author: Mr. Justice Fitch

text:
    Harris Trust & Savings Bank, Trustee, Appellee, v. Helen H. Morse et al. On appeal of Robert H. Morse, Appellant.
    Gen. No. 29,898.
    1. Trusts — oral voluntary trust. A court of equity may establish and enforce a voluntary oral trust concerning personal property, but the acts or words relied on as creating such a'trust must be unequivocal, admitting of but one interpretation and manifesting a completed transaction in prwsenti.

    2. Trusts — proof of oral voluntary trust. Proof of acts or words relied on as creating an oral voluntary trust must be clear and convincing, not only of the existence of the trust, but .also as to its essential terms and conditions.
    3. Trusts — revocation. When a trust has been perfectly created, it is not revocable at the will of the party who created it unless he has expressly reserved the power of revocation.
    4. Trusts — intention to establish oral trust hy written instrument. If a person intends to establish a trust and with that intention transfers the title of the property to a trustee and orally states what the terms and conditions of the trust are to be, these facts, though clearly proved, are insufficient to create a voluntary trust, where it also appears that the donor intends the trust to be established by a written instrument or deed signed by him.
    5. Trusts — incomplete creation as creating resulting trust. Where property was transferred with the intention of creating a trust, but the donor died before the trust was completed, a resulting trust arose in favor of his heirs and devisees as to the property received by the intended trustee.

      Appeal by defendant from the Superior Court of Cook county: the Hon. Charles M. Foell, Judge, presiding. Heard in the second division of this court for the first district at the October term, 1924.
    Reversed and remanded with directions.
    Opinion filed October 6, 1925.
    Rehearing denied and additional opinion filed October 19, 1925.
    Lord, Wire & Cobb and John E. Kehoe, for appellant; John S. Lord and A. C. Wetterstorm, of counsel.
    Chapman, Cutler & Parker, for appellee.
    John J. Healy, Guardian ad litem and Solicitor and William S. Beck, for minor heirs; John P. Barnes, John E. Tracy, William H. Radebaugh and John J. Healy, of counsel.
   Mr. Justice Fitch

delivered the opinion of the court.

In March, 1921, complainant and Charles Hosmer Morse entered into a written agreement, dated June 19, 1920, by which Morse assigned to the complainant, as trustee, 10,000 shares of the common stock, without par value, of Fairbanks, Morse & Co., an Hlinois corporation, and complainant agreed to hold the same and collect the income therefrom for ten years, “or until such time as this trust shall be terminated” as therein provided, and to pay the entire net income from time to time, less its reasonable charges, to the First Trust & Savings Bank, of Chicago, “as Trustee, under an agreement with Charles Hosmer Morse, being Trust No. 2343”; also “whenever directed in writing” by said bank, as such trustee, to transfer and assign “the entire principal of the trust estate” to said bank, “as Trustee under said Trust No.' 2343.” Two months later, Morse died without having executed any written instrument or agreement with the First Trust & Savings Bank specifying the nature or purpose of said “Trust No. 2343,” or defining the powers and duties of that hank, as trustee, with reference to the disposition of any money or stock it might receive from complainant. Complainant collected and held the dividends accruing on the stock, and about a year after Morse’s death filed its bill in equity alleging that it was in doubt as to its powers and duties under its written agreement with Morse, and asking the court for instructions. After an extended hearing, in which all parties interested were represented, a decree was entered which finds that although Morse in his lifetime contemplated that “Trust Ho. 2343” should be reduced to writing and signed, both by himself and by the First Trust & Savings Bank, as trustee, and although that was never done, still, Morse had “orally declared said trust” and that “the same was effectively by him declared and established by his language and conduct during his lifetime.” The decree sets forth the nature of such oral trust as found by the court, directs complainant to proceed according to its written agreement with Morse, and specifies the terms and conditions upon which the First Trust & Savings Bank shall hold the trust funds and estate after receiving the same from complainant, and when, how and to whom such funds shall be paid or assigned by said First Trust & Savings Bank. From this decree, Bobert Hosmer Morse, a son of the deceased, appeals.

