text:
    The First National Bank of Taylorville, Appellee, v. Charles E. Kalb, Appellant.
    Gen. No. 8,371.

      Opinion filed February 3, 1930.
    Oscar J. Putting, for appellant.
    Brown, Hay & Stephens, for appellee.
   Mr. Justice Shurtleff

delivered the opinion of the court.

This is an appeal from a judgment rendered in the circuit court of Sangamon county in favor of appellee, the First National Bank of Taylorville, and against appellant, Charles E. Kalb.

On November 8, 1926, appellee recovered judgment by confession against appellant on a judgment note, for $2,950.45 and costs. Appellant presented a petition to the court asldng to have said judgment opened and praying leave to plead, and the court granted the prayer of said petition and appellant was permitted to file pleas. Various pleas were filed, non assumpsit, want of consideration and failure of consideration. The third plea alleged that the note and indorsement of appellant was obtained from appellant by false, fraudulent’ and deceitful statements and representations made to appellant by M. J. Riedel and Frank C. Kincaid, "officers of a corporation chartered as the Illinois Milling and Elevator Company, in the sale of its stock. It was charged that said Riedel and Kincaid represented to appellant that said corporation had been organized and had $200,000 of capital stock fully paid up and $200,000 worth of property on hand over and above its debits, and was doing a large and prosperous business and making and about to make" large and fabulous profits; that said corporation had mills and elevators in operation at Yirden and Taylorville and was doing a successful business and that said Riedel and Kincaid were both men of means and financially responsible. It was further charged that Riedel and Kincaid represented that they were not only a going concern and producing a product which the people needed, in whole wheat flour, but that representations were made that appellant was interested in the health of-the people and that it was his opportunity to aid humanity and engage in a profitable investment. Appellant was a physician and it is charged that he relied upon the statements of Riedel and Kincaid in the execution of said note, and that all of said statements were false and untrue. Appellee filed replications to the last four pleas, averring a consideration for said note and that it was a holder in due course for value and had no notice.

Appellant executed his note for $2,500 on June 30, 1925, due 12 months after date with interest at '6 per cent per annum, and the note was first made payable to the order of the Illinois Milling and Elevator Company, but later was returned to appellant and he was requested to make a new note payable to his own order and indorse, which he did. At the time the note was first executed on June 22, 1925, Kincaid and Riedel gave to appellant a contract as follows:

“This is to certify that Dr. Chas. E. Kalb has this 22nd day of June, 1925, purchased of Frank C. Kincaid & Co. twenty-five shares of Illinois Milling & Elevator Co.’s stock for twenty-five hundred dollars, par value of said stock is one hundred dollars per share.
“It is herein agreed by the parties signing this agreement that at the expiration of twelve months should the said Dr. Kalb for any cause whatsoever wish to dispose of the above said stock, the undersigned parties agree to dispose of said stock at twenty-five hundred dollars or par value without cost to said Dr. Kalb.
“In case of death of the said Dr. Kalb the undersigned agree to carry out the above agreed contract with Dr. Kalb’s heirs, executors or administrators.
“Signed at Springfield,, Illinois, this 22nd day of June, 1925.
Frank C. Kincaid & Company,
(Signed) Frank C. Kincaid.
Illinois Milling & Elevator Co.,
(Signed) M. J. Kiedel, Pres.”

At the close of all the proofs, appellee requested and the court gave an instruction to the jury to find a verdict for appellee, and the jury so found and the original judgment was confirmed in the sum of $2,950.45 and appellant has appealed.

On the trial of the cause appellee offered in evidence the promissory note and rested its case. Appellant presented his proofs and it is contended on the part of appellee that appellant presented no proofs tending in any manner to establish the allegations set out in any of appellant’s pleas and that the court was warranted in instructing the jury to find a verdict for appellee. Little assistance is afforded by counsel on either side to place before this court an abstract of testimony showing the real facts in the case. Counsel for appellant has shown with great care several verbose affidavits which had no bearing upon the case, and a considerable number of leading and incompetent questions, “tilts” with the court and counsel over testimony, and no attempt made to sort out the competent from incompetent testimony. Counsel for appellee tried the case upon the theory that appellant must prove a vacuum, a pure negative, as to ownership of property before appellant could even proceed in the .attempt to show fraud. As to some objections' appellee was erroneously supported by the court, to which rulings both parties contributed. It is beyond question that the note was made out to and for the benefit of the Illinois Milling & Elevator Company and for the benefit of Riedel and Kincaid. .It is further shown that they represented to appellant as matters of fact that the Illinois Milling & Elevator Company had $147,800 worth of property and thatoit was a $200,000 capital stock corporation, of which $147,800 was fully paid up; that as portions of this property the company had a mill and elevator at Virden, Illinois, and another mill and elevator at Taylorville, Illinois. These were representations of concrete facts and if the statements were false and appellant relied upon them, it constituted fraud. (Dunlap v. Peirce, 336 Ill. 178, 185.) The court erred in excluding the certificate of December 12, 1924, of the incorporators of this company, including M. J. Riedel, that said sum of $147,800 had been paid into said company. This certificate was under oath and in it the said M. J. Riedel stated that he had paid in the sum of $87,800 to this company at the time of its incorporation. Appellee insists that these certificates were admitted and cites the record as follows:

“The Court: I will admit them subject to renewal of the objection. Mr. Vogel excepts. '
“The Court: All this must be connected up before it is finally admissible. ’ ’

Court and counsel later evidently did not consider they were connected up. The certificates did not go to the jury.

It is said that no competent proofs were offered tending to show that the above statements or any of them were false. A witness, Webster, who was the sales manager, office manager and bookkeeper for the Milling & Elevator Company in May and June, 1925, and thereafter, testified that the company began to turn out products in the early spring of 1925 and operated only about a year. Webster states that at the time the note was signed the company did not have any property. Webster was with the company about four months. After this four months the witness states that the company bought a lot of grain and could not pay for it and was unable to meet its bills and that the farmers at Taylorville had money coming to them. Webster further testified as to the assets and property of the Milling Company that “It proved afterwards they didn’t have any. I am basing the statement upon the fact that they had no assets; well, upon the fact they didn’t have any; they didn’t have anything to pay any of their bills with; that was about five months after this,—along about November, 1926; they did not seem to be able to find any; they had no elevator at Virden; they had no interest in an elevator at Virden; they had no elevator at Taylorville; they operated an elevator at Taylorville afterwards (after appellant purchased stock). This was owned by the McKenzie Milling Company and they operated it for a while; the Illinois Milling & Elevator Company had no title to this mill. I examined the records. The Milling & Elevator Company never owned any notes to my knowledge. My knowledge of the financial affairs of this company goes from March 1st, 1925, until January 1st, 1926. I was sales manager of flour, office manager and bookkeeper. I kept the books of the amount of stuff that was sold and taken in and the value and amount of stock on the stock books. I kept the stock books. I took orders for flour and delivered some.”

The witness further stated that he could not state positively but that on June 30, 1925, the company may have had notes. He states positively that it had no real estate and he states that he bases his testimony that the company had no assets in June, 1925, upon what he saw and upon what he heard and upon what later “came out in court.” He further testified: “I saw they had nothing; it was not on what I heard; it was on what I saw.

“Q. Where did you,see it?

“A. I failed to see it; they did not have it.”

The witness further testified that he based his testimony “on the fact that they never had any property; there was none to be found; they owe me money and I sued them and got a judgment in this court for over $2,000 along about January 1926—7—1927.” Webster further testified that he knew about the condition of affairs prior to that time from the records. The witness testified that the office furniture of the company in the office on June 30, 1925, came from “Dirkson’s” in Springfield and was never paid for. The court struck it out. The witness testified to a conversation between appellant and Kincaid about the note and stated: “Mr. Kincaid told him (appellant) that Mr. Biedel, who was president of the company, didn’t want the note made out to the company but wanted it made out to—‘a myself note.’ He wanted to transfer the note and it couldn’t be done that way with the company’s name on it. Tes, that is what Mr. Biedel said; that is what he told Mr. Kincaid before he went down there.” The court struck out this testimony. The witness was asked to state anything he heard in regard to the note in the presence of appellant or Biedel or Kincaid or any officer of the company. The answer' was a statement of what Biedel had stated to Kincaid, a part of which Kincaid had stated to appellant. It was competent. •

Appellant offered the bill, summonses, proof of service and decree in a cause brought in the circuit court of Sangamon county in the month of September, 1926, by the Attorney General of the State of Illinois in the name of the People of the State against the Illinois Milling & Elevator Company, to dissolve the corporation for failure tq make any report and for failure to pay any corporation or franchise tax or license fees. The corporation had listed its business office in the City of Springfield in the county of Sangamon. No such office could be found. Service was had by publication. This company made no report of having done any business in 1925; it made or paid no license or franchise tax for the year 1925 and by the decree of the court in November, 1926, the corporation was dissolved and vanished into ‘ ‘ thin air. ’ ’ The court, upon objection by appellee, refused to admit any of these records in evidence. It was argued that it was too remote and counsel cite: Eureka Coal Co. v. Braidivood, 72 Ill. 625 and David Bros. v. Vandalia R. Co., 168 Ill. App. 621. The cases cited have no application to the facts in this case. The proofs offered were highly corroborative, if not conclusive, as to the truth of the testimony of the witness Webster and should have been admitted. Taking the proofs altogether appellee having offered no proofs except the note, the least that can be said is that appellant’s proofs made a prima facie case of fraud in the transaction that shifted the burden of proof to appellee to show that he was a holder of the note in due course, for value, and had no notice of the facts proven. Appellant contends that the burden of proof does not shift to the holder of the note unless it is shown that there was fraud in the execution of the note, citing such cases as Gray v. Goode, 72 Ill. App. 504; Wells v. Manufacturers & Merchants Life Ass’n, 213 Ill. App. 549, and Morey v. Simpson, 197 Ill. App. 55. These cases do not hold to that rule, and such is not the law. The question of fraud in the execution of the note has not been argued in this case and doubtless could not be, unless it should be proven that Kincaid and Riedel were not financially responsible to carry out the contract and guaranty that they gave to appellant oil June 22,1925, and never had any intention of carrying out. Section 59 of the Negotiable Instruments Act, Cahill’s St. ch. 98, ¶ 79, provides :

“Every holder is deemed prima facie to be a holder in due course; but when it is shown that the title of any person who has negotiated the instrument was defective, the burden is on the holder to prove that he or some person under whom he claims acquired the title as a holder in due course.”

