text:
    Trustees of Schools of Town One, etc., in the Counties of Clinton and Washington, Appellee, v. Clyde A. Chambers et al. American Surety Company of New York, Appellant.
    1. Appeal and error — waiver, of errors assigned but not argued. It is a well-settled rule that errors assigned but not argued are waived.
    2. Officers and public employees — •construction of bond intended to meet statutory requirements, by disregard of prohibited or unauthorized provisions. Where the bond of a township school treasurer, although manifestly intended to. meet the requirements of the statute then in force, contained provisos stating conditions unauthorized or prohibited by such statute, such provisos may be stricken or disregarded as surplusage in determining the liability of the sureties thereunder.
    3. Officers and public employees.— sufficiency, of evidence to show felonious withholding of funds by township school treasurer. Undisputed evidence in action on official bond of township school treasurer held to show his guilt of a penitentiary offense in withholding funds coming into his hands as such officer.
    4. Officers and public employees — sufficiency of evidence to show liability of surety oh bond of township, school treasurer. Proof that a township school treasurer has feloniously withheld funds coming into his hands as such officer, that he admitted being short in his accounts, that he withdrew funds from his account as such officer but refused to explain what became of them on the plea that his answer would incriminate him, and that he has received a much larger sum during his term of office than he has lawfully paid out, held sufficient, in an action on his bond, to show that the trustees of schools had sustained the losses sought to be recovered by acts of fraud, dishonesty, wrongful abstraction and misapplication of township school funds within the meaning of the conditions of the bond so far as such conditions were authorized by or not in conflict with the provisions of the statute providing therefor.
    5. Subbtyship— right of election, in suit in equity, against which of two■ concurrently enforceable official bonds, to proceed. The fact that school trustees sued in equity, rather than at law, to recover upon the official bonds of a township school treasurer for four successive terms, did not preclude their right to elect as to which of such bonds they would seek to enforce as, to the defaults of a particular term during which two bonds were in force.
    6. Equity— cross-bill as prerequisite to affirmative relief. A defendant in equity may not have affirmative relief unless he files a cross-bill with a prayer therefor. Such relief cannot be granted upon an answer.
    Appeal by defendant from the Circuit Court of Clinton county; the Hon. F. R. Dove, Judge, presiding. Heard in this court at the October term, 1925.
    Affirmed.
    Opinion filed February 17, 1926.
    Bryan, Williams & Cane, Thomas S. McPheeters and Wham & Wham, for appellant.
    Noleman, Smith & Dallstream, for appellee.
   Mr. Justice Barry

delivered the opinion of the court.

Appellee, the trustees of schools, filed a bill against Clyde A. Chambers, appellant, and Southern Surety Company to reform four township, school treasurer’s bonds, each in the sum of $12,000, and to recover the amounts found to be due thereon. Chambers was elected township school treasurer in 1918 and was reelected every two years thereafter, up to and including 1924. Appellant was a surety on the bonds executed in 1918,1920 and 1924, and Southern Surety Company was on his bond for the term of 1922 to 1924. Issues were joined and upon a hearing before the court the bonds were reformed. Chambers was found to be short in his accounts as follows: $4,752.62 during his first term of office, $213.17 during his second term, and $10,353.93 during his fourth term, and as appellant was his surety it was ordered to pay said several amounts. He was also found to be short in his accounts during his third term in the sum of $11,036.76 and Southern, Surety Company was ordered to pay that amount. The latter company has abided by the decree.

While appellant assigned thirteen errors upon the record, it has argued but three, which are set out in its brief and argument as follows:

(1) That the court erred in finding and decreeing the bonds of appellant to be official statutory bonds;

(2) That the court erred in decreeing the reformation of said bonds so as to follow the form mentioned and set forth in the statutes of the State of Illinois concerning the bonds of township school treasurers ; and,

(3) That the court erred in finding and decreeing appellant to be solely liable for the loss sustained during Chambers term which began on May 1, 1924, and in refusing to find and adjudge that the bond of the Southern Surety Company was likewise in full force and effect during that term and in the failing to find and adjudge that said company was equally liable with appellant for all losses sustained during that term. It is a well-settled rule that errors assigned but not argued are waived.

Appellant executed the bonds in question upon an application made by Chambers. The blanks were furnished by appellant and bore, in large letters, this heading, “Application for Bond, Public Officers and their Employees (except Federal Officers).” When filled out, signed and submitted the applications informed appellant that Chambers had been appointed township school treasurer for a certain term; that he desired appellant to sign his bond as such officer and that it should be made in favor of the school trustees. Appellant prepared the bonds and they were executed by Chambers as principal and by it as surety. Each bond contained a promise that appellant would pay to the trustees of schools any pecuniary loss sustained by reason of any one of certain acts on the part of Chambers while he held the position of township school treasurer. The bonds were presented to- the trustees of schools and by them approved. They were also approved by the county superintendent of schools. By reason thereof Chambers was permitted to- assume the duties of the office and large sums of money came to his hands as such officer.

We see no escape from the conclusion that the bonds in question were executed, accepted and approved as the-official bonds of Chambers as township school treasurer. Appellant contends, however, that in form the bonds were so- materially different from the form prescribed by the statute, they cannot be construed as official statutory bonds; that they are simply common-law obligations and when so construed all of the conditions and limitations therein contained are valid and binding, and not having been complied, with there can be no recovery thereon.

The bonds in question are in the following form:

“We, Clyde A. Chambers, as principal, hereinafter called the ‘ employee, ’ and the American Surety Company of New York as surety, bind ourselves to pay School Trustees, Brookside Township, Clinton County, Illinois, as employer, such pecuniary loss, not exceeding Twelve Thousand ($12,000.00) Dollars, as said employer shall have sustained of money or other personal property (including that for which the employer is responsible), by any act or acts of fraud, dishonesty, forgery, theft, embezzlement, wrongful abstraction or misapplication on the part of said employee, directly or through connivance with others, while holding the position of Township School Treasurer, in the employ of said employer and during the period commencing ................and ending with the termination of this suretyship by the retirement of the employee from bis said position, the discovery of loss hereunder, or the cancellation of this suretyship by the employer or the surety.

Provided, however:

“1. That loss be discovered during the continuance of this suretyship, or within fifteen (15) months next after its termination, and notice thereof delivered to the surety at its home office in the City of New York within ten (10) days after such discovery.

“2. That claim, if any, be submitted by the employer in writing, showing the items and the dates of the losses, and delivered to the surety at its home office within three (3) -months after such discovery, and the surety shall have two (2) months after such claim has been presented in which to verify and to make payment. In the meantime no suit, action or proceeding shall be brought against the surety by thd employer, nor after the expiration of twelve (12) months after the delivery of such statement of claim.

“3. In the event that the loss exceeds the amount of this suretyship, the employer and the surety shall share with each other pro rata in any net recovery, except recovery upon or from other suretyship for such employee, in the proportion that the amount of the payment under this suretyship bears to the total shortage.

“4. The amount of this suretyship' may, on written application of the employer, be increased or decreased by the surety without impairing the continuity thereof.

“5. This suretyship may be terminated by the surety upon thirty (30) days’ notice to the employer, and likewise the employer may terminate this suretyship by notice in writing to the surety, specifying the date of cancellation. Thereupon the surety shall refund the unearned premium, if any claim has been paid.

“In witness whereof, the employee, as principal, and the surety have hereunto set their hands and seals this ...........day of................., 19..

Clyde A. Chambers, Principal.
Andrew Kuhn,
Witness.
American Surety Company of New York, By F. W. Lapentz,
President.
Attest: L. A. Kroehnke,
Besident Assistant Secretary, at St. Louis, Mo.”

If Callaghan’s Ill. St. Ann. ch. 122, ¶ 68, had been complied with the bonds executed by appellant would have been, and the court reformed them so as to read, as follows:

“Enow all men by these presents, that we, Clyde A. Chambers and American Surety Company of New York are held and firmly bound, jointly and severally, unto the Board of Trustees of Township’ One (1) North, Bange One (1) West of the Third Principal Meridian in said county, in the penal sum of Twelve Thousand ($12,000.00) Dollars for the payment of which we bind ourselves, our heirs, executors, administrators and successors firmly by these presents.

“In witness whereof, we have hereunto set our hands and seals this..........• day of.........;----, 19..

“The condition of this obligation is such that if Clyde A. Chambers, Treasurer of Township One (1) North, Bange One (1) West, of the Third Principal Meridian, in the county aforesaid, shall faithfully discharge the duties of his office, according to law, and shall deliver to his successor in office, after such successor shall have qualified by giving bond as provided by law, all moneys, books, papers, securities and property, which shall come into his hands or control, as such Township Treasurer, from the date of his bond up to the time that his successor shall have qualified as Township Treasurer, by giving such bond as shall be required by law, then this obligation to be void; otherwise to remain in full force and virtue.

