the State of Illinois.
“Whereby and by force of which, an action has accrued to the plaintiff to demand of the defendant the sum of Two Hundred Dollars.
“Robert E. Crowe,
“State’s Attorney.”

The affidavit of plaintiff’s claim was sworn to by an agent saying “that the nature of the plaintiff’s demand is as follows: An action in debt for the recovery of a penalty for violation of the Illinois Dairy Products Law, and the Illinois Dairy and Food Law.”

The act alleged to be violated (Cahill’s St. 1925, ch. 56b, ¶44) provides that:

“Any person convicted of violating any of the provisions of the foregoing Act shall, for the first offense, be punished by a fine in a sum not less than fifteen (15) dollars, and not more than one hundred (100) dollars, or by imprisonment in the county jail not exceeding thirty days, or by both such fine and imprisonment, in the discretion of the court, and for the second and each subsequent offense by a fine of not less than twenty-five (25) dollars and not more than two hundred (200) dollars, or by imprisonment in the county jail not exceeding one year, or both, in the discretion of the court; or the fine above may be sued for and recovered before any justice of the peace or any other court of competent jurisdiction in the county where the offense shall have been committed, at the instance of the State Food Commissioner or any other person in the name of the People of the State of Illinois as plaintiff and shall be recovered in an action of debt. ’ ’

It was said in People v. Gartenstein, 248 Ill. 546, that: “Where an offense is created by statute and a penalty is fixed for its commission, which is to be recovered by an action of debt and not by prosecution, the action is civil and the rules of criminal pleading and procedure do not apply to it.” The suit here, as in that case, was neither criminal in form nor substance and as the act in question expressly provides for recovery of the fine by an action of debt, it must be deemed a civil action, and not a quasi-criminal action as contended by appellant.

It is urged that the statement of claim does not state a cause of action. The case apparently comes within the classification of fourth-class cases provided for in the Municipal Court Act. (Cahill’s St. ch. 37, ¶ 390, subd. 4.) In such cases it is generally sufficient to state the nature of the demand. (Cahill’s St. ch. 37, ¶ 428.) While in some respects the statement of claim is in-artificially drawn, defendant could hardly have failed to understand the nature of the demand against it.

Whether the procedure was in conformity with the rules of that court we cannot know in the absence of its rules, they not being preserved in the record. Assuming, however, that the court might under its rules require an affidavit of merits or defense by the defendant after its appearance in the case, still the question arises whether or not on default of defendant to comply with such a rule the court could enter judgment for a specific amount in an action of debt without a hearing to assess damages. The bill of exceptions in this case indicates that no hearing was had, that no proof was introduced on which to base an assessment, otherwise we might presume regularity of procedure and that the court performed its duty and heard evidence. On default in an ordinary action of debt an inquiry or hearing of evidence is requisite to the assessment of damages. The default of the defendant did not admit the amount of. plaintiff’s damages as claimed in the statement of claim. (Chicago & I. R. Co. v. Ward, 16 Ill. 522-532; section 1117, Puterbaugh Common Law PI. and Pr. (10th Ed.); Hockings v. Westmoreland, 205 Ill. App. 196.) Under section 59 of the Practice Act, Cahill’s St. ch. 110, 59, proof is required to be made in assessing damages notwithstanding the default. (Manaster v. Kioebge, 257 Ill. 431-434; Povlich v. Glodich, 311 Ill. 149-151.) Under the statute in question the court had discretion to fix the fine anywhere from $25 to $200, inclusive. It seems to have undertaken to exercise that discretion without any proof. It could not reasonably do so.

The point is made that as defendant might be prosecuted under the act he could not be required to file an affidavit of merits by which he might incriminate himself. We do not think the point is well taken. We apprehend the act does not contemplate both a prosecution and an action in debt for the same offense, but that they are alternative remedies.

Reversed and remanded.

Gridley, P. J., and Fitch, J., concur.


author: Mr. Justice Fitch

text:
    Equitable Trust Company, Appellee, v. L. R. Taylor, Appellant.
    Gen. No. 31,296.
    1. Trusts — when erroneous construction of trust . agreement by trustee a mistaTce of law. Where one of several trustees under an assignment for the benefit of creditors, which does not authorize individual action by the trustees, borrows money from a trust company on a collateral note signed with the debtor’s name, per the trustee as trustee, and the trust company has notice of the trust agreement and knowledge of its terms, the agreement being also referred to in the note, and the money so procured i& used for the purposes of the trust, the erroneous assumption of the trustee and of the trust company that a provision in the agreement authorizing the trustees, for any purpose necessary to carry into effect the objects of the trust, to sign the debtor’s name, authorized the trustee to execute the note in question was a mistake of law.
    2. Trusts — when trustee not liable for breach of implied warranty of authority. Where a trustee executes a note as trustee which it is beyond his power, under the trust agreement, to execute and, at the time, the payee has full knowledge of the nature and extent of the trustee’s express written authority, the payee cannot hold the trustee liable on the ground of a breach of an implied warranty of authority.