Section 55 of the act, Cahill’s St. ch. 98, ¶ 75, provides when a title is defective:

“The title of a person who negotiates an instrument is defective within the meaning of this Act when he obtained the instrument, or any signature thereto, by fraud, duress, or force and fear, or other unlawful means, or for an illegal consideration or when he negotiates it in breach of faith, or under such circumstances as amount to a fraud.”

Did Riedel and Kincaid obtain the instrument in question upon the proofs submitted by fraud? Regardless of what the court has heretofore or shall hereafter hold to 'be the fraud contemplated in section 55 of the Negotiable Instruments Act, under the testimony in this case the burden of proof would shift to appellee to establish that it obtained the note in good faith .for value, without notice of fraud. It was held in Bell v. McDonald, 308 Ill. 329, 335: “Section 52 defines a holder in due course as one who has taken the instrument under the condition, among others, that he took it in good faith and for value and with no notice of any infirmity in'the instrument or defect in the title of the person negotiating it. In the absence of any statute, a well known rule of commercial law is that the holder of a promissory note obtained from the maker by fraud has the burden of showing that he obtained it in good faith for value without notice of the fraud. (Wright v. Brosseau, 73 Ill. 381; Charles v. Remick, 156 id. 327; Hodson v. Eugene Glass Co., 156 id. 397; Merchants’ Loan, and Trust Co. v. Welter, 205 id. 647; Hide and Leather Bank v. Alexander, 184 id. 416.) The title of the payee was not defective because of anything occurring in connection with the obtaining of the note. The pleas did not aver any fraud, duress, force, fear or other unlawful means by which the instrument was obtained. They merely averred the breach by the payee of its agreement to put in agents to sell the powder and of its warranty that the powder would cure hog cholera and keep hogs from having it; that the notes were signed and delivered only as collateral security for whatever powder should be sold and were to be held by the payee, whose representative would come at the end of five months, collect for the powder sold and surrender the first note, and would come again at the end of six months and surrender the second note, wherefore the notes were 'given without any good or valuable consideration and the consideration wholly failed.”

In Wright v. Brosseau, supra, one partner issued a note in fraud of the firm and it was held that the burden of proof was thrown upon the holder to show good faith and that he was a holder in due course. Charles v. Remick, supra, is a similar case and in Merchants’ Loan and Trust Co. v. Welter, supra, the note was fraudulently put in circulation. We have no doubt but that a note obtained upon representations which are false, untrue and material and upon which the maker relied, and so put in circulation by the illegal custodian, comes directly under the provisions of section 10 of the Act of 1874, Cahill’s St. ch. 98, ¶ 11, which described “an instrument obtained by fraud,” and if there be “any fraud or circumvention used in obtaining the making or executing of any such instrument,” the instrument is void.

Appellee contends that it will be as well to affirm the judgment now and save the appellee the trouble of putting in its proof to establish that appellee is a holder in due course. On this question we much prefer that the cause be submitted to a jury and that some of the errors occurring on the former trial be avoided.

For the reasons stated, the verdict and judgment of the circuit court of Sangamon county is reversed and the cause remanded.

Reversed and remanded.


source: Caselaw Access Project

author: Mr. Justice Shurtleff

license: Public Domain

text:
    Beecher Johnson, Appellee, v. Jake Squires, Appellant.
    Gen. No. 8,377.

      Opinion filed February 3, 1930.
    J. D. Allen, for appellant.
    Lewman & Carter, for appellee.
   Mr. Justice Shurtleff

delivered the opinion of the court.

Appellee brought suit against appellant for injury to appellee’s car, by reason of said car running into the wagon and vehicle of appellant being driven upon the highway in the night without any lights, and causing the destruction of appellee’s car. Appellee’s car was being driven by his stepson, who was on the road with two companions, and appellant’s wagon was being driven by one Harris and was loaded with tools, the team attached to the wagon belonging to Harris, and he was accompanied by two men who were working for appellant. Appellant was a contractor and employed Harris with his team and wagon to do various pieces of work, paying him the sum of $6 a day. The witnesses in appellee’s car testify that the accident occurred about 8:30 in the evening and that while they were driving on the highway at a speed of 30 miles an hour they came upon the wagon and a vehicle from the rear and did not see it until they were within 20 feet from the wagon, upon which the driver of the automobile steered his machine to the left in an effort to avoid the collision, but that the right front wheel of the automobile crashed into the wagon, tipping the automobile over and throwing it into the ditch.

The cause was commenced in a justice court and was tried de novo in the county court of Vermilion county. There was a verdict and judgment for appellee in the sum of $225 and appellant has brought the record to this court, by appeal, for review.

Appellant contends that Harris was an independent contractor; that the work that Harris was doing upon the day in question was particular work and required a wagon larger or different from Harris’ wagon and that appellant had permitted Harris to use his wagon on this particular day, and that the accident occurred at about 6:30 in the evening. The accident occurred on the evening of March 22nd before the trial. Some question is raised as to' the proofs of the amount or extent of the injury to appellee’s car and the value of the car before and after the injury, but upon reading the testimony we are satisfied that the witness was qualified and competent to testify tó such values. The principal contention on the part of appellant is that the driver of the wagon was not a servant of appellant, but was working for appellant as an independent contractor and not under appellant as a superior. Appellant testified: “I contract work, yes, sir; took contract to load a discarded boiler at Westville; employed Harris and several men on that job; don’t recall date of beginning that job; had another contract at Yankee Branch. On my job I had a wagon and a truck. I paid Harris by the day for his team' and wagon; his wagon was not suited to the work at Westville, had to use my wagon. I told him what to do. I am working boss nine hours of the day. ’ ’ Harris testified as shown by the abstract: “Beside at 327 E. Harrison St., Dan-ville ; business public work with team and wagon; own team and wagon. Hired to Jake Squires in March; worked when needed; he just calls me up; worked for Squires pretty much every day in March; was working for him the day of the accident. I had my team. I had Squires’ wagon. I exchanged wagons with him because we had blocks to carry and my wagon was not sufficient to carry them all. I used his wagon and he used mine and his team. Went to Westville to a little mine out from Westville; got through at the mine about five o’clock, took about twenty minutes to load tools on wagon; They were Squires ’ tools; he had not told me to bring them in town; was getting $6 for use of my team and wagon.”

Further than this, appellant produced a witness who testified: “I asked him (appellant) if the fellows on the wagon were working for him and he said they were.” This testimony was not contradicted. The men on the wagon, other than Harris, were working with Harris at the same work and under the testimony of appellant were servants of appellant and upon all the proofs the jury was not warranted in finding that Harris was the servant of appellant. Taking all of the testimony as to the service of Harris for appellant, sufficient facts are not shown upon.which it may be determined definitely whether he acted as a servant or as a contractor. (Besse v. Industrial Commission, 336 Ill. 283.)

Some errors in rulings upon the admission of testimony were made, but none in the opinion of this court that prejudiced appellant’s cause or that would warrant a reversal of the judgment. This case was very closely contested upon the question of due care and caution on the part of the driver of appellee’s car at the time of the injury. Upon this trial the witness Quarrels (driver) refused to testify or make any estimate or express any opinion as to how far in front of his car he could see, as he approached appellant’s wagon. He testified that the lights of his car were burning and that he could not see the wagon until he was within 20 feet from it; that driving the car at 30 miles an hour he could stop in 25 feet. The witness denied that he testified in justice court. “I had lights in front, bright, and I could see 50 or 75 yards with the lights.” The lawyer who tried the case in justice court, Casper Platt, was produced as a witness and testified that he could not remember the face or name of Quarrels, but that in the justice court he had made notes and that the driver of appellee’s car had testified that “he had bright Ford lights and could see ahead of his car with the lights from 50 to 75 yards.” The witness remembered the testimony and remembered the witness, but he could not remember his face and he had refreshed his memory before coming to court and upon the trial testified from memory. Thereupon the following colloquy occurred before the jury:

“Mr. Carter: I demand that the witness produce the notes, he is testifying to his recollection from the notes.

The Court: Well, I don’t know anything about who made notes.

Mr. Platt: I made notes at the trial, when the case was tried.

The Court: Well, I think if the witness refreshed his recollection from notes, I think counsel has a right to see them.

Mr. Carter: You refuse to produce them?

Mr. Allen: I say I am standing on my rights. I don’t have to produce the notes, they would not be good evidence if I did.

Mr. Carter: Be damaging to you. All right. I’m not waiving my demand however, by that remark.

Mr. Allen: I’ll say this, we will submit no notes.

The Court: Call the next witness.