Clyde A. Chambers, Principal.
Andrew Kuhn,
Witness.
American Surety Company of New York, By F. W. Lapentz,
President.
Attest: L. A. Kroehrike,
Resident Assistant Secretary, at St. Louis, Mo.”

Appellant insists that such a reformation was without authority of law; that the court, in effect, made a new contract for the parties, to the terms of which it never gave its assent. Appellant was fully informed that Chambers was appointed to a public office and the statute prescribed the form of the bond that he should execute as such officer. Appellant was bound to know the law and, for a consideration, became surety for Chambers as such officer. Chambers was thereby enabled to assume the duties of the office and to receive large sums of money. It will be observed that all of the acts of Chambers, for which appellant assumed responsibility by the terms of the bonds, are included in the statutory form of bond. The statute includes all of that liability, and more, but it does not authorize any of the conditions or limitations found in the bonds in question and designated as provisos 1, 2, 3, 4 and 5.

At common law the conditions of the bond may be in part void and in part valid, if they are severable one from another; the same rule applies to statutory bonds where the statute is silent as to the effect of a departure from the statutory form. Erlinger v. People, 36 Ill. 458. A bond given by the county treasurer, the condition of which is that he shall faithfully and impartially discharge all the duties of the office, is a good statutory bond for so much as is prescribed by the statute and comprehended in the condition, even though it be void for the residue. State v. Findley, 10 Ohio 54.

It requires no stretch of the imagination to conclude that appellant intended to furnish such a bond as would meet the requirements of the law. If so, there is no hardship imposed upon appellant if it is held to the liability fixed by the statute. But as we are of the opinion that the decree should be affirmed on another ground we do not deem it necessary to decide whether the court carried the doctrine of reformation too far.

In 9 Corpus Juris, pp. 34, 35, it is said: “Where a bond is given under the authority of the statute in force when it is executed, in the absence of anything appearing to show a different intention, it will be presumed that the intention of the parties was to execute such a bond as the law required, and said statute constitutes a part of the bond as if incorporated in it, and the bond must be construed in connection with the statute and the construction given to the statute by the courts. Such a bond must be given the effect which in reason must have been intended by the statute. Whatever is included in the bond, and is not required by the law, must be read out of it, and whatever is not expressed, and ought to have been incorporated, must be read as if inserted into it.”

The prevailing doctrine is that where the conditions of a statutory bond are severable, and part are authorized by the statute and part are not authorized or even prohibited and the statute does not expressly or by necessary implication declare it void as a whole, the conditions not authorized or prohibited may be rejected as surplusage. 4 R. C. L. 54; 9 Corpus Juris 26. The law in force when the bonds were executed became a part of the contracts between the officer, his sureties and the public. Ramsey’s Estate v. People, 197 Ill. 572; 9 Corpus Juris, p. 34. It follows, necessarily, that the provisos in the bond in question may be stricken or disregarded as mere surplusage.

When the conditions and limitations are stricken from the bonds or disregarded, it will be seen that appellant bound itself to pay to the trustees of schools such pecuniary loss, not exceeding $12,000 on each bond, as they shall have sustained by any act or acts of fraud, dishonesty, forgery, theft, embezzlement, wrongful abstraction or misapplication on the part of said Chambers while holding the position of township school treasurer.

Chambers was the only lawful custodian of township and district school funds, and it was his duty to receipt for and. safely keep, according to law, all moneys, etc., belonging to his township. Callaghan’s Ill. St. Ann. ch. 122, ¶ 71. He was an insurer of the funds coming to his possession. Thompson v. Board of Trustees, 30 Ill. 99; Swift v. Trustees of Schools, 189 Ill. 584. Treasurer’s sureties are required to1 show that the treasurer disposed of the funds coming to his hands in accordance with the law. School Trustees v. Smith, 88 Ill. 181. When Chambers was removed from office it was his duty to deliver all funds to his successor. Callaghan’s Ill. St. Ann. ch. 122, ¶ 84.

If Chambers failed or refused to deliver the school funds to his successor as required by law he was guilty of a criminal offense, and if the amount withheld was more than $100 he was subject to imprisonment in the penitentiary for not less than one or more than ten years. Callaghan’s Ill. St. Ann. ch. 38, ¶ 447. If he were indicted for that offense it would not be necessary for the State to aver or prove that his failure or refusal to turn over the money was not occasioned by unavoidable loss or accident. That would be a matter of defense and the burden would be upon him to prove it. Dreyer v. People, 188 Ill. 40. The same rule applies where a treasurer is his own successor in office. Johnson v. People, 123 Ill. 625.

Appellant stipulated on the trial that during his first term of office from 1918 to 1920 Chambers received, as treasurer, $4,752.62 more than he lawfully-paid out; that during his second term, from 1920 to 1922, he received $213.17 more than he lawfully paid out; that during his third term he received $11,036.76 more than he lawfully paid out; that during his fourth term he received $10,353.93 more than he lawfully paid out. It seems to us that it is a fair inference from the stipulation that all of these several amounts were gone and that they had been unlawfully paid out. Neither Chambers nor appellant attempted to show that his failure or refusal to turn said amounts over to his successor was occasioned by unavoidable loss or accident. Under the statute and the authorities last above cited and the undisputed evidence in this record Chambers was guilty of a penitentiary offense for withholding public funds. Some of those funds had been withheld for several years.

It was proven, without objection, that Chambers told the county superintendent of schools that he was in serious trouble, that he was short in his accounts as township treasurer and wanted to know what he should do about it. That evidence is not disputed. He made no claim that the shortage was due to an unavoidable loss or accident. Why should he say that he was in serious trouble because he was short in his accounts if he were not guilty of fraud, dishonesty or a misapplication of the township funds ? In a suit upon a township treasurer’s bond, an admission by the treasurer that he owed the township certain amounts is evidence of that fact, not only against himself, but against his sureties. Swift v. Trustees of Schools, 189 Ill. 584. A short time before Chambers was removed from office he withdrew $6,000 of the school funds from his account as treasurer. When called as a witness and asked to explain what he had done with that money he refused to say, on the ground that his answer would incriminate him.

The bond prepared by a surety company guaranteeing an employer against “loss by reason of dishonesty or fraud, amounting to larceny or embezzlement, ’ ’ of an employee, is a guaranty against dishonesty or fraud of the employee, whether such as would render him liable to indictment for larceny or embezzlement or not. City Trust, etc., Co. v. Lee, 204 Ill. 69. In that case the court said: “It is apparent the appellee, by the bond, sought to protect himself from financial loss from the dishonesty of Morrow, even though the act by which the loss was occasioned was not criminal. The bond was prepared by appellant, and under a well-settled rule of construction will be most strongly construed against it, and in our view was intended to protect appellee from financial loss from just such dishonest acts of Morrow, namely, the failure to account for and pay over rents collected. ’ ’ In that case the court held it was dishonest for an agent to collect rents for his principal and then fail or refuse to account for the same, even though, having an interest in the same, he could not be found guilty of larceny or embezzlement.

We are not disposed to hold that a public officer is not guilty of any fraud, dishonesty, wrongful abstraction or misapplication of public funds when it is shown that he is guilty of a penitentiary offense in withholding such funds; that he admitted he was short in his accounts; that he withdrew funds from his account as such officer and refused to say what he had done with them because it would incriminate him; that he has received a much larger amount of money during his term of office than he has lawfully paid out.

In view of the law and the undisputed and admitted facts in this record there is no escape from the conclusion that the trustees of schools sustained the losses sought to be recovered by acts of fraud, dishonesty, wrongful abstraction and misapplication of township school funds on the part of Chambers while holding the position of township school treasurer. That being true, appellant is liable on the bonds as executed when the conditions and. limitations therein contained, and which were not authorized by the statute, are stricken therefrom or disregarded as surplusage.

Appellant’s contention, that the court erred in failing to find and adjudge that the Southern Surety Company was equally liable with it for the loss sustained during Chambers’ last term of office and that the same should have been apportioned between the two companies, cannot be sustained. Appellant says: ‘‘Unquestionably the appellees could bring a suit at law against the American Surety Company on any one of its bonds without joining the Southern Surety Company as a defendant, and the fact that there was a bond outstanding covering the same period, executed by another surety company, would be no defense.”

It argues, however, that this suit being in a court -of equity the loss sustained during the last term of office should be apportioned between the two companies. No authority is cited in support of that contention. The law gave the trustees of schools a right to elect upon which of the bonds suit should be brought. Pinkstaff v. People, 59 Ill. 148. We are of the opinion that they had the right of election whether the suit was brought at law or in equity. If the bonds of both companies were in force during the last term they were concurrent and cumulative. The trustees had the right to sue upon both bonds but, of course, would be entitled, to but one satisfaction of their loss. They were not concerned with the question of a prorating between the two companies.

It is a well-settled rule of law that a defendant in equity cannot obtain affirmative relief unless he files a cross-bill with a prayer therefor. Such relief cannot be granted upon an answer. The decree is in accordance with the law and the evidence and is affirmed.

