author: Mr. Justice Matchett

text:
    Fred M. Blount, Appellant, v. Chicago Railway Equipment Company et al., Appellees.
    Gen. No. 30,424.
    1. Rescission and cancellation — sufficiency of allegation of bill as to tender of consideration. Where it is alleged in a bill seeking rescission of a contract of sale on the ground of fraud that the ostensible purchaser in the transaction was merely the agent of two conspiring principals, also named as defendants, and that complainant is not advised as to which of such principals furnished the consideration paid by such agent in consummating the sale, but that complainant will return such consideration to whichever of such defendants it shall be made to appear to the court actually furnished the same, the bill was not subject to demurrer on the ground that it failed to allege a sufficient tender gf the consideration. .

      2. Rescission and cancellation — sufficiency of bill to rescind sale upon ground of fraud. A bill by a trustee in bankruptcy to secure rescission of a sale of the interest of the bankrupt in certain corporate stock, wherein it was alleged that such interest was sold for a wholly inadequate consideration in consequence of false testimony of the bankrupt and a fraudulent conspiracy on the part of such bankrupt and others, designed and carried out for the purpose of securing such stock for themselves at a nominal figure and of depriving the creditors of such bankrupt thereof, held sufficiently to state, as against demurrer, facts from which it could be inferred that the sale in question was fraudulent.
    3. Rescission and cancellation — when bill to rescind sale for fraud not demurrable upon ground of laches. A bill in equity to rescind a contract upon the ground of fraud is not demurrable upon the ground of want of diligence on the part of the complainant in seeking such relief where the bill alleges, that such diligence was prevented by the acts of the defendants whereby the existence of such fraud was effectually concealed from the complainant until shortly before the filing of the bill.
    4. Rescission and cancellation — when trustee not estopped to seek■ rescission of sale by predecessor of assets of bankrupt for inadequate consideration. The trustee of a bankrupt is not es-topped to seek rescission of a sale of the bankrupt’s interest in certain corporate stock by the complainant’s predecessor, although ten years have elapsed since such sale, where it is alleged that the former trustee made such sale, for the benefit of creditors of the bankrupt, for a wholly inadequate consideration, in the mistaken belief, induced by the perjury of the bankrupt and the fraud of such bankrupt and his coconspirators, that such stock was of doubtful value, and that the facts as to such perjury and fraudulent conspiracy were effectually concealed from the complainant and from the creditors of such bankrupt during all of such period.
    5. Bankruptcy — application of limitation fixed by Federal Act to suit by trustee to rescind sale of bankrupt’s assets induced! by fraud upon trustee and creditors. The provision of section lid of the Federal Bankruptcy Act limiting the bringing of suits by a trustee in bankruptcy to a period of two years after the estate of the bankrupt has been closed, does not preclude such trustee from maintaining a bill in equity, after such period, to secure rescission of a sale by such trustee, in the course of his administration of the estate of the bankrupt, of the interest of the bankrupt in certain corporate stock, where such sale was made for a wholly inadequate consideration in the mistaken belief, induced by the perjury and fraud of the bankrupt and others, that the interest of the bankrupt in such stock was of doubtful value, and knowledge of such perjury and fraud was, by the further fraud of such bankrupt and others, effectually concealed from the trustee and from the creditors of the bankrupt until long after the expiration of such period of limitation.
    6. Equity — want of jurisdiction of court of Taw where cause of action based upon showing of property in hands of defendant equitably belonging to his creditors. A court of law is without jurisdiction of an action to secure rescission of a contract of sale, the basis of complainant’s rights being the statutes and facts from which it appears that the defendants have in their hands property which equitably belongs to their creditors.
    7. Limitation of actions — inapplicability of statute where cause of action purely equitable. Statutes of limitations have no application to an action purely equitable in its nature, except under circumstances that would appeal to the conscience of a court of equity.
    8. Rescission and cancellation — when suit to rescind- sale by trustee of assets of bankrupt not barred by limitations. Where a trustee in bankruptcy sold the interest of the bankrupt in certain corporate stock for a wholly inadequate consideration in the mistaken belief that such interest was of doubtful value, a court of equity will not sustain a demurrer to the bill of such trustee seeking rescission of the sale upon the ground that the cause of action is barred by the statute of limitations, where it is alleged that the mistaken belief of the trustee was induced by the perjured testimony of the bankrupt in the proceedings upon his estate and by the fraudulent acts of the bankrupt and his co-defendants thereafter.
    Appeal by plaintiff from the Circuit Court of Cook county; the Hon. Iba Ryneb, Judge, presiding. Heard in the first division of this court for the first district at the October term, 1925.
    Reversed and remanded with directions.
    Opinion filed October 11, 1926.
    Amos C. Miller and William H. Haight, for appellant.
    Cutting, Moore & Sidley, Mayer, Meyer, Austrian & Platt and McKinney, Lynde & Grear, for appellees; Charles S. Cutting and George H. Grear, of counsel.
   Mr. Justice Matchett

delivered the opinion of the court.

This is an appeal by the complainant from a decree which sustained the demurrer of defendants and dismissed for want of equity his amended bill as amended.

The complainant is trustee of the estate of Edward B. Leigh, who, upon an involuntary petition, was on November 14, 1906, adjudicated a bankrupt. The defendants to the bill are said Edward B. Leigh, the Continental and Commercial National Bank, Harvey C. Vernon, and the Continental and Commercial Trust and Savings Bank.

The subject matter of the suit is 10,000 shares of the capital stock of the Chicago Bailway and Equipment Company, a corporation organized under the laws of the State of Illinois, which the bill avers is dominated and controlled by Leigh.

The amended bill as amended avers in apt language the adjudication of the bankrupt; the filing of schedules by him on December 8,1906; the meeting of creditors thereafter; the appointment and qualification of the Chicago Title and Trust Company as his trustee; the allowance of claims in the amount of $105,507.23 to more than ten creditors; the payment on such claims of 6y2 per cent thereof and no more, and the discharge of the bankrupt on July 13, 1916; the presentation of its final account by the trustee; the approval thereof by the United States District Court and the discharge of such trustee on July 3, 1917; the filing thereafter on February 2,1920, of a petition by one of the creditors, alleging the fraudulent concealment by the bankrupt of this stock and praying the estate of the bankrupt might be reopened; the entry of an order granting the prayer of the petition on August 26,1920; the ineffectual attempt of defendants to secure a review of this order in the United States Circuit Court of Appeals and in the Supreme Court of the United States, and the entry thereafter on January 11, 1922, of an order by the United States District Court in and for the Northern District of Illinois authorizing the prosecution of this suit.

The bill further avers that at the time of the adjudication in bankruptcy and at the time the bankrupt’s schedules were filed, he was the owner of these shares of stock and had been the owner of the same for years prior thereto; that in said schedules he made no mention of these shares except that under Schedule A (4), in which he was required to list the names and amounts of indebtedness of creditors holding notes or other instruments that ought to be paid by parties other than the bankrupts, he said:

“ ‘.Name of holder as far as known
“ ‘American Trust and Savings Bank
“ ‘Memo: This bank holds demand notes, renewals of previous notes, signed by Leigh, aggregating $50,-500.00 and secured by 10,000 shares of the Chicago Railway Equipment Company stock, transferred to David S. Geer December 12, 1904, on condition that said Geer assume payment of said notes and save Leigh harmless therefrom, and accept the equity in said stock and notes attached, as payment to him for professional services theretofore performed in “Laughlin litigation.” ’ ”