This was reversible error. It was in substance a ruling by the court that if the notes were not produced the testimony was incompetent. . Counsel for appellee was not entitled to the notes and his conduct is not to be commended.

Appellee’s second instruction given by the court was as follows:

“The court instructs the jury as a matter of law that one who employs others to work for him is responsible for the acts of the others while so working to the same extent as if he had done the acts himself.”

This instruction ignores entirely one of the issues made in the case and was error. Some other criticism is made upon the giving and refusal of instructions and in which there were errors, but upon another trial these errors and the errors upon the rulings as to evidence doubtless will be corrected.

For the reasons stated the judgment of the county court of Vermilion county is reversed and the cause remanded.

Reversed and remanded.


text:
    Albert A. Renner, Appellee, v. Jacksonville Clothing Company, Appellant.
    Gen. No. 8, 382.

      Opinion filed February 3, 1930.
    Bellatti, Samuell & Moriarty, for appellants.
    Masters & Masters, for appellee; Walter T. Day, of counsel.
   Mr. Justice Shurtleff

delivered the opinion of the court.

This is a suit in chancery for an accounting, receiver and injunction. The complainant, appellee Albert A. Benner, was the largest stockholder of a corporation doing business in Jacksonville, Illinois, under the name of Jacksonville Tailoring Company. Such corporation, in the conduct of its business, had a large amount of machinery, tools, equipment, patterns and leasehold right and in carrying on such business appellee became acquainted with the defendants. One of the defendants, 1ST. J. Federgreen, operated a clothing factory at Fairbury, Illinois, engaged principally in the making of pants and had in his plant machinery, tools and equipment of various kinds. The other defendants resided in Chicago, Illinois.

After much discussion these parties proposed to organize a new corporation, to be known as the Jacksonville Clothing Company. Throughout the proceedings, therefore, the old and new corporations have been distinguished by designating them, respectively, as the Tailoring Company and the Clothing Company, and will be so designated herein..

On June 15,1924, a contract was entered into among the four parties, interested to organize the new corporation. By such contract the appellee, Albert A. Benner, was to turn over to the new corporation all the “machinery, tools, equipment, good will, patents, leases and other intangibles” of the Tailoring Company, and the defendant 1ST. J. Federgreen was to turn over similar assets of his factory at Fairbury, Illinois. It was agreed and stipulated in such contract that the said properties were valued at $3,250 each. The appellee, Albert A. Benner, and the defendant hi. J. Federgreen, in return for the assets thus surrendered to the new corporation, were to receive 32% shares each fully paid. These two men also were to subscribe and pay for 17% shares of additional stock in the Clothing Company. The remaining incorporators, Herbert Bindskopf and Fred Philipson, subscribed for 50 shares of the capital stock of the Clothing Company and each paid $5,000 in cash therefor, the plan being that each of the four incorporators should have equal stock holdings of 50 shares.

In order to effectuate his part of the agreement, appellee, Albert A. Benner, surrendered his stock in the old company and received a bill of sale to the machinery, tools, equipment and assets of such company, and having so become the owner of said assets, turned over to the Clothing Company the articles listed and specified in the contract to be turned over, and thereupon received a stock certificate for 32% shares of stock of said Clothing Company.

As a part of the contract to incorporate, it was stipulated and agreed that the appellee was to be employed as manufacturing manager of the Jacksonville plant at a salary of $75 a week, and that Mr. Federgreen was to be employed as manager of the Fairbury plant at a similar salary. $50 of such salary was to be paid in cash each week and $25 thereof was to be retained by the corporation and applied upon the 17% shares of additional stock for which each of said parties had subscribed, each share of which was to be issued to them as paid for in such manner.

In mailing the transfer of the equipment and machinery of the Tailoring Company at Jacksonville, Illinois, to the Clothing Company, it was found that such property could not be transferred until the provisions of the Bulk Sales Law, Cahill’s St. ch. 121a, .If 1 et seq., were complied with by the payment of all obligations of the Tailoring Company. For this purpose the new corporation advanced to appellee, upon his promissory note, the sum of $1,500, said note being secured, it is claimed, by an assignment 'of all accounts due and owing to the Tailoring Company, which accounts were to be collected by the Clothing Company and applied in discharge of such note and any other indebtedness of appellee to the Clothing Company. A short contract of assignment was executed and delivered to the Clothing Company, evidencing such understanding.

All details having been adjusted the new corporation, Jacksonville. Clothing Company, commenced business in July of 1924, with appellee in charge of the plant as manager. He continued in such employment until July, 1927, at which time his services with the company terminated. He was paid each week of such period of three years or more the sum of $50, $25 weekly being retained according to the contract before mentioned. The 17% shares of stock for which he had subscribed were never issued to him.

The books of the corporation were kept in Chicago. Meetings of the officers and directors were held in Chicago. The business and plant at Jacksonville was eventually leased to Isadore Philips on at a rental of $1 a year.

Other acts of mismanagement were charged in the bill of complaint and appellee charged that his rights as a stockholder were ignored, and that, although he had demanded an accounting of his affairs with the corporation, such accounting had never been made to him, and that the corporation was indebted to him in a large sum of money. The bill concluded with a prayer for a receiver to take charge of the affairs and property of the corporation pending such accounting; for an injunction restraining the transfer of any corporate property; for an accounting under the direction of the court, and upon such accounting the said corporation be directed to pay to appellee the amount found to be due to him upon such accounting, and a prayer for general relief.

The court, upon the application of appellee, appointed Felix Rothchild receiver, and upon giving bond as required by statute, which was given and the receiver went to the plant at Jacksonville, Illinois, to take charge thereof. The receiver was not permitted by those in charge to take possession of such plant, but three days later, with the consent of appellee, an order was entered by the circuit court of Morgan county removing the receiver and permitting the appellant corporation to retain possession of its property upon filing a counterbond, as provided by section 2 of the Chancery Act, Cahill’s St. ch. 22, ¶ 56. All questions as to the receivership from such time passed out of the case and no claims were made by either of the parties on account thereof.

An answer was filed for the appellant Jacksonville Clothing Company, and a joint and several answer for the individual defendants identical therewith. Such answers admit the formation of the corporation Jacksonville Clothing Company, as alleged in the bill of complaint; the contract so providing for such incorporation, the surrender by the appellee of the machinery, tools and equipment of the Tailoring Company to the new corporation; admits that the principle office of the corporation was in Chicago, Illinois; admits the employment of the appellee as manufacturing manager, but denies that his term of employment was for any fixed period of time or at any fixed salary; admits that the appellee acted as manufacturing manager and performed the duties thereof; admits that the meetings of the corporation were held in Chicago and that its policies were controlled by the defendants Federgreen, Philipson and Rindskopf until the latter sold his stock interests and became no longer a member of the corporation; admits that the additional 17% shares of capital stock have not been issued to the appellee; admits that $25 a week was retained or withheld from the salary of appellee during the time of his employment, but claims that such salary was reduced to $50 per week on January 1, 1927; admits that the appellee assigned to the corporation certain accounts claimed to be due to him, and that such accounts, when collected, were- to be applied as a credit as against the sums borrowed by appellee.

The answers deny that appellee made a demand for the issuance to him of the said 17% shares of stock, or that he demanded an accounting, or that the corporation had failed to account to him for any sum due to him; deny all allegations of the bill as to mismanagement or fraud or conspiracy; deny that an indebtedness exists in favor of appellee and any right to an accounting, and denies that the appellee is entitled to such additional 17% shares of stock of the corporation.

The answers further allege that the appellee was indebted to the defendant N. J. Federgreen and that such indebtedness was paid by the corporation to Federgreen, the corporation reimbursing itself therefor out of the salary of appellee withheld weekly according to the contract of incorporation.

Replications were filed to such answers and the cause was referred to the master in chancery to take the proofs and to report the same, together with his conclusions of fact and law thereon.

Upon the accounting complainant made claim to the following items:

Trimmings ................$999.97
45 suits at $18, less $400'.... 410.00
Liebman, Philipson & Wolfe check ................... 25.50
Blumenthal & Frost........ 685.22
Checks.................... 400.00
Salary retained............4,000.00
Total credits claimed $6,520.69
With the following debits:
Extra stock...............$1,750.00
Note..................... 1,500.00
Order or draft............ 1,016.70
Debt due to Philipson..... 200.00
Total Debits $4,466.70
Leaving a balance claimed by appellee of $2,053.99

The master disallowed the claim of $410 for suits; made a deduction from the amount of salary claim of 25 weeks at $25 per week, reducing the item to $3,375; disallowed the claim of Blumenthal & Frost of $685.22; disallowed the item, Liebman, Philipson & Wolfe check, $25.50, and reduced the item of “Trimmings” by the amount of $24, making that item $975.97, resulting in a balance in favor of complainant of $284.27. The master then made tentative findings, as based on the books of the defendant corporation and the items of “Trimmings” and “Salary Correction” as follows:

Salary balance due Benner on books ...................$158.30
Personal bal. due Benner on books ................... 825.00
Trimmings ................ 975.97
Salary wrongfully deducted.. 225.00
Total due Benner as gross credit $2,184.27
Deduction for 17% shares of stock.. 1,750.00
Net balance due Benner $ 434.27

And makes “note” in that connection: In this last “tentative finding” no account is taken of the $200 item which Benner charges himself owing to Fred Philipson. Taking this into account, we find by different routes we arrive close to the same destination or result.