Affirmed.


source: Caselaw Access Project

author: Mr. Justice Higbee

license: Public Domain

text:
    T. B. Howland, Appellant, v. Newton Ice & Cold Storage Company, Appellee.
    1. Warehouses and storage — sufficiency of evidence to sustain verdict as to cause of damage to stored goods. Where in an action for loss alleged due to deterioration of a quantity of evaporated apples while in storage in defendant’s warehouse, the evidence was conflicting as to the condition of the apples when placed in storage as well as to the possibility that they were damaged, as alleged, by dripping water while in storage, a verdict for defendant was held not manifestly against the weight of the evidence.
    2. Warehouses and storage — admissibility of testimony of parties to storage contract evidenced by warehouse receipts. Where warehouse receipts issued when plaintiff stored a quantity of evaporated apples in defendant’s warehouse stated the terms of the storage agreement, it was not error to exclude testimony by plaintiff as to his understanding with defendant’s manager as to such terms, in an action to recover damages for injury to the fruit while so stored.
    3. Harmless and prejudicial error; — ■refusal to strike incompetent testimony as to fact shown by competent evidence. Where a warehouse receipt, issued when plaintiff stored a quantity of evaporated apples in defendant’s warehouse, stated an agreement for storage “until October 1,” and the court, in an action for damage to the apples while in storage, after permitting defendant’s manager to answer a question as to whether he had an understanding with plaintiff as to the time the goods were to remain in storage by saying: “Yes, sir, until October 1,” the refusal of the court to strike out the last three words, although error, was not ground for reversal of the judgment for defendant.
    4. Harmless and prejudicial error — faults in appellee’s instructions also appearing in instructions for appellant. An appellant may not complain of an instruction given on behalf of appellee, even if it is not wholly a correct statement of the law, where the same fault appears in other instructions given at appellant’s instance.
    5. Warehouses and storage — propriety of instructions in action for damage to stored goods. Instructions in an action for damage to goods while in storage in defendant’s warehouse held to have fairly advised the jury of the law applicable to the case.
    Appeal by plaintiff from the Circuit Court of Jasper county; the Hon. William B. Wright, Judge, presiding. Heard in this court at the October term, 1925.
    Affirmed.
    Opinion filed February 17, 1926.
    Kasserman & Kasserman, for appellant.
    Isley & Yelvington, for appellee.
   Mr. Justice Higbee

delivered the opinion of the court.

On April 21, 1923, appellant, T. B. Howland, placed in storage with the Newton Ice and Cold Storage Company, appellee, a quantity of dried apples for which appellee issued its warehouseman’s receipt. These apples had been evaporated by appellant during the fall of 1922 and remained in storage with appellee until the last of March, 1924. Appellant contends that when he removed the apples in March, 1924, they were so wet and moldy and in such a damaged condition that about 7,000 pounds were destroyed and the remainder had to be redried by him, resulting in a loss of $2,200 to recover which this suit was brought. Upon a trial before a jury a verdict was returned in favor of appellee and this appeal was taken from the judgment entered upon that verdict.

In his case in chief appellant placed witnesses upon the stand whose testimony tended to show that the apples were in good condition when placed in storage; that while in storage water dripped upon them from frost melting from the pipes in appellee’s plant, and also from one leaking pipe, and that the apples were in bad condition when removed from storage. Appellee in its behalf placed witnesses upon the stand whose testimony tended to show that the apples were not in good condition when placed in cold storage, and that it would have been impossible for water to drip upon them either from melting frost on the pipes or from a leaking pipe. We do not deem it necessary to discuss this evidence in detail. While there was to some extent a conflict in the evidence, yet if the jury, in whose presence the witnesses testified, believed the evidence in behalf of appellee, it was sufficient to sustain a verdict, and we cannot say that the same is against the manifest weight of the evidence.

Appellant contends that the court refused to permit him to state the conversation had by him with appellee’s manager at the time the apples were placed in storage, but did permit appellee’s manager to testify thereto, and that such action was error. Since it appears that the warehouse receipts stated the contract between the parties it was not error to' exclude appellant’s testimony as to what the understanding was between him and appellee’s manager. The question asked appellee’s manager and the answer thereto, which are objected to, were as follows: “Did you have any understanding with Mr. Howland at that time as to how long you were to store these apples?” Over objection the witness was allowed to answer as follows: “Tes, sir, until October 1.” A motion to strike the last portion of this answer was also overruled. He was then asked: “Was your: answer ‘yes’ or ‘no,’ ” and answered “yes.” He was then asked what was the understanding he had with appellant regarding the storage of the apples, and an objection to this question was sustained. In our opinion it 'was not error to permit this witness to state that he did have an understanding with appellant, but that it would have been error to permit him to state what that understanding was. However, since the receipt issued contained the following “storage to October 1, 1923” we do not believe that it was reversible error for the court to refuse to strike from this witness’ first answer above quoted the words, “until October 1.”

Complaint is made of the fourth instruction given on behalf of appellee. The objection made to this instruction is that after advising the jury of the degree of care required of appellee it proceeds to state “and before Howland .can recover in this case it will be necessary that he shall have proved to yon by a preponderance of evidence that the Newton Ice and Cold Storage Company did not nse such a degree of care.” It is claimed by appellant that all that was necessary for him to do was to show that his apples were in good condition when placed in storage and were redelivered to him in bad condition, and that after the establishing of this prima facie case the burden was upon appellee to prove that it did use the care required. This instruction is not to be commended, and is not a wholly correct statement of the law. However, appellant is in no condition to complain for the reason that an instruction was given in behalf of appellant which, after defining the degree of care required of appellee, advised the jury that if a preponderance of evidence showed that the apples were in good condition when placed in storage, and if they further believed from a preponderance of the evidence that defendant in the storing of said evaporated apples did not exercise that degree of care which a reasonably careful man would exercise in regard to similar goods of his own, and that by reason thereof the said evaporated apples became damaged and of less value to the plaintiff, then they should find for the plaintiff. This instruction in effect advises the jury that negligence of appellee must be established by a preponderance of evidence which is the complaint made by appellant of appellee’s fourth instruction. (Hotel Sherman Co. v. Railway Terminal & Warehouse Co., 210 Ill. App. 191.) Complaint is also made that appellee’s sixth instruction in effect advises the jury that the degree of care required of appellee was “ordinary care and diligence” while the law requires appellee to exercise only such care as a reasonably careful owner of similar goods would exercise. There is but little distinction between the language found in this instruction and that contended for by appellant. However, this instruction was given not for the purpose of defining the degree of care, but really for the purpose of advising the jury that appellee was not responsible for damages resulting from any inherent qualities of the apples. Upon a consideration of these instructions as a whole, we are of the opinion that the jury was fairly advised of the law applicable to the facts of the case. The verdict in our opinion was warranted by the evidence and as the record discloses no reversible error on the trial, the judgment will be affirmed.

Affirmed.


author: Mr. Presiding Justice Niehaus

text:
    Dora Andrews and Mary Lee Andrews Paris, Executrices of the Estate of James Lee Andrews, Deceased, Appellants, v. F. M. Votaw et al., Administrators de bonis non with Will Annexed of the Estate of Jesse D. Andrews, Deceased, Appellees.
    Gen. No. 7,859.
    1. Agency — when relation created between payee of notes and custodian thereof. Where pursuant to’ an agreement between brothers, one of whom held notes of the other payable to the holder, the instruments were placed for safe-keeping in the hands of the office manager of the maker, the transaction created the relation of principal and agent between such payee and the office manager.
    2. Evidence — competency of letter from, custodian of personal property to owner thereof to show< purpose and character of possession. A letter written to the owner of personal property by one having possession of such property is competent evidence to show the character and purpose of such possession.
    3. Evidence — admissibility of letter containing competent and relevant matter where also containing inadmissible hearsay. Where. a letter offered in evidence, while containing relevant and competent matter, also contained matter inadmissible because hearsay, it was not error to exclude the letter as a whole.

