author: Mr. Justice Hebel

text:
    Robert J. Watt et al, Appellees, v. Charles Cecil et al, Defendants, Lucy Rooney, Appellant.
    Gen. No. 40,710.

      Heard in the third division of this court for the first district at the February term, 1939.
    Opinion filed April 8, 1942.
    Rehearing denied May 7, 1942.
    Francis M. Lowes, of Chicago, for appellant.
    Albert E. Jenner, Jr. and Bennett & Colbach, all of Chicago, for appellees.
   Mr. Justice Hebel

delivered the opinion of the court.

The action in this case was to foreclose a trust deed to secure payment of certain notes and coupons therein described. On January 26, 1937, a decree was entered finding certain defendants liable on all the said notes, and Lucy Rooney liable on all of said notes, except one note for $500 held by John C. Taylor, and decreeing the sale of the real estate in default of the payment of the amount so found due. Upon default of such payment the said premises were duly sold by the master to Kildare-Schubert Apartments Corporation, a corporation, for $17,000, which report of sale was duly made to and confirmed by the court on the 10th day of March, 1937. Lucy Rooney appealed the case to the Supreme Court, which rendered its opinion, finding that there was usury in the amount found due, and reversed the case, with the following language; “For the error in denying the claim as to usury the decree is reversed, and the cause is remanded to the Superior Court, with directions to enter a decree in conformity with the views herein expressed.” (See 368 Ill. 510.) Upon the filing of the Supreme Court mandate in the trial court, plaintiffs and certain defendants as noteholders whose interests were the same as complainants, and the said purchaser Kildare-Schubert Apartments Corporation, presented to the trial court another decree which was entered on July 6, 1938, over the objection of appellant, Lucy Booney.

The decree of July 6, 1938 was substantially the same as the decree of January 26, 1937, except that it set aside the sale of January 26, 1937, and ordered a resale of the premises to be made by the master in chancery, and also found that the Kildare-Schubert Apartments Corporation had been formed by the holders of the said notes (excepting noteholder, John C. Taylor) and the attorneys for the plaintiffs to act for such noteholders and attorneys to protect their said interests.

On July 11, 1938, Lucy Booney moved the court to set aside and vacate the said decree of July 6, 1938, and presented a decree which she asked the court to enter, which motion the court denied. Lucy Booney here appeals from the decree entered on July 6, 1938, and from the denial of her motion to set such decree aside and to enter the decree presented with such motion.

Lucy Booney, codefendant and appellant, appealed from the decree of July 6, 1938 direct to the Supreme Court of this State, contending that a freehold was involved. The Supreme Court entered an order in this cause directing that the same be transferred to the Appellate Court of Illinois, First District, and in its opinion did find and adjudicate that this cause was wrongfully appealed to the Supreme Court and that it was without jurisdiction to determine the questions of the appeal.

It appears from the record that appellant, Lucy Booney, filed her answer in the cause alleging by way of affirmative defense and new matter, that the original loan'had been usurious. It was alleged that although the aggregate face amount of the 54 notes was $23,000, the amount of money actually received by the original mortgagors, Charles- and Margaret Cecil, from the Citizens State Bank was $21,750, the remaining $1,250 being retained by the Bank as a commission. No charge was made that the appellee noteholders had any connection whatsoever with the negotiations for or the consummation of the loan. Trial court counsel for appellees failed to file a reply to the answer. The cause was referred to a master in chancery without objection, and was tried and heard before him, neither side putting in any evidence on the question of usury or raising the issue as to the effect of the failure to file a reply. (Watt v. Cecily 368 Ill. 510.) On appeal, the Supreme Court in an opinion by Mr. Justice Jorros held that since no reply had been filed to the answer, the allegations of fact in support of the affirmative defense of usury stood admitted, even though the cause had been referred to and heard before the master without objection — since no evidence was introduced by any of the parties respecting the affirmative defense of usury.

Consequently, due solely to the failure of counsel for appellees to file a formal reply to appellant’s answer, appellees, although innocent investors in the many small mortgage units involved in the cause, suffered a loss of some $8,550, which figure consists of the usurious commission of $1,250 retained by the bank, and approximately $7,300 of interest paid by appellant and her predecessors, which has been deducted from the principal indebtedness pursuant to the mandate of the Supreme Court. Appellant and her husband, Hugh Booney, although they were subsequent purchasers who did not take part in the floating of the original loan, gained that amount without having had to introduce an iota of evidence in support thereof.

The appellees contend that this appeal should be dismissed for failure of appellant to serve a copy of the notice of appeal on certain parties whose interests will be adversely affected by a reversal or modification of the decree, and for failure to serve Kildare-Schubert Apartments Corporation with the amended praecipe for record, and for failure to file a proper abstract of record. One of the points urged is that appellant failed to serve a copy of the notice of appeal on co-appellant, B-. J. Hildebrandt, despite the fact that she seeks a substantial judgment against him in this court. It appears that R. J. Hildebrandt is a coplaintiff; that he was a party appellee on the former appeal; and that the Supreme Court assessed costs against him, which appellant collected after threatening execution levy against his coal business. In her second assignment of error, appellant asserts the chancellor should have entered judgment against Hildebrandt and the other plaintiffs for the difference between the reduced indebtedness and the amount bid at the sale; that a similar judgment should be rendered against Hildebrandt and his coplaintiffs for the total amount of the income of the property received by the receiver and expended pursuant to order of court. In the decree presented by appellant to the chancellor on her motion to vacate the decree from which she now appeals, it is provided that “Hugh Rooney and Lucy Rooney have and receive from the plaintiffs, R. J. Watt, Mary Steinback, Ferdinand Jahn, Olga Peick and R. J. Hildebrandt, the sum of . . . $5,135.34, and that • execution issue therefor.” It appears that if the second decree be reversed or modified as appellant requests, R. J. Hildebrandt will be adversely affected. Rule 34 of the Supreme Court provides:

“(1) A copy of the notice by which the appeal is perfected shall be served upon each party whether appellee or co-party, who would be adversely affected by any reversal or modification of the order, judgment or decree, and upon any other person or officer entitled by law to a notice of appeal, within ten days after said notice of appeal is filed in the lower court. ’ ’ Neither the notice of appeal nor any of the subsequent appeal papers were served upon Hildebrandt or his attorney.

In answer to appellees contention that the appeal be dismissed for failure to serve notice of appeal, the appellant calls attention to the fact that all of the appellees (except one who is not urging the point) have filed their brief herein upon the merits, and it is contended by appellant that they have, therefore, waived the failure to serve notice of appeal. It is further answered that the defendant, Hugh Rooney, the husband of appellant, does not seem to have filed an answer in the case, to the amended and supplemental bill on which the decree was based, and must have been defaulted to put the case at issue, and as the decree of January 26,1937, recites that the case came on to be heard upon the amended and supplemental bill and the answer of Lucy Rooney and the exceptions filed by Lucy Rooney, it would not appear that these appellees can have the appeal dismissed because Lucy Rooney did not file service of notice of appeal upon her husband. Appellant urges that the appeal should not be dismissed by reason of anything urged in appellee’s second point of their brief.

There was also the suggestion made that, no notice of the amended praecipe for record was served on ICildare-Schubert Apartments Corporation. There does not seem to be much merit in the contention; as a matter of fact, it was served upon Bennett & Colbach, whom the records show were attorneys for the said corporation, and the said corporation is now before this court as a party to the case by the additional abstract filed by its attorneys and by the brief filed on behalf of said corporation by its attorneys. From the facts appearing in the record, there does not seem to be any merit in appellee’s contention that failure to serve notice of appeal as well as praecipe for record is fatal and that the appeal should be dismissed as to appellees.

It further appears from appellees’ brief that Kildare-Schubert Apartments Corporation, purchaser at the sale, was not an innocent, good-faith, third party purchaser, without notice, and consequently it is immaterial whether this court treats the corporation as an entity, separate and distinct from the unpaid note-holders and their attorneys, who constitute the shareholders, the officers and the directors of the corporation, or whether the corporate veil be lifted and the unpaid noteholders treated as the actual purchasers at the sale. Kildare-Schubert Apartments Corporation, from its inception, had such a connection with the proceedings as to occupy the same position as a party. Appellant’s position is that the said corporation “should be treated as an entity or person not a party to the cause, separate and apart from the said complainant and defendant noteholders and their attorneys.” The appellees state that the literal observance of the distinction between the corporate entity and its shareholders, as urged by appellant, has always been surrounded by our Supreme Court with limitations and exceptions. The true position of the Supreme Court is announced in Donovan v. Purtell, 216 Ill. 629, where the court said:

6‘ The fiction by which an ideal legal entity is attributed to a duly formed incorporated company, existing separate and apart from the individuals composing it, is of such general utility and application, as frequently to induce the belief that it must be universal, and be, in all cases, adhered to, although the greatest frauds may thereby be perpetrated under the fiction as a shield, but modern cases sustained by the best text writers confine the fiction to the purposes for which it was adopted — convenience in the transaction of business and in suing and being sued in its corporate name, and the continuance of its rights and liabilities, unaffected by changes in its corporate members; and have repudiated it in all cases where it has been insisted on as a protection to fraud or any other illegal transactions.” Kildare-Schubert Apartments Corporation, as is true of all purchasers at sales, became a party to the proceeding when it bid the property in. It became subject to the jurisdiction of the court to the extent that its bid could have been enforced in a summary proceeding. (Fienhold v. Babcock, 275 Ill. 282.) In Chandler v. Morey, 195 Ill. 596, the court in describing the position of a bidder at a judicial sale, said:

“ ‘By bidding he subjects himself to the jurisdiction of the. Court, and, in effect, becomes a party to the proceeding in which the sale is made, and may be compelled to complete his purchase by the process of the Court.’ ” Appellees admit that the corporation was not an actual party to the cause at the time of the sale, and that it could not subsequently be made a party nunc pro tunc as of the date of the sale so as to affect any of the vested rights and obligations of the parties. Its position as purchaser at the sale is to be determined on the basis of its status at that time, and the fact that it subsequently became an actual party to the proceeding has no bearing on that question. One of the cases called to our attention is that of Ure v. Ure, 223 Ill. 454, in which case the court said:

“Innocent third parties have a right to rely upon a judgment or decree of a court having jurisdiction to pronounce it. They are not required to look beyond the question of jurisdiction, and if the decree is one which the court has jurisdiction to render both as to the subject matter and the parties, innocent purchasers acting in good faith will be protected, notwithstanding the subsequent reversal of the decree or judgment.” That the opinion in the Ure case is still adhered to appears from the opinion in Arnold v. Arnold, 325 Ill. 500, in which later case the court repeated and emphasized the fact that third party purchasers, in order to take free and clear of defects in the proceedings, and in order to acquire rights which will be unaffected by a subsequent reversal or modification of the decree or judgment, pursuant to which the sale is had, must be innocent purchasers who buy in good faith and in reliance alone upon the decree.

It appears that a hearing was had for the purpose of determining whether or not the corporation, at the time of the sale, in fact occupied the position of a stranger to the proceeding — an innocent, good-faith purchaser without notice, as it were — and from the evidence adduced at that hearing, the chancellor quite properly concluded and found that the corporation was not a stranger to. the proceeding and did not occupy the position of an innocent, good-faith purchaser, without notice or knowledge. The hearing was not for the purpose of changing the status of the corporation as appellant seems to believe but was rather for the purpose of determining what that status was. Under all the circumstances of this case, the corporation was as fully bound by the subsequent reversal and modification of the decree as the parties themselves. It cannot, under any circumstances, occupy the position of an innocent purchaser relying in good faith upon the decree merely, without notice or knowledge of defects in the proceedings itself. As we understand the purpose of this incorporation, it was to enable the thirty-two unpaid noteholders to unify their scattered rights so as to act as a unit in the protection of their interests in the purchase and subsequent reorganization of the real estate. The individual unpaid noteholders, holding as they did, unit notes of ás small a denomination as $100, were required to form some character of unit organization in order to pool their meager individual interests, so as to make a unit bid at the sale. The usual practice in this regard is either to form a bondholder’s committee or a corporation, but it cannot be said that a corporation so organized occupies the position of an innocent, good-faith purchaser without notice or knowledge. When we further consider that the corporation, in making good its bid, used the unpaid mortgage notes which the noteholders had assigned to it; that such use of the unpaid notes by the corporation was contemplated by and expressly authorized in the decree of foreclosure; and that no other consideration was ever paid; it would, therefore, appear that the corporation, which sought to use the very subject matter of the action in the payment of its bid at the- judicial sale, cannot occupy the position of an innocent, good-faith purchaser without notice. We are of the opinion that the chancellor was correct in refusing to hold as urged by appellant that the corporation was in the same position as an innocent, good-faith, third party purchaser for value, without notice. Appellant’s counsel quotes in full section 32 (a) of the Judgments, Decrees and Executions Act (Ill. Rev. Stat. 1937, ch. 77, sec. 35 (a) [Jones Ill. Stats. Ann. 107.185]), but it would appear that the term “purchaser” employed in that section has uniformly been interpreted to mean an innocent, goodfaith purchaser, without notice or knowledge.

The further suggestion is offered by appellees that where a purchaser at a foreclosure sale is either an unpaid noteholder or a person or corporation so connected with a cause as virtually to be in the position of a noteholding party to the proceeding, or to occupy a position other than that of an innocent purchaser in good faith without notice, such purchaser is bound by all proceedings in the case; and that, when on appeal the decree of foreclosure, pursuant to which the sale is had, is reversed because of the inclusion of certain usurious items in the mortgage debt and the case is remanded to enter a decree in accordance with the view expressed in the opinion of the reviewing court, the chancellor may vacate the master’s sale and the order approving the sale, and direct a new sale to be held. Appellant’s position appears to be that once the chancellor has approved a sale, he no longer has any discretion or right to vacate that sale. None of the authorities relied upon in her brief support her position ; in fact the cases indicate the contrary, and are to the effect that the chancellor does have such discretion, but that the party moving to set aside the sale must present a proper basis for invoking the discretion.

The action of the chancellor — as suggested in appellee’s brief — fully complied with the mandate of the Supreme Court. The mandate was that “For error in denying the claim as to usury, the decree is reversed and the cause is remanded to the Superior Court, with directions to enter a decree in conformity with the views herein expressed.” It will be noted from the mandate that the decree of the superior court was reversed and not merely modified or affirmed in part. The superior court was directed to enter an entirely new decree, and the only limit on its powers was that the new decree should be in conformity with the views expressed in the opinion of the Supreme Court. It is apparent from the expression of the mandate that the nisi prius court was to conform its actions to the directions given in the mandate and to enter a decree in accordance with the views expressed in the opinion. (People v. DeYoung, 298 Ill. 380; Roggenbuck v. Breuhaus, 330 Ill. 294.) An order approving a sale, as in the case at bar, where the purchaser is not in the position of an innocent good-faith purchaser for value without notice, and where no distribution has been made and the certificate of sale has not been delivered, is not a final appealable order within the meaning of the Civil Practice Act. Such a sale and the order approving the same has a direct relation to the foreclosure decree itself, and while the reversal of the decree of foreclosure does not ipso facto vacate the sale, it has such a direct and immediate connection therewith that the chancellor, upon reversal or modification of the decree may quite properly order the sale vacated. We believe that the chancellor was well within the principles of the decided cases.

It is further contended by appellees that upon reversal of the decree the parties are to be restored to their original rights so far as it can be done without prejudice to third persons, and that the court should consider the equities of both parties in determining the question of whether or not the foreclosure sale should be set aside. It is suggested that applying these principles to the case at bar, it is clear that the action of the chancellor in setting aside the mortgage sale constitutes a reasonable exercise on his part of his judicial discretion. The amount bid ($17,000) at the mortgage sale was predicated upon the unpaid notes, and, as suggested by appellees, the bid was not and was never intended to be, and none of the parties, including appellant, ever contemplated that it was to be a cash bid. Appellees submit that it would have been grossly unfair, unjust and inequitable for the chancellor to have refused to set aside the sale upon a bid made under the circumstances and by the particular bidder in this cause after the mortgage debt, upon which reliance was made, was so substantially reduced by the Supreme Court. Counsel for the parties have cited a number of cases, the principles of which we have examined and, applying the theories of these cases, we are satisfied that the chancellor acted properly and in conformity with the expressions of the Supreme Court in reversing the first decree.

In entering the second decree pursuant to the mandate of the Supreme Court, we are of the opinion that the chancellor correctly computed the sums to be deducted from the indebtedness found to be due in the first decree. Appellant repeatedly mentions the figure of $12,313 as the amount which the chancellor should have found to be due after deducting all principal, interest and commission payments from the original indebtedness. Since appellant makes no attempt to break down the lump sum figure which she uses, and since that figure cannot be analyzed on the basis of the defective abstract filed by her, we must take as true the computation of appellees to demonstrate that the indebtedness fixed in the decree now before this court is correctly computed. Appellees’ computation is as follows:

Original debt ...........................$23,000.00
Deductions:
Unlawful commission retained by
Citizens State Bank ........$1,250.00
Principal paid on notes 1 to 10 inclusive ................... 1,000.00
Interest on said notes for 3 years at 6% ..................... 180.00
Principal paid on notes 1 to 20.. 1,000.00
Interest paid on said notes for 4 years at 6% ................ 240.00
Interest on $21,000 for 5 years at 6% ........................ 6,300.00
Interest at 5% on $20,400 (per extension agreement) for a period of 6 months.......... 510.00
Paid on account of interest...... 77.00
Total of Deductions ............. 10,557.00
Balance of principal due ................$12,443.00

At least one error in the figure of $12,313 urged by appellant consists of the fact that she included in her computation a $30 payment alleged to have been made to the cross plaintiff, John C. Taylor, but which both decrees find was never received by him. There is to be added to the principal indebtedness due, the total of costs, expenses and attorneys’ fees paid by appellees, aggregating $1,735.05, and the master’s costs of $245.65, making a total indebtedness due appellees of $14,423.70, which is the amount of the indebtedness fixed in the decree from which appellant appeals. The sum of $14,423.70 does not include the sum which will be due the master for commission and other expenses incident to a sale.

Having passed upon the matters of importance in this appeal, we are of the opinion that as to the merits of the cause, the chancellor fully complied with the mandate of the Supreme Court in entering the decree of July 6,1938, and that the decree should be affirmed. Having reached this conclusion, the order of the court will be that the decree entered on the date last mentioned is affirmed.

Decree affirmed.

Burke, P. J., and Kilby, J., concur.


source: Caselaw Access Project

license: Public Domain

text:
    Mabel Elliott, Appellant, v. Congress Hotel, Inc., Appellee.
    Gen. No. 41,971.