The master in his report makes the following comment: “The affairs of the parties hereto are involved and complicated and intermingled. ' Benner had money dealings with not only the defendant corporation, -but with other defendants. By the conduct of the parties, it would appear that the defendant corporation was a ‘clearing house’ between Benner and itself and other defendants. For instance: Benner owes Fred Philip-son and charges his account with the defendant corporation to cover his debt to Philipson; Benner owes Federgreen $1016.70, and the same is charged to Benner’s account with the defendant corporation. What the items involved in Benner’s debt to Federgreen, aforesaid, are, is unexplained. In short, there are ‘vacuums’ in the proof, which may account for any inaccuracies in my findings as set forth in the following paragraph.”

The master’s report shows the account as stated and recommends that the complainant is entitled to recover the sum of $284.27. There were objections before the master, which were made exceptions- before the chancellor, and upon a hearing of the exceptions the court recast the account and entered a decree finding that the complainant was entitled to the following items of account :

For the value and amount of machinery, tools, equipment and good will......$3,250.00
Salary of appellee retained from July 15, 1924, to January 1, 1927, @ $25.. 3,150.00
Cash advanced by appellee.. 400.00
The item of “Trimmings” 975.97
Amount collected by appellants from Blumenthal & Frost.................. 685.22
Total amount due appellee......$8,461.19

From which the court decreed there shall be deducted :

Subscription for 50 shares of stock ..................$5,000.00
Loan to appellee by I. Philips on .................. 200.00
Amount of note or draft due N. J. Federgreen........ 1,016.70
Note of appellee for moneys advanced .............. 1,500.00
Total deductions...... $7,716.70
leaving a balance decreed to be paid to appellee by appellants of........ $ 744.49

No interest was figured on the stock purchase or on the $1,500 note and a decree was entered ordering the appellant the Jacksonville Clothing Company to pay to appellee the sum of $744.49; to execute and deliver to appellee the certificates for 17% shares of stock in said corporation of the par value of $100 each, within 30 days, or to pay to appellee the additional sum of $1,750 in money; appellee’s bond for a receiver and the receiver’s bond were each discharged and the bond of appellant to discharge the receiver was left in full force and effect and the costs were taxed to appellant, the clothing company. The appellant, Jacksonville Clothing Company, has brought the record, by appeal, to this court for review.

There are various assignments of error made, nearly all of which pertain to the credits allowed appellee. The items of debit against appellee were cast the same by the master and by the chancellor and about these items there are no contentions unless it may be on a matter of interest. The real items in dispute are practically three: the items of “trimmings” $975.97, the item called Blumenthal & Frost $685.22, and a variation in claims as to the number of months’ salary which was retained.

As to the item of trimmings, consisting of cloth, alpaca, canvasses, thread, gimp and clothing materials, the appellee testified that after the corporation was organized, but before taking charge of the Jacksonville factory, that the old corporation,-Jacksonville Tailoring Company has continued to work upon its pending business, making suits and overcoats; that on July 15, when the new corporation, Jacksonville Clothing Company, took over the factory, there was on hand a large quantity of unused materials belonging to the appellee and which had formerly belonged to the Tailoring Company before its assets became the property of the appellee. These materials consisted of alpaca, threads, gimp, canvasses and a great variety of materials suitable for making clothing. The appellee testified that Mr. Rindskopf, the secretary of the new corporation, upon coining to Jacksonville, invoiced and listed these materials with Mr. Bracewell, the secretary of the old corporation. Each item was counted, measured or estimated, and its value determined between them. This inventory was made in duplicate, one copy being taken by Mr. Eindskopf and the other being kept by the appellee. The amount of this inventory was $999.97. These trimmings were taken over by the Clothing Company and were used by it later in the making of clothing. The amount was to be applied upon the debt of the appellee to the corporation. In this testimony the appellee is corroborated by the testimony of Mr. Bracewell, the secretary of the Tailoring Company, who assisted Mr. Eindskopf, the secretary of the Clothing Company, in taking said inventory and computing the amounts. It is conceded there is an error of $24 in this inventory. We cannot, by any of 'the figures, make this item fit in as a part of appellee’s purchase of stock to the amount of $3,250. It is conceded that appellee’s inventory, under the contract, amounted to no more than $2,750 and that he was obliged to purchase from Federgreen machinery to the amount of $750 to make up his quota of $3,250, and this $750 later became a part of the item of note and draft due N. J. Federgreen of $1,016.70. The testimony is that appellee put in all of his machinery and tools and they were listed at three different prices— at cost, a medium price and a low price, and at cost price they listed $4,753.50; at a medium price the list showed a value of $3,057 and at a low price the list shows $2,450. This does not include the trimmings which inventoried nearly $1,000. There is a preponderance of the testimony that appellant had these goods. In view of this court it cannot be construed that these goods passed under the clause in the contract: “all machinery, tools and. equipment, good will, patents, leases, leaseholds and other intangibles.” The word “equipment” is connected up with the word “tools” and stock and goods are not mentioned. The fact that appellee had this item of credit and did not apply it early is not convincing, as he then owed appellant for stock $1,750 and upon a note $1,500. We see no reason for sustaining the assignment of error as to this item.

As to the item “Blumenthal & Frost, $685.22,” appellee testified that he1 had made some suits for Blumenthal & Sons just previous to the date when the new corporation took charge of the Jacksonville plant, and these suits were in the place of business when it was taken over by the new corporation. A Mr. Frost from Blumenthal & Sons called to take these suits away. Mr. Federgreen of the new corporation was present and would not permit the agent of Blumenthal & Sons to take the suits unless a check was left for them. The agent claimed to have no power to sign a check, but left with Mr. Federgreen under protest a check for $685.22. This check was later converted into two checks by Blumenthal & Sons for $380 and $305.22 dated, respectively, September 2 and September 12, and were paid on their due date to the. Clothing Company to be by it applied as a credit upon appellee’s debt. Appellee is corroborated with respect to this item by the testimony of Bracewell, who was present at the time. Appellants first objected that there was no showing that this amount ever reached the hands of the appellant Clothing Company, but upon the production of the books of the appellant company it appeared that the appellee was correct in every detail, the books showing the receipt of $380 and $305.22 upon the identical dates testified to by appellee.

On August 6, 1924, appellee made an assignment of all accounts owing to him to appellant, and all collections on said accounts were to be credited upon appellee’s note for $1,500. Appellant contends that this assignment does not show the Blumenthal & Frost account. The assignment does not show any item of account. Appellant concedes that the goods were actually sent to Jacksonville prior to the incorporation of the Clothing Company, and appellant’s books show that appellant received pay for the goods. Appellant would have no claim upon these goods unless it purchased or manufactured them and the proofs show neither. This assignment of error should be overruled. As. to the item of appellee’s salary withheld by appellant, appellee testified, and it is not disputed, that he worked for the corporation as manager of the Jacksonville plant for three years and four weeks—from July 15, 1924, until August 20, 1927. His salary was $75 per week. $25 of this amount was withheld weekly by the corporation to pay for the unissued stock. Over said period the amount withheld amounted to $4,000, the amount claimed by appellee. On behalf of the appellant corporation it was testified that the appellee consented to a reduction in salary as of January 1, 1927. There was considerable uncertainty in the testimony as to when this reduction became effective. Mr. Isadore Philipson, testifying from the books of the corporation, admitted that appellee was credited with salary at $75 a week until March 1, 1927, but claimed that nine weeks of that amount, or $225, was “ charged back as an offset,” some time during March, 1927, by the bookkeeper. The master in chancery in his report held that appellee was entitled to the salary item from the date when he began work, July 15, 1924, until March 1, 1927, as shown by the books of the corporation, and did not permit the offset of $225 testified to by the witness.. The master therefore allowed appellee, on account of the salary item, $3,375. Upon exceptions before the chancellor the chancellor further reduced this item by the amount of $225 ‘ ‘offset,” and found that appellee consented to a reduction of salary to $50 weekly as of January 1, 1927. In view of the condition of the proof we are not disposed to disturb the decree of the chancellor.

Appellant assigns error that no interest was figured upon the $1,500 note or upon the $1,750 item of stock purchase. Neither were the dividends or losses of the company accounted for in any manner. As to the question of interest upon the note and amount of stock purchase, appellant raises that question for the first time in this court. In the master’s report there was no recommendation as to the item of interest and no objection on that ground made to the report. The question cannot be raised for the first time in this court.

Appellant assigns error in that the decree requires appellant to issue 17% shares of the stock of the appellant corporation of the par value of $100 and deliver the same to the appellee within 30 days from the date of the decree, or to pay to appellee an additional sum of $1,750. It is argued that this part of the decree is inequitable and that upon failure to deliver the stock, any money decree in lieu thereof should be for the value of the stock and no value of the stock is shown. The rule contended for by appellant would be a correct rule in a proper case where appellee’s stock had been taken from him, but in this case appellee never had had the stock. Appellee contracted for the stock and has advanced $1,750 in payment therefor. Appellee is entitled to his purchase or the refund of the purchase price. If appellant has placed itself in a position where it cannot fulfill its contract, it certainly had no right to speculate in shares of stock contracted to be delivered to appellee. In such a case appellant has first rescinded its contract and appellee is entitled to the return of the purchase price which he has advanced.