The amended bill as amended also avers that at the meeting of the creditors thereafter, about January 24, 1907, the bankrupt was examined for the purpose of discovering assets, and he then testified in substance that the American Trust and Savings Bank was the holder of demand notes signed by him aggregating over $50,000 and secured by $100,000 par value of the shares of stock of the Chicago Railway Equipment Company; that said stock was held by said bank as collateral security to said note, and that the stock had been transferred by him, the bankrupt, without reservation, to one David S. Geer, upon the condition that Geer would assume the payment of said notes and accept the equity in the stock in payment of his attorney’s fees for services theretofore rendered; that this testimony was untrue, and that in truth and in fact the bankrupt, on or about December 12, 1904, caused the said shares of stock to be transferred into the name of Geer in order that Geer might appear as the actual owner thereof, but in fact to hold the same as a secret trustee for the benefit of Leigh, which Geer then agreed with Leigh to do and continued to so hold the shares up to the time of his death; that until after the discharge of the trustee in bankruptcy Leigh gave out and pretended he had no interest in the stock and pretended that Geer was the sole owner thereof subject to the lien of the American Trust and Savings Bank for the repayment of its loan of $50,500; that Geer aided Leigh in concealing from all persons except Geer and one other person, who stood in a confidential relationship to Leigh which precluded his disclosure of this knowledge, the fact of such ownership; that the trustee in bankruptcy believed the statement of Leigh as made in the schedule and Leigh’s testimony that until after the discharge of said trustee all knowledge as to the true facts was concealed from all persons except Leigh and Geer and one other person, who was also a director of the Equipment Company; that this person about January 7, 1907, received from Geer full information,, but as he received the same in the capacity of counsel for Leigh, he concealed the same until the trial of the suit brought by the executrix of Geer’s estate in the fall of 1919, the said executrix making claim in said suit to said stock; that until that time the trustee and all the creditors of Leigh were ignorant of any facts or evidence which would tend to disprove the schedule and testimony of Leigh in the bankruptcy proceedings and acquiesced in such sworn statements of Leigh; that after the transfer of the stock from Leigh to Geer dividends were paid by the Equipment Company to Geer, who promptly remitted the same to Leigh; that about the time of the filing of the petition in bankruptcy the American Trust and Savings Bank caused the stock to be transferred into its own name or into the name of its nominee, and that from that time until about April 1, 1916, the dividends on the stock were paid to said bank and to the Continental and Commercial National Bank, or their nominees, and were applied in reduction of the indebtedness of Leigh, as evidenced by his notes, until April 1, 1916, when by the application of these dividends the said notes had been paid in full and a balance of $581.66, derived from said dividends, then and yet remains with the Continental and Commercial National Bank; that on April 30, 1916, at a sale of the remaining assets of the bankrupt, the then trustee sold to the defendant, Harvey C. Vernon, the undisclosed interest of Leigh in said shares of stock for the sum of $1,000; that this sale was afterwards confirmed by the district court; that prior to the sale Leigh and the Equipment Company arranged and agreed with the Continental and Commercial National Bank that this bank should at such sale have one of its employees, on behalf of and for the benefit of Leigh and the Equipment Company, buy the shares at as low a figure as possible; that pursuant to this arrangement the bank selected Vernon, who was one of its employees, to bid in the shares, and that Vernon in making the purchase acted as the agent of defendants Leigh and the Equipment Company, and that Leigh and the Equipment Company, or one of them, pursuant to the agreement, furnished the purchase price of the said stock to Vernon (which one complainant is not advised); that long before the sale of the stock Leigh and the Equipment Company entered into a fraudulent scheme to secure the same for the Equipment Company or Leigh; that the Equipment Company knew that Leigh was at that time the owner of the stock and had been the owner when the same was transferred to Geer and ever after-wards, and that Geer in his lifetime and Leigh from the beginning of the bankruptcy proceedings and ever since, concealed the ownership for the purpose of defrauding the creditors of Leigh; that it was agreed between Leigh and the Equipment Company pursuant to this plan that Leigh would transfer to the Equipment Company the shares of stock in satisfaction of some baseless claim which the Equipment Company was then asserting; that the assertion of this claim was fraudulent for the purpose of establishing the consideration of the transfer of the sale from Leigh to the Equipment Company; that in further pursuance of this conspiracy it was agreed between Leigh and the Equipment Company that Vernon should be induced to purchase the stock at the sale, and Leigh’s ownership was concealed until after the sale in order that the purchase of the stock might be consummated for a trifling sum and the facts concealed in the bankruptcy proceedings until the discharge of the trustee; that this plan was successful, and the trustee until after the discharge did not have knowledge of the interest of Leigh in the stock, nor of any evidence tending to prove such fact, nor means of procuring such evidence, nor were any facts brought to the attention of the trustee which would tend to cause the trustee to become suspicious, the facts being at all times concealed by the defendants, or some of them, from the trustee; that at the time of the sale the defendant Continental and Commercial National Bank asserted an alleged lien against said stock for more than half of its value; that the bank was so induced to do by the Equipment Company and Leigh; that the claim of lien was without any basis and was known by the bank and by the Equipment Company and Leigh to be without any basis, and the assertion of such claim was fraudulent and for the purpose of chilling bids at the sale, and that the same did in fact have that effect, and by reason thereof Vernon was enabled to and did purchase the shares for $1,000 when the same were actually worth $100,000 or more; that only after the estate in bankruptcy had been wound up and the trustee discharged did Leigh and the Equipment Company admit or assert the ownership of the stock; that on July 27, 1917, the executrix of the last will and testament of Geer, filed a bill setting up a claim of ownership, as executrix, of said shares of stock, averring that the bank had been paid the claim for which the stock was held as collateral, and asking that the stock be transferred to her as owner; that Leigh answered, alleging the transfer to Geer was colorable only and done at the suggestion of Geer, and alleging that he, Leigh, had been the actual owner of the stock at all times; that the Equipment Company filed its answer in that suit, also averring that Leigh at all times had been the owner thereof; that the trial of this suit occurred in the month of November, 1919, when for the first time the creditors of Leigh (with the exception of Mrs. Geer) learned through a witness, who had also been the counsel of Leigh during the bankruptcy proceedings and during all that time was also counsel and director of the Equipment Company, that Geer shortly before his death had admitted that he held the stock as trustee and as agent for Leigh and had no other interest therein; that because of his confidential relationship said witness had not theretofore disclosed the fact until called as a witness in the suit; that thereupon such testimony not being controverted, the circuit court on the 20th of March, 1920, enter a decree finding that Geer never had any interest in the stock; that after this trial the counsel for Mrs. Geer advised one of the creditors of Leigh of the claim set up in the answers and of the testimony produced on said trial, and that such information was the first information of any kind received by the creditors of Leigh, or any of them, except Mrs. Geer, of the actual facts; that Mrs. Geer first learned of said facts after the filing of the answers in said suit, and being interested adversely to other creditors and a bona fide claimant of the shares, she did not advise said other creditors of the facts set up in the answer; that neither the creditors nor any of them had any means of acquiring information concerning the ownership of the stock; that shortly after the disclosure upon the trial of the Greer suit, one of the creditors of Leigh, whose claim in bankruptcy proceedings had been allowed, instituted the proceedings in the United States District Court for the reopening of said bankruptcy estate and diligently prosecuted the same until said estate had been reopened; that in the year 1909 the American Trust and Savings Bank transferred its banking business to the defendant Continental National Bank of Chicago; that the notes of Leigh and the said stock were then turned over and delivered to said Continental National Bank, which thereafter consolidated with the Commercial National Bank, whereupon the same became known as the Continental and Commercial National Bank and is still so known; that said stock and notes were delivered into the possession of the Continental and Commercial National Bank and have been held by the said bank from about the year 1910; that by reason of the payment and cancellation of the notes of Leigh, as before set forth, the bank has no further claim by reason of said notes and no right, title or interest in and to said shares of stock held by it as collateral security to said notes; that the Continental and Commercial National Bank now asserts the right to hold the said shares of stock by reason of certain transactions between the American Trust and Savings Bank, now the Continental and Commercial Trust and Savings Bank, and Edward B. Leigh and the Chicago Railway Equipment Company, which transactions occurred in the year of 1900 and were stated to be that prior to that time Leigh borrowed from the American Trust and Savings Bank $50,000, giving as collateral security bonds of the Railway Equipment Company of a certain Series M, to the par value of $50,000; that these bonds were in fact the property of Henry D. Laughlin, which the bank and Leigh well knew; that thereafter Leigh gave to the Equipment Company $50,000 wherewith to pay these bonds to the American Trust and Savings Bank as trustee and in order that it, as said trustee, might pay the same to Leigh, who was known not to be in fact the owner of the bonds; that the Equipment Company gave its check for the amount of $50,465.75 to Leigh as a part of said fraudulent transaction, and thereupon the check was turned back to the American Trust and Savings Bank by Leigh in an alleged payment of his said indebtedness, whereupon the bonds and the note were canceled, the transaction thus amounting to a cancellation of the bonds belonging to Laughlin without any consideration; that thereupon Laughlin filed a bill to foreclose his lien under these bonds, and that a decree was entered, which upon appeal was affirmed by the Appellate Court; that after the chancellor directed the decree (but before its entry in fact) the Equipment Company filed a cross-bill against the American Trust and Savings Bank, praying that if the finding was in favor of Laughlin, payment should be made out of the money turned over to the American Trust and Savings Bank as trustee in payment of said bonds; that the cross-bill was not filed in good faith, and that since its filing on March 1,1911, no steps have been taken by the Equipment Company or the Bank to get a hearing thereon, but the same has been allowed to lie dormant for the purpose of clouding the title to this stock.