While the evidence is voluminous, the essential facts are not disputed. When the written agreement with complainant was executed, Charles Hosmer Morse was a retired manufacturer, eighty-eight years of age, living at Winter Park, Florida. He had two sons and a daughter living, nine grandchildren and two great-grandchildren. His first wife was dead and he had married a second time in 1911. He was one of the founders of the manufacturing and mercantile business conducted under the name of Fairbanks, Morse & Co., and had accumulated a large fortune. His two sons, Charles and Bobert, were men of means and were both heavily interested with him in the same business. Two of his grandsons (appellant’s sons, Charles Hosmer Morse, Third, and Robert Hosmer Morse, Jr.) occupied minor positions in the business of the corporation.

In 1908, the elder Morse (who will be hereafter referred to as Mr. Morse) made his last will and testament. In it he bequeathed to the First Trust & Savings Bank, in trust for the benefit of the two grandsons last mentioned, 2,000 shares of stock in Fairbanks, Morse & Co., of Illinois; and after stating that he desired his two sons to succeed him in business, he bequeathed to them all the rest of his stock in that corporation and its associated corporations, to be divided equally between them, except that the 2,000 shares placed in trust for appellant’s two sons were to be deducted from appellant’s share. This bequest to the sons was charged with the payment of sundry specific legacies and all debts and expenses of administration. All the residue of the testator’s estate (consisting of other stocks, bonds and real estate) was devised and bequeathed to the First Trust & Savings Bank, in trust, for the benefit of his daughter. That bank was appointed executor of the will. By a codicil made in 1917, the bequest to the testator’s sons was further charged with the payment of inheritance taxes, “for the reason * * * that in the distribution of my estate my said two sons will have received more of my estate than has or will my daughter.”

In 1919, some of The companies theretofore associated with Fairbanks, Morse & Co. of Hlinois were consolidated with it. At the same time, the number of shares of common stock was increased tenfold, and the shares were given no par value.

In June, 1920, Mr. Morse visited Chicago. While there, in a conversation with Frank M. Boughey, secretary of Fairbanks, Morse & Co., who had handled many of Mr. Morse’s personal matters, he said he felt disposed to cancel the provision in his will in favor of his two grandsons, but would first talk to his son (appellant) about it. A day or two later, he told Boughey that after talking with appellant, he “felt” he should continue his gift to his two grandsons, making the gift 20,000 shares instead of the original 2,000 shares, because of the increased capitalization, and would prefer to make the donation through a trust fund and not through his will; that he would make another codicil, canceling the original gift to his grandsons and would create a trust for 5,000 shares in favor of each of them; that he “felt” that by putting the stock in trust for them during his lifetime it would encourage them to take an interest in the business. One of the grandsons had recently married and the other was about to be married, and Mr. Morse said their salaries were not sufficient to maintain them as he thought they ought to maintain themselves, and that he thought the income from the trusts of about $500 a month each, “would be sufficient for their purpose and it would be ample to support them, supplemented by their own earnings.” He also said that he would not place more than 10,000 shares in trust at that time “because he had promised $100,000 to Rollins College, to be spread over five years.” This allusion to Rollins College referred to the fact that in April, 1920, he had promised that college a donation of $100,000, provided $400,000 more was raised by it within a certain time, and it was uncertain at that time whether the college would be able to raise the additional amount or not.

A few days after this conversation with Boughey, Mr. Morse carried out his expressed intention to create a trust for the benefit of each of said two grandsons, by assigning and delivering to complainant, as trustee, two certificates of stock for 5,000 shares each, and by joining with complainant in executing two separate trust agreements, one for each of such stock certificates. Each agreement provides that out of the net income from the 5,000 shares so assigned, complainant shall pay to the grandson named therein $6,000 a year until he is thirty years old, When one-half of the principal shall be turned over to him; that thereafter all the income from the other half shall be paid to such grandson until he is thirty-five years old, when the balance shall be turned over to him, with further provisions in the event of his prior death. Having done this, Mr. Morse changed his will accordingly by making a (fourth) codicil, revoking the provisions therein made for his sons and his said two grandsons. In that codicil the testator states that since the publication of his last will in 1908, he had sold a portion of the shares of stock mentioned therein and a number of the companies therein mentioned had been consolidated with or purchased by Fairbanks, Morse & Co., the capitalization of which had been largely increased; that “I have placed with the Harris Trust and Savings Bank, as Trustee, certificates for Ten Thousand (10,000) shares of no par value of the common stock of Fairbanks, Morse & Co. in separate trusts for” said two grandsons (naming them), “and intend to place Ten Thousand (10,000) additional shares in trust for the benefit of my said grandsons.” The remainder of the codicil makes the same bequests to the testator’s sons as were made in the original will, and in the same words, except a few unimportant changes obviously necessitated by rewriting the original to fit the changed circumstances mentioned in the codicil. It provides that in making distribution of his shares of stock between his two sons, “the shares given by me and which may hereafter be given by me in trust for the benefit of” said two grandsons “shall be deducted from the share of said Robert Hosmer Morse.”