      Heard in the third division of this court for the first district at the October term, 1941.
    Opinion filed April 8, 1942.
    Rehearing denied May 7, 1942.
    J. S. Pressman, of Chicago, for appellant.
    George C. Bliss, of Chicago, for appellee.
   Mr. Justice Hebel

delivered the opinion of the court.

This is an action at law in tort instituted by Mabel Elliott against Congress Hotel, Inc., to recover damages for personal injuries sustained by her while a guest in a hotel conducted by the defendant in the city of Chicago at about 2:30 p.m. on the 30th day of December, 1936. The case was tried before a court and jury resulting in a verdict of not guilty in favor of defendant. The' court overruled the plaintiff’s motion for a new trial and entered judgment on the verdict, from which judgment this appeal is taken.

The plaintiff at the time of the accident was a visiting professor of sociology at the University of Minnesota. Prior to that time she was a professor of sociology at the University of Kansas and had taught at the latter school since 1929. From her statement of facts, it appears that she was the author of numerous books and articles in her field of sociology. At the time of the accident she was 38 years old and was engaged in writing a text book on public welfare. Her previous condition' of health was excellent, with the exception of a minor sinus ailment which did not interfere with her work.

On December 30, 1936, Miss Elliott was attending the American Sociological Society Editorial Convention in Chicago and was a guest at the Congress Hotel. On that day she was dining in the “Pine Room” of the hotel with a Miss Edna Walther. She entered the room shortly after 1:00 o’clock in the afternoon and had been seated at a table for approximately an hour. While so seated, her room key fell to the floor and she stooped to pick it up. She arose from her chair and stooped to pick up the key, and, at that time, the waitress, employed by the defendant, without warning to the plaintiff, removed the chair, and as the plaintiff went to sit back on the chair she fell and struck her head against the juncture of a mirrored wall and a door jutting.

It appears that she was stunned and suffered acute pain in her head. She was assisted to her room by "her dining companion, Miss Walther, and a bell boy. The hotel doctor was called and plaintiff was put to bed and an ice bag applied to her head. Plaintiff testified that everything appeared black to her; and later that evening the doctor ordered a nurse to remain with her throughout the night and the following day. The nurse kept ice bags on her head during that night and on the following morning. Plaintiff testified that her head “hurt terribly” and that she had the “sensation of ants crawling over her brain.” The following morning her forehead was discolored from bleeding under the skin. She was very dizzy and remained in bed all morning with an ice bag on her head. She wanted to go to her home in Minneapolis and requested permission of the doctor to leave. She was given his permission and at the same time the doctor and the nurse demanded payment of their bills, which she refused.

The morning following the accident, an adjuster called upon her and after asking two friends of plaintiff to leave the room, questioned her concerning the accident, but did not discuss settlement. That afternoon the adjuster returned and advised plaintiff that the doctor said she would be alright and that he could not pay the doctor’s bill or the nurse’s bill if she did not sign “these papers” before she left the city. Plaintiff testified that he told her specifically that it would be impossible for him to pay anything after plaintiff “left the city”; that he told her “if you will sign this paper, I will pay the doctor’s and nurses bill and give you $25.00 to cover your hotel expenses”; and that he did not read the paper to her, she did not read it herself, nor did he mention what the paper was, and when she signed it, the adjuster had it in his hands as she signed it.

Plaintiff was then assisted to a waiting car by Misá Murray and the nurse and driven to Miss Murray’s home, where she was immediately put to bed. Ice bags were kept on her head and about 3:00 o ’clock the next afternoon she was taken to the railroad station, assisted onto the train, and the conductor told to keep her ice bag filled. Her destination was Minneapolis, but because of her condition changed her destination to Sparta (half way to Minneapolis) where she had some friends. At Sparta she proceeded to the home of her friends and was put to bed and still required ice bags to her head. After several days she went by train to Minneapolis. The next day after arriving in Minneapolis, she called a Dr. Sweetser, which was on January 4, 1937, five days after her mishap. She further testified that the pain in her head at that time was terrific and that she saw Dr. Sweetser 45 or 50 times.

She went back to the University in January of 1937, but only carried one third of her normal load,. and further testified that she did not get back to the University of Kansas until February 1938, and found that teaching still exhausted her and she continued to have severe headaches. She began to improve in the Fall of 1938, and at the time of the trial she was much improved, although more nervous than prior to the accident.

Constance Haymaker testified that she was an associate professor of Economics at Ripon College; that at the time of the accident she was in Chicago attending the Convention of the American Economics Society; that she was called to the plaintiff’s hotel on the date of the accident and got there some time after 4:00 o’clock and found the plaintiff very confused, almost incoherent. At 7:30 that evening, she testified, the plaintiff was definitely hysterical and very wobbly. Ice bags were applied to her head while she was there that evening. Edna Walther, called as a witness on behalf of plaintiff, testified that she was a school teacher of an intermediate school in Chicago Heights, Illinois, for 12 years; that she lunched with the plaintiff at the time of the accident; that the plaintiff dropped her key to the floor and as she stooped down to pick it up, the waitress stepped up and removed the chair; that the plaintiff put her hand back to touch the chair, but the chair not being there, lost her balance and fell back and her head struck the wall; and that the plaintiff was stunned and apparently senseless for a moment. The witness assisted plaintiff to her room. According to her testimony, the plaintiff at that time was nervous, dazed and incoherent, and incoherent in her conversation.

Marguerite Murray, a child welfare worker, employed by the Children’s Aid Society of Racine, Wisconsin, testified that she saw the plaintiff December 30, 1936. At that time she was in bed hysterical or semihysterical and she was groaning about pains in her head. The witness testified that “she would start one sentence and not complete that, then she would start talking about something else and she was highly excited and incoherent.” She further testified that the next morning the doctor came in with another man and they had some personal business to discuss with plaintiff and asked Miss Raymaker and this witness to leave the room, which they did. The witness returned to the hotel after lunch, at which time the plaintiff asked the witness to check out for her and was given a check which she took to the hotel desk and paid her bill. There were a few dollars left out of the check. The bill was between sixteen and twenty dollars. She then helped plaintiff down to the car, and plaintiff was immediately put to bed upon arrival at the witness’ home and an ice bag applied to her head. The next afternoon, plaintiff was assisted to the train, and as far as the witness knew she went to Minneapolis'.

Dr. Horatio Sweetser, Jr., a licensed physician practicing medicine and surgery in the State of Minnesota since 1924, testified that he examined plaintiff on January 4, 1937. He found a slight discoloration of the scalp over the right temple, indicating a fading subcutaneous hemorrhage; that plaintiff was quite nervous, quite fidgity, not well controlled; that there were three positive findings — discoloration in her scalp, increased knee jerks, general nervousness, almost semi-hysterical. He further testified “my impression was that a few days before my examination on January 4, 1937, she had had a concussion of the brain”; that she was disabled from January 4, 1937 and on for a considerable time. On January 21, 1937 she was still very nervous and upset, and that she was disabled up until February 1, 1937. He discontinued seeing her on June 7, 1937 when he sent her to Dr. Albert M. Snell of the Mayo Clinic. During the period between January 4, 1937 and June 7, 1937, he treated her for various disabilities, headache, low-grade fever, indigestion, abdominal distress and hives.

Dr. Snell testified that he had been a practicing physician and surgeon at Mayo Clinic for over 16 years; that he first saw plaintiff professionally on June 5, 1937 at the clinic; that he made the usual tests and on June 17, 1937 his diagnosis was exhaustion syndrome with nervous and mental instability or neurosis. As to the type of neurosis, the doctor testified that there was a background of injury and a background of infection and one had no positive way of determining whether either one alone or both acting together were responsible for the patient’s condition. He testified “the fact is she said she had been well up to the time of the injury and thereafter never regained her health.”

Dr. Victor E. Gronda, a specialist in nervous and mental diseases, testified that on December 9, 1940, shortly before the trial he made a neurological examination of plaintiff and diagnosed her condition at that time as a traumatic neurosis, which is any nervous condition that develops after some individual sustains a trauma; and that exhaustion syndrome was just another medical term for neurosis.

Dr. John W. Foster testified for the defendant that he saw the plaintiff about an hour after the accident and prescribed ice bags to the side of her head and aspirin for her headache. He did not see any bruises on her head. He made five or six calls in all and rendered her a bill for $15 and advised her that it was all right to leave for home. He saw nothing in her conversation that showed any disorientation at all. He further testified that she complained of a lot of pain and was excited. He called Miss Brown, the nurse, to attend her throughout the night and the next day. He took no X-rays and told her not to bother about it until she got home.

Miss Brown, the nurse, a witness on defendant’s behalf, testified that at the time of the trial she was a radio broadcaster; that when the witness came to see the plaintiff the night of the injury, the plaintiff was rational, and that the next morning her mental condition was rational and her conversation was coherent; that a representative of the insurance company visited the plaintiff in the morning after the injury and in a conversation stated that $75 was a little too much, but would talk it over with someone and see what he could do for the plaintiff; that the representative came back later after plaintiff had dressed herself and she affixed her signature as a witness to defendant’s exhibits 2 and 3; that the plaintiff read these documents, and that she was quite rational at the time. She was paid $10 for her services by Dr. Foster.