The decree of the circuit court in that case is appended to the bill as Exhibit “A.” That decree was reviewed in Laughlin v. Chicago Railway Equipment Co., 182 Ill. App. 262.

The bill further charges that the Continental and Commercial National Bank now claims a lien against the shares of the Equipment Company stock here in controversy because of an alleged contingent liability of Leigh to it, under a provision in the note of Leigh, by which the American Trust and Savings Bank was given a lien upon any collateral held by the bank as security for any other liability of any kind whatsoever of Leigh to the bank, but that no claim existed or could exist on behalf of the Equipment Company against the Bank, or any other persons, because of the alleged double payment of the Series M bonds, and that such claim of said bank is not made in good faith, but for the purpose of clouding the title to the Equipment Company stock, and that such is the effect of the decree in Laughlin v. Chicago Railway Equipment Co., hereinbefore set forth.

The bill also avers that on April 30, 1916, prior thereto, and ever since, the interest of Leigh in the said shares of stock was worth at least $100,000 in the open market; that the said stock has a general sale in the city of St. Louis, Missouri, and market quotations were published from time to time prior to the sale and have been so published ever since. The prayer of the bill is that the sale made April 30,1916, in the District Court of the United States may be set aside, an accounting taken with the Continental and Commercial National Bank or the Continental and Commercial Trust and Savings Bank, and of the dividends which have been paid upon the stock, the complainant offering to do equity and repay the persons entitled thereto the sum of $1,000, being the consideration for said sale which complainant offers to pay into court for the benefit of the persons entitled thereto, and for other and further relief.

The demurrer is general and special, and passing for the present the special reasons assigned, defendants contend that the bill is insufficient because it fails to aver a sufficient tender by the trustee to Vernon of the consideration which he. paid for this stock at the sale. On this point defendants rely upon Rigdon v. Walcott, 141 Ill. 649; Dunbar v. American Telephone & Telegraph Co., 224 Ill. 9; Huiller v. Ryan, 306 Ill. 93, and other cases which announce the unquestioned and general rule that where a party seeks to rescind a contract of sale for fraud, he must offer to return the consideration which he has received. The rule is unquestioned and based on reasons which are perfectly obvious.

There are, however, exceptions to it, and the technical rules of tender are not so stringently enforced in a court of equity as in a court of law. 26 B. C. L. 625-626. We are not impressed with this contention when applied to the actual facts of this case as alleged in the bill.

The original bill contained an offer to do equity and to return the consideration if the court should so decree. The hill was afterwards amended so as to allege that the money which Vernon paid was furnished by the Equipment Company or Leigh, and offers to pay whichever of the two it should appear actually furnished the consideration. The defendants say that the trustee, complainant, should have gone to the purchaser, Vernon, offered him $1,000, and notified him that the trustee had elected to rescind the contract.

If the allegations of the bill are true, Vernon was simply an agent in the transaction for a principal who could not be. accurately identified. Under these circumstances, equity would not, we think, require the complainant to take chances in the matter. The offer in the amended bill to pay the money into court for the benefit of the defendant who should appear to be entitled to it, was, we think, under the circumstances, sufficient even if it is conceded (which we are not disposed at present to hold under the allegations as made by the bill) that conspirators in the perpetration of the kind of fraud which is alleged, would be entitled to receive back the money used in the perpetration of it. Beidler v. Crane, 135 Ill. 92; Thornton v. Hendrickson, 213 Ill. App, 121, 69 L. R. A. 53.

But aside from other points made, defendant argues that the bill does not allege facts sufficient to justify relief in a court of equity.

It is said that the averments of the bill that the assertion of a lien by the defendant bank chilled bids is averred only as the conclusion of the pleader; that the bill'does not name a single bidder or prospective bidder; that the bill does not assert that the defendant bank had anyone attending the sale announcing its claim of lien, as was true in some of the cases cited by complainant; Coffey v. Coffey, 16 Ill. 141; Stoker v. Greenup, 18 Ill. 27; that the bill does not allege that the then trustee was unfair, as in Kennedy v. Afdal, 229 Ill. 295; further, that the allegations of the bill show that the then trustee had full notice of the claim of lien by the bank, and that the trustee was therefore not imposed upon; that if the bids were chilled, as alleged, the trustee, with this knowledge, should have informed the court and asked it not to approve the sale; that the alleged lien was not purely fictitious, and that the fact that the cross-bill was not filed until after the decision of the court was announced and before the decree was entered, does not constitute fraud; that the decree did not purport to adjudicate that controversy; that the sale for $1,000 was fair in view of the fact that the purchaser got only the right to engage in litigation and that the sale of a cloud on a title is quite different from the sale of the title itself; that there was nothing fraudulent in the agreement between Leigh and the bank and the Equipment Company to have Vernon attend the sale and bid on what the trustee had decided to sell. Further, that the mere allegation of the bill that these transactions were fraudulent does not make them so, and that taken as a whole it simply appears that the former trustee undervalued this claim and sold it rather than pursue an inquiry as to the facts; that the predecessor trustee, having made this definite election, it is inequitable to permit his successor to change it.

There is much that is plausible in these contentions, but it is the whole case rather than any particular part of it that we are called upon to consider. There are many of the acts averred which standing alone would be insufficient to make out such a case of fraud as to require the sale to be set aside, and the case made by the bill is, as the defendants assert, easily distinguishable from most of the cases cited. However, it is rare indeed that facts in cases of this kind will be found altogether similar.

The case stated in the bill would be stronger if it alleged that defendants had some one present at the sale notifying prospective bidders of the claim of the bank to a lien on the stock, but the cross-bill which was filed was of record in a court of general and superior jurisdiction, and presumptively everyone had notice of it. It did in effect say to every prospective bidder, “You buy this stock at your peril,” and indeed the defendants (somewhat inconsistently, we think) argue that because of the fact of that litigation the price paid for the stock was adequate. One thousand dollars cannot, of course, be considered an adequate price for stock the market value of which is $100,000.

We cannot agree with the defendants that the allegations of fraud in this bill are stated simply as conclusions of the pleader. On the contrary, a careful reading of the bill has convinced us that the facts from which fraud may be inferred are well stated in the bill. These facts in substance show a conspiracy of which the defendant debtor Leigh was the principal, in which he used the Equipment Company, the defendant banks and their employee, Vernon, as his tools by which the ownership of this stock which, according to the provisions of the statute and in equity, belonged to his creditors, was retained for his own use and benefit.

If it is granted that the former trustee was not so diligent in running down the conspiracy as it might have been, the averments of the bill are to the effect that such diligence was prevented by the acts of the various defendants through which the ownership of this property was concealed, and by the perjury of Leigh, upon which the bill avers the predecessor trustee relied. The defendants misjudge, we think, the reach and the power of the arm of a court of equity, which is at all times commensurate with the extent of the fraud perpetrated.

Closely related to the foregoing is the further contention that the complainant trustee is on the face of the bill estopped from maintaining this suit. Defendants say (and cite cases so holding) that the trustee in bankruptcy is not bound to take over assets which are onerous or burdensome, and that if he elects not to do so cannot thereafter change his mind and claim these assets. Dushane v. Beall, 161 U. S. 513, is cited to this point, and defendants say that even if there had been no sale of this stock under the rule as announced in that case, the trustee, having been advised of the transfer of the stock to Geer, had the right to have the sale set aside, and that it is therefore apparent that the trustee elected to abandon any right of action against Geer, and having so elected and having had notice of his rights and so- continued to elect for the space of ten years, the successor trustee is now estopped by that election, which was not in any sense negligence but an affirmative election.