The witness Boughey testified that when this codicil and these trust agreements were signed by Mr. Morse, the latter said he would “get the certificate out so that you (Boughey) can transfer 5000 shares” to complainant “for each of the two trusts that have just been created”; whereupon he (Boughey) “asked Mr. Morse whether he would allow or permit to have made out at the same time a certificate in the name of the Harris Trust & Savings Bank, covering the additional 10,000 shares,” and that Mr. Morse replied that Boughey could do that, and Mr. Morse then took from his safe a certificate for 55,870 shares and told Boughey to go to the transfer agent in Chicago and have two new certificates issued to complainant to cover the two trusts for 5,000 shares each in favor of the grandsons, and another for 10,000 shares issued in the name of the complainant; that the witness obtained the certificates as directed; that Mr. Morse then instructed him, to take the certificate for 10,000 shares to complainant’s bank and “have them open a trust and give it a trust number, and tell them the dividends were to be paid to them”; that the witness followed these instructions and asked complainant’s secretary, Mr. Dow, to open a trust account and give it a trust number, and collect the income from the shares of stock, telling him that as soon as Mr. Morse was certain as to the amount of his proposed donation to Rollins College, “the trust deed would be drawn up and executed”; that Mr. Dow replied that while complainant would “open the trust and give it a number,” yet, “in view of the fact that the trust deed had not been executed,” he thought Boughey should hold the certificate until the trust deed was executed; whereupon Boughey put the certificate in a tin box in the vault of Fairbanks, Morse & Co., and kept it there until about March 17, 1921, awaiting further instructions from Mr. Morse as to the terms and conditions to be inserted in a formal trust agreement to be signed by him and by the complainant as trustee.

During this period, considerable correspondence passed between Mr. Morse and Boughey and many of the letters are in evidence. In a letter dated November 24, 1920, Boughey inclosed a list of Mr. Morse’s investments which, Boughey wrote, was “exclusive of the 10,000 shares of F. M. & Co. common stock held by the Harris Trust in escrow pending your decision regarding their disposition,” and stating that on the basis of an income of $300,000 Mr. Morse’s income tax for that year would amount to about $140,000, which “seems a very heavy tax to pay, but on incomes between $300,000.00 and $500,000.00, the tax is 63%, which is much worse.”

On January 31, 1921, Boughey wrote as follows:

“Outside of the trust funds reported on now, you have the 30,000 shares of F. M. & Co. common stock in the revocable trust with the Harris Trust & Savings Bank and the 30,000 shares with the Northern Trust. You have also 10,000 shares standing in the name of the Harris Trust as Trustee with no trust Deed yet decided upon, in respect of which they are also holding $25,000.00 accrued dividends, invested in Treasury Certificates temporarily. This last-named matter will, I assume, be adjusted when you have finally decided what you will do about the College. ’ ’

On February 2, 1921, Mr. Morse wrote to Boughey that “the endowment for Rollins College is likely to be secured within a few days,” and asking Boughey’s advice as to the best manner of providing for the payment of his subscription of $100,000, payable in annual instalments of $20,000 each “to some Trust Co. for Rollins.” To this letter Boughey replied that the first payment of $20,000 “will of course come out of the fund at the Harris Trust, accumulated from dividends on the 10,000 shares of F. M. & Co. stock”; and that “at the present rate of dividend, the 10,000 shares will bring $50,000 a year,” so that the payment of the other instalments from such dividends “could be regarded as quite secure.” In this letter, Boughey questioned whether the trustees of Rollins College might not object to having Mr. Morse’s donation “deposited with a Trust Company in Chicago, ’ ’ but that he would “in any event proceed to draft out a form of deed with the First Trust & Savings Bank as Trustee.” In the same letter, Boughey reminded Mr. Morse that he had mentioned at one time that he might give an annuity to a Mrs. Munger and suggested that this could be taken care of in the same trust.