It is assigned as error that the decree discharges the bond of appellee for a receiver and the receiver’s bond. The record shows that the receiver was removed with the consent of appellee. Appellant, as a part of its motion to remove the receiver, .offered to file the counterbond provided for by section 2 of the Chancery Act, Cahill’s St. ch. 22, ¶ 56. The appointment of a receiver was never questioned by appellant in the lower court. The receiver never assumed to act as such. He was removed by consent of all parties within a few days of his appointment and no question or element of receivership has appeared in the cause throughout the entire period of time the cause was pending below. No damages were claimed or suggested by appellant on account of the appointment of a receiver. His appointment was not resisted. His removal was by consent and in compliance with the statute in such case provided. Under the circumstances it was not error to discharge the bonds in question.

Finding no error in the record warranting a reversal, the decree of the circuit court of Morgan county is affirmed.

Affirmed.


text:
    Samuel Iddings, Appellee, v. The Pennsylvania Railroad Company, Appellant.
    Gen. No. 8, 386.

      Opinion filed February 3, 1930.
    C. Everett Smith, for appellant.
    Bevan & Bevan and Harold Trapp, for appellee.
   Mr. Justice Shurtleff

delivered the opinion of the court.

Appellee, Samuel Iddings, brought his action of trespass on the case against the appellant in the Logan county circuit court, to recover damages for the loss of 6 head of steers which were killed by one of appellant’s trains about 3% miles east of Atlanta on the nights of October 9 and 10, 1928. The cause was tried upon the single issue of the alleged failure on the part of appellant to erect and maintain statutory fences upon the right of way, by reason of which the cattle of appellee strayed upon the right of way of appellant and were there killed.

The cause is presented in this" court solely upon the assignment of error that the verdict is contrary to the manifest weight of the evidence. There was a verdict and judgment in the sum of $740 in favor of appellee ánd appellant has appealed. No questions as to the admission or exclusion of evidence are raised, and there are no criticisms made as to any instructions given or refused.

As to the situation and surroundings, appellant’s railroad runs in a southeasterly direction from Atlanta in Logan county to Waynesville, DeWitt county, a distance of about 6 miles. About 3 miles east of Atlanta it crosses a small stream known as Clear Creek and about five-eighths of a mile further in a southeasterly direction, passes under an overhead highway bridge on a public road running north and south. Between the bridge over Clear Creek and the overhead bridge, the tracks, for the greater part of the distance, run through a cut and upon a curve much like the letter S. Approaching Clear Creek bridge from Atlanta there is a downward grade, and, after passing.the creek, a rising grade. About 12 rods east of the Clear Creek bridge there is a farm crossing, with gates in both the north and south right of way fences. The gates are ordinary slide gates, made of 16 foot lumber 1 by 6 inches in size. The right of way fence on the south side of the right of way was constructed of posts, with woven wire and barbed wire attached; much brush, briars and weeds had grown up in, through and about the fence. A short distance east of the farm crossing, a fence, running north and south and connecting with the south right of way fence, separated the field into which the farm crossing entered on the south from a field, which, at the time of the accident, was a meadow from which the hay had been harvested. The field on the south into which the farm crossing entered was, at the time of the accident, in corn, part of which had been cut and shocked, in rows running from north to south. On the north side of the right of way at the farm crossing was a small timber pasture.

Appellee, the plaintiff, a farmer and stock raiser living in Atlanta, owned a farm of at least 80 acres lying about a quarter of a mile south of the right of way of the appellant company. The east part of his land was in pasture and adjoined the corn field above referred to and was separated from it by a barbed wire fence. The east line of appellee’s farm and the east line of the corn field were coincident. Clear Creek, running in a southeasterly direction after crossing under the right of way of appellant and through the cornfield, cut off about an acre and a half of the northeast corner of appellee’s pasture. •

On the day before the cattle were killed appellee had in his pasture 42 head of steers coming 2 years old. They were fed by him between 4 and 5 o’clock of that day. On the following morning appellee, upon going out from Atlanta to his farm to feed his steers, found that 6 were missing. These were the 6 killed upon appellant’s right of way.

The division fence between appellee’s pasture and the cornfield was the portion maintained by the owner of the cornfield, and was built of posts and barbed wire. This fence, crossing Clear Creek, was broken down at or near the creek on the night the cattle were killed and all, or a major portion, of the herd of cattle passed through this fence into the cornfield immediately south of appellant’s right of way. Working their way north through the cornfield for a quarter of a mile, they, or a part of them, came upon appellant’s right of way.

There was testimony on the part of appellant that at about 4 o’clock in the afternoon of October 9, 1928, the farm gates on the south and north sides of the right of way were closed, and that on the next morning, before 7 o’clock, appellant’s employees found a considerable portion of appellee’s herd upon the right of way, 6 of which had been killed, and both gates open. One of appellant’s witnesses testified that he observed cattle tracks coming into the south side of - the right of way through the open south farm gate. Appellee’s testimony is abstracted and in parts was as follows: ‘ ‘ Commencing with the fence on the south side of the right of way at Clear Creek, the fence runs up even with the north end of the bridge, then it turns in and runs under the bridge. There is 'no fence after it goes through under the bridge. Under the bridge there were two'wires at the time the cattle got in. There were two wires left there of that fence and there was a little lot of grass. I think the top wire was maybe a foot and a half high. They were barbed wires. I think at the north corner of the bridge the wires were a little higher maybe; but down at the south corner, about eight or ten feet there, it was about I suppose a foot and a half high. That was on the east side of Clear Creek.

“There was no fence or wire across Clear Creek on the south side of the railroad. I have never seen any fence there. I made an examination of the ground as to tracks of those steers that same evening after they were appraised. Starting from the bridge over Clear Creek, under the bridge there were tracks coming up, part of them on the north side of the bridge and part on the south side, and tracks ran up here to come on top of the track, and that first steer was killed about 100 feet of the bridge. In regard to those tracks, I started at the creek where the cattle come through this field and the cattle had scattered, some one way and some another and I couldn’t trace any of them very closely. The tracks were scattered so they didn’t make any trail, and I searched around a while and I went over to the creek and some of them had come along the bank of the creek there. They followed a trail along the creek down until they got to this bridge, and there was a kind of path there and there is two or three willows go across it, and there is a path running over and there is stuff running over that about knee high. Then when they got in there, under the bridge, the creek and ditch there on the other side stopped them and they crossed over this fence and they went under the bridge. The tracks went up there and I noticed along the bridge here, as far as the other bridge and along up to where the first steer was, but I couldn’t see any tracks coming back west. They were all going east, and the first steer was killed about 100' feet of the bridge, and that the.next one a little farther on.

“The condition of those tracks showed they were fresh; I should say they had been made about 12 hours. The fence from Clear Creek up to the farm gate is a woven wire and then some barbs above it in places and in places the barb is off. As to the number of places the barb wire was down, I noticed one place in particular about half way between]the bridge and the gate. When I looked at it I. saw there had been something crossing over, and I was trying to find out whether horses or cattle. I stepped over astraddle and I could touch the ground on either side. That was in the evening of that day or the next day when I went back. At that point there were tracks where something had gone over, I couldn’t tell. I saw tracks there, but I don’t know whether they were cattle or whether they were horse tracks. I got down and scratched in the ground to see whether they were cattle or horses; there was some large brush there and I don’t know whether they were cattle or horses. There were tracks all through the cornfield, but I do not remember whether I saw any tracks within ten feet of that place.

“There was no other place between the creek and the gate that the fence was down; there was broken wire all along. • At different places there was a part of the barbed wire broke and part of it was up, but I couldn’t describe it from memory that far back. The wire is old and rusty. The barbed wires were broken down between the creek and the gate. I went along and looked at it, but I cannot remember about the top wire, but there was no place in the fence that it was good.

“Proceeding east from the gate toward the overhead bridge, I made an examination of the fence. I walked along it and looked at it, took hold of some of the posts to see whether they were rotten and so on. I went from the farm gate to the overhead bridge along the fence. I don’t believe there was anyone with me when I went along that fence October 12th. There was once I went along there. Just east of the gate there is a place that the top wires were broken, sunken. It was about three foot high, maybe little more. That place was from five to ten rods east of the gate. The next really bad place was where the fence was laying down for about four rod. This place was about 20 rods from the farm gate. There, the fence was laying flat on the ground. The ground it lay on was flat. The grade didn’t come down to the fence there. There was room between the grade and the fence. The fence was laying right on the ground and it was laying flat. The fence was three or four feet from the grade. I counted them, I think it was three rods it was down there. In making that examination, I was walking on the cornfield side of the fence. The right of way was grown up in briars and things and wasn’t nice walking. Continuing toward the overhead bridge, there was a place a little further up, the fence was laying down and there were several places it was leaning. Then there was one place that the woven wire was cut clear out or broken out and the top wire was on the post yet, and cattle could walk right under that and go in.”