This contention is based on a one-sided and partial consideration of the case made by the bill. The transfer to Geer is only one incident in the case which shows a general conspiracy extending over many years. The transfer to Geer is not, as we conceive it,' the gist of the action set up in the bill. How can the conduct of a complainant, shown to have been brought about by the fraud of a defendant, form the basis of an estoppel? Granted that the trustee abandoned this property, which was worth enough to pay all the debts of the bankrupt, and granted that there was an election persisted in for ten years, the cause of such abandonment, if the facts alleged in the bill are true (as we must assume), was the false testimony given by the bankrupt and his failure to comply with the affirmative duty which, under the statute, devolved upon him, not only to inform the trustee but to turn over the estate to him. The trustee says, and we must assume that this is true, that he relied on these false statements and this false testimony.

It would be a novel doctrine to hold that one who believed and relied on the sworn testimony of a defendant in a court where the statute cast upon the defendant the duty of making a full disclosure was thus estopped. Fraud like this vitiates all it enters into, and no matter what the form of it may be, a court of equity will look through to the reality. The successful fraud of a defendant cannot form the basis of an estoppel.

It is contended that the demurrer was properly sustained because the suit was barred by laches and by certain statutes of limitation applicable.

In the first place, it is suggested that section lid of the Bankruptcy Act, which provides, “Suits shall not be brought by or against a trustee of a, bankrupt estate subsequent to two years after the estate has been closed,” is a complete bar to this suit.

The United States District Court, the United States Circuit Court of Appeals, and the Supreme Court of the United States necessarily passed on that question adversely to defendants’ contention when considering the petition of the creditors to reopen the estate of the bankrupt. While these respective decisions are perhaps not conclusive as to all of these defendants, they are indeed persuasive. On this point the complainant

relies on Bilafsky v. Abraham, 183 Mass. 401, and defendants rely on Kinder v. Scharff, 231 U. S. 517.

These decisions are not necessarily conflicting, and they can be easily distinguished from the instant case, in that (again assuming, as we must, that the averments of the bill are true) the bankrupt and some other defendants actively planned to fraudulently conceal the cause of action. The court expressly says in Kinder v. Scharff, supra, that such cases are to be distinguished from the case there considered.

It will hardly be contended, we think, that section lid places an absolute limit on the time within which the estate of a bankrupt may be reopened, since other sections of the Bankruptcy Act provide that this may be done without any limitation as to time.

The bill here charges that the cause of action was concealed from the trustee and the creditors by false testimony and other means, and that the trustee and the creditors relied upon the false representations by which the concealment was perfected and were thereby deceived and injured. If these facts alleged are true, the creditors and trustee were imposed upon, and it is clear, we think, that section lid was not intended to give repose in such cases.

Again it is urged that if any cause of action ever existed in favor of complainant, it is barred under section 15 of chapter 83 of the Illinois Revised Statutes. See Smith-Hurd Rev. Stat., page 1647 [Cahill’s St. ch. 83, [[16]. That section provides that the causes of action therein enumerated are barred, unless the suit is commenced within five years after the cause of action accrued. But it is conceded that a court of equity is not in all cases bound to apply the statute of limitations. It has been held that it will do so in cases where the action in equity is analogous to an action at law or where the cause of action is one of which a court of law would have concurrent jurisdiction. In any case, of course, in conformity with the maxim that equity follows the law, a court of equity will act in obedience to the statute unless there is some reason which takes hold of the conscience of the chancellor and prevents. Hancock v. Harper, 86 Ill. 445; Quayle v. Guild, 91 Ill. 378.

Defendants say that the complainant’s cause of action must be based on one of two rights — first, that of having enforced in complainant’s favor a constructive trust in the stock transferred by Leigh to his attorney Geer; or, second, upon the theory that as representing Leigh’s creditors, the trustee may assert the right of creditors to have that transfer set aside as to them, because of its fraudulent character.

The first question is not raised by the representative of Geer, however. It is not necessary, we think, to consider whether the statute would be applicable in case it was raised by her.

Under the facts alleged Leigh and Geer both intended to defraud. Leigh could not enforce a trust as against Geer or his representatives. Cochonour v. Ratcliff, 223 Ill. 274. But that fact is immaterial in a suit brought by a judgment creditor or trustee in bankruptcy. They are not precluded by the fraud of their debtor. The rights of the trustee here are similar to those of a complainant in a creditor’s bill, and the basis of such a complainant’s right is the statutes and facts from which it appears that defendants have in their hands property which equitably belongs to the creditors.

A court of law would not have jurisdiction, nor is this analogous to such a case as Becker v. Billings, 304 Ill. 190, where the gist of the action was alleged negligence of the director of a bank. On the contrary, the action is purely equitable and statutes of limitation have no application, except under circumstances that would appeal to the conscience of a court of chancery. A court of chancery does not apply such a statute ordinarily nor permit the defense of laches to be interposed in cases where a defendant has property in his hands which equitably belongs to a complainant. That is the situation which exists here, if the facts alleged in the bill are true. The bill says that all the defendants took the stock and held it with knowledge of the complainant’s rights and that they conspired together to keep the creditors from obtaining the property to which they were entitled.

Whether the statute would or would not be applicable as to others, we need not inquire. It will not be interposed to shield defendants who stand in the position of those described in the bill.

The brief of the defendants, which we are persuaded leaves nothing unsaid which could be said in defendants’ favor, points out that in the cases cited by the complainant a, fiduciary relationship existed which prevented the court from acting in obedience to the statute of limitations. We do not think that it can be successfully contended that the duty which is cast upon a bankrupt debtor to disclose to his trustee the extent of the estate is not a fiduciary one. If not in fact so, it is at least analogous to such a relationship, and the other defendants who assisted in the plan by which the creditors were defrauded do not stand in a better position than the bankrupt himself. Such was evidently the view of the United States courts when the bar of the Federal statute was lifted and the estate reopened. The bar of the Federal Statute of Limitations has been lifted. The bar of the State statute should not be permitted to interpose.

It is perhaps unnecessary to say in conclusion that we have of necessity assumed on this record the existence of all facts well pleaded in the bill. The hearing will disclose the facts.

The court erred in sustaining the demurrer and the decree will therefore be reversed and the cause remanded with directions to proceed in conformity with the views.expressed in this opinion.

Reversed cmd remanded with directions.

McSurely, P. J., and Johnston, J., concur.


source: Caselaw Access Project

author: Mr. Justice Jones

license: Public Domain

text:
    In re Estate of Duane C. Stocking, Deceased.
    Gen. No. 7,615.
    Estates op decedents — priority of right to nominate administrator as between surviving widow- and children of decedent. Under Cahill’s St. ch. 3, U18, a widow who has within the statutory period exercised her right to obtain appointment as administratrix of the estate of her husband, has the further right, upon her resignation as administratrix, to have her nominee, if competent, named administratrix de bonis non in preference to the nominee of the decedent's children.
    Appeal by petitioner from the Circuit Court of Winnebago county; the Hon. Earl D. Reynolds, Judge, presiding. Heard in this court at the April term, 1926.
    Reversed and remanded with directions.
    Opinion filed October 8, 1926.
    Fisher, North, Linscott & Gibboney, for appellant.
    No appearance for appellee.
   Mr. Justice Jones

delivered the opinion of the court.

This is an appeal, from an order of the circuit court of Winnebago county appointing an administrator de bonis non in the estate of Duane C. Stocking, deceased. There is no dispute about the facts. The decedent died intestate November 4, 1924, at Rockford, Illinois, leaving surviving him Nettie Y. Stocking, his widow, and five children his only heirs-at-law. On November 17, 1924, the widow filed in the probate court of that county her petition for appointment as administratrix of decedent’s estate, and on the same day she was appointed by the court, and qualified.. She continued to act as such administratrix from that time until January 24,1925, when she filed a report to that date. In her report she tendered her resignation as such administratrix and asked that Blanche Pardridge be appointed administratrix de bonis non of decedent’s estate. Notice as provided by law of the hearing on said report was duly given. Lewis C. Stocking, one of decedent’s children, filed his objection to the appointment suggested by the widow, based solely upon, the ground that upon the widow’s resignation as administratrix the children, and not the widow, had the right to nominate an administrator de bonis non. Three of the other children of decedent also filed a petition in the probate court for the appointment of Lewis C. Stocking as administrator de bonis non. Upon the hearing the probate court entered an order approving the report but denying the application for the appointment of Blanche Pardridge and granting the petition for the appointment of Lewis C. Stocking, and appointing him administrator de bonis non. From this order Nettie Y. Stocking appealed to the circuit court of Winnebago county, wherein a similar order was entered. No claim was made that Blanche Pardridge was not competent. From the order of the circuit court Nettie Y. Stocking appealed to this court and filed a brief and argument.