      4. Evidence — rules governing proof of defensive matter where trial without written pleadings. The rules of evidence concerning the necessary proofs of matters of defense are the same in an action wherein no written pleadings are required as in actions where such pleadings are filed.
    5. Payment — burden of proof in proceeding upon claim against estate of decedent. In proceedings against the personal representatives of a decedent upon a claim based upon notes of the decedent, wherein the defense urged is payment, the burden of proof of such payment is upon such personal representatives in the same manner and to the same effect as if issue had been joined upon a plea of payment.
    6. Payment — sufficiency of evidence to sustain defense, in proceeding upon claim against estate based upon note. In proceedings against personal representatives of a decedent upon a claim against his estate based upon notes payable to claimants’ testator, evidence that while such notes were in the possession of an employee of the maker, defendants’ decedent, as agent of the payee, the signature of such maker was torn from such notes, and that in such condition they came into the possession of the defendants as personal representatives, held insufficient to support a finding that the notes had been paid by the maker thereof.
    7. Payment — propriety of instruction correctly stating general presumption as to payment of note found in effects of deceased maker, in view¡ of evidence. An instruction correctly stating the general rule, that where one has signed notes in his lifetime, and after his death they are found among his effects, a presumption that he has paid such notes arises, is nevertheless misleading and prejudicial where the evidence shows' that by agreement between such maker and the payee of the notes they were committed to the custody of an employee of the maker as agent of the payee, and there remained, although accessible to the maker, until after his death, when they were taken possession of by the maker’s personal representatives.
    8. Appeal and error — when conduct of counsel in argument ground for reversal although objection thereto sustained. Where counsel in argument made repeated and persistent efforts to bring to the attention of the jury matters outside of the record for the purpose of prejudicing the jury against the opposing party and his cause, and to arouse local prejudice against him, such conduct is ground for reversal of a judgment notwithstanding that the trial court sustained objections of opposing counsel to such remarks:
    Appeal by plaintiffs from the Circuit Court of Coles county; the Hon. Augustus A. Pabtlow, Judge, presiding. Heard in this court at the April term, 1925.
    Reversed and remanded.
    Opinion filed March 8, 1926.
    Rehearing denied April 14, 1926.
    Charles C. Lee, Clarence W. Hughes and Burnett M. Chiperfield, for appellants.
    Donald B. Craig; Fred H. Kelly and Thomas D. Masters, for appellees.
   Mr. Presiding Justice Niehaus

delivered the opinion of the court.

In this case a claim was presented, and filed on March 1, 1919, in the county court of Coles county by James Lee Andrews against the estate of his brother, J esse D. Andrews, deceased, amounting to the sum of $21,-864.70. Afterwards, on March 14, 1922, James Lee Andrews, also deceased, and the appellants, Dora Andrews and Mary Lee Andrews Paris, as executrices of the estate of James Lee Andrews, were substituted as claimants. The claim is contested by the appellees, F. M. Votaw, J. W. Bledsoe and Margaret J. Andrews, who are administrators de bonis non of the estate of Jesse D. Andrews. Two trials were had in the county court. The first resulted in a disagreement of the jury, and upon the second trial there was a verdict and judgment in favor of the appellees, against the allowance of the claim. An appeal was thereupon prosecuted to the circuit court. A trial in the circuit court resulted in a verdict in favor of the appellees, disallowing the claim. Judgment was rendered on the verdict, and this appeal is prosecuted from the judgment.

The claim of J ames Lee Andrews against his brother’s estate, is as follows:

“March 8,1909 — Note due one year after date without interest as per copy identified as Exhibit ‘A’ hereto attached..............$ 352.00
“Jan. 4, 1910 — Note due one year after date without interest as per copy identified as Exhibit ‘B’ hereto attached..............$2,157.41
“Jan. 1, 1912 — Note due on demand without interest as per copy identified as Exhibit
‘O’ hereto attached...................... 5,583.51
“Jan. 20,1914 — Note due on demand without interest as per copy identified 'as Exhibit
‘D’ hereto attached..................... 7,721.78
“Feb. 10, 1915 — Note of J. L. Andrews to F. J. Andrews for one thousand ($1,000) Dollars due one year after date with interest at 5 per cent given for a valuable consideration at the request and for the accommodation of Jesse D. Andrews in payment of indebtedness due from Jesse D. Andrews to F. J. Andrews, which note and interest has been paid in full by J. L. Andrews, copy thereof identified as Exhibit ‘E’ being hereto attached............................. 1,250.00
“Plus interest from 2-10-20.
“Feb. 10, 1915 — Note of J. L. Andrews to F. J. Andrews for one thousand ($1,000) Dollars due two years after date with interest at 5 per cent given for a valuable consideration at the request and for the accommodation of Jesse D. Andrews in payment of indebtedness due from Jesse D. Andrews to F. J. Andrews, which note and interest has been paid in full by J. L. Andrews, copy thereto being hereto attached, identified as Exhibit ‘F’ ................ 1,250.00
“Plus interest from 2-10-20.
“Feb. 10, 1915 — Note of J. L. Andrews to F. J. Andrews for one thousand ($1,000) Dollars, due three years after date with interest at 5 per cent given for a valuable consideration at the request and for the accommodation of Jesse D. Andrews in payment of indebtedness due from Jesse D. Andrews to F. J. Andrews, which note and interest has been paid in full by J. L. Andrews, copy thereof identified as Exhibit ‘Gr,’ being hereto attached ............................$1,250.00
“Plus interest from 2-10-20.
“Feb. 10, 1915 — Note of J. L. Andrews to F. J. Andrews for one thousand ($1,000) • Dollars, due four years after date with interest at 5 per cent given for a valuable consideration, at the request and for the accommodation of Jesse D. Andrews in payment of indebtedness due from Jesse D. Andrews to F. J. Andrews, which note and interest has been paid in full by J. L. Andrews, copy thereof identified as Exhibit
‘H,’ being hereto attached............... 1,250.00
“Plus interest from 2-10-20.
“Feb. 10, 1915 — Note of J. L. Andrews to F. J. Andrews for one thousand ($1,000) Dollars due five years after date with interest at 5 per cent given for a valuable consideration, at the request and for the accommodation of Jesse D. Andrews, in payment of indebtedness due from Jesse D. Andrews to F. J. Andrews, which note and interest has been paid in full by J. L. Andrews, copy thereof identified as Exhibit
‘I,’ being hereto attached................. 1,250.00
“Plus interest from 2-10-20.”

The evidence shows that the original claimant, James Lee Andrews, and his brother, J esse D. Andrews, and another brother, Fount J. Andrews, were all actively engaged in the lumber business for a number of years. The business of Fount J. Andrews was located at Jacksonville; that of Jesse D. Andrews at Mattoon, and James L. Andrews conducted his business at Canton. In the year 1908, the three brothers came to an understanding concerning their respective business enterprises, and made an agreement to> treat them as a whole, and to divide the profits, which were to be ascertained, equalized and adjusted annually between them. It was also agreed that Park- Kelly, who was office manager in the business of Jesse D. Andrews, was to take a yearly account of the profits accruing in the respective yards, at Jacksonville, Mattoon and Canton, and ascertain the amount of profits so that a settlement might be had between the three brothers. And Park Kelly each year, for several years thereafter, made the necessary examinations and statements of accounts of each of the several lumber yards, and figured out the adjustments of the profits among the brothers, and in equalizing the respective profits of the business of the three lumber yards, four of the notes embraced in the claim in question were given by Jesse D. Andrews to James Lee Andrews. The claim also includes five other notes made by James Lee Andrews to Fount J. Andrews for Jesse D. Andrews, in settlement of a part of an indebtedness which Jesse D. Andrews owed Fount J. Andrews, and which afterwards were paid by James Lee Andrews to Fount J. Andrews. The three brothers in June, 1913, met at the Brevoort hotel in Chicago, and at that time the matter of placing the notes, which James Lee Andrews held against Jesse D. Andrews, in the hands of Park N. Kelly for safe-keeping was talked about, and was afterwards carried into effect. The purpose which Jesse D. Andrews had in view by this arrangement with his brother, James Lee, clearly appears from the testimony of William A. Irvine. He testified as follows: “I had a conversation in mid-summer of 1918, in Lincoln Park, Chicago, with Jesse D. Andrews, with reference to the subject matter of some notes given by Jesse D. Andrews and James Lee Andrews. Jesse D. Andrews at that time was residing temporarily at Edgewater Beach Hotel in Chicago. * * * The conversation I am referring to, took place sometime in July, 1918. He said his brother, Lee, at Canton, held some $20,000 worth of his notes, which he had given him in connection with the settlement of profits of the three years, in which the brothers were interested. He said his brother was in very poor health, and had been for some time. So bad in fact, he feared he might die, and if he did, he feared his business might pass into the hands of strangers or people unfriendly to him, and holding $20,000 of his notes, might demand payment over night. It was quite a considerable amount of money to take out of his business on such a short notice. He arranged for a meeting with Lee Andrews in Peoria, and prevailed on him at that time to send those notes to Park Kelly for safe-keeping.” At the time of the conversation with Irvine referred to, the notes in question were in the hands of Park N. Kelly. The evidence shows that the notes had been sent by James Lee to Jesse D. Andrews, about June 5, 1913, inclosed in the following letter:

“Mr. J. D. Andrews,
“Mattoon, Ill.
“Dear Brother:
“Enclosed find the three notes which you will please do with as we talked about.
“I hope that you reached home on time and had a comfortable trip as we did. •
“Pauline had a laundry bill which I paid. Am mentioning this so that she will have no uneasiness about it.
“Tour fond brother,
“ J. L. Andrews. ’ ’