It appears on the cross-examination that she did not discuss this case until two years later when a representative of the insurance company came to see her. That at this conversation, she referred to a chart that she had made of the plaintiff’s ease; that she forgot about the plaintiff during the two-year period; that the record she made contained the various conversations she had with the plaintiff; that she destroyed the records and did not turn them over to the insurance company.

The adjuster, Jerry B. Howard, testified that he saw plaintiff on December 31, 1936; that when interviewed concerning the accident, she appeared perfectly normal as far as her mental condition was concerned; that she read the memorandum he made of her replies to his questions and refused to sign it; that she wanted $75 and her doctor’s and nurse’s bills and wanted to see the doctor first to see if she could go home that day. That he came back in the forepart of the afternoon ; that she decided to take $25 for herself and an additional $25 for the doctor and nurse; that he handed her the release and took it for granted she was reading it; and that she signed the releases, after he called the nurse over to act as a witness to plaintiff’s . signature. On cross-examination he testified that he always carried releases and drafts and was in a position to settle a case right on the spot immediately; that he knew at that time that Miss Brown was the nurse for plaintiff; and that he did not know the extent of her injuries, and at no time did he inquire as to the extent of her injuries from any one.

The plaintiff contends that the verdict of the jury in the instant case is contrary to the weight of the evidence; and that there is no evidence whatsoever to sustain the verdict or the judgment with respect to the negligence issue of the case, and that as to the release issue the evidence to say the least was highly conflicting and close, thereby making it essential for the court' to use extreme care in instructing the jury. However, when we come to consider the issue that was before the court and jury as to the release that was signed by plaintiff, the position of plaintiff concedes that the evidence was “highly conflicting and close.” Plaintiff points to the testimony of Miss Elliott and Miss Raymaker as showing that plaintiff was not in possession of her full faculties at the time of signing the release, and that the adjuster took advantage of her physical condition and anxiety to return to Minneapolis. Plaintiff further says that “ ... we were not so presumptions as to say that the weight of the evidence of the release was manifestly in favor of the plaintiff. It is true the defendant introduced three witnesses, Dr. John W. Foster, Miss Kathryn Brown and Jerry B. Howard who all testified that the plaintiff was perfectly normal as far as her mental condition was concerned and according to the witnesses, Miss Brown and Mr. Howard, she read the releases before she signed them and knew perfectly well what she was doing.” It is contended that, therefore, it became mandatory upon the court to instruct the jury correctly and not to confuse them and give them an instruction which would in no way assist them in arriving at a proper verdict. In support of plaintiff’s theory, the case of Wallace v. Parnell, 306 Ill. App. 310, is quoted, where the court said:

“Where the evidence is conflicting and the case is a close one on the facts, great care should be taken in properly instructing the jury, and the failure so to do constitutes reversible error.”

The result of this suggestion of plaintiff is that this court must consider whether the trial court committed reversible error in giving an alleged prejudicial instruction to the jury at the request of defendant. Plaintiff contends that instruction No. 19, tendered by defendant and given by the court over plaintiff’s objection, introduces a theory of “mere accident” when there is no basis in the evidence for such a theory. This instruction is as follows:

“The court instructs you that if you believe from the evidence under the instructions of the Court that the injury to the plaintiff was a result of a ‘mere accident’ which occurred without negligence on the part of the defendant as charged in the complaint, you should find the defendant not guilty.” It is contended that the vice of this instruction is in the fact that it injects the possibility that the injury resulted from “mere accident,” without negligence, something entirely foreign to the record. In reply, the defendant points out that it is not shown in the record and abstract that this instruction was given at the request of defendant, and urges that since it is nowhere shown in the record or abstract who requested any of the instructions, this court must presume that plaintiff requested the giving of the instruction complained of unless she preserves a record to the contrary. Without waiving the point, the defendant goes on to discuss the instruction in question, contending that the trial judge committed no error in giving it, regardless of who requested it. The cases cited by plaintiff are contended to be either not in point or distinguishable. In Peters v. Madigan, 262 Ill. App. 417, there was a right angle collision between automobiles, and the court held that there was no evidence in the record which tended to show the collision was the result of mere accident and that there must be evidence upon which to base the instruction. While the instruction was criticized, still the court did not hold that the giving of such an instruction amounted to reversible error, but reversed and remanded the case, holding that another instruction amounted to reversible error. Defendant goes on to criticize Streeter v. Humrichouse, 357 Ill. 234, and quotes from the opinion as follows;

“Turning to the instructions, the fifteenth instruction told the jury that if the death of the decedent was caused through ‘accident purely’ they should find the defendant not guilty. There was no evidence that McGann was injured through accident, alone, not coupled with negligence and it was error to give this instruction.” It is pointed out that this case was reversed and remanded on other grounds, and further that the instruction given in that case does not appear to be the same as the instruction in the instant case, which told the jury that if the injury to plaintiff was the result of a.mere accident which occurred “without negligence on the part of the defendant as charged in the complaint,” they should find the defendant not guilty. In the instant case there are reasonable inferences from the undisputed facts surrounding the occurrence, that plaintiff’s fall was due to a mere accident and without negligence on the part of defendant (as denied in defendant’s answer). In Mississippi Lime & Material Co. v. Smith, 282 Ill. App. 361, cited by plaintiff, the court found that the injuries to deceased were clearly the result of negligence of the defendant, and the instruction referred to by plaintiff is not set forth in the opinion. Therefore, the áuthority would not seem to apply to the facts as they appear in this record. It is contended by defendant that the trial court committed no error in giving this instruction, and urged that under the peculiar facts of this case, it would have been reversible error for the court to have refused to give it. In City of Chicago v. Lavelle, 83 Ill. 482, where the plaintiff sought to recover damages for an injury claimed to have resulted from a hole in the sidewalk where there was evidence that the walk was in good condition, the refusal of the court to instruct the jury, that, if they believed from the evidence that the alleged injury was accidental, and that neither the plaintiff nor defendant was negligent, they should find for the defendant, was held error. It was there said in reference to the instruction that:

“If it be true that the city was free from negligence, as the evidence introduced on the part of the defense tended to establish, and if it was also true that the injury was accidental, no argument is needed to show that the city could not be held responsible for the damages Appellee had received. We perceive no objection to the instruction. The principle therein announced is correct, and it should have been given.” To the same effect is Brown v. Richardson, 177 Ill. App. 488. In Bentkowski v. Bryan, 299 Ill. App. 217, it appears that an instruction was given almost identical to that given in the instant case. There was a verdict in favor of defendant, and it was contended that the giving of the instruction was reversible error. The court held that as there was evidence tending to show that defendants were not guilty of any negligence, it was not error to give this instruction, saying :

“It is a well settled rule of law that each side in any litigation is entitled to have the jury instructed relative to the theory of the law upon which the case is tried.” Then again, in Oliver v. Kelley, 300 Ill. App. 487, where the court refused to give the following instruction :

“If you believe from the evidence that the alleged injury to the said Mary Ellen Oliver was accidental and that neither the plaintiff nor the defendant was negligent, you should find the defendant, Thomas 0. Kelly, not guilty. ’ ’ The Appellate Court held that the refusal to give this instruction was error in view of the close character of the case upon the facts. In the instant case, there does appear to be a reasonable inference from all the facts that the fall of plaintiff was not due to any negligent or careless act on the part of the defendant, and there was no presumption of negligence from the mere happening of the occurrence. (Barnes v. Danville Street Railway & Light Co., 235 Ill. 566.) One of the issues submitted to the jury was whether or not defendant was guilty of negligence and it would appear as we consider the facts, that the court committed no error in giving instruction No. 19 to the jury.

As we have already indicated, there were two separate and distinct issues submitted to the jury; the first involving whether or not defendant was guilty of any negligence, and the second the affirmative defense of settlement and release of plaintiff’s claim. Neither had any relation to the other. It appears that the trial court reserved its ruling upon the motion for a directed verdict at the close of all the evidence. The evidence disclosed that plaintiff accepted the draft and cashed same, which draft constituted a release of all claims, and which was a ratification of the settlement entered into, regardless of whether or not plaintiff read the releases she signed. From all the facts appearing in evidence, we are of the opinion that the trial court was fully justified in entering judgment on the verdict. From the record it does not appear that defendant committed any fraud which impelled plaintiff to sign the releases. On the contrary, upon examination of the releases, it appears in words of large type on the face of these releases at the top “Release of all Claims” and at the bottom “Caution, Read Before Signing.” These words would readily catch the eye of the person signing such releases and should have given sufficient notice of the character of the paper which she was signing. No evidence was introduced to indicate that the adjuster told plaintiff that the paper he asked her to sign was not a release. This is borne out further by the fact that the adjuster gave her a draft, which by its language on the reverse side, was notice to plaintiff that the endorsement and cashing of the draft constituted a complete and full release of her claim.

We are of the opinion that the verdict of the jury was not contrary to the weight of the evidence, and under the facts as submitted to this court, we are of the opinion that the court did not err in denying plaintiff’s motion for new trial and was justified in entering judgment on the verdict.

Judgment affirmed.

Burke, P. J., and Kiley, J., concur.


author: Mr. Justice Kiley

text:
    Clemens Kortum and Elsbeth Kortum, Appellees, v. Albertina Ludwig et al., Defendants, and Fred Landl, Supplemental Defendant. Appeal of Albertina Ludwig et al., Appellants.
    Gen. No. 41,619.