No brief or argument was filed by any of the other parties to this cause, and under rule 21 of this court the cause was reversed pro forma. Subsequent to the entering of the order reversing the cause pro forma, appellant filed a motion asking that the cause be remanded with directions for the appointment of Blanche Pardridge as administratrix de bonis non. We cannot reverse a cause and remand it with directions unless it is taken regularly on call. Buie 21 provides among other things: “Briefs for appellee or defendant in error must be filed within ten days after the time fixed for filing briefs for appellant or plaintiff in error, or within such further time as may be granted by the court on motion; and if not so filed, the judgment or decree of the court below will be reversed pro forma on the call of the docket, unless, on an examination of the record, the court shall deem it proper to decide the case upon its merits.” After an examination of the record we think this cause should be decided upon its merits and our former order reversing the cause pro forma is hereby set aside and vacated.

Having considered the case upon its merits, we conclude that under the circumstances here presented the widow had the first right to nominate an administrator de bonis non under section 18 of the Administration Act [Cahill’s St. ch. 3, [[18]. It has long been the settled legislative policy of this State to give to the surviving .husband or widow or to the nominee of such survivor the first right to administer upon the estate of an intestate, provided, of course, the survivor or the nominee is qualified to act as an administrator. The right of a widow or her nominee to administer takes priority over the right of the children or their nominee to administer. In the present case the widow exercised her right within the time prescribed by the statute and obtained letters of administration upon her deceased husband’s estate. Her right to administer cannot be disputed and it seems to us that her right to nominate her successor, upon the acceptance of her resignation, is equally clear. It cannot be denied, except upon the ground that she has once exercised it and cannot again do so in preference to the decedent’s children. We are of the opinion that such an objection, if made, would be without force, because it would tend to defeat the very object of the legislature in giving the first right to administer to the widow or her nominee. The right of children to administer where there is a surviving widow is secondary to her right, and can only be availed of upon her refusal or failure to act or to nominate some one else in her stead within the time prescribed by the statute.

In Wilkinson v. Nowers, 217 Ill. App. 314, Willis L. Wilkinson was appointed administrator de bonis non, with will annexed, of the estate of Lyman J. Wilkinson, deceased, after the death of the executor of said will. The administrator de bonis non made final settlement of the estate and made distribution of all the assets except a certain note which was filed for the benefit of such heirs as might sue and recover the same, as provided by the present section 83 of the Administration Act [Cahill’s St. ch. 3, ft 84]. The administrator de bonis non died and some time after-wards, upon her petition, his widow was appointed administratrix de bonis non of the estate of said Lyman J. Wilkinson, deceased, so that she might sue for and recover uncollected assets of that estate. Her right to administer was challenged, and this court said (p. 322): “The general rule is that persons are entitled to administration de bonis non in the same order as they would have been entitled to an original grant in case of intestacy or to letters with the will annexed in case there is a will.”

Under our statute the right to nominate is coextensive with the right to administer. We are therefore of the opinion that appellant, upon her resignation as administratrix, had the right within the limit prescribed by the statute to nominate her successor. The decree of the circuit court and the decree of the probate court denying the petition for the appointment of Blanche Pardridge as administratrix de bonis non, dismissing the petition therefor, granting the petition of Lewis C. Stocking et al., and appointing Lewis C. Stocking as administrator de bonis non, are each reversed and the cause is remanded to the probate court with directions to dismiss the said petition of Lewis C. Stocking et al. and to enter an order appointing Blanche Pardridge as administratrix de bonis non in pursuance of the petition of Nettie Y. Stocking, widow of the said intestate, Duane O. Stocking.

Reversed cmd remanded with directions.


text:
    Henry Frochter, Defendant in Error, v. George Arenholz and Michael Arenholz, Plaintiffs in Error.
    Gen. No. 7,619.
    1. Highways — sufficiency of evidence to show negligence of automobile driver stopping' car beside highway at night to adjust lights. Where the driver of an automobile, the lights of which had become extinguished by the jar of crossing a railroad track, drove ahead to a point where an arc light overhung the roadway, and stopped as far to the right of the traveled way as he could safely drive for the purpose of fixing his lights, a verdict finding the owner of such car guilty of negligence contributing to cause the injury of one resulting from a collision between such standing car and another was against the manifest weight of the evidence.
    2. Damages — admissibility of evidence, in action for personal injury, to show improper treatment of injury by physician. Questions asked of a physician, in an action for personal injuries, sustained in an automobile accident, the evident purpose of which was to show that the treatment given to the injured person by the last of several physicians who treated him was improper, held properly excluded as having no bearing upon the issues of the case respecting the liability of the defendant.
    3. Evidence — when physician properly permitted to testify that plaintiff in personal injury action was suffering from his injuries. Where the testimony of a physician that the plaintiff in an action for personal injuries was suffering very much was based upon his own observations, the admission of such testimony was not error.
    4. Evidence — when testimony of medical witness properly excluded as positive statement of fact as distinguished from opinion. In an action for personal injuries it was error to overrule an objection to a question asked of a medical witness, as to whether the injured leg of the plaintiff would ever become straightened, the question calling for a positive statement as distinguished from an opinion.
    5. Evidence — admissibility of opinion of medical witness as to whether injured plaintiff would ever be able to return to work as coal miner. In an action for personal injuries it was error to overrule an objection to a question asked of a medical witness, as to whether the injured plaintiff would ever be able to resume work as a coal miner, the answer to such a question not being admissible as opinion evidence.

      6. Highways — when instruction as to speed of automobile properly refused as inconsistent. A requested instruction, in an action for injuries in a collision of automobiles, that even if the jury believed that the defendant’s automobile was being driven at a greater rate of speed than permitted by statute, this alone would not permit plaintiff to recover, unless they further found that such automobile was being driven at a speed that was greater than reasonable and proper, having regard to the traffic and use of the way, held properly refused, being inconsistent in that if the speed was not unreasonable in view of the traffic and the use of the way, then such speed was not unlawful.
    7. Appeal and error — reversal as to all defendants Where joint judgment erroneous as to one. A joint judgment against defendants in an action for personal injuries, erroneous as to one defendant, must be reversed as to all.
    Error by defendants to the Circuit Court of Peoria county; the Hon. Frank Lindley, Judge, presiding. Heard in this court at the April term, 1926.
    Reversed and cause remanded.
    Opinion filed October 8, 1926.
    E. V. Champion, George W. Hunt and Clarence W. Heyl, for plaintiffs in error; Wayne C. Townley and Heyl & Heyl, of counsel.
    Joseph A. Weil and Joseph F. Bartley, for defendant in error; Weil, Bartley & Weil and Leo. F. Cavanaugh, of counsel.
   Mr. Justice Jones

delivered the opinion of the court.

This is an action in case brought by the defendant in error in the circuit court of Peoria county against the plaintiffs in error jointly. The declaration contains two counts, and by apt averments charges that defendant in error received personal injuries in consequence of the concurrent negligence of plaintiffs in error. Both counts aver that defendant in error was in the exercise of due care and caution for his own safety. Plaintiffs in error filed separate pleas and were represented by different counsel. A trial was had before a jury and a verdict rendered against them jointly for $5,000. They have separately brought the cause to this court by writ of error.

The evidence tends to show that Michael Arenholz was a dealer in coal and employed in his business an automobile truck and a driver. His truck, driven by such an employee, was going south on a public highway which extends from Peoria through Bartonville and passes the Peoria State Hospital. The truck was equipped with acetylene lamps that were lighted, and as it passed over some railroad tracks which crossed the highway the jar extinguished them. The driver, observing that the lights were out, drove a short distance farther south to a place immediately opposite the State Hospital where there was an electric arc light overhanging the highway from the west side. He there stopped the truck and alighted for the purpose of fixing the lights. While he was doing this a Ford automobile owned by Fred Hinckley, and carrying Hinckley, his son and defendant in error, approached from the north. The two Hinckleys were in the front seat and defendant in error was in the rear seat, all going south to a coal mine at which they were employed. It was about six o’clock in the morning in the month of December. It was not light and there was a little rain or mist falling. The right side of the Ford car struck the left side of the truck near the rear end and the Ford went to the left side of the truck where it stopped. The three men alighted and defendant in error went to the rear of the Ford car, and while he was standing there another car driven by plaintiff in error, George Arenholz, came from the north and struck him, causing the injuries for which he sued.