Jesse D. Andrews, when he received the notes from his brother, James Lee, at once turned them over to Park N. Kelly. Park Kelly testified in reference to his taking possession of the notes as follows: “Jesse D. Andrews gave them to me one morning. He called me into his office and said, ‘Here are some notes of Lee’s. Put them away in the vault.’ The notes were those identified as Plaintiff’s Exhibits 3, 5 and 8. This conversation was in June, 1913. At the samé time he gave me a letter, that letter identified as Plaintiff’s Exhibit 12, I placed in the vault in the office with the notes. This was the office of Jesse D. Andrews. I placed the notes and the letter in a pasteboard document box on a shelf on the south side of the vault.” Park Kelly also testified that afterwards in February, 1915, he also received the $7,721.78 note made by Jesse D. to James Lee Andrews, which constitutes a part of the claim in question, and that Jesse D. Andrews told him to put this note in the vault with the other notes, which he did. These notes remained in the custody of Park N. Kelly, in which he had placed them, in the vault, from the time that Park Kelly took possession of them until the death of Jesse D. Andrews, and they were never returned by Kelly to the possession of Jesse D. Andrews at any time, but Jesse D. Andrews had access to them, as he had to all papers which were kept in the vault. In the fall of 1917 at the request of James Lee Andrews, Park Kelly made copies of the four notes and sent the copies to James Lee Andrews, who had requested the copies. The notes at that time were in the same condition that they were at the time théy were placed in the package; but in December, 1918, Kelly noticed that the signatures of Jesse D. Andrews had been torn off. These facts appear from the evidence adduced for the claimants on trial and are not controverted by any evidence offered on the part of the appellees. The claimants contend that the verdict and judgment is contrary to the evidence, also that the court excluded competent evidence, and that there are errors in the instructions. The claimants insist that the following letter, which was transmitted by Park N. Kelly to James Lee Andrews in August, 1917, in reference to the notes held by Kelly, which was excluded, should have been admitted for the consideration of the jury. The letter offered is as follows:

“Mattoon, Ill., Aug. 9, 1917.
“Mr. J. L. Andrews,
‘ ‘ Canton, Ill.
“Dear Sir:
“I have in my possession certain valuable papers for safe-keeping which are your property and can be delivered to you at any time on your request.
“P. 1ST. Kelly.”

The letter referred to is a declaration by a person iri possession of personal property, and is competent evidence to show the character of his possession, the purpose of it, and in this case tended to show that Kelly was acting in conformity with the purpose for which he had received the property, and was carrying into effect such purpose. The declarations of persons in possession of personal property explanatory of the nature and character of their possessions are competent. 22 Corpus Juris, sec. 280, p. 277. It is well settled that the existence and extent of a claim of one in possession of personal property as to the ownership thereof, or as to the rights therein, may be shown by his relevant declaration, although they operate in the declarant’s own favor. 22 Corpus Juris, sec. 279, p. 276; Martin v. Martin, 174 Ill. 371; Amick v. Young, 69 Ill. 542; Whitaker v. Wheeler, 44 Ill. 440; Rigg v. Cook, 4 Gilm. 336.

This evidence tended to show that Kelly held the notes in question as custodian for James Lee Andrews, in accordance with the arrangement which had been made by the two brothers in reference to the possession of the notes, and for their safe-keeping, and that Kelly had accepted the responsibility of acting in that capacity. The relation which was created by the arrangement made by the brothers concerning the notes was that of agency. An agent is one who undertakes to manage some affairs to be transacted for another by his authority on account of the latter, who is called the principal, and to render an account. Bouvier Law Dictionary, vol. 1, p. 84; Equity Produce & Stock Exchange v. Keyes, 67 Ill. App. 460. And where one puts property in the hands of another to keep or manage, the relation is that of principal and agent. 2 Corpus Juris, sec. 11, p. 425; Weer v. Gand, 88 Ill. 490; Mabley v. Irwin, 16 Ill. App. 362; Hartley v. Phillips, 198 Pa. 9. The authority to act as agent is complete where permission to do a thing is given. There need be no direction or request on the part of the principal. Fay & Bryant v. Richmond, 43 Vt. 25. Nor is it essential “that an agent should be appointed directly by the principal, but the appointment may be made through another, * * * or the relation may arise out of an agreement to employ the agent of another, such person then becoming the agent of the first party.” 2 Corpus Juris, sec. 30, p. 435.

In accordance with the principles emphasized in the authorities cited, we conclude that the latter was competent evidence under the issues, and should have been admitted.

Appellants also offered to put in evidence another letter written by Park N. Kelly to James Lee Andrews, about January 28, 1919, to which the court also sustained an objection. This letter is as follows:

“Mattoon, Ill., Jan. 28th, 1919.
“Mr. J. L. Andrews, Canton, Ill.
“Friend Lee:

“When in Chicago, you requested me to look up and send you some notes which you had placed in trust in the hands of J., D. Andrews. In looking up same 1 find four notes as follows:

“March 8, 1909...............$ 352.00
“January 4,1910............. 2,157.41
“January 1,1912.............. 5,383.51
“January 20,1914............. 7,721.78

“These notes were at one time signed by J. D. Andrews, but the signature has been torn from each note.

“I took these notes up to Mr. Craig and told him that you wanted them but they were of no value in this shape. He asked me if I knew who removed the signatures and I said I did not. * * * You boys and Mr. Craig had two or three meetings in Chicago in the early part of 1914. * * * I was not present at any of these meetings. * * * Mr. Craig wanted to go and talk to J. D. about it but I told him he was gone and we would have to wait until some future time.”

The record discloses that the letter was offered as a whole, and that it contains certain hearsay statements in a conversation with Judge Craig, and was therefore properly excluded.

We find no error in the rulings of the court concerning the books of account of James Lee Andrews; nor in excluding the books of account of the Canton National Bank.

The contention of the claimants that the verdict is contrary to the evidence presents this legal situation.

There are no written pleadings required in this proceeding, but the rules of evidence, concerning the necessary proofs of matters of defense, are the same as if written pleadings had been filed. The defense urged by the appellees, against the right of recovery on the notes in question, is payment, an affirmative defense. The burden of proving payment rested upon the appellees in the same manner and to the same effect as if issue had been joined upon a plea of payment. Schallman v. The Royal Ins. Co., 94 Ill. App. 364; Vail v. North American Union, 191 Ill. App. 297; Weber v. American Posting Service, 197 Ill. App. 500; Supreme Tent Knights of Maccabees of the World v. Stensland, 105 Ill. App. 267, and 206 Ill. 124. The appellees did not adduce any evidence showing or tending to show that the notes in question had been paid by Jesse D. Andrews. The record discloses but one fact, namely, that the signatures of Jesse D. Andrews had been torn off these notes, which is shown by the evidence for the claimants, and could be regarded as a circumstance tending to show payment; but the fact alone that the signatures have been torn off the notes while they were in custody of Park 1ST. Kelly cannot be regarded as sufficient proof of the payment of the notes. The verdict of the jury which in effect found that the notes in question had been paid by Jesse D. Andrews was therefore manifestly against the weight of the evidence. :

We find that the instructions are substantially correct statements of the general rule concerning the legal presumption of payment which arises where notes are found in the possession of a maker at the time of his death. The general rule, however, when viewed in the light of the facts proven, was misleading. The rule is stated in the first instruction as follows:

“1. The court instructs the jury that the law is that where a person has signed a promissory note or notes and such note or notes in the lifetime of the person signing them, or after his death, is or are found in the possession or among the effects of the maker or signer thereof, a legal presumption arises that said note or notes has or have been paid or settled, and unless that presumption is rebutted by the person seeking to recover upon the note or notes, then the presumption prevails that such note or notes were paid.”

The jury could, and probably did, infer from this instruction that if the notes in question at the time of the filing of the claim against the estate of Jesse D. Andrews, deceased, were in the possession of the appellees among the other effects of Jesse D. Andrews, that a legal presumption of payment would arise, even though the proof in the case would show they were in the possession of Park N. Kelly as custodian for James Lee Andrews at the time of the death of Jesse D. Andrews, in which case the presumption of payment would not arise, even though the appellees may afterwards have taken possession of the notes as a part of the effects of Jesse D. Andrews, deceased.