Appellee was strongly corroborated as to the condition of the fence and of the cattle killed. Two were found west of the farm gate and between the gate and the bridge over Clear Creek and four were found lying east of the farm gate and between it and the overhead bridge. One witness testified, who saw the cattle and observed the cattle tracks on the right of way that it would appear that the cattle were running from west to east and that the cattle tracks started west of the farm gate. It is not shown how the farm gates came to be open. As to the maintenance of the farm gates, appellant states the rule correctly: “A railroad company is not required to patrol the line of its road to see if gates at farm crossings are left open. Nor to keep a guard upon the road sufficient to discover and counteract such carelessness immediately upon its occasion. The company is only negligent where it has had reasonable time to discover such breach or has been notified and failed to take proper action.” And in this case, from the proofs submitted, if the jury believed from a preponderance of the evidence, that the cattle passed upon appellant’s right of way, through the farm gate, there should have been a verdict for appellant, unless negligence was shown on the part of appellant. It is provided in section 1 of Cahill’s St. ch. 114, ¶ 78: “That every railroad corporation shall, within six months after any part of its line is open for use, erect and thereafter maintain fences on both sides of its road or so much thereof as is open for use, suitable and sufficient to prevent cattle, horses, sheep, hogs or other stock from getting on such railroad, . . . and when such fences or cattle-guards are not made as aforesaid, or when such fences or cattle-guards are not kept in good repair, such railroad corporations shall be liable for all damages which may be done by the agents, engines or cars of such corporation, to such cattle, horses, sheep, hogs, or other stock thereon, and reasonable attorney’s fees, in any court wherein suit is brought for such damages, or to which the same may be appealed; but where such fences and guards have been, duly made and kept in good repair, such railroad corporation shall not be liable for any such damages, unless negligently or wilfully done.” And this is the law regardless of how the cattle came to be upon the premises from which they passed through the insufficient fence to the right of way. (Chicago & N. W. Ry. Co. v. Harris, 54 Ill. 528, 531; Cairo & St. Louis R. Co. v. Murray, 82 Ill. 76, and Ewing v. Chicago & Alton R. Co., 72 Ill. 25.)

The jury in this cause could have found a verdict for either party and the verdict would have been supported by the proofs. The verdict is not manifestly against the weight of the evidence and the judgment of the circuit court of Logan county should be and is affirmed.

Affirmed.


author: Mr. Justice Shurtlepp

text:
    Charles P. Colby, Appellee, v. Great American Casualty Company, Appellant.
    Gen. No. 8, 387.
    Opinion filed February 3, 1930.
    John G. Friedmeyer, for appellant.
    Frank L. Trutter and Gillespie, Burke & Gillespie, for appellee.
   Mr. Justice Shurtlepp

delivered the opinion of the. court.

This is a suit in assumpsit brought by appellee Charles P. Colby against appellant, Great American Casualty Company, an insurance corporation, to recover damages on an insurance policy issued by appellant on November 13, A. D. 1926, on the written application of appellee, which is a part of the policy, for indemnity on account of sickness which incapacitated appellee from performing any and every kind of duty pertaining to his occupation. The policy of insurance was an accident and indemnity policy in case of total loss of time from sickness.

The declaration contains one count in which a copy of the policy is set for, including the application, which is a part of the policy of insurance sued on. In the original count, appellee alleges that he paid the premium of $140 to appellant, continuing the insurance for the further term of 6 months from May 13, 1927, to November 13,1927; that on November 3,1927, he was ready and willing to tender and offered to pay appellant the. further sum of $140 for the continuance of said insurance from November 13, 1927, to May 13, 1928, which appellant refused, and brings the same into court ready to be paid to appellant if it will accept the same. Appellee alleges that after the execution and delivery of said policy of insurance, while the same was in full force and effect, on May 3, 1927, appellee fell ill and on account of said illness was and has been totally and completely unable to perform each and every duty pertaining to his occupation, and was treated by a licensed physician. Appellee then negatives certain exceptions and provisions in the policy, and alleges that within 90 days from the beginning of the illness he was removed to a regularly incorporated hospital and there confined for a period of 4 weeks and expended weekly the sum of $50, aggregating $200. Appellee avers that appellant paid him the sum of $1,000 that was due arid owing to him, and at the time of the beginning of the suit, indemnity and hospital charges were due him in the sum of $3,400, and alleges that appellant has refused and still refuses to pay the remaining sum due him, on the ground that appellee failed to fully answer the questions in the application for insurance;-that his illness is due to a tubercular condition in existence before said policy took effect; and alleges that he did keep and perform and comply with all the provisions and conditions of said policy on his part.

Appellant filed a plea of nonassumpsit and seven special pleas as follows:

First. That the plaintiff made false and untrue answers with the intent to deceive, in his application, to questions therein propounded respecting his physical condition, and that such answers were material to the risk.

Second. That the plaintiff with intent to deceive, falsely and untruthfully affirmed in the application that he was in sound physical condition when in truth he was not, and that such answer was material to the risk.

Third. That the plaintiff falsely and untruthfully with intent to deceive replied in the negative to a question in the application asking him whether he had ever had, among other things, tuberculosis, when in truth and in fact he had, arid that such answer was material to the risk.

Fourth. That the plaintiff falsely and untruthfully with intent to deceive, answered that he had been attended by a physician in March, 1922, for infection of upper lip, to a question asking him whether he had received medical or surgical attention within the last 5 years, which answer was material to the risk.

Fifth. That the plaintiff falsely affirmed that all answers in his application were true and complete, with the intention to deceive the defendant, and that said answer was material to the risk.

Sixth. That the illness for which the plaintiff claimed indemnity under the policy was not contracted by him and did not commence after the 15th day after the date contained in the policy of insurance, nor after the 15th day after said contract of insurance became effective, but commenced long before the effective date of said policy.

Seventh. That the policy sued upon was canceled by defendant at the expiration of the term for which the premium of $140 had been paid on May 13, 1927, said policy expiring on November 13, 1927, and that the policy was not in full force and effect from and after the 13th day of November, 1927, or at the time of the institution of this suit.

Appellee, by leave of court, replied double to the special pleas of the appellant by joining issue under the first replication to each count and by pleading a waiver and estoppel in his second replication to each plea. Rejoinders were filed by appellant to each second replication, so that an issue was raised on each plea and each replication.

The evidence in this record tends to show that appellee received a policy of insurance in the appellant company November 13, 1926, which, among other things, insured appellee against total disability from illness contracted and commencing 15 days after the effective date of the policy; that a semi-annual premium was paid upon this policy by the appellee and accepted by appellant on May 13, 1927, continuing the policy in force for 6 months, and that thereafter a further tender of premium was made on November 3, 1927, to continue said policy in force upon the expiration of 6 months’ period, which appellant refused; that appellee went to a hospital on May 4,1927, for an operation to relieve him of a diseased condition of his intestines from which he had suffered for several months prior to that date; that following' his release from the hospital appellee was, as a result of such illness, prevented from following the duties of his profession for 42 weeks, which under the terms of the policy entitled him to $4,600, upon which amount there had been paid $1,000' by the appellant company following appellee’s release from the hospital. It is testified by the appellee that the first signs of this disease came on in January, 1927, and although an attempt was made by appellant to impeach this testimony through a conversation had between the appellee and the general agent of the appellant, it was admitted by the appellant’s witness that the date of his conversation with appellee was “early in the new year, 1927.”

Appellant, to sustain its various defenses under its seven special pleas, concentrated particularly upon its defenses of misrepresentation by the appellee in answering certain questions respecting his condition of health with the intent to defraud the appellant company. Appellant attempted to show by cross-examination of appellee that he had tuberculosis at the time he answered the questions asked in his application respecting his condition of health, and that he made such answers with full knowledge of his tubercular condition with the intent to deceive the appellant company. The evidence discloses that in 1918 appellee was discharged from the army and was told that he had tuberculosis, which he at that time disputed; that he had been engaged for 18% years in the general practice of medicine and surgery in Springfield, Illinois, and since 1922 in the treatment of the eye, ear, nose and throat; that he had known the postive test for tubercule bacilli since his second year in medical school and following his discharge from the army applied this test to himself in the autumn of 1919, which test disclosed no tubercular infection. The testimony of three doctors was introduced in' rebuttal of appellee’s evidence, tending to show that the disease resulting in total disability was contracted and commenced before the effective date of the policy, that is to say, that the said disease was contracted and commenced before November 28, 1926. The testimony of Dr. Patton of Springfield, Illinois, was to the effect that any opinion given by him respecting the duration of the disease prior to operation would be speculative, as in some «ases tuberculosis condition of that kind develops very rapidly and in others remains dormant for long periods. He stated that it was generally believed that practically all individuals who reach adult life, at some time during' their life, have had tubercular infection but may have been cured, and that it was a tendency of nature to effect a cure of that infection in a number of cases, and that a person may have tubercular infection for a long time and not manifest any illness or disease. The testimony of Dr. Compton was to the effect that the length of time before the operation that such condition existed could not be determined by examination of the mass taken from the body. Dr. Richard F. Herndon, a practicing physican of Springfield, testified that he had examined appellee in April or May, 1927, and that in his opinion the disease had been there at least three months and probably some weeks' before that time. This testimony corroborated rather than rebutted the contention of appellee that the disease commenced after November, 1926, inasmuch as three months and some weeks prior to April, 1927, allowing appellant all benefit of doubt, would bring the inception of the disease to some date in December, 1926, which was after the effective date of the policy.

The general agent of the appellant company, Lawrence L. Flinn, testified that he received notice either on the 3rd or 4th of May, 1927, that appellee had gone to the hospital, and that under appellee’s policy numher he notified the appellant company that Dr. Colby had undergone an operation; that nothing was done until Dr. Colby came home, when he requested an advance, and that at that time he sent the appellee a draft for $500; that he was requested by the company to take a statement from Dr. Colby respecting his condition, as no statement up to that time had been taken; that he presented a form claim blank to Dr. Colby, which he filled out; that he forwarded the claim affidavit to the company and wrote another draft for $500, which was forwarded to appellee.

There was a verdict and judgment in favor of appellee in the sum of $3,363.71, and appellant has appealed.