The main questions in dispute are whether the driver of the truck was negligent in stopping his car where he did without any tail light or any illumination burning upon the rear end, and without indicating its presence or giving any warning to approaching vehicles or persons; whether the defendant in error was guilty of contributory negligence; whether George Arenholz was guilty of negligence in the management of his car and whether the accident occurred in a street in the village of Bartonville.

After reviewing the case our conclusion is that the evidence shows that the truck driver was not guilty of any actionable negligence in stopping where he did. Although defendant in error and one or two of his witnesses claim that the driver of the truck left it standing with all four wheels upon the paved portion of the road, the great preponderance' of the evidence shows that he drove the truck as far as he could off of the pavement. The shoulder along the west side of the concrete was about 5 feet wide. A ditch on the west side of the shoulder prevented his getting entirely off of the pavement, but the right wheels of the truck were as close to the ditch as it was safe to drive. The absence of lights on this car was due to the fact that they became accidentally extinguished as he crossed the railroad tracks. His only purpose in stopping was to repair the lights and this he attempted to do under an arc light. He drove as far off the pavement as he could and immediately proceeded to fix the lights. It is contended that there were shadows under the arc light, but the testimony fails to show that there was any heavier or different kind of shadow than is usual under an arc light. Two disinterested witnesses testified that the rear end of the truck was in the light and could be plainly seen, one of them stating that it could be seen a block away. The driver could not lawfully operate his truck upon the highway without lights while it was dark, and it seems that he acted as any reasonably cautious and prudent person would act under the circumstances. There is therefore no ground for the action as against Michael Arenholz. An accidental break in machinery, or a defect in the mechanism or parts peculiar to the car, often gives the person operating it no choice about leaving a car standing in the road until a remedy for the mishap is found. The rights of persons operating cars upon the public highway are coequal, and it seems apparent that all parties operating cars in the exercise of ordinary care should be on the lookout for other cars either moving or standing in the highway. It is a reciprocal duty to exercise reasonable care to avoid collisions. Collins v. McMullin, 225 Ill. App. 430. The question of a defendant’s negligence is ordinarily a question of fact for the jury, and courts will not disturb a verdict unless it is manifestly contrary to the weight of the evidence, but in this case, the verdict is against the manifest weight of the evidence, and the trial court should have directed a verdict in behalf of Michael Arenholz.

Before passing upon other questions, we desire to say that from the record in this case it is not clear whether the accident occurred on a street in Barton-ville or not. The evidence should have been more explicit upon that subject because it is a ¡matter in dispute.

Counsel for the respective plaintiffs in error complain that prejudicial error arose out of the conduct of counsel for defendant in error in the examination of a juror, and also in the examination of a witness. It is claimed that this led the jury to believe there was an insurance company interested in the defense of the case. The questions asked the juror and his answers showed that he was employed by an insurance company and that one of counsel for George Arenholz represented the same company. There is nothing in the examination of the juror to indicate that the questions were asked for any other purpose than to enable counsel to exercise his right of challenge. Iroquois Furnace Co. v. McCrea, 191 Ill. 340; Aetitus Spring Valley Coal Co., 246 Ill. 32.

A witness for defendant in error had testified under cross-examination to parts of a conversation with George Arenholz and his counsel. On redirect examination he stated that he signed a paper about which he had been cross-examined and that Mr. Heyl said it would not “inflict” with Frochter’s trial. When asked what he meant when he said “inflict” and if there was anything said about that by Heyl, he replied, “I think he came down there and told me he was the insurance company, or lawyer for the insurance company, and he wanted to straighten up the case.” The answer was stricken on objection and the jury was orally advised by the court to pay no attention to that portion of the evidence and they were also told to disregard it by a written instruction. The answer of the witness was undoubtedly improper and prejudicial. The general rule is that where part of a conversation has been testified to, the adverse party is entitled to the whole of the conversation, but the rule will not permit a party to introduce evidence which would not be otherwise admitted merely because the adverse party has brought out some evidence on the same subject. 22 C. J. Evidence, § 163. Counsel for defendant in error disclaims any knowledge that the conversation referred to an insurance company and asserts that the answer came as a surprise to him. As the cause must be reversed on other grounds and the same error is not Ekely to occur on another trial, we refrain from further comment on this point.

It also appears that after the accident defendant in error was taken to the Methodist Hospital in Peoria and there treated by three physicians. Subsequently he was moved to another hospital and thereafter was under the care of a different physician who testified to the method of treatment he used. One of the physicians who treated him at the Methodist Hospital was called on behalf of plaintiffs in error and testified to the method of treatment given by him and his two associate physicians. He was also asked if he had an opinion as to whether, there would have been a union of the bone if that treatment had been continued. The evident purpose was to show that the treatment used by the last physician was improper. The court properly sustained objections to this line of questioning. The wrongdoer is liable for all the actual consequences of the injury whether the method of treatment' adopted by the injured person was or was not the best possible. 17 C. J. Damages, § 103. The testimony of Dr. Ives that defendant in error was suffering very much was based upon his own observations and there was no error in the admission of such testimony. Chicago, B. & Q. R. Co. v. Martin, 112 Ill. 16; 11 R. C. L. Expert and Opinion Evidence, § 31. The same physician was asked whether the injured leg would ever become straightened and answered, “No.” This was objected to on the ground that it called for a positive statement and not an opinion. The objection was overruled. On questions of science, skill or trade, or others of the like kind, persons of skill called as experts are permitted to give their opinion in evidence. City of Chicago v. McGiven, 78 Ill. 347; Toledo, W. & W. Ry. Co. v. Baddeley, 54 Ill. 19. "We think the objection should have been sustained. The witness was also asked for his opinion as to whether the defendant in error would ever he able to resume his work as a coal miner. An objection to its competency was overruled hut we think it should have been sustained. Human ability in a customary connection is within the rule excluding opinion evidence. 11 R. C. L. Expert and Opinion Evidence, §20.

Plaintiff in error, George Arenholz, complains of instructions 3 and 5 given on behalf of defendant in error. Identical instructions were given in Kershaw v. Illinois Power Light Corp., 238 Ill. App. 642, and held to be correct statements of the law. Objection is made that the court refused to give his first, second, third and eleventh offered instructions. The first of the refused instructions told the jury that even though they believed George Arenholz ran his automobile at a greater rate of speed than permitted by the statute, this alone would not entitle plaintiff to recover, unless they further found that his speed was greater than was reasonable and proper — having regard to the traffic and use of the way. The instruction is inconsistent and was properly refused. If the rate of speed was not unreasonable when the traffic and the use of the way are considered, it was not unlawful. The second refused instruction was limited to the actual lack of knowledge by George Arenholz of the presence of the Ford car on the highway. It omitted all reference to whether the exercise of reasonable care should have disclosed its presence, and it assumes that the car of George Arenholz struck the Hinckley car, which in turn struck defendant in error. There is nothing in the pleadings or the testimony on which to base this assumption. The instruction was properly refused. The third refused instruction is covered by the twenty-first and twenty-second instructions given for this plaintiff in error and we see no error in refusing it. Refused instruction No. 11 ignored the question of due care on the part of defendant in error and was properly refused.

Whether or not any liability exists as against George Arenholz is a matter about which we can express no opinion at this time. However, we do hold that under the facts in the case no liability has been proven against Michael Arenholz. The judgment against them is a joint one, and as such is a unit as to all defendants. If such a judgment is reversed as to one, it must be reversed as to all. South Side El. R. Co. v. Nesvig, 214 Ill. 463; Seymour v. O. S. Richardson Fueling Co., 205 Ill. 77. The judgment of the circuit court is reversed and the cause is remanded.