For the errors indicated, the judgment must be reversed, but the record discloses another ground for the reversal of the judgment. During the arguments, the counsel for appellees made repeated and persistent efforts to bring matters outside of the record to the attention of the jury, to prejudice the jury against the claimants, and their cause of action, and to arouse whatever local prejudice there might have existed in the minds of the jury against the claimants, who were from another county. Counsel also sought to emphasize the fact that the amount of the claim which the claimants were- seeking to recover was a lot of money which they wanted to take away from C'oles county to Fulton county. The court very properly sustained objections to these remarks of counsel, which were reprehensible and unwarranted. The sustaining of the objections, however, could not remove from the minds of the jury the prejudice which may have been engendered thereby; nor did it remove the injury suffered by the claimants to the right of a fair and impartial trial. Judgment is reversed and the cause remanded.

jReversed and remanded.


author: Mr. Presiding Justice Jones

text:
    Celeste Buysse, Appellee, v. Connecticut Fire Insurance Company, Appellant.
    Gen. No. 7,588.
    1. Insurance — when no breach of warranty shown by statements of insured under automobile policy touching year of car’s manufacture. Where the undisputed evidence, in an action upon a policy insuring an automobile for damage caused by fire, shows that the agent who wrote the policy examined the car before the policy was issued and placed his own insurable value upon it, as a matter of law there was no- breach of warranty arising out of any statement made by the insured concerning the year the automobile was manufactured.
    2. Insurance — burden of proof as to waivers of policy provisions alleged in declaration. Where the declaration in an action upon a policy insuring an automobile for damage caused by fire alleged a waiver of the provisions of the policy concerning incumbrances and proof of loss, it was incumbent upon the plaintiff affirmatively to prove such waivers, and hence it was not necessary for the defendant to give notice of special defenses based upon the existence of such incumbrances or the failure to make proofs of loss under the policy.
    3. Insurance — when waiver of policy provision concerning existence of incumbrances on insured automobile question for jury. Where in an action upon an automobile fire insurance policy testimony of the insured that the soliciting agent, when informed that there was a chattel mortgage against the car, stated that there was no use mentioning it in the application or policy, since it was to be paid off in a few days, and that such mortgage was in fact paid before the loss sued for occurred, together with testimony by such agent denying that he was informed of the existence of the mortgage and that he made the statement credited to him, held to raise an issue for the jury as to whether there was a waiver of the policy provision respecting. incumbrances.
    4. Insurance — authority of soliciting agent to waive policy provision respecting incumbrances as question for jury. It was a question for the jury, in an action upon an automobile fire insurance policy, whether the agent who solicited the insurance had authority to waive the provisions of the policy requiring proofs of loss.
    5. Insurance — unaccepted offer to compromise claim under automobile insurance policy as effecting waiver of requirement as to proofs of loss. No waiver of the provision of a policy insuring an automobile against damage by fire requiring the making of proofs of loss under such policy within a certain period, is effected by an offer of an adjuster of the insurance company to settle the claim at a compromise figure named by him, where such offer is rejected by the insured.
    6. Insurance — /when policy requirement for making proofs of loss not waived by rejecting claim- of insured on other grounds. Letters from an insurance company, denying all liability under a policy insuring an automobile for damage by fire on the ground that there had been a breach of the policy provisions concerning incumbrances, did not effect a waiver of the policy provision requiring insured to make proofs of loss within a certain period, where such period had expired prior to the writing of such letters.
    7. Insurance — evidence ¡admissible in action on automobile fire policy touching alleged waiver of proofs of loss. Oral testimony by insured under an automobile fire insurance policy, in an action for a loss thereunder, that prior to the expiration of the time for making proofs of such loss- in accordance with the terms of the policy, the insurer, through its agents, denied all liability under the policy because of an alleged breach of the policy provisions touching incumbrances, was admissible as tending to prove a waiver of the provision respecting proofs of loss.
    8. Insurance — when instruction in action on automobile fire policy erroneous as depriving insurer of additional defense. Where under the pleadings in an action upon an automobile fire insurance policy the insurer was entitled to defend on the grounds that there had been a breach of the policy provisions against incumbrances and a failure to make the required proof of loss, and there was evidence raising issues of fact as to each defense for the jury, an instruction in effect directing a verdict for plaintiff if the jury found that the soliciting agent knew of the incumbrance when he issued the policy was prejudicially erroneous, because depriving insurer of second defense.
    Appeal by defendant from the Circuit Court of Rock Island county; the Hon. War. H. Church and C. J. Seabee, Judges, presiding. Heard in this court at the October term, 1925.
    Reversed and remanded.
    Opinion filed April 16, 1926.
    Marshall & Marshall, for appellant.
    S. E. & Geo. D. Long and Stewart & Klingbiel, for appellee; Ben A. Stewart, of counsel.
   Mr. Presiding Justice Jones

delivered the opinion of the court.

This is an action of assumpsit brought by Celeste Buysse against the appellant insurance company on a policy of insurance to recover for damages to an automobile occasioned by fire. A trial resulted in a judgment for plaintiff for $883. The cause is here on appeal.

N. W. Johnson, agent for the company, solicited the insurance and examined the car before the policy for $1,000 was issued by him. The policy contained the customary forfeiture provisions relative to incumbrances, sole and unconditional ownership of the property, false or fraudulent statements, and breaches of warranty. The property insured is described in the policy as a 1919 model, 34B, Oakland 5-passenger sedan; Serial No. 9833; Motor No. 79540; price list $1,825; purchased new and not mortgaged.

The declaration, besides containing the usual averments, charged that the agent who wrote the policy was at such time informed by plaintiff of the lien of a chattel mortgage on said automobile and that by reason thereof the said policy provision against incumbrances was waived. The declaration also averred that proofs of loss were waived, by promises to pay the insurance, and by a subsequent denial of all liability on account of the existence of said chattel mortgage.

A plea of the general issue with notice of special defenses was filed. The defenses thus presented were (1) that plaintiff warranted the automobile to be new, when in fact it was a second-hand or used car and that the representation was material to the risk; (2) that the automobile was incumbered by chattel mortgage, and (3) that no proofs of loss were submitted. Two other defenses were also presented by the notice but as they have not been mentioned in the briefs and argument we will deem them to have been abandoned.

Appellant’s agent examined the car before the policy was issued and put his own insurable value on it. The proof showed beyond doubt, that the car was of greater value than the amount for which it was insured. Tinder the undisputed evidence in this case, it can be said as a matter of law that there was no breach of warranty arising out of any statement made by appellee concerning the year the automobile was manufactured. (Mazeika v. Automobile Underwriters of America, 226 Ill. App. 239.) The defenses are therefore narrowed to two, viz., the existence of a mortgage lien on the automobile and the failure to furnish proofs of loss. There was no necessity for giving notice of either defense for the reason that the declaration set out the alleged breaches and averred a waiver of each. And under the rules of pleading, it was her duty to affirmatively prove the waivers.

As to the first matter of defense, it is admitted that on August 11, 1922, the automobile was under the lien of a chattel mortgage dated June 20, 1922, for $475.11 due to Elmer L. and Bay C. Mizer; that the indebtedness secured by this mortgage was paid in full August 15, 1922; and that the fire which occasioned the damage occurred September 1, 1922. There was evidence which tended to show that the said agent, who solicited and wrote the insurance, was fully informed by appellee of the existence of the mortgage lien and that he stated there was no use to mention it in the application or policy because it was to be paid off in a few days. Johnson denied having any such information and also denied that he made any such statement as was attributed to him. Whether or not there was a waiver of the provision against incumbrances was a controverted question of fact for the jury.

No proofs of loss were furnished the company within 60 days after the fire as required by the policy, and it is claimed that this condition of the policy was waived, first, by the statement of the agent Johnson made a • few days after the fire that he would get the money for her and that she need not notify or write to the company; second, by the offer of G-. D. Phillips, an adjuster of the company, to settle the claim; and third, by the company’s basing its denial of all liability on the existence of the mortgage lien and not upon the failure of appellee to furnish proofs of loss.