      3. Negotiable instruments — stipulation against personal liability as essential to protect trustee waiter. To protect himself from individual liability on a note which he signs for the benefit of his trust, a trustee must stipulate that he shall not be personally responsible.
    4. Negotiable instruments — sufficiency of stipulation to relieve trustee from personal liability. Where a trust agreement contains a provision that none of the trustees shall be personally liable in carrying out any term thereof and the payee of a note, signed by the trustee as trustee and for the purposes of the trust, is fully advised of the terms of the agreement, which is also specifically referred to in the note, the trustee will be held, in an action on the note by the payee, to have stipulated against personal liability.
    5. Appeal and error — when judgment of nil capiat proper on reversal for error of law. Upon a judgment for plaintiff being reversed for errors of law and not of fact, a judgment of nil capiat will be entered in the Appellate Court against the plaintiff.
    Appeal by defendant from the Circuit Court of Cook county; the Hon. David M. Brothers, Judge, presiding.
    Heard in the second division of this court for the first district at the October term, 1926.
    Reversed and judgment here.
    Opinion filed May 17, 1927.
    Rehearing denied May 28, 1927.
    D. W. Parker, for appellant.
    Winston, Strawn & Shaw, for appellee; Harold A. Smith, of counsel.
   Mr. Justice Fitch

delivered the opinion of the court.

The question presented by this appeal is whether under the circumstances shown by the evidence the defendant, L. R. Taylor, is personally liable on a promissory note for $1,000 payable on demand to the order of the plaintiff and signed “Wm. Groyette, per L. R. Taylor, Trustee.”

Groyette, a building contractor, was possessed of assets valued at $6,218.48, most of which were accounts receivable, some on completed contracts and others on unfinished contracts. He owed $7,425.45 to 22 creditors and was unable to pay them. Thereupon his creditors appointed a committee consisting of Taylor and two other creditors, who, on May 4, 1922, entered into a written agreement with Goyette, in the nature of a voluntary assignment for the benefit of creditors.

By the terms of this agreement Goyette assigned all his property to the creditors’ committee in trust, and it was provided that they should convert the assigned property into money and “pay the creditors”; that Goyette should “continue in his present business” and complete his unfinished contracts under the direction of the creditors’ committee, but “shall incur no further liabilities” without their consent, and that “all contracts to be let” must be first submitted to them for their approval; that he would “personally attend to the collection of all accounts” and immediately deliver the proceeds to them, to be used in carrying out the purposes of the agreement; that he would assign all his contracts and mechanics’ liens rights to them, and should receive from them a weekly salary for his services; that ‘ out of the proceeds realized from this trust,” the committee should “devise ways and means to provide for and pay the payroll of the business of .this trust” and pay the overhead and current expenses, “but it is expressly understood and agreed that said parties of the second part in no way assume or are obligated personally in carrying out this or any other provision of this agreement.”

The agreement further provides that Goyette constitutes and appoints the creditors’ committee “his true and lawful attorney, irrevocably, with full power and authority to do all acts and things which may be necessary in said premises to the full execution of the trust hereby created,” and to sign his name “to any instrument in writing whenever it shall be necessary so to do to carry into effect the object, design and purpose of this trust.” It was further stipulated that the specified 22 creditors should be entitled to a dividend of 10 per cent as soon as received by the trustees, but that the latter should always keep on hand a surplus of $300 for emergencies.

On June 24, 1922, Taylor, accompanied by Morris Frisch, the attorney for the creditors’ committee, called at defendant’s bank, showed a copy of the trust agreement to William A. Nicol, defendant’s cashier, and asked for a loan of $1,000. The cashier testified that the trust agreement “was presented to us by Mr. Taylor and his attorney, and on the strength of that document and the note that he signed, we made the loan of $1,000.” He also testified that after reading the copy of the trust agreement, he prepared the note for Taylor to sign, and saw him sign the name “Wm. G-oyette, per L. R. Taylor, Trustee,” that the other two members of the creditors’ committee were not present, and that he (Nicol) “was willing to accept it (the note) in the form it was signed,” and understood “that Mr. Taylor was acting as one of the trustees” named in the agreement.

The note is in the form of a collateral note and the trust agreement is referred to on the face of the note in the following language (written in the blank space ordinarily used to describe the collateral deposited), which the cashier testified was written on the note before it was signed: “Copy of Trust agreement fr Morris Frisch atty 62 N. Clark St.”

Taylor had a personal bank account with defendant’s bank at that time, but a new account was opened in the name of “Wm. Goyette, per L. R. Taylor, Trustee,” to which account the proceeds of the loan were credited and from which all were later drawn out on checks signed by Taylor in that form. It is not claimed the proceeds were not used by Taylor for the purposes of the trust. The note shows indorsements of interest paid each month following the date of the note to and including July 1,1923. The cashier testified that “we charged the interest to Mr. Taylor’s personal account one month, and when he objected we credited it back to his account.” Taylor testified that he did not know that interest had been thus charged to his personal account until he received his bank statement, and then he immediately telephoned to the plaintiff’s cashier that he “was not personally liable and for him not to charge the interest to my account.”