      Heard in the third division of .this court for the first district at the February term, 1941.
    Opinion filed April 8, 1942.
    Rehearing denied May 7, 1942.
    Arthur J. Goldberg and Robert J. Millman, both of Chicago, for appellants; Arthur J. Goldberg and Leonard G. Nierman, both of Chicago, of counsel.
    John E. Timm, of Chicago, for appellees.
   Rehearing Opinion.

Mr. Justice Kiley

delivered the opinion of the court.

This is an appeal from a decree of the circuit court of Cook county which rescinded.and set aside contracts for the sale of defendants’ bakery business and set aside a judgment by confession in favor of defendants on plaintiffs’ note given under the contracts.

The essential question here is whether alleged misrepresentations made by defendants as to the earnings of their business are sufficient to avoid the sale. The misrepresentations to be adequate for that purpose must be untrue statements of material fact, knowingly made for the purpose of inducing the purchase of the business and relied upon by the plaintiffs. Bennett v. Hodge, 374 Ill. 326.

The record indicates that plaintiffs decided to buy defendants’ bakery, after considering others, and that negotiations for its purchase commenced in June 1938 and ended with a sale on September 6,1938. The purchase price was $4,500 and plaintiffs paid part in cash and the balance in notes secured by a mortgage, and payable at $200 per month. Plaintiff also purchased merchandise and materials on hand.

The testimony in support of plaintiffs’ case is that defendants stated that their weekly income from the business during the winter of 1937-1938 ranged between $600 and $900 and in the summer season was never below $500 and one week was $625. The defense testimony is that the statement of weekly income of $600 to $900 referred to that of a combined market and bakery conducted by defendants three years before the instant sale; and further, that the statements made by the defendants set the average weekly income from the bakery business between $500 and $550 and that such statements were true. From entries made by Mrs. Ludwig in a book, and not contradicted in the record, we have computed the average weekly income for the period from September 1937 to September 1938. The average is $526.95 and includes a December weekly income of approximately $700 and an April weekly income of $625. Plaintiffs say that we should determine this issue, not by averaging but by considering separately the alleged statements of winter and summer business. Undisputed expert testimony shows that the average difference between the seasonal incomes in bakery business is about 10 per cent or 15 per cent. Plaintiffs have been in the business for 25 years and should know this fact and, if they relied upon statements of seasonal differences of 20 per cent to 80 per cent, they acted imprudently for, had they been prudent, they would have been placed upon their guard when the statements were made and have searched for the truth.

The evidence shows that plaintiffs observed the business in operation and made investigations of the neighborhood several times before the sale and the inference is, in view of their business experience, that they relied upon these observations and investigations rather than upon the indefinite alleged misrepresentations. Plaintiffs were required to take reasonable precautions to protect themselves in this transaction. 23 Am. Juris. 962. Their experience placed them on an equal basis with defendants in the deal; they admit rejecting an opportunity to inspect the books; and they did not reduce to definite information the general statements of defendants who wanted to sell their business. All of these considerations lead to the conclusion that if plaintiffs did rely upon the alleged misrepresentations, they should not have done so and took an unreasonable risk.

The business fell off after the sale and plaintiffs say that the record of the income shows that defendants’ statements were false. Defendants contend that poor management and a reduction in butter and shortening in biscuits, plus competition of a new bakery in the vicinity, contributed to reduce the business. If plaintiffs relied solely upon the alleged misrepresentations of income and took no precautions to protect themselves in the transaction, there may be substance to defendants’ theory of poor management. In any event we believe that the record of income following the sale is not, under the circumstances, an appropriate criterion by which to determine that the alleged statements were misrepresentations of fact of the kind required by the rule announced in the Bennett case hereinbefore cited. Several weeks after the sale Schlossers opened a branch bakery a block away from the business involved here and a reasonable inference is that a reduction in business was bound to follow.

The undisputed expert testimony further shows that a bakery is valued at $1,000 for each $100 of weekly income. Applying this formula to the circumstances here, it would appear that the purchase price for the business was fair.

We have read Vojtek v. Horan, 243 Ill. App. 362, upon which plaintiffs mainly depend. That case is not helpful to a determination of the case at bar.

For the reasons herein given the decree of the circuit court is reversed and the cause is remanded with directions to dismiss the complaint for want of equity at plaintiffs’ costs.

Decree reversed and cause remanded with directions.

Burke, P. J., and Hebel, J., concur.


author: Mr. Presiding Justice Huffman

text:
    John Knell et al., Appellees, v. Village of Rockdale, Appellant.
    Gen. No. 9,767.
    Heard in this court at the February term, 1942.
    Opinion filed April 8, 1942.
    Rehearing denied May 5, 1942.

      Ludwig V. Kuhar, of Joliet, for appellant.
    Leonard 0. Mead, of Geneva, and Ralph Murphy, of Joliet, for appellees; Howard B. Bryant and Tolman & Megan, all of Chicago, and Barr & Barr, of Joliet, of counsel.
   Mr. Presiding Justice Huffman

delivered the opinion of the court.

Appellees are the legal holders of special assessment bonds issued by appellant. Appellant never having paid any money on these bonds since the date of their issue in 1926, appellees instituted this suit for an accounting to determine what money had been collected for the payment thereof and diverted to other purposes, alleging that the appellant, although it had collected the money due thereon, had misapplied such funds, and had thereby become indebted and liable to appellees for the sums of money so collected, and so misappropriated and misapplied, or otherwise withheld. Appellees ask that an accounting be taken of the collections upon the several special assessment projects out of which the bonds in question arose, and that appellant be adjudged and decreed to pay to appellees what should appear from such an accounting to be due them upon their bonds.

The accounting was made by an auditor. It is full and in detail. The facts are not in dispute. The only witness in the case was the auditor who made the audit. The results thereof are not questioned. Four improvement projects were involved in this proceeding. To attempt to go into detail with respect to the same is impractical and unnecessary as the correctness of the audit is not challenged. The master’s report and the decree are in conformity with the auditor’s testimony and report.

The trial court determined the sums due the respective appellees and rendered a decree granting judgment therefor against appellant village. The decree provided that said village, through its proper officers, should appropriate and levy such sums of money as might be necessary for the purpose of paying the respective amounts found to be due appellees upon! their bonds; such appropriation and levy to begin with the next general tax levy and to continue from year to year until the judgments as granted appellees, together with interest thereon, had been paid. Appellant has prosecuted this appeal from the decree rendered.

Several cases of this character have arisen in the past few years where the city or village collected special assessment funds, kept' no proper account thereof, and misused the money for other purposes, or at least failed to pay it to the persons entitled thereto. This is but one form of repudiation. "When public officials wilfully ignore the rights of bondholders, collect and misapply the funds, it is little short of the application of power against right. Although it is impracticable, in view of the changes and reforms which are now taking place in the economic and social structure, to endeavor to anticipate ultimate results, yet the future growth and development of cities and villages is so inseparably linked with public improvement that they must go forward together. Confidence reposed in the soundness of the integrity of officials charged with the administration of special assessment money must not be replaced by doubt and suspicion. This would serve to destroy the market for such bonds, imperiling the welfare of growing municipalities.

Appellant objects to that portion of the decree which undertakes to direct the course of conduct of the village officers in regard to the future performance of their duty, respecting the appropriation and levy of taxes for the payment of the judgments. In this respect, it would appear that the decree is in error. Rothschild v. Village of Calumet Park, 350 Ill. 330, 343. The judgments as rendered are the same as any judgment against a city, and the failure or refusal of the city officials to perform their duty toward paying same cannot be judicially anticipated. Appellant further objects to the allowance of $500, as master’s fees. The master certified in explanation of his fees as charged, that forty-eight hours were spent on this case in addition to his statutory charge for taking testimony, which he approximates at $90. Should the forty-eight hours spent in consideration of the case be placed upon a six hour basis, it would then resolve itself into eight days, and the master in charging $410 ($500, less $90, statutory charges), on a basis of eight days service, would be malting a charge of more than $50, per day. Such a charge cannot stand in view of the expression of the Supreme Court in Klekamp v. Klekamp, 275 Ill. 98.

The decree of the circuit court in granting judgments to appellees and directing the payment thereof by appellant, is affirmed. So far as it purports to direct the future course of conduct of the village officers with respect to the appropriation and levy of taxes, the decree is reversed in accordance with Rothschild v. Village of Calumet Park, supra. With respect to the allowance of master’s fees in the sum of $500, the decree is reversed and the cause remanded with directions to allow the said master the sum of $90, for his statutory charges in taking evidence, and $120, for his services in reporting conclusions of law and fact. In all other respects, except as above indicated, the decree is affirmed.

Affirmed in part, reversed in part, and remanded with directions.

Costs in this court ordered taxed, one-fourth to appellees, and three-fourths to appellant.


author: Mr. Justice Wolfe

text:
    Grand Carniolian Slovenian Catholic Union of United States of America, Appellee, v. Village of Rockdale, Appellant.
    Gen. No. 9,768.
    Heard in this court at the February term, 1942.
    Opinion filed April 8, 1942.
    Rehearing denied May 5, 1942.
    Ludwig V. Kuhar, of Joliet, for appellant.

      Frank J. Jones, of Joliet, for appellee.
   Mr. Justice Wolfe

delivered the opinion of the court.