Reversed and cause rema/nded.


text:
    Del Rhodes, Appellee, v. Sidney Warsawsky and David Rosenbloom, trading as The Warsawsky Auto Parts Company, Appellants.
    Gen. No. 7,642.
    1. Bailments — sufficiency of evidence to show negligence of bailee in retaining dishonest employee, in action for value of bailed property after theft thereof by such employee. Evidence in an action to recover the value of an automobile alleged to have been stolen from defendants' garage while in their custody as bailees for hire held insufficient to show negligence on the part of the defendants in retaining in their employ the servant alleged to have taken the automobile.
    2. Bailments — general rule as liability of bailee for hire. A bailee for hire is not an insurer, but owes to the bailor the duty to exercise that care of the subject of the bailment which every prudent man takes of his goods of like character.
    3. Bailments — what constitutes prima facie case for plaintiff in action by bailor for value of bailed goods not returned on demand. Where a bailor shows that the subject of the bailment was received by the bailee in good condition, and was not returned on demand, the bailor has made out a prima facie case of negligence against the bailee, rendering it incumbent upon the bailee to show that the loss or damage was not caused by his fault.
    4. Bailments — burden of proof as to negligence of bailee where subject of bailment stolen or destroyed by fire while in his custody. Where the failure of a bailee to redeliver the bailed goods upon demand is explained by showing that they have been stolen or destroyed by fire, the law will not presume negligence, and the burden of proving the same is upon the bailor.
    B. Bailments — liability of bailee for hire where subject of bailment stolen by employee of bailee. A bailee for hire is not liable to the bailor for the loss of the subject of bailment in consequence of the theft thereof by the bailee’s servant unless it appears that he retained such servant in his employ after he knew, or in the exercise of reasonable diligence should have known, of such servant’s dishonesty.
    6. Bailments — inapplicability of res ipsa loquitur to action for value of bailed property stolen by employee of bailee. The doctrine of res ipsa loquitur has no application to an action by the bailor of an automobile against the bailee thereof to recover the value of the car, when the failure of the bailee to return the car to the bailor on demand is due to the fact that it has been stolen by an employee of the bailee.
    Appeal by plaintiffs from the Circuit Court of Winnebago county; the Hon. E. D. Reynolds, Judge, presiding. Heard in this court at the April term, 1926.
    Reversed and cause remanded.
    Opinion filed October 11, 1926.
    Hyer & Gill, for appellants.
    Early & Early, for appellee.
   Mr. Justice Jones

delivered the opinion of the court.

Appellee was the owner of an automobile which he kept in appellants’ garage at an agreed compensation of $7 a month. The car was stolen from the garage on the night of December 7, 1924, and it is claimed that one of appellants’ servants, Leggio, a night man at the garage, stole it. Appellee brought this suit against appellants to recover the value of the car. A verdict for $973 was returned by the jury. Judgment was rendered on the verdict and this appeal followed.

Appellants urge several reasons why this judgment should be reversed, and they may all be disposed of under three of the principal causes urged: (1) That the trial court erred in the giving and refusal of instructions ; (2) that it erred in admitting and excluding testimony, and (3) that there was no evidence of negligence on the part of appellants sufficient to establish their liability. The evidence shows that appellants were operating a public garage in the city of Rockford. Leggio first entered their employ in January, 1924, and continued to work there until about June 15, 1924. He again returned to work early in September and his employment continued until the car and some cash belonging to appellants were stolen on December 7. While he was so employed, he had full charge of the garage at night, including cash and about $3,500 worth of personal property belonging to appellants. The garage did no towing service and Leggio had no authority to take any of the cars out of the garage. The testimony of appellee and his son was that they never had any reason to suspect him of stealing up to the time the car was stolen. While the car was stored in appellant’s garage, it was taken care of as well as it could have been, and appellee never had any cause to make any complaint, except that on Sunday previous to the night of the car’s theft appellee and his son complained to appellants of the car’s being dirty inside and that it looked like somebody had slept in it. Appellee intimated that Leggio had staged an indecent party in it, but there is absolutely no evidence in the record to sustain such a claim, or that Leggio had been in the car. Appellee’s son had used the car on Saturday afternoon. One of appellants testified that he was at the garage Saturday night until a quarter to one o ’clock and the car had not been moved from the place reserved for it. He also testified that certain heel marks on one of the windows were much smaller than that of Leggio’s shoes. He went to Leggio immediately after the charge was made and Leggio denied that he had been in the car.

Appellee testified that Leggio was about 17 or 18 years of age and urges that appellants were guilty of negligence in hiring a boy of such immature years, and in putting him in a place where temptation to steal was great. One of appellants testified the boy was 22 years old. If the position of appellee is correct, no business concern could afford to employ any youth in a position of trust. Honesty is not an attribute of age, nor youth evidence of thieving characteristics. There is no merit in this contention of appellee.

Evidence was admitted to the effect that appellants knew Leggio had violated the “State License Law.” The purpose was to show appellants had information which should have led them to suspect his dishonesty. It is not clear what the term ‘ ‘ State License Law” means, but we assume that the witness referred to the Motor Vehicle Law [Cahill’s St. ch. 95a] which contains provisions with reference to speed, license numbers on automobiles, etc. We cannot conceive how it is possible to infer that one who violates a provision of the statute as to speed or who fails to obtain a license from the automobile department in due time is to be suspected of being a thief. The admission of this testimony constituted error. There is testimony in the record that one of appellants said some time after the theft that Leggio had been looking for gasoline and a pump the night before the car was stolen, and that this fact ought to have aroused his suspicion that something was wrong. At most, this remark is but an expression of his belief, which was arrived at subsequent to the time of the theft. If it proves anything, it shows that Leggio’s act did not arouse appellants ’ suspicion that their servant was dishonest. By no stretch of the imagination can it be said that the circumstance was sufficient to put appellants upon notice of dishonesty of Leggio. There is nothing in this record which would do so, nor is there anything in the record which proves any negligence upon the part of appellants.

The principal question to be determined, then, is that of the liability of appellants as bailees and where the burden of proof lies. It is well settled that a bailee for hire is not an insurer, but owes to the bailor a duty of ordinary care. Saunders v. Hartsook, 85 Ill. App. 55; Standard Brewery v. Bemis & Curtis Malting Co., 171 Ill. 602; Jacobs v. Grossman, 310 Ill. 247; Schaefer v. Washington Safety Deposit Co., 281 Ill. 43; 3 R. C. L. Bailments, § 21. As bailees, appellants were bound to exercise such care and diligence as every prudent man takes of his own goods of like character. Chicago & A. R. Co. v. Scott, 42 Ill. 132; National Safe Deposit Co. v. Stead, 250 Ill. 584; Schaefer v. Washington Safety Deposit Co., supra. Ordinary diligence means that degree of care, attention or exertion, which, under the circumstances, a man of ordinary prudence and discretion would use in reference to the particular thing, were it his own property. Schaefer v. Washington Safety Deposit Co., supra.

The weight of modern authority holds the rule to be that where the bailor has shown the goods to be received in good condition by the bailee, and were not returned to the bailor on demand, the bailor has made out a case of prima facie negligence against the bailee, and the bailee must show that the loss or damage was caused without his fault. The effect of this rule is not to shift the burden of proof from plaintiff to defendant but simply the burden of proceeding. The bailor must in all instances prove that the bailee was negligent; but when he shows that the goods which he intrusted to the bailee’s care were not delivered upon demand, he has made out a prima facie case or created a presumption of negligence, which the bailee may overcome by offering evidence to show that he was not negligent. It was held in Sanford v. Kimball, 106 Me. 355, that the bailee has sufficiently exonerated himself from liability when he has shown that the cause of the loss was a mystery. Miles v. International Hotel Co., 289 Ill. 320. The rule that a default by the bailee in delivering or accounting for the property bailed makes a prima facie case of negligence, and that it devolves upon him to show he has exercised the degree of care required by the nature of the bailment, proceeds upon the theory that the facts surrounding the care of the property by the bailee are peculiarly within his knowledge and power to prove. The enforcement of any other rule would impose great difficulties upon bailors. But it is also the rule that where the failure to deliver is explained by the fact appearing that the goods bailed have been stolen or destroyed by fire, and the bailee is no longer able to deliver them, the law will not presume negligence and the onus or burden of proving the same is upon the bailor. Nichols v. Union Stock Yards & Transit Co., 193 Ill. App. 14; Chicago, R. I. & P. Ry. Co. v. Kendall, 72 Ill. App. 105; Bryan v. Chicago & A. R. Co., 169 Ill. App. 181; Cumins v. Wood, 44 Ill. 416; Standard Brewery v. Hales & Curtis Malting Co., 70 Ill. App. 363, aff’d 171 Ill. 602. It is true that in each of the cases above cited, the loss was occasioned by fire, but the principle stated in Kent’s Commentaries, vol. 2, p. 587, is adhered to: “The bailee, when called upon for the article deposited, must deliver it, or account for his default by showing a loss of it by some violence, theft, or accident. When the loss is shown, the proof of negligence or want of due care is thrown upon the bailor, and the bailee is not bound to prove affirmatively that he used reasonable care.” A similar rule is laid down in 3 Am. & Eng. Encyc. of L. (2nd Ed.) 751, and in 6 C. J. p. 1158, § 160. Where the relation of bailee for hire or mutual benefit subsists, it devolves upon the bailee to use ordinary care and diligence in safeguarding the bailor’s property. If it is lost through a failure to observe such duty, he is answerable, but of course he is not responsible for any losses not occasioned by the negligence of himself or his servants. He will not therefore be liable for any loss by thieves or for any taking from him or his servant by force. 3 R. C. L. Bailments, § 39. If the bailee proves that the property was stolen or destroyed by fire or accounts for his failure to return or for the injury in any way, which does not on its face involve negligence, or call for further explanation the bailor must prove negligence. 3 B. C. L. Bailments, § 74.