These facts are uncontradicted. Plaintiff’s cashier and the defendant, Taylor, were the only witnesses. The case was tried by the court without a jury, and the court entered a finding and judgment for the plaintiff.

There is a provision in the trust agreement requiring “all checks or other evidence of payment made in carrying out the purposes of this agreement” to be signed by Goyette and countersigned by Taylor, but it is not claimed that this provision applies to the note in question. There is no other provision authorizing any one of the creditors’ committee to act alone, and it is contended that for this reason Taylor acted without authority when he, alone, signed Groyette’s name, “per L. R. Taylor, Trustee,” to the note. Conceding this to be true, the question presented is whether defendant made himself personally liable because of that fact.

The plaintiff’s representative, Mr. Nicol, knew that the only authority Taylor had to sign Groyette’s name to a note was set forth in the trust agreement. He knew that by the terms of the trust agreement, the creditors’ committee were authorized to act not only as trustees for the creditors, but that “for any purpose necessary to carry into effect the objects of the trust,” they were also authorized, as Groyette’s agents, to sign his name to a promissory note. It was by virtue of this clause of the trust agreement that Taylor assumed to act when he signed the note in question. It is clear, therefore, that after Nicol had read the trust agreement, he, as well as Taylor, made the mistake of construing it to authorize Taylor alone to sign Groyette’s name to the note. This was not a mistake of fact, but a mistake of law.

In Seeberger v. McCormick, 178 Ill. 404, an action was brought by a lessor to recover rent upon a lease made to the Market National Bank of Chicago, and signed, on behalf of the lessee, in the name of the bank, by Seeberger as its president and Cox, its cashier. The bank was organized and incorporated, but had not received a certificate of the comptroller authorizing it to transact business, and the organization was abandoned within a few months. It having been determined in another suit that the bank had no power to enter into the lease, suit was brought against Seeberger and Cox personally on the theory that they were personally liable ex contractu upon their implied warranty of their authority to execute the lease on behalf of the corporation. The court said: “The principle is one of agency, and that plaintiffs in error, as the agents of the corporation in making the contract of lease, by necessary implication asserted to the lessor that they were in fact authorized to cause the lease to be executed by the corporation. Where the contract is made in good faith and both parties are fully cognizant of the facts, and the mistake is one of law only, the result of which is to exonerate the principal from liability because the agent had no lawful authority to make the contract, it is clear that the agent cannot be held liable, either ex contractu or ex delicto.” In that case, because McCormick, the lessor, did not know that the bank was not authorized to do business when the lease was signed, Seeberger and Cox. were held personally liable for a breach of the implied warranty of authority. In the present case, both parties were fully cognizant of all the facts, but were mistaken as to the legal right of Taylor to act alone in signing Goyette’s name to the note. That mistake being one of law only, the result of which was to exonerate Goyette from liability because Taylor alone had no authority to execute a note in his name, it must be held, on the authority of the Seeberger case, supra, that Taylor is not personally liable. To put the matter in another form, there can be no recovery in this case on the theory of a breach of an implied warranty of Taylor’s authority, because the nature and extent of his express written authority were fully known to the plaintiff when the note was executed.

Plaintiff also invokes the rule that when a trustee contracts for the benefit of his trust, he becomes personally liable thereon “unless it is specially contracted otherwise.” That such is the rule in this State does not admit of doubt. It was so held in Wahl v. Schmidt, 307 Ill. 331, and in Austin v. Parker, 317 Ill. 348. In the opinion filed in each of those cases the case of Taylor v. Mayo, 110 U. S. 330, is cited. Part of the opinion in that case is as follows: “If a trustee, contracting for the benefit of a trust, wants to protect himself from individual liability on the contract, he must stipulate that he is not to be personally responsible, but that the other party is to look solely to the trust estate.” Nearly all the cases cited in plaintiff’s brief on this subject contain similar or equivalent language.

The application of this rule to the facts of this case, however, does not help the plaintiff. When the loan was applied for, defendant and his attorney made it clear to the plaintiff’s representative that defendant was assuming to act only under the authority given by the trust agreement. As the provisions of the trust agreement were discussed at the time and as the trust agreement is specifically referred to in the body of the note, and the loan was made “on the strength” of that agreement, the provisions of the agreement must be read into the note, when considering the question of defendant’s personal liability. When that is done, it is clear that as part of the contract with the plaintiff, defendant did, in fact, expressly stipulate that he is not to become “personally obligated” in carrying out any of the provisions of the trust agreement. By so stipulating, defendant protected himself from individual liability on the contract; and this seems to have been the construction placed on the contract by both parties.

For the reasons stated, the judgment is reversed, and as such reversal is occasioned by errors of law and not of fact, a judgment of nil capiat will be entered in this court against the plaintiff.

Reversed and judgment here.

Gridley, P. J., and Barnes, J., concur.