The Grand Carniolian Slovenian Catholic Union of the United States of America, a fraternal organization, is the owner and holder of certain special assessment bonds, bearing interest at 6 per cent per annum, of various denominations and amounts issued by the Village of Rockdale, in payment for work and materials and expenses with special assessment warrants Nos. 1031,1032 and 1033. These bonds were past due in both principal and. interest, and said corporation started a suit in the circuit court of Will county against the Village of Rockdale for an accounting. It asked that the said Village of Rockdale be ordered to pay to the holders of the bonds, their pro rata share of the same of whatever was found to be due on the bonds.

The complaint alleged that the defendant, the Village of Rockdale, had issued the said bonds, and that the plaintiff was the holder of the same, and was entitled to payment of both principal and interest on said bonds; that the bonds are what is commonly termed special assessment bonds issued by the said village on certain sewer projects which had been built in said village. It is alleged that the village collected large sums of money on the instalments due on said special assessments, and had failed to pay over to the plaintiff, their pro rata share of said collections; that the Village of Rockdale should be compelled to account for its collections and disbursements of these special assessment funds, and after determining what interest and principal due and owing upon the bonds, that the village be ordered to pay to the plaintiff the said sums, together with interest, at the rate of 5 per cent on all sums due from the time said money was due and owing upon said bonds, to the date of the final accounting.

The defendant filed a motion to dismiss the complaint, because it appears that there are other bondholders who hold or own bonds of the same special assessment number, and that they are necessary parties plaintiff: or defendant to the litigation. This motion was denied by the court. The defendant then filed its answer, and admitted the issuance of the-bonds, the ownership of the same by the plaintiff, and that the same should be paid by special assessments, as charged in the plaintiff’s bill of complaint. The defendant denied that it had failed to pay the plaintiff its pro rata share of the principal and interest collected in each of the various instalments of the special assessment, or that upon an accounting, it would be found that the Village of Rockdale has failed and refused to pay, upon said bond held by the plaintiff, its distributive shares of the money collected on the instalments of said special assessment, or that an accounting would show that the officers of said village had diverted any sums of money for purposes other than the payments of the bonds and coupons issued against said special assessment. It denied that the village was liable to pay any interest whatsoever, on said past due instalment.

In the answer (paragraph 16), the defendant again raised the question that the necessary parties, either plaintiff or defendant, were not before the court, as there were other bondholders of the same issue as that of the plaintiff. The answer also states that the owners and holders of said bonds are unknown to the defendant. The plaintiff made á motion to strike paragraph 16 of the defendant’s answer, alleging that it did not state any defense to the plaintiff’s cause of action. The motion was sustained and this part of the defendant’s answer was stricken.

The cause was referred to the master in chancery to report his conclusions of facts and law in the case. Evidence was heard by the master who made his report finding in favor of the plaintiff and recommended a decree accordingly. The village filed objections to the report, which were overruled. Exceptions were filed in the circuit court to the master’s report, which were also overruled, and the court entered its decree finding in favor of the plaintiff in the sum of $34,367.70. It is from this decree that this appeal is prosecuted.

It is first insisted that the court erred in denying appellant’s motion to dismiss the complaint. The appellant has not seen fit to argue this point, so it is considered waived, but they raise the same question in point two, where they say the court erred in granting appellant’s motion to strike, and in striking paragraph 16 of appellant’s answer. It will be observed from a reading of the complaint, and also the decree of the court, that the plaintiff was not seeking to collect any money that any of the other bondholders might be interested in, relative to these special assessments, but only its pro rata share of the proceeds of the same. The other bondholders, if the plaintiff had cared to make them so, would have been proper parties to the litigation, but not necessary parties, therefore the trial court properly ruled that paragraph 16, of the defendant’s answer did not state any defense to the appellee’s bill of complaint.

It is next insisted that the trial court erred in holding that the Village of Rockdale was chargeable in the accounting for public benefits due and owing, but not paid by the village in the special assessment warrants Nos. 1031, 1032 and 1033. The facts in this litigation are not in dispute. The plaintiffs introduced their bonds in evidence. An auditor, a certified public accountant, was called as a witness, and testified as to his finding’s on examination of the records and files of the Village of Rockdale; that checked the same with the county treasurer of Will county for the purpose of determining what principal and interest of the delinquent instalments had been collected by said treasurer and turned over to the village; that he checked the payments of principal and interest received by the plaintiff; that his report showed a true and correct account of the bonds in question, with the Village of Rockdale. This report showed the amount due upon each assessment, and the pro rata share of the plaintiff, He also computed the interest due on the past due payments, at the rate of 5 per cent per annum. This report showed the public benefits which had been charged to the Village of Rockdale in the three improvements. These benefits were spread on the assessment roll against the property benefited, and were divided in ten instalments and judgments against the village, and confirmation was entered thereon, by the county court of Will county. The Village of Rockdale never paid any part of these benefits in money for the improvements. The payments or collection of these public benefits have been entirely ignored by the village. It is admitted by the appellant that they made no attempt, or effort to collect any of these unpaid assessments.

It is contended that a suit for an accounting will not lie against the village for these unpaid assessments, but the proper remedy should be by mandamus to compel the city to first collect the assessments. It is admitted that the improvements have been completed and accepted; that the city has obtained credit for the public benefits, and judgment has been entered in the county court against the city for the amount of these ten assessments. In the case of Shade v. City of Taylorville, 212 Ill. App. 512, it is said: “The stipulation in the contract that the city should not be held liable to pay to appellant any money to be raised by special taxation until it was in fact paid into the city treasury cannot be held to apply to moneys due from the city on special assessments. It would be strange law that would permit a city to defeat its own legal obligations by a wilful or negligent failure on its part to turn into the paving fund the amount duly assessed against it for public improvements or special benefits to its property. Conway v. City of Chicago, 237 Ill. 128.” It is our conclusion that the court did not err in holding that the appellant was chargeable in the accounting with the public benefits due and owing by, but not paid by appellant, under the special assessment warrants in this case.

It is next insisted that the court erred in holding that the appellant was chargeable with 5 per cent interest per annum on the monies claimed to be withheld by appellant, and due appellee, which interest was figured from the maturity dates of the special assessment bonds to the dates of the accounting. In Bankers Life Co. v. Village of Elmwood Park, 280 Ill. App. 524, and Conway v. City of Chicago, 237 Ill. 128, the liability of municipal corporations for interest on special assessment bonds was raised and each court held adversely to the contention of the appellant. We think the trial court properly allowed interest at the rate of 5 per cent in this case.

Appellant objects to the amount of $235 as master’s fees allowed by the court. The master, in explanation of his fee, certified that he had spent 22 hours actual time in hearing and reporting the case, for which he made a charge of $10 per hour, and a statutory charge of $15 for the testimony taken. In addition thereto, it was necessary to employ a court reporter for which a reasonable fee for the same would be $30.25. The appellant does not object to the $15 for the taking of evidence for the master, or of the $30.25 for the court reporter, but it does insist that the other fee is exorbitant and unreasonable. Figuring the charges of the master on a per diem basis at six hours a day would be $60. Such an allowance cannot stand in view of the ruling of the Supreme Court in Klekamp v. Klekamp, 275 Ill. 98.

It is finally alleged that the court erred in its decree directing the course of conduct to be pursued in the performance of duties by those who may be officials of the municipality in the future. The decree in part is as follows: “That the Village, through its proper officials, shall appropriate and levy such sums of money as-may be necessary for the specific purposes of paying the amounts so found to be due and owing from said Village of Bockdale to said plaintiff at the next general tax levy, said amount so appropriated and levied being in addition to the amount required for the actual necessary corporate purposes, and continue from year to year so to do until said amount is sufficient to pay the judgment herein provided for in full, together with interest thereon at the rate of five per cent per annum from the date of entry of this decree, and the costs of this proceeding.” As authority for the proposition that this decree is improper, the appellant cites and relies upon Rothschild v. Village of Calumet Park, 350 Ill. 330. In ruling on a similar provision in a decree,, the Supreme Court in that case uses this language: “While a court of equity may take jurisdiction of a proceeding to enforce a trust where the officers of a municipality have been guilty of a breach of the trust in the performance of their duties, it will not take charge of the management of the affairs of the municipality and direct the course of conduct to be pursued in regard to the performance of duties by those who may be officers of the municipality in the future. Because the officers have- failed, either ignorantly or willfully, to perform their duty, the court will not assume that they will continue to do so after an adjudication of the court has determined that their course was wrong.”

The appellee cites several cases where it is claimed similar language was used in decrees, and the same was held not objectionable. We have examined all of the' cases so cited, but if any of the decrees contained such language, it is not set forth in the opinion of the court, and no objection was raised to the use of such language if the decree did contain such language. We think the principle of law, as announced in Rothschild v. Village of Calumet Park, supra, is controlling in this case, and it was error for the court to include the language used in the decree.

The decree will be affirmed in so far as the result of the accounting is concerned, and wherein it directs the payment of $34,367.70 from the Village of Rockdale, to the plaintiff. So far as it purports to direct the course of conduct of the officers of the Village of Rock-dale in regard to the method of payment, levying of tax, etc., to pay said judgment, and the allowance of $235 as a fee for the master in chancery, it is reversed. The appellant in error will pay three-fourths of the cost of this proceeding, and the appellee one-fourth. (Rothschild v. Village of Calumet Park, supra.)

Affirmed in part and reversed in part and remanded.


author: Mr. Presiding Justice McSurely

text:
    City of Chicago, Appellee, v. Reuter Bros. Iron Works, Appellant.
    Gen. No. 41,803.