In Glende v. Spraner, 198 Ill. App. 584, it is held that a garage keeper, who, for compensation, stores a vehicle for the owner, is not liable for its loss by theft, if he exercised ordinary care to prevent it, and that in an action by a bailor against a bailee to recover damages for the loss of the bailment, where plaintiff shows delivery of the bailment to defendant, and the failure of defendant to make redelivery, the burden is on defendant to show the exercise of the degree of care required by the nature of the bailment; but where it appears that the bailment was lost, through violence, stolen or destroyed by fire, the burden of proving negligence is on the bailor. In Stern v. Welensky, 182 Ill. App. 417, it is held that where a patron of a bathing establishment delivered property to such establishment as bailee and such property could not be returned on demand, a presumption of negligence on the part of the bailee arose and since the bailee failed to show that the property had been lost by some violence or theft, it was liable for the value thereof. In Gray v. Merriam, 148 Ill. 179, Ker, the assistant cashier of a bank, stole a depositor’s bonds. He had access to these and other special deposits. The testimony showed that about a year before he absconded, the chief officer of-the bank learned that Ker was speculating on the Board of Trade in Chicago and had a conversation upon the subject with him. Ker was not known to have any other property but a salary of $1,800. He was, however, allowed to retain his position in the bank. No effort was made to verify the truth as to his speculations, nor any examination made of the special deposits. About two months before he absconded, his speculations were again called to the attention of the bank- officers and a second interview had. An examination of the bank’s books and securities was made, but none as to the special deposits. The court held the bank was guilty of gross negligence. In that case it affirmatively appeared that the bank had notice of facts which should have aroused their suspicions and caused them to have examined the special deposits or discharged the speculating assistant cashier. But as we have already said, there are no facts in the record in the case at bar sufficient to charge appellants with notice of their employee’s dishonesty or to arouse their suspicions.

In Geist v. Pollock, 58 Ill. App. 429, Pollock deposited with defendants $500. It was put in the safe. There was no watchman, but Pollock and another man slept in the building. That night the safe was broken open and this and all other money taken. The court held that if the deposit was a special one, and the same package was to be returned, the appellants were not liable. Appellee contends that under the holding in Cumins u. Wood, supra, the burden of proof is on the bailee in such a case; but a different interpretation was put upon that case in Chicago, R. I. & P. Ry. Co. v. Kendall, supra, and Bryan v. Chicago & A. R. Co., supra. The Kendall case quotes the Supreme Court of Massachusetts to the effect that the burden of proof never shifts, but is upon the plaintiff from the beginning to the end of the trial. Such appears to be the rule in this State. Koczora v. Standard Safe Deposit Co., 221 Ill. App. 43, was reversed because the court instructed the jury that when plaintiff had made out a prima facie case, the burden then rested upon the bailee to show by a preponderance of the evidence that the loss was not caused by its negligence. The opinion distinguishes the burden of proceeding from the burden of proof. It is true that some authorities in other jurisdictions are not in harmony with the general rule, but it is apparent that the courts of Illinois follow it.

Appellee claims that where the theft of a bailment is committed by a bailee’s employee, a different rule applies, and it remains to be determined whether that contention is correct. It is not wholly free from difficulty. In Tinucane v. Small, 1 Espinasse’s Nisi Prius 315 (Eng.), it is held that where goods are bailed to be kept for hire, the bailee is bound to take the same care of them as he would of his own, and therefore if they are stolen by the bailee’s servants, without gross negligence on his part, the bailee is not liable. There are a few cases to the effect that the burden of proof is on the bailor where the property is stolen. The mere fact that the bailee’s servant stole the property does not cast upon the bailee the burden of showing want of negligence in selecting and keeping such servants, but the burden is on the bailor to show negligence in this respect on the part of the bailee. Firestone Tire & Rubber Co. v. Pacific Transfer Co., 120 Wash. 665; 26 A. L. R. 217, note 26 A. L. R. 232 et seq. In Vigeant v. Nelson, 140 Ill. App. 644, certain goods belonging to a guest of a family hotel were stolen by the proprietor’s servant. They were taken from the guest’s trunk which he took there with him and which was placed in a storage room in the basement. The proprietor sued the guest for a board bill and a counterclaim was set up for the value of the stolen goods. It was claimed that the technical relation of innkeeper and guest existed and that therefore the keeper was an insurer of the goods, but the court held the establishment was not an inn for transient guests, but a boarding house of the kind known as a family hotel. In holding the proprietor not liable the court said:

“There was no evidence of negligence on the part of the defendant in error, either in the care of the trunk or in the employment of servants. There was evidence, not that a porter had been ‘a convicted thief,’ as counsel for plaintiff in error suggests, but that he actually was a thief and stole the goods in question, together with some belonging to the defendant in error, and was properly punished therefor. But there is no reason to suppose that defendant in error had any knowledge, means of knowledge, or grounds of suspicion of his bad character when she employed him.”

In Evans v. Williams, 232 Ill. App. 439, cited by appellee, the bailee’s servant, without authority to do so, took the bailor’s car out for a “joy-ride” and wrecked it. The decision in that case rested wholly upon the question of negligence and in no way involved a crime of a servant. Other cases cited by appellee relate to the same question. There is a wide difference between the law fixing liability for a servant’s negligence and the law fixing liability for the consequences of his crime.

Appellee contends that the doctrine of fes ipsa loquitur applies to the facts in this case. With this we cannot agree. It has also been held that proof that a bailee dealt with his own property and the bailors in the same way ordinarily raises a presumption of adequate diligence — a prima facie showing of diligence. 3 R. C. L. Bailments, § 76; 6 C. J. Bailments, §160.

Appellee’s first instruction is as follows: “The court instructs the jury that this is a suit on a contract of bailment by the bailor, plaintiff, against bailees, defendants, and that such contract is in its nature, a direct and personal obligation, whereby the bailees undertook personally to keep safely the property committed to their care; that the actual work of guarding the property may be delegated to an employee, but by so doing, the bailees, defendants, are not to be relieved from their personal obligation on their contract of bailment; and that any negligence of the employee in protecting or taking care of the property is the negligence of the employer or bailees.” It is predicated upon the assumption that an employee’s negligence is an element involved in the case and tends to lead a jury to the conclusion that appellants were insurers against thefts by an employee. The instruction should not have been given. Appellants’ fourth and fifth refused instructions omitted elements necessary for a proper statement of the law and there was no error in their refusal.

Appellee, over the objection of appellants, was permitted to reopen his case after it was closed to produce additional testimony. The court had a discretionary right to do so, but should not have permitted appellee to cross-examine and ask leading questions of his witness Buzzard. Upon proper representation made by counsel of surprise or that a witness is unwilling, reticent, evasive, or hostile, an attorney may be permitted to ask leading questions, and cross-examine his own witness, but this is an indulgence which is largely in the discretion of the court and such discretion should not be abused by passive permission to an attorney to cross-examine his witness at his own pleasure. The right should be extended by the court only when it is apparent to the court that the ends of justice require it in order to arouse the conscience and enliven the memory of a wilfully reticent witness. Pegram v. Mutual Protective League, 159 Ill. App. 214.

Our conclusion is that appellants are not liable to appellee for the loss of the car in question, unless they knew or by the exercise of reasonable care should have known that the servant who stole the car was dishonest and that they thereafter retained him in their employ, but the record is devoid of any proof to that effect. For the reasons above pointed out, the judgment is reversed and the cause remanded.

Reversed and cause remanded.