The principal legal question raised upon the appeal is, whether appellee’s answer to questions in the application constituted warranties or representations; and if false, whether the applicant must have made such representations knowingly in order to defeat recovery. It is not admitted that any false representations were made. The application, with the policy, formed the contract. Counsel for appellant, by the special pleas, alleged the intentional misrepresentation by appellee in his application respecting his condition of health, and cites authorities to sustain the pleas, based only upon the theory that the answer to some question was not true. Counsel cite United States Fidelity & Guaranty Co. v. First Nat. Bank of Dundee, 233 Ill. 475. This was a case in equity for the cancellation of certain renewal certificates of a fidelity bond. While the question was not involved in that case, the court held: “The law is well settled, in its application to insurance contracts, that a misrepresentation of a material fact in reliance upon which a contract of insurance is issued will void the contract and it is not essential in equity that such a misrepresentation should be known to be false.” And the court further held: “A material misrepresentation, whether made intentionally and knowingly or through mistake and in good faith, will avoid the policy.”

In Blahofski v. Metropolitan Life Ins. Co., 237 Ill. App. 220, 225, this court held to the same rule, citing United States Fidelity & Guaranty Co. v. First Nat. Bank of Dundee, supra. Appellant cites Hranicka v. Prudential Ins. Co., 235 Ill. App. 257, but in that case the court held. “Two contentions are made for the defendant: First, that as a matter of law, the trial judge erred in instructing the jury that if they believed from the evidence that at the time of making the application any of the answers were false and were material to the risk and that the insured knew they were false or should have known it, plaintiff could not recover; and second, that the verdict is manifestly against the weight of the evidence.

“As to the instruction, this court held in Joseph v. New York Life Ins. Co., 219 Ill. App. 452, that the only question in such a case is whether the answer was knowingly false. The apt cases are reviewed at large in that opinion. That case is here decisive, and the contention that the trial judge erred is not tenable.”

In Joseph v. New York Life Ins. Co., 219 Ill. App. 452, 466, the court of the First District examined all the cases in this State and the United States and held: “From a consideration of the authorities to which we have referred and of many others which we have examined, we think the law is that where it is sought to avoid a policy on the ground that the insured made false answers in his application, the question of the good faith of the applicant in making his answers (in the absence of an express provision that they are warranties) is always a material one, and as Mr. Justice Harlan said in the Moulor case: ‘If it be said.that an individual could not be afflicted with the diseases specified in the application without being cognizant of the fact, the answer is that the jury, in that case, would have no serious difficulty in finding that he had failed to communicate to the company what he knew or should have known was material to the risk, . . . and the policy was, by its terms, null and void.’

“While there is some apparent conflict in the language used in the reported opinions, yet we think upon a careful analysis of each case it will be found that there is no real conflict; that the question in each case is whether the answers made by the applicant were knowingly false. Other authorities sustain this view. Donahue v. Mutual Life Ins. Co., 37 N. Dak. 203; Baer v. State Life Ins. Co., 256 Pa. 177; Oplinger v. New York Life Ins. Co., 253 Pa. 328; Sharrer v. Capital Life Ins. Co., 102 Kan. 650; Reserve Loan Life Ins. Co. v. Isom, 173 Pac. (Okla.) 841; Mutual Life Ins. Co. v. Morgan, 39 Okla. 205; Guarraia v. Metropolitan Life Ins. Co., 90 N. J. L. 682; Suravitz v. Prudential Ins. Co., 244 Pa. 582.”

In the case at bar the application contains a clause as follows: “Do you understand that the foregoing statements are made to induce the issuance of the policy applied for, and do you agree that the falsity of any answer in this application for a policy shall bar the right to recover thereunder, if such answer is made with intent to deceive, or if it materially affects the acceptance of the risk or the hazard assumed by the company?” Answer, “Tes.”

In Weisguth v. Supreme Tribe Ben Hur, 272 Ill. 541, it is said: “By the terms of the certificate plaintiff in error agreed to pay the beneficiary the sum of $1,000 on the death of the member prior to her sixtieth birthday, ‘provided that said application for membership and said medical examination are absolutely and strictly true as written. ’ ” In this case the court held: “It is insisted, as a matter of law, that the answers of the deceased to the questions propounded by the medical examiner were warranties and not mere representations, and therefore, some of them having been found untrue, defendant in error is not entitled to recover. It is only in cases where the policy will admit of no other construction that a statement contained therein will be construed as a warranty. ‘The doctrine of warranty, in the law of insurance, is one of great rigor and frequently operates very harshly upon the assured, and courts will never construe a statement as a warranty unless the language of the policy is so clear as to preclude any other construction.’ Spence v. Central Accident Ins. Co., 236 Ill. 444.” And the court, citing Continental Life Ins. Co. v. Rogers, post, held:

“Under the holding in Continental Life Ins. Co. v. Rogers, 119 Ill. 474, the statements made in this application must be held to be representations and not warranties. In that case the policy provided that the answers, statements and declarations contained in or indorsed upon the application, which was made a part of the contract, were warranted by the assured to be true in all respects, and that if the policy was obtained by or through any fraud, misrepresentation or concealment it should be absolutely null and void. In passing upon the question whether that constituted a warranty or a mere representation we said: ‘It is clear, the fraud, concealment and misrepresentation here contemplated can have no application to anything other than the answers to the questions in the application. If true and full answers there could be neither fraud, concealment nor misrepresentation, and if not full and true, upon the hypothesis they were warranties, the assured would incur a forfeiture of the policy whether there was any intentional misrepresentation or suppression of the truth or not. If the answers, however, are simply representations, as contradistinguished from warranties, in the technical sense of those terms, then such of the answers, not material to the risk, as were honestly made in the belief they were true would not'be binding upon the assured or present any obstacle to a recovery. It is clear, therefore, the only way in which to give that provision of the policy relating to fraud, concealment and misrepresentation any effect at all, is by treating the answers in the policy as mere representations and not warranties.’ ” And the court further, citing Fitch v. American Popular Life Ins. Co., post, a New York case, held: “The Rogers case cited and relied upon Fitch v. American Popular Life Ins. Co., 59 N. Y. 557. In that case the policy provided that fraud or intentional misrepresentation vitiated the policy, and that the statements and declarations made in the application, and on the faith of which the policy was issued, were warranties and in all respects true, and that the applicant declared that the answers to the questions annexed, and the written statements in the statement, declaration or warranty, together with the statements made to the examining physician, were warranties correct and true, and that the policy was issued and accepted in entire, unconditional honesty and good faith and with the just intent of scrupulously fulfilling all the conditions and engagements of the contract. It was held that the answers and statements contained in the application were mere representations and not warranties, mainly upon the same ground as the basis of the holding in the Rogers case, supra.”

We do not find that the courts of this State have, in any manner, receded from what is said in Weisguth v. Supreme Tribe Ben Hur, supra, and it follows that the statements and answer to questions in the application in the case at bar constitute representations and not warranties, and what was said by this court in Blahofski v. Metropolitan Life Ins. Co., supra, if based upon the same set of facts, should be overruled. The only basis in the record for charging a false statement in the application on the part of appellee is that he stated he had never had tuberculosis. There is no proof that this statement was false or that appellee had ever been tuberculous. On cross examination appellee stated that in 1918 some officer had stated to him that he had tuberculosis and he was discharged from the United States service. Appellee disputed the charge and applied the test in 1919 and found no tubercular infection. This application was not signed until 8 years later. This constitutes no proof as to the charge. What we have said covers appellant’s assignments of error as to the instructions given for appellee.

Some contention-is made by appellant that the policy was canceled by appellant which should defeat a portion of the recovery, but section 16 of the policy provides: “The company may cancel this policy at' any time by written notice delivered to the insured or mailed to his last address, as shown by the records of the company, together with cash or the company’s check for the unearned portion of the premiums actually paid by the insured and such cancellation shall be without prejudice to any claim originating prior thereto.”

Appellant assigns error upon the refusal of the court to give certain instructions for appellant, among which was one marked “L” based upon appellee’s failure, under the standard provisions of the policy, to give written notice of any injury or sickness. Clauses four and five of these provisions are in the following language: “Written notice of injury or of sickness on which claim may be based must be given to the Company within twenty days after the date of the accident causing such injury, or within ten days after the commencement of disability from such sickness. In event of accidental death immediate notice thereof must be given to the Company.”

Clause 5: “Such notice given by or in behalf of the insured or beneficiary, as the case may be, to the company at its home office, 226 W. Adams St., Chicago, Illls., or to any authorized agent of the company, with particulars sufficient to identify the Insured, shall be deemed to be notice to the company. Failure to give notice within the time provided in this policy shall not invalidate any claim if it shall be shown not to have been reasonably possible to give such notice and that notice was given as soon as was reasonably possible.”

Appellee went to the hospital on May 4, 1927. Appellant’s authorized agent received notice of the sickness on the 3rd or 4th of May and notified the company, and as soon as appellee came out of the hospital appellant made two payments of $500 each upon the claim. This conduct was a waiver of any specific provision of said clauses three and four not carried out, and the instruction “L” should not have been given. We have examined the other refused instructions upon which appellant assigns error. Some were covered by other instructions, others were not supported by the testimony and there are some instructions offered by appellant that do not state the law correctly. None of the rulings of the court upon these instructions, in the opinion of this court, would warrant a reversal of the judgment. Finding no error in the record sufficient to warrant such reversal, the judgment of the circuit court of Sangamon county is affirmed.

Affirmed.


author: Per Curiam.

text:
    Russell Watt, Appellee, v. Iroquois Auto Insurance Underwriters, Appellant.
    Gen. No. 8,360.

      Opinion filed February 3, 1930.
    O. D. Mann, for appellant.
    Lewman & Carter, for appellee.
   Per Curiam.