      Heard in the first division of this court for the first district at the October term, 1941.
    Opinion filed April 20, 1942.
    Louis W. Reinecker, Jr,, of Chicago, for appellant.
    Barnet Hodes, Corporation Counsel, for appellee; James A. Yelde, Barnet Fagen and Alphonse Cerza, Assistant Corporation Counsel, of counsel.
   Mr. Presiding Justice McSurely

delivered the opinion of the court.

On a trial by the court defendant was found guilty of violating a section of the Chicago Zoning Ordinance and fined $200, and it appeals.

The section of the zoning ordinance in question is 194A-12 (b), found in the current Municipal Code of Chicago of August 30, 1939. This seeks to regulate the kind of business which may be permitted in certain parts of the city. The ordinance defines what are called manufacturing districts, and the type of work which may be carried on in such districts. The section in question relates to what is called “M2 use,” and provides that “No M2 use shall be established nearer to a residence or apartment district than 400 feet nor nearer to a commercial district than 125 feet.” An M2 use is defined in section 194A-11 of the code as including the handling of materials which customarily emit noise affecting the comfort or welfare of occupants of residence districts located within 400 feet of the premises occupied by the M2 use. This use is also defined as including “Metal fabricating processes or the assembling of materials where snap riveting is done, or where processes creating noises permitted . . . for the manufacturing of such products as . . . structural and reinforcing steel for buildings, bridges, ships and other structures ??

The defendant was charged with being guilty of violating this code in the conduct of its business on the premises located at the rear of 10115-43 S. Taiman avenue, within 400 feet from a residential district; that these violations began on January 10, 1941, and continued to February 14,1941. It was stipulated that a part of defendant’s business conducted on these premises was “the metal fabricating, processing and assembling of structural steel for buildings.”

Witnesses testified that in the conduct of the business a great deal of noise was made, from pounding of hammers, punching of holes through steel, roar of the furnace, dropping of beams, and snap riveting; that there was a difference between “snap riveting” and “squeeze riveting”; that by the latter process, after the rivet is put in the hole it is flattened by a device which is worked by compressed air which makes a hissing sound; that in snap riveting the rivet is flattened in the hole by an air hammer which makes a steady tattoo or click, sounding like a machine gun.

The defendant argues that the evidence fails to show that it was engaged in “manufacturing” structural steel, and says it was engaged only in “assembling” structural steel for buildings. The ordinance includes under M2 use not only metal “fabricating processes,” which might mean manufacturing in the strict sense of the word, but also “the assembling of materials where snap riveting is done, or where processes creating noises . . . are carried on.”

Moreover, it has been held that manufacturing may include a number of successive processes which may be required to make the final product. H. H. Kohlsaat & Co. v. O’Connell, 255 Ill. 271. In Dolese & Shepard Co. v. O’Connell, 257 Ill. 43, 46, the corporation sought exemption from a tax on its capital stock on the ground that it was purely a manufacturing corporation. It was shown that under its charter it was authorized to make improvements in materials which it employed in its business. The court held that whenever labor is bestowed upon an article, resulting in a new form or new combinations, the process of manufacture has taken place; that the company could use material already manufactured. We are of the opinion that “metal fabricating, processing and assembling of structural steel,” comes under the definition of manufacturing.

There was a conflict in the evidence as to whether the defendant used the process of snap riveting upon its premises. A Mr. Dimford testified that defendant’s place of business was about 60 feet from the property line of his residence. He was an electrical engineer and testified that during the period from January 10 to February 13 he heard disturbing noises practically every day coming from defendant’s premises; that he heard pounding, roar of the furnace, dropping of the beams, and snap riveting on certain days, which he noted; that he knows what snap riveting is; that the noise from the “squeeze riveting” machine prevented him from sleeping. Another witness living within 60 feet of defendant’s premises testified that he heard noises from snap riveting made by defendant; that these noises kept him awake. Several other witnesses testified to the same effect. As opposed to this there was the testimony of a Mr. Burke, a building inspector of the city, and a Mr. O’Shea, that they visited the premises and while they were there they heard only slight noises and never saw any snap riveting on the premises. The weight of the testimony of both of these witnesses was considerably lessened by their admissions that they were hard of hearing. Other witnesses gave testimony tending to show that there was no snap riveting on the premises.

This is a case for the application of the well-known rule that where the court saw the witnesses and observed their demeanor while on the stand, a court of review will not disturb its finding unless it is against the manifest weight of the evidence.

Defendant also argues that it was error for the trial court to sustain objections to evidence as to other noises in the vicinity. Such evidence would not be relevant to the charge that defendant ivas violating a section of the zoning ordinance. City of Metropolis v. Gibbons, 334 Ill. 431, 437; American Baking Co. v. City of Wilmington, 370 Ill. 400. Defendant cites City of Chicago v. Dube, 235 Ill. App. 618 (Abst.). There the defendant was charged with maintaining a nuisance, and the court held that whether the defendant’s business was a nuisance depended upon the character of other businesses and the neighborhood generally. Here we have only the question as to whether the defendant violated a particular section of the zoning ordinance.

If the building department issued to defendant a certificate of occupancy, this would have no connection with the requirements of the zoning ordinance, but relates merely to the physical attributes of the building, but such certificate of occupancy would not authorize a violation of the city’s zoning ordinance. Sinclair Refining Co. v. City of Chicago, 246 Ill. App. 152; Burton Co. v. City of Chicago, 236 Ill. 383.

The validity of the ordinance is not questioned. The only point to be determined is whether defendant carried on its business in violation of the zoning ordinance which forbade noises affecting the comfort and welfare of persons residing within a limited distance of the premises. The trial court’s conclusion in this respect is supported by sufficient evidence, and it will not be disturbed.

The judgment is affirmed.

Affirmed.

Hatchett and O’Connor, JJ., concur.


text:
    General Motors Acceptance Corporation, Appellant, v. Leland A. Keran and Employers’ Liability Assurance Corporation, Ltd., Appellees.
    Gen. No. 41,880.

      Heard in the first division of this court for the first district at the October term, 1941.
    Opinion filed April 20, 1942.
    Kremer, Branand & Hates, of Chicago, for appellant.
    Otto M. Hamer, of Chicago, for appellee Employers’ Liability Assurance Corp.; Chester D. Kern, of Chicago, of counsel.
   Mr. Presiding Justice McSurely

delivered the opinion of the court.

Plaintiff filed.a creditor’s bill seeking to obtain from the defendant insurance company payment of $2,051.70 which plaintiff alleged it paid to certain parties because of the negligence of its employee, Leland A. Keran, who also is named as a defendant; Keran filed no answer to the complaint and presented no defense. Upon trial by the court the complaint was dismissed for want of equity, and plaintiff appeals.

Keran was employed by plaintiff as a collector of delinquent accounts; he was driving a Chevrolet automobile owned by plaintiff and furnished to him by it for use in his work. In the evening of March 17,1937 this car developed motor trouble; he took it to the garage of the Yanson-Chevrolet Company in Chicago Heights and was told that repairs could not be completed that evening, and Keran asked for and was given another car by Yanson so that he could finish his work. That evening, with the borrowed car, Keran ran into two pedestrians, both elderly ladies, killing one and slightly injuring the other. Claims were made against the plaintiff, Keran’s employer, for these injuries and payment was made by it and releases from both claimants were given.

Subsequently plaintiff brought suit against Keran to recover the amount so paid, alleging that he was its employee as a collector of delinquent accounts and that “while on the business of plaintiff” the automobile driven by him ran into the two women and that claims were made against plaintiff for these injuries, which it settled. Plaintiff had judgment against Keran for $2,051.70.

The creditor’s bill in the instant case alleges that the defendant insurance company had issued its policy of insurance to Yanson to cover the legal liability of any prospective purchaser “or customer of the Assured for liability or property damage claims arising while said prospective purchaser or customer is driving or riding in any automobile loaned to him by the Assured.” Plaintiff’s theory is that, as the automobile Keran was driving at the time of the accident had been loaned to him by Yanson, Keran was a customer of Yanson within the meaning of this policy and that the defendant company, because of the liability created by the policy, became indebted to Keran, the customer, in an amount which plaintiff was entitled to have applied on its judgment against Keran.

To this defendant insurance company filed an answer asserting first that Keran was not the customer of Yanson. In support of this point it is shown that the automobile left with Yanson was owned by the plaintiff, General Motors, and furnished to Keran by it for use in his work as collector for plaintiff; that its care and upkeep was provided by plaintiff; that Yanson had had business relations with plaintiff and knew that Keran was its employee and that the car left to be repaired was the property of the plaintiff. Keran had no specific directions from plaintiff where to take the car for repairs but it was the policy of plaintiff that cars driven by field men should, when necessary, be taken to a dealer with whom it was doing business. Bills for repairs were paid by the field men and plaintiff reimbursed these men for such sums so paid. Yanson’s bill in the particular instance was paid by Keran, who was later reimbursed by plaintiff. Defendant argues forcefully that the plaintiff, like all corporations, must transact business through its agents and servants and that Yanson knew he was dealing with an agent of plaintiff and was repairing one of its cars, and that in fact the transaction, including the loaning of the car to Keran, was between plaintiff and Yanson.

The facts above stated tend to support defendant’s position that Keran, in the occurrence described, was not the customer of Yanson. However, there is another reason which definitely sustains the ruling of the chancellor in dismissing plaintiff’s complaint.