As a general proposition an agent who merely solicits insurance has no power to waive a provision of a policy requiring proofs of loss. (American Central Ins. Co. v. Birds B. & L. Ass’n, 81 Ill. App. 258.) Whether or not the agent Johnson had authority to waive such a condition was also a question of fact for the jury. But as to the claim of waiver, on the ground that the adjuster Phillips offered to settle the loss, we must hold as a matter of law, that there was no waiver. The evidence showed that Phillips, in order to settle the loss, offered to pay appellee $600 and take the remains of the car or to pay her $585 and let her keep the damaged car. Mrs. Buysse refused these offers and insisted upon the payment of $1,000. An offer of compromise and settlement by the company, where it has been rejected by the insured, does not constitute a waiver. (Hill v. Commercial Union Ins. Co., 164 Mass. 406.) Nor do the letters, denying all liability on account of the existence of said chattel mortgage, waive the provision of the policy requiring proofs of loss. According to the terms of the policy, proofs of loss should have been furnished not later than October 31, 1922. The first of these letters was dated November 9 thereafter and informed Mrs. Buysse that it had been discovered the automobile was under mortgage at the time the policy was issued. Appellant now seeks to construe this letter as being intended merely to notify her of the discovery, and to offer her an opportunity to make some explanation. We do not think the letter is subject to such interpretation and it is obvious that the company did not so interpret it, because, on January 30, 1923, it wrote a letter to the attorneys of Mrs. Buysse, in which it referred to its letter of November 9, and again called attention to the chattel mortgage. The letter concluded as follows: “Accordingly we see no reason why this claim merits any further attention on our part.” There is no doubt that the company intended both letters to be absolute denials of liability. But do these refusals to pay, based on an alleged violation of the mortgage clause of the policy, estop the company from urging any other matter of defense? The rule, that an insurance company which has claimed a forfeiture for noncompliance with certain specified conditions of the policy, cannot be afterward heard to assert different matters in defense, has no application to a case where it is sought to show a waiver of proofs of loss by a denial of liability made after the time for furnishing such proofs has expired. The doctrines of waiver and estoppel are fundamentally equitable doctrines and are based upon the principle that it would be wrong to permit an insurer to insist upon a forfeiture after it has induced the insurer to alter his position to his prejudice, or to do or omit to do anything which he would otherwise have omitted or done. It is evident that the letters of the company denying liability because of the mortgage could not have caused Mrs. Buysse to omit furnishing proofs of loss. They were not written until after proofs of loss were past due and therefore could not furnish any reason for the application of the doctrine of waiver or of estoppel. (Hinsell v. Capital Live Stock Ins. Co., 219 Ill. App. 77, 83.) While it is true that if an insurer, during the time allowed the insured for submitting proofs of loss, denied all liability or by its conduct leads the insured to believe he need not submit such proofs, the requirement for them is waived; but in the absence of such circumstances and after the time for submitting proofs has expired, an insurance company may rely on a failure to furnish proofs of loss although it may have denied liability on some other ground. It will not then be restricted to a single defense simply because it has specified but one in a letter or statement refusing or denying liability. In Westen v. State Mut. Life Ass. Co., 234 Ill. 492, the action was on a life insurance policy. It was contended that the insurance company was es-topped from claiming a forfeiture on account of nonpayment of premiums, because it had denied all liability on another ground. But the court held that an insurance company is not restricted in its defense, in an action on a policy, to the reason assigned in its refusal to pay, if it does not appear that the plaintiff has been misled to his injury by the omission or failure to set forth other reasons. To the same effect are Peckham v. M. W. A., 151 Ill. App. 95; American T. C. & C. Co. v. Bankers Surety Co., 199 Ill. App. 545; Woodlawn Farm Co. v. Farmers & Breeders L. Ins. Co., 227 Ill. App. 577.

While, under the evidence here presented, we hold as a matter of law that the appellant’s offer to compromise and its denial of all liability did not constitute waivers of proofs of loss, nevertheless, we do not mean to express any view in regard to the weight of the oral testimony offered by appellee, to the effect that appellant through its agents, prior to October 31, 1922, denied all liability because of the said mortgage. Such evidence was admissible as tending to prove a waiver.

Under our view of the case appellant had the right to interpose as a defense both the alleged violation of the mortgage provision of the policy and the failure of the insured to furnish proofs of loss. However, the trial court virtually eliminated one of these defenses by giving an instruction, known as plaintiff’s modified instruction No. 2, in which the jury was told, in substance, that if it believed from the evidence that the agent of the insurance company, when he solicited and wrote the insurance, knew of the chattel mortgage and advised appellee that it need not be mentioned in the application or policy, then the mortgage provision of the policy was waived by the company and the verdict of the jury should be for the plaintiff. It will be seen that this instruction directs a verdict and wholly ignores the defense based on the failure of appellee to furnish proofs of loss. The jury was instructed that if the company’s agent knew of the existence of the mortgage at the time the policy was issued, it should find for the plaintiff without regard to whether the provision for furnishing proofs of loss had been waived or not. This instruction deprived the appellant of a substantial defense and was of course prejudicial to it.

Because of the likelihood of this case being tried again, it is necessary for us to express our view upon certain questions involving the admissibility of evidence. There is no doubt that evidence tending to prove the value of the car at the time it was damaged by fire is admissible. Under the terms of the policy the company was only liable for such loss and damage as was occasioned by the fire. It appears from the evidence that the automobile was almost wholly destroyed and that the only value remaining was its junk value.

Appellant offered in evidence a book entitled “National Used Car Market Report,” also “Branham’s Table Reference Book.” We are somewhat in doubt as to whether the offer of the books was intended to prove price or to show that appellee misrepresented to the company the year in which the car was made. But whatever may have been the purpose, we see no error in the ruling of the court in excluding them.

We believe the testimony of Mrs. Buysse regarding her conversation with Johnson on the morning after the fire was properly admitted. There 'is testimony in the case tending to show that Johnson actively participated in the efforts made to adjust the loss and that he not only acted as an agent in procuring the insurance, but that he engaged in an attempt to adjust the loss with the knowledge and consent of the company. He accompanied Phillips, the adjuster, to see Mrs. Buysse and urged her to accept $600 in settlement of her claim and according to her testimony, he finally offered her an additional 10-dollar bill to sign a release. Johnson admitted his participation in the efforts to settle the claim but denied he made the offer of $10. However, such denial does not affect the situation when it comes to determining the admissibility of appellee’s version of his statements.

Because of the errors herein pointed out this cause is reversed and remanded.

Reversed and remanded.


author: Mr. Presiding Justice Boggs

text:
    Lena Lewis, Administratrix of the Estate of George W. Lewis, Deceased, Appellee, v. The Cleveland, Cincinnati, Chicago & St. Louis Railway Company, Appellant.
    1. Master and servant — section hand assisting in making measurements preliminary to construction of switch track not employed in interstate commerce. A section hand in the employ of an interstate railroad who was injured while assisting a member of the employer’s engineering staff in making certain measurements preliminary to a determination of the feasibility of constructing a requested switch track connecting with the main line, was not injured while employed in interstate commerce within the meaning of the federal Employers’ Liability Act.
    2. Master and servant — direction of verdict for defendant in action under federal Employers’ Liability Act where evidence shows employee not employed in interstate commerce at time of injury. Where in an action under the federal Employers’ Liability Act for injuries to a section hand the defendant by special plea set up that the employee was not employed in interstate commerce at the time of his injury, and that his remedy, if any, was under the Workmen’s Compensation Act, and the evidence disclosed that he was not employed in such commerce at the time of the injury, it was error to deny defendant’s motions, at the close of the plaintiff’s case and at the close of all the evidence, to direct a verdict for defendant.
    Appeal by defendant from the Circuit Court of Madison county; the Hon. J. P. Gillham, Judge, presiding. Heard in this court at the October term, 1925.
    Reversed.
    Opinion filed April 27, 1926.
    D. E. Keefe and Henry G. Miller, for appellant; H. N. Quigley and S. W. Baxter, of counsel.
    Geers & Geers, for appellee.
   Mr. Presiding Justice Boggs

delivered the opinion of the court.

This appeal is prosecuted by appellant to reverse a judgment for $16,500, recovered by appellee at the May term, 1925, of the circuit court of Madison county, in an action brought under the Federal Employers’ Liability Act [Cahill’s St. ch. 114, ¶¶ 321-329] for the alleged negligent causing of the death of appellee’s intestate.

The declaration charges among other things that on October 25, 1924, and prior thereto, appellant was possessed of, using and operating in interstate commerce a certain railroad extending from St. Louis, Missouri, through Illinois to Cleveland, Ohio; that appellee’s intestate was prior thereto and on said date, a servant of appellant, employed in interstate commerce as a section hand, or track laborer; that on said date, while so engaged, a certain other servant of appellant, working with appellee’e intestate, in attempting to measure the height of certain high tension wires above the ground, carelessly, negligently and improperly threw a long metallic tape over and across one of said high tension wires; that said tape while in contact with said wire struck appellee’s intestate, whereby he was instantly killed; that appellee’s intestate left him surviving appellee, his widow, and a son, alleging damages, etc.

To said declaration appellant filed a plea of the general issue, and a special plea setting forth that it was an employer operating under and subject to the Workmen’s Compensation Law, and that appellee’s intestate at the time he was killed was not engaged in interstate commerce, and that appellee’s remedy, if any, was under the Workmen’s Compensation Act.

A replication traversing said special plea was filed by appellee, and a trial was had, resulting in a verdict for $25,000. A remittitur was filed by appellee, reducing said verdict to $16,500. and judgment was rendered thereon.

The record discloses that appellant had received an application from the Standard Oil Company for the construction of a track to connect its. bulk station near Gillespie, Illinois, with appellant’s main track near that point. The poles of the Illinois Power and Light Company, supporting a high tension wire, were located either on the extreme outer edge of appellant’s right of way, or immediately abutting the same; just which, the record fails to disclose definitely. Appellant’s division engineer had sent to Leslie T. Doolin, appellant’s section foreman under whom appellee’s intestate was employed, a blue print, showing a section of appellant’s right of way located about one mile east of Gillespie, and had directed Doolin to locate on said blue print the distance which the poles supporting the high tension wire of the Illinois Power and Light Company stood from the ball of the north main rail of appellant’s track, and the distance that said poles stood apart.