This is a suit in assumpsit brought by appellee, hereinafter referred to as the plaintiff, originally brought against two defendants, Iroquois Underwriters, Inc., against which said defendant the suit was later dismissed, and against Iroquois Auto Insurance Underwriters, appellant herein, hereafter referred to as the defendant.

The declaration consisted of the common counts and one special count and the action arose out of the loss by fire of the truck of the plaintiff insured by the defendant against such loss in the sum of not to exceed $3,500. The plaintiff filed an affidavit of claim with his declaration, swearing that he had lost his truck by fire; that the truck was insured against such loss by the defendant; and that the amount due the plaintiff, after allowing all just credits, deductions and set-offs, was $3,500. The defendant filed the general issue and four special pleas, three of which were later amended. The first special plea alleged that the insurance policy was issued upon an application for insurance made by the plaintiff in which the plaintiff stated that the truck in question was of the model of the year 1927; that the said truck was purchased in May, 1927, and that the actual cost of the truck was $6,000; defendant alleged that said truck was of the year model 1925, and was purchased the 1st day of January, 1926. Plaintiff replied to this plea that the policy of insurance was not issued upon an application made by the plaintiff as was in said plea alleged. The defendant joined issue.

The second special plea alleged that the plaintiff executed and delivered to the defendant a proof of claim in which he stated that the year model of the truck in question was 1926, and that it was purchased from the Myers Motor Mart for $5,700 in 1926. The defendant then alleged in said plea that the statement that it was purchesd new from the Myers Motor Mart for $5,700 was wilfully false and fraudulent, as the car was in fact purchased for $4,975. The said plea further alleged that plaintiff stated in his application that there was no incumbrance upon the automobile, which statement was false and fraudulent, when as a matter of fact there was a lien for $250 on said automobile. The plaintiff replied to said second plea that he had made no false or fraudulent statement as to the purchase price of said automobile in a proof of claim, and that he made no application for insurance in which, he stated there was no incumbrance upon the automobile for the purpose of defrauding such insurance company. The defendant joined issue.

The third special plea alleged that the damage to the truck was purposely inflicted by the assured or by someone at his request. ° The plaintiff replied denying such allegation.

The fourth special plea alleged that the plaintiff made his application for insurance stating the car was of the year model 1927, purchased in May, 1927, and that the actual cost of the truck was $6,000, whereas, as a matter of fact said truck was purchased the 1st day of January, 1926, was of the year model 1925, and that the actual cost of the truck was $4,975. Said plea also alleged that the plaintiff made an affidavit of claim in which he stated under oath that the automobile was purchased in February, 1926, from Myers Motor Mart for the sum of $5,700, and the defendant alleged that said statements in the application and proof of claim were at variance with each other and were made for the purpose of concealing and misrepresenting the material facts concerning the insurance and were made for the purpose of defrauding the insurance company. Plaintiff replied to this fourth plea that he made no application for insurance and that he made no statement in the proof of claim for the purpose of concealing or misrepresenting any material fact or for the purpose of attempting to defraud the defendant. The defendant joined issue.

As required by the statute the defendant filed, in support of his pleas, an affidavit in which he swore that his defense was that the plaintiff had made an application for insurance, and in such application stated that the truck was of the year model 1927, and was purchased in May, 1927, and that the actual cost of the same was $6,000; that the policy of insurance was issued in response to said application so made by the defendant and that in truth and in fact the automobile was of the year model 1925; was purchased the 1st day of January, 1926, and that the statements of the plaintiff were untrue and material to the risk, and that the defendant accepted such statements of the plaintiff in his application without investigation or inspection. The affidavit further recited that the plaintiff made, executed and delivered to the defendant a proof of loss in which the plaintiff stated that the car was of the year model 1926, was purchased new from the Myers Motor Mart for $5,700 in the year 1926, when as a matter of fact the statement of the plaintiff that he purchased the car new from the Myers Motor Mart for $5,700 was a wilfully false and fraudulent statement as to the purchase price because the car was purchased for $4,975. The affidavit further recited that the plaintiff stated in his application for insurance that there was no incumbrance on the automobile, which statement was false and fraudulent because there was a lien for $250 on said automobile at the time, and such statement of the plaintiff was made for the purpose of defráuding the defendant. The affidavit further recited that the affiant believed that plaintiff had wilfully destroyed the truck by his own hands or by the hands of someone else unknown to the defendant.

Plaintiff’s declaration in the special count avers the policy of insurance, the fire -and the making of proofs of loss and the performance of all the conditions of the contract and avers: “And also he sustained said loss and damage to his automobile truck by fire, in the manner and to the extent above set forth, to wit, thirty-five hundred dollars ($3,500),” etc. In one of the common counts the plaintiff avers that he sold and delivered goods to the defendant of the value of $3,500. The declaration does not otherwise show or allege the actual value of the truck mentioned in the policy, at the time of the fire in question. The terms of the policy set out in plaintiff’s declaration, provided: “It being expressly agreed and understood that the liability of the Underwriters for such damage or destruction is limited to the actual intrinsic value of the' property damaged or destroyed at the time of its damage or destruction, or the cost of suitable repair or replacement, not exceeding, in any event, the sum of $1,000.”

Plaintiff, neither by averment nor proof, alleged or offered to prove the actual, intrinsic value of the truck, and insisted that inasmuch as defendant had not controverted the damage alleged in its affidavit of claim, defendant was estopped to show the value of the car. The court sustained objections to all such proofs offered on the part of the defendant, and instructed the jury that in case they found a verdict for plaintiff it should be in the sum of $3,500, which was so found, although one witness testified that the value of the truck was only $1,200. This testimony was not stricken out and was not contradicted.

We do not see under the terms of this policy how plaintiff can properly allege and prove the liability of the defendant, except by alleging and proving the actual, intrinsic value of the car. The proof of loss and damage to the plaintiff under such circumstances does not prove the liability of the defendant. We are of the opinion that the court erred in this case in not permitting the defendant to show the actual value of the truck. In this case plaintiff is in the anomalous position of bringing suit upon a policy of insurance which recites: “In consideration of the agreements and statements in the application heretofore signed, which is a part of this contract,” etc., and then-denying that he ever signed any application and asserting that defendant’s agents voluntarily made up the policy without his request and handed it to him. The least that can be said, in a court of law, is that plaintiff cannot claim to have a policy of insurance or contract covering other property than that described in the policy, set out in plaintiff’s declaration. That policy covered a truck manufactured by the “International,” Factory No. 437, D. A., Motor No. 5822, four cylinders, of the model for the year 1927. Under the terms of this policy it is provided as to proofs of loss: “It is a condition of this policy that failure on the part of the assured to render such sworn statement of loss to the Underwriters, within sixty days of the date, shall render such claim null and void.” Plaintiff did present proofs of loss, under oath, which describe a similar car of a model for the year 1926. Defendant offered in evidence a policy of insurance taken out by plaintiff on April 8, 1927, with the Republic Casualty Underwriters, describing this car as a 1926 model and stating that plaintiff purchased the car in March, 1926. The court refused to admit the evidence. This was error. It was shown'that the rate and terms of insurance varied for the different models. There were different and varying statements made by plaintiff proven as to the cost of the car, tending to show that he paid a considerably larger price for it than it actually cost.

Various proofs were submitted by the defendant which should have been received by the court; and plaintiff was permitted by oral testimony to contradict the terms and provisions, not only of the policy, but of the verified proofs of loss, all of which was error in a court of law.

Complaint is also made repeatedly at the remarks of plaintiff’s counsel, before the jury, and to the extent that the court threatened to dismiss the jury and should have done so. Upon defendant’s counsel asking to see a paper plaintiff’s counsel refused, stating: “I am t’old you tried to get it once.” Plaintiff’s counsel stated in the presence of the jury: “I have a picture here showing the entire situation.” The picture was not admitted in evidence. Plaintiff’s counsel stated: “I thought you wanted the jury to know the facts in the case.” Plaintiff’s counsel asked a witness: “Do you get paid for testifying this way?” Various interjections of this nature were made. In the argument plaintiff’s' counsel indulged in the following: “Some of you gentlemen in being examined said you had taken out insurance for one thing and another in the past. I have a few policies myself and I will venture to state that your experience with the insurance agent has been the same as mine; all they are anxious for is to get your application, get you to say the word'and they get away as quick as they can so you won’t change your mind—

“Mr. Mann: Object to that remark.

The Court: The jury will disregard any statement by counsel which is not supported by the evidence.

Mr. Carter: I say that is a correct statement of our ordinary experience.

Mr. Mann: Object again.

Mr. Carter: And justified by the evidence in this ' case.

Mr. Maim: Object to that remark.

The Court: Yes, the jury will disregard any statement which is made that is not supported by the evidence or is not properly inferable from the evidence.

Mr. Carter: Does the court say this is not inferable from the evidence?

The Court: No, that is for the jury to decide.”

The pleadings were discussed and the jury informed by plaintiff’s counsel that they, the jury, could take the pleadings to their jury room and study their intricacies. All this was error. A reviewing court should let no verdict stand secured in the manner as this record indicates.

There are other errors in the case that doubtless will be corrected on another trial. In the manner that this case has been presented to this court we forbear to express any opinion as to its merits. Defendant’s brief is not systematic, quotes much testimony without giving references and rather argues incidents than principles, and is not enlightening. If tried in the same manner in the court below by defendant’s counsel, he may, without committing fault, have invited some of the errors.'

For the errors pointed out the verdict and judgment of the circuit court of Vermilion county are reversed. and the cause remanded for further proceedings.

Reversed and remanded.