Defendant as an additional defense in its answer asserted that plaintiff’s liability was covered by an accident policy issued to it by the Royal Indemnity Company, which had indemnified plaintiff for the amount it had paid to satisfy the claims made on behalf of the injured persons. To this plaintiff replies that a wrongdoer may be sued for damages although an insurance company may have paid the loss to the person wronged, citing Byalos v. Matheson, 328 Ill. 269, and other cases to the same effect. But none of these cases is applicable to the present situation. The defendant insurance company is not a wrongdoer. We know of no rule of law that permits a party who has paid a legal tort liability, for which it has been reimbursed by an insurance company, to recover a like amount from another insurance company. We are referred to no cases so holding.

Defendant’s answer further asserted that the policy issued by it to Yanson contained, among other provisions, the following: “It is further understood and agreed that the coverage herein granted is excess coverage over and above any other valid and collectible insurance applicable to a claim covered hereby”; that the policy of the Royal Indemnity Company to General Motors had a limit of liability of $10,000 and $20,000 ; that the amount paid by General Motors to satisfy the claims was less than $2,000, and that its (defendant’s) policy to Tanson was for liability only in excess of any other valid and collectible insurance. This is a sufficient defense.

Plaintiff made motions to strike the affirmative defenses filed by the defendant, which motions were denied. No replications were filed to the answer but plaintiff stood by its motions to strike. Such a mo fcion admits the facts which are directly alleged. Barzowski v. Highland Park State Bank, 371 Ill. 412.

For the reasons indicated the decree of the trial court is affirmed.

Affirmed.

Hatchett and O’Connor, JJ., concur. ”


author: Mr. Justice Matchett Mr. Justice O’Connor

text:
    Otto C. Woerter, Receiver for Berwyn State Bank, Appellant, v. Fred J. Mahler, Jr. et al., Appellees.
    Gen. No. 41,864.

      Heard in the first division of this court for the first district at the October term, 1941.
    Opinion filed April 20, 1942.
    Rehearing denied May 4, 1942.
    Henry T. Chace, Jr. and Carl Gr. Pretzel, both of Chicago, for appellant.
    Cameron, Heath & Burry, of Chicago, for appellee Fred J. Mahler, Jr.; William Burry, Jr., of Chicago, of counsel.
   Mr. Justice Matchett

delivered the opinion of the court.

The receiver brought suit against Mahler, Jr., on June 24,1938. June 24 he filed an amended complaint naming Robert W. Teeter, Cole Lenzie, William Scheive and John Killips, with others, as defendants. Attached to the complaint is the promissory note upon which the action was based. It was executed May 1, 1931, is for the sum of $9,630 due on demand to the order of the Berwyn State Bank, with interest at 6 per cent per annum after date. It is a collateral note secured by certificate No. 99 for 42' shares of the Lyons State Bank stock and certificate No. 4 for 48 shares of the stock of the Lyons State Company. The note was executed “Fred J. Mahler, Jr., Trustee.” The Berwyn State Bank was closed by the auditor of public accounts on June 27,1931.

The complaint in three counts alleges that Mahler, Jr., Teeter, Lenzie, Scheive and Killips in April 1931, agreed between themselves to purchase the stocks held as collateral to the note for their mutual benefit, and pursuant to that agreement made the note under the name and style of “Fred J. Mahler, Jr., Trustee,” and delivered it to the Berwyn State Bank, and plaintiff asks judgment against each of the defendants for the full amount of the note with interest at 6 per cent. The second count states the same facts with the exception that the agreement is said to have been that each of the defendants would be liable for payment of one seventh of the purchase price of the stock and the amount of the note, and judgment is asked against each of them for $1,375.71 with interest at the rate of 6 per cent per annum from May 1,1931. The third count alleges that Fred J. Mahler, Jr. made the note, and that he is liable for the amount of it with interest.

Mahler, Jr. appeared and filed a verified plea and affidavit of merits. October 2, 1940, by stipulation the cause was dismissed as to Cole Lenzie without costs. Killips and Teeter were defaulted and the other defendants are dead. The cause was put at issue and tried by the court without a jury. There was a finding for the defendants with judgment against the plaintiff for costs, and this appeal followed.

Mahler’s (Jr.) plea denied that he promised as alleged. The affidavit of merits averred as a defense that Mahler, Jr. executed the note in his capacity as trustee under a parol trust agreement made between himself, as trustee, and Teeter, Mead, Killips, Scheive and Wegner, individually, as beneficiaries to evidence a loan made by the Berwyn State Bank about May 1, 1931, to the trust estate for which affiant was (and still is) acting as trustee; that the terms of the trust agreement were well known to the Berwyn State Bank at the time the loan was made, and that the bank by its duly authorized officers and agents specifically agreed at the time the loan was made and the note executed that the bank would not look to the individual liability of Mahler, Jr., and that the note sued on was executed as evidence of this agreement and as evidence of the limitation of liability for repayment of the loan; that after the loan was made and the note executed by him as trustee, a written memorandum embodying the terms and provisions of the trust, dated June 1,1931, was entered into between the parties, which he offers to produce in court. The affidavit further averred that plaintiff, who sued as receiver of the Berwyn State Bank, is not an innocent holder for value before maturity of the note but succeeded to the title and to the indebtedness evidenced thereby, subject to all legal and equitable defenses.

There is practically no dispute as to the facts. The note sued on was given in lieu of a former note executed “Fred J. Mahler, Jr.,” August 28,1930, to the order of the Berwyn State Bank, for the same amount as this note. On that date Fred J. Mahler, Jr., Robert W. Teeter, Mead, Killips, Scheive and Wegner were directors of the Lyons State Bank, and Robert W. Teeter was its president. Teeter was also a director, vice president and cashier of the Berwyn State Bank. The Lyons State Bank had petitioned the Secretary of State to increase its capital stock. The time was approaching when this capitalization must be completed. The bank had not sold the additional stock as it had hoped to do. August 27, 1930, Lyons State Bank was short on subscriptions to the increased stock 42 shares. The directors met at the bank and talked about the matter. Teeter suggested a loan from the Berwyn State Bank to be used to pay for the stock. The suggestion was agreed to. There was no meeting of the board of directors of the Berwyn State Bank. The matter was, however, arranged by telephone. The Berwyn State Bank had obtained at one time a similar loan from the National Bank of the Republic. Mr. Rann, cashier of the Lyons State Bank, had a block of blank notes of the Berwyn State Bank. He filled one out and on the next day (August 28,1930) secured the signature of Mahler to it at Mahler’s place of business. While a director of the bank, Mahler was the proprietor of a meat and grocery store in Lyons. Rann had the certificates for the stock issued in Mahler’s name and procured his endorsement, took the certificates to the Berwyn State Bank, where Teeter, president of the Lyons State Bank (also cashier of the Berwyn State Bank), issued the check of the Berwyn State Bank to the order of Mahler for $9,630. Mr. Bann then secured the endorsement of Mahler and deposited the check in the Lyons State Bank in payment for the shares of stock in the Lyons State Bank and the Lyons State Company. The note sued on was given in lieu of this personal note of August 28, 1930.

Mahler, Teeter and Bann testified. Their evidence tending to show that the transaction was not for the benefit of Mahler, Jr. but for the accommodation of the Lyons State Bank by the Berwyn State Bank, and that the agreement was that while Mahler’s name was to be used in the transaction he would not be held personally liable but that the Berwyn State Bank would look solely to the stock which was put up as collateral. The trial judge, after hearing the evidence, made this statement: “I find from the evidence that it was the intention of all parties to the transaction that the money loaned upon the note was to be loaned to Mahler as trustee and not individually; that such money and the stock subscribed for and paid for with it should constitute a trust fund, and that the bank agreed that it would look only to such fund for repayment of the note, and that Mahler should not be liable therefor individually.” The real transaction was that Berwyn State Bank loaned money to the Lyons State Bank and there was no intention that anyone else should pay the loan or own the collateral.

In Tampa Investment & Securities Co. v. Taylor, 272 Ill. App. 541, this court held where the note sued on was executed as this one, oral evidence was admissible to show what was the real intention of the parties to the transaction, and for the refusal to admit such evidence we reversed a judgment for plaintiff and remanded the cause. In that case we construed section 20 of the Negotiable Instruments Act [Jones Ill. Stats. Ann. 89.040]. We adhered to that decision in City Nat. Bank & Trust Co. of Chicago v. Oberheide Coal Co., 307 Ill. App. 519, 527. This construction of that section was approved by some courts and disapproved by others, as will appear from the annotation to Kegel v. McCormack, 225 Wis. 19, 272 N. W. 650, 111 A. L. R. 643. Apparently Professor Williston regards such construction as in effect amounting to reformation of the instrument sued on. (See Williston & Thompson, Rev. Ed., vol. 1, § 312, pp. 911-916; see also Kaspar American State Bank v. Oul Homestead Ass’n, 301 Ill. App. 326.)

The finding of the trial judge in this court and in this case is entitled to the same weight as the verdict of a jury, and we cannot say that his finding is manifestly against the weight of the evidence. Balaban v. Willett, 305 Ill. App. 388. The judgment will be affirmed.

Affirmed.

McSurely, P. J., concurs.

Mr. Justice O’Connor

specially concurring: I agree that the judgment should be affirmed. See my concurring opinion in City Nat. Bank & Trust Co. of Chicago v. Oberheide Coal Co., 307 Ill. App. 519, 527.