On the morning of October 25, 1924, said section foreman, with Guy Smith, another member of said section gang, and appellee’s intestate, were making certain measurements along the north rail of appellant’s track, and prior to the accident had measured the distance from the rail in question to the poles supporting said high tension wire. Immediately after those measurements had been made, Doolin desired to measure the height of said high tension wires above the ground. He testified: “I told Mr. Lewis and Mr. Smith to stand back, and I would do the measuring. I was going to measure with this metallic tape.” Smith and appellee’s intestate then stood back, and Doolin threw the metallic tape over the high tension wire. The tape in some way came in contact with appellee’s intestate, and he was instantly killed.

■ In order for appellee to recover, the evidence must show that at the time of the death of her intestate, both he and appellant were engaged in interstate commerce. St. Louis, S. F. & T. Ry. Co. v. Seale, 229 U. S. 156-158, 57 L. Ed. 1129; Pedersen v. Delaware, L. & W. R. Co., 229 U. S. 146-150, 57 L. Ed. 1125 [3 N. C. C. A. 779]; North Carolina R. Co. v. Zachary, 232 U. S. 248-256, 58 L. Ed. 591 [9 N. C. C. A. 109] ; Illinois Cent. R. Co. v. Behrens, 233 U. S. 473-478, 58 L. Ed. 1051 [10. N. C. C. A. 153].

The test to determine whether an employee was engaged in interstate commerce is the nature of the work being done at the time; of the injury. The mere expectation that the employee would presently be called upon to perform a task in interstate commerce is not sufficient to bring the case within the act. Erie R. Co. v. Welsh, 242 U. S. 303, 61 L. Ed. 219; Illinois Cent. R. Co. v. Behrens, supra, 478. Each case must be decided in the fight of the particular facts, with the view of determining whether at the time of the injury the employee was engaged in interstate commerce, or in an act which was so directly and immediately connected with such business as substantially to form a part or a necessary incident thereof. Erie R. Co. v. Welsh, supra, 306; New York Cent. & H. River R. Co. v. Carr, 238 U. S. 260-264, 59 L. Ed. 1298 [9 N. C. C. A. 1]; Jackson v. Chicago, M. & St. P. R. Co., 210 Fed. 495; Devine v. Chicago, R. I. & P. R. Co., 266 Ill. 248; Patry v. Chicago & W. I. R. Co., 265 Ill. 310.

The evidence in this case with reference to the purpose of the measurements being made at the time appellee’s intestate met his death is practically confined to the testimony of Doolin, the section foreman. He testified: “We had to locate those high tension poles on a blue-print because of a proposed new track for the Standard Oil Co. * * * The proposed track was to be a side track off the main track and, if it were laid, would connect up with the Big Four. There was no side track laid at the time, or any preparations for laying it, outside of the measurements we ' were making. There had been no grading or anything of that kind done for the purpose of laying any side track. In taking the measurements as to where those poles stood, I made a record and returned it to the division engineer’s office. * * * I wanted to get the exact height of the Hlinois Power & Light Company’s high tension wire above the ground. That information was required so that the division engineer would know the height he would have to raise the wire for the proposed track.”

In Illinois Cent. R. Co. v. Behrens, supra, the court at page 478 says:

“diving to the words ‘suffering injury while he is employed by such carrier in such commerce’' their natural meaning, as we think must be done, it is clear that Congress intended to confine its action to injuries occurring when the particular service in which the employee is engaged is a part of interstate commerce. The act was so construed in Pedersen v. Delaware, L. & W. R. Co., 229 U. S. 146. It was there said (p. 150): ‘There can be ho doubt that a right of recovery thereunder arises only where the injury is suffered while the carrier is engaged in interstate commerce and while the employee is employed by the carrier in such commerce.’ Again (p. 152): ‘The true test always is: Is the work in question a part of the interstate commerce in which the carrier is engaged?’ * * * Mondou v. New York, N. H. & H. R. Co., supra [223 U. S. 1, 1 N. C. C. A. 875] ; Seaboard Air Line Ry. v. Moore, 228 U. S. 433; St. Louis, S. F. & T. Ry. Co. v. Seale, 229 U. S. 156, 158; North Carolina R. Co. v. Zachary, 232 U. S. 248, 256; Grand Trunk Western Ry. Co. v. Lindsay, 233 U. S. 42.

“Here, at the time of the fatal injury, the intestate was engaged in moving several cars, all loaded with intrastate freight, from one part of the city to another. That was not a service in interstate commerce, and so the injury and resulting death were not within the statute. That he was expected, upon the completion of that task, to engage in another which would have been a part of interstate commerce, is immaterial under the statute, for by its terms the true test is the nature of the work being done at the time of the injury. The question is accordingly answered in the negative.”

And in Kinsell v. Chicago, M. & St. P. R. Co., 250 U. S. 130 [19 N. C. C. A. 1], the court says:

“In Pedersen v. Delaware, L. & W. R. Co., supra, it is stated that a guide to> a decision of such a case as we have here may be found in the questions: Was the work being done independently of the interstate commerce in which the company was engaged, or was it so closely connected therewith as to be a part of it? Was its performance a matter of indifference so far as that commerce was concerned, or was it in the nature of a duty resting upon the carrier? And in other cases it is said in substance that in such inquiries may be found the true test of employment in such commerce in the sense intended by the act.”

Counsel for appellee seem to base their argument that appellee’s intestate was engaged in interstate commerce upon the fact that the evidence shows that the foreman and appellee’s intestate and Smith were making certain measurements along the rails of appellant’s road. The evidence, however, shows that such measurements were being made at the instance of one of appellant’s division engineers, looking toward the possible or probable building of a track to the property of the Standard Oil Company, but whether that track would ever be built or not is not disclosed by the evidence.

In Bravis v. Chicago, M. & St. P. Ry. Co., 217 Fed. 234, the court at page 236 says:

“The Federal Employers’ Liability Act protects only those employed in interstate commerce. Those employed in the preparation or construction of roadbeds, rails, ties, cars, engines and other instrumentalities which are intended for use in interstate commerce, but have never been and are not in use therein, are not employed in interstate commerce, and are not protected by that act.”

And in Jackson v. Chicago, M. & St. P. Ry. Co., 210 Fed. 495, the court at page 498 says:

“Stripped of the conclusions in the complaint, we have the fact that the defendant is engaged in constructing a ‘cut-off’ on its line of road so as to shorten the route used by it now and eliminate some of the inconveniences, and possible expense, in the operation of the line at the present time. * * * The building of this cut-off is a facility which is to be used by the defendant, when completed, as an engine or cars, or any other appliance under construction might be considered for use when completed. Can it be said that a person engaged in the building of engines or cars, or any other facilities to be used by a common carrier engaged in interstate commerce, comes within the provisions of the Employers’ Liability Act? The Act deals only with the liability of a carrier engaged in interstate commerce for injuries sustained by its employees while engaged in such commerce. Second Employers’ Liability Cases, 223 U. S. 1, 32 Sup. Ct. 169, 56 L. Ed. 327, 38 L. R. A. (N. S.) 44 [1 N. C. C. A. 875]. The Act is not ‘concerned with the construction of tracks, bridges, engines, or cars which have not as yet become instrumentalities in such commerce, but only with the work of maintaining them in proper condition after they have become such instrumentalities, and during their use as such.’ Pedersen v. Delaware, L. & W. R. Co., 229 U. S. 146, 152, 33 Sup. Ct. 648, 57 L. Ed. 1125. The language of the complaint, ‘when completed, the interstate commerce * * * will be routed’ through the tunnel, conclusively shows that it is not now so employed; hence the Act cannot apply, and Supreme Court decisions supra are decisive. ’ ’

And in Heed v. Industrial Commission, 287 Ill. 505, our own Supreme Court, referring to Minneapolis & St. L. R. Co. v. Winters, 242 U. S. 353 [13 N. C. C. A. 1127], said:

“In that case a machinist’s helper engaged in mak- ' ing repairs in the roundhouse upon an engine which had been used in hauling freight trains in both interstate and intrastate freight, and which was used in the same way after the accident, was held not to be employed in interstate commerce within the meaning of the Federal Employers'* Liability Act. The court said that an engine, as such, is not permanently devoted to any kind of traffic, and its character as an instrument of commerce depends upon its employment at the time and not upon remote probabilities or accidental later events; that the case was not like repairs on a road permanently devoted to commerce between the States, nor like the case of an engine interrupted in an interstate haul and then to go on again with the haul. Pierce was not engaged in interstate commerce. ’ ’ ■

Tested by the rule laid down in the foregoing authorities, we are of the opinion and hold that appellee’s intestate, just prior to and at the time of receiving the injury which caused his death, was not engaged in interstate commerce. The motions for a directed verdict, made by appellant at the close of appellee’s evidence and again at the close of all the evidence,, should have been allowed, and the court erred in denying the same.

For the reasons above set forth, the judgment of the trial court mil be reversed.

Judgment reversed.