To this letter Mr. Morse replied:

“I am not sure that I can have the 10,000 shares F. M. & Co. stock now in the Harris Trust transferred to the First Trust without increasing taxes. If not, how would it do to have the Harris Trust continue to hold the 10,000 shares, receiving the dividends and immediately on receipt of same remit them to the First Trust, the First Trust to pay, 1st, the amount going to Hollins until my pledge is fully paid, and 2nd, the amount for Mrs. Morse, and, 3rd, for Mrs. Munger as pr. my recent letters to you? I may be a little mixed on this subject and so will have to ask you to straighten me out.”

On February 18, 1921, Mr. Morse wrote Boughey as follows:

“You will see by the enclosed clipping from this morning Tampa Tribune that I have decided to give the $100,000.00 conditional pledge to Hollins College, and not wait for the balance to be raised. You therefore may ascertain from Mr. Osborn of the First Trust & Savings if my gift to Hollins of $100,000.00 can be held by them and the full income from said gift paid to Hollins College without any tax it being for educational purposes only and the College being located in Florida.
“If it can be held by the 1st Trust & S. Co., without paying a tax, you may proceed at once to prepare the proper trust papers for me to execute, drawing from the Harris Trust the 10,000 shares of F. M. & Co. also the cash, putting all of them with the First Trust, to be used, 1st to meet my donation to the College and 2nd for Mrs. Morse, after my death, and such other beneficiaries as I may designate, say $2,000 pr. annum to Mrs. Munger in quarterly payments during her lifetime. My payments to the College being $20,000 pr. year until the $100,000 is paid.”

On February 22,1921, Boughey wrote to Mr. Morse that he would prepare the trust papers as suggested, and inclosed two letters addressed to complainant which he asked Mr. Morse to sign. One of these letters requested complainant to issue a cashier’s check in favor of the First Trust & Savings Bank for $37,500 and accrued interest “which you are holding for me in anticipation of the establishment by me of a new trust, and which is known by you as Temporary Account No. 1524.” The other reads as follows:

“Some time ago I contemplated establishing a new trust with your Bank, and in connection therewith, registered in your name ten thousand shares of the Common Stock of Fairbanks, Morse & Co. I now find it necessary to abandon my contemplated plan for the new trust, and would ask that you re-transfer to me the ten thousand shares of the Common Stock of Fairbanks, Morse & Co. now standing in your name.”

These letters were signed by Mr. Morse and sent to Boughey, but Boughey never delivered them to complainant for the reason that complainant’s officers demanded a fee of $10,000 to transfer the stock and the accumulated dividends. Boughey then prepared, without consulting Mr. Morse’s attorney, and forwarded to Mr. Morse for his signature, a draft of a trust agreement, purporting to assign to complainant said 10,000 shares of stock, with directions to pay over the income, as collected, to the First Trust & Savings Bank, as trustee, until December 31, 1935, and until the death of both Mrs. Morse and Mrs. Munger, to be distributed by the last-named bank in accordance with the terms of a trust agreement with that bank “for the benefit of Helen H. Morse, et a!.,” which “provides among other things,” for the payment of $100,000 and interest to Rollins College and “for the payment under certain conditions therein set out, of portions of the income of the Trust” to Mrs. Morse and Mrs. Hunger. This draft further provided for the payment of the principal in 1935, if both Mrs. Morse and Mrs. Hunger were dead, to said two grandsons, or their descendants. This latter provision appears to have been Mr. Boughey’s suggestion. In his letter to Mr. Morse, dated February 28, 1921, inclosing this draft, Boughey said:

“In order to avoid excessive income tax this agreement must be signed before March 15th, so to save time I am sending the draft to you just as I have drawn it up, and before Mr. Ashcraft or the Harris Trust have approved the technical wording. This will give you an opportunity of saying whether you approve the suggested disposition of the stock at the end of the period. The agreement with the First Trust can then be proceeded with in a more leisurely manner, as they will open the trust account as soon as they receive the $37,500.00.
“I do not see how you can avoid giving the 10,000 shares to C. H. M. Ill and R H. M., Jr. finally, as in your will you have reduced R. H. Morse’s proportion by 20,000 shares, with the statement that you have through trust funds provided that amount of stock for his two sons, but up to date you have only placed 10,000 shares in trust for them. * * *
“The Agreement with the First Trust & Savings Bank will of course go into more detail with regard to the disposition of the income, this being only referred to in a general way in the present agreement. ’ ’
When this draft was received by Mr. Morse, it happened that Mr. E. M. Ashcraft, Jr., a member of the law firm of Ashcraft & Ashcraft, of Chicago, who had been counsel for Mr. Morse for years, was in Florida, and on March 5, 1921, Mr. Morse sent for him, produced Boughey’s draft and asked Ashcraft what he thought of it. After looking it over, the latter said he did not understand the reason for the dual trusteeship. Mr. Morse explained that if complainant was required to transfer the stock and accumulated dividends to the First Trust & Savings Bank there would be some additional expense, and Mr. Ashcraft then advised Mr. Morse that both instruments should not contain all the details of the proposed new trust with the First Trust & Savings Bank, but that such details should be specified only in the agreement with the latter. Mr. Ashcraft also called Mr. Morse’s attention to the fact that the draft contained no definite statement as to the amount of income to be received by Mrs. Munger and Mrs. Morse. Mr. Morse replied that he had written to Boughey that from the income there should be paid first the Bollins College endowment of $20,000 a year for five years, and after the payment of that amount, with interest, and after the payment of $2,000 a year to Mrs. Munger, and after his death, Mrs. Morse was to have the whole income. After some further talk regarding the draft, Mr. Morse requested Mr. Ash-craft to take the draft back to Chicago, confer with Boughey and Mr. Ashcraft, Sr., and then prepare “trust agreements” and send them to him as soon as possible, “as he desired to close up the Bollins College situation as soon as he could because they were bothering him a great deal about it.”

Mr. Ashcraft testified that Immediately upon his return to Chicago he conferred with his father and Boughey, and soon after prepared an agreement to be signed by Mr. Morse and the complainant. This agreement he delivered to Boughey, to be sent to Mr. Morse. He also discussed with Boughey the prepareution of a second trust agreement with the First Trust & Savings Bank and instructed Boughey to draft the same. Boughey prepared such a draft, but it was never submitted to Mr. Morse.

The agreement prepared by Mr. Ashcraft was sent to Mr. Morse by Boughey on March 11, 1921, with a letter suggesting that it be signed at once and as soon as it was signed to wire Boughey to that effect, in order that complainant might make the proper income tax return, which was due within a few days. When Mr. Morse received this letter and document he was confined to his bed. He sent for his secretary and had the latter read the document to him and then signed it, and his secretary forwarded it to Boughey, wiring Boughey at the same time that he had done so. Upon its arrival in Chicago it was signed by complainant as trustee, and it is the instrument described in the first paragraph of this opinion. Mr. Morse died on May 5, 1921.

The decree appealed from assumes to define and prescribe the terms and conditions of “Trust No. 2343.” For that purpose, it apparently adopts, as the oral declarations of Mr. Morse, substantially all of the provisions of the second unexecuted agreement, which was drafted by Mr. Boughey after conference with Mr. Ashcraft and the trust officers of the First Trust & Savings Bank, but which was never submitted to Mr. Morse for his approval, nor signed by him. That draft is essentially different from the draft which Mr. Morse had talked over with Mr. Ashcraft in Florida and contains provisions not mentioned in Mr. Morse’s letter to Boughey, dated February 18, 1921, including a provision for the final transfer of the stock 'in question to the two grandsons in 1935. There is no direct evidence in the record that this provision, and several others of minor importance, were ever approved by Mr. Morse. The main question here involved is whether this evidence is sufficient to sustain the decree.

It is conceded by counsel that a court of equity may establish and enforce a voluntary oral trust concerning personal property. The authorities hold, however, that “the acts or words relied on must be unequivocal, admitting of but one interpretation, and manifesting a completed transaction in prcesenti” (Trubey v. Pease, 240 Ill. 513, 521); and that the proof of such acts or words must be clear and convincing proof, not only of the existence of the trust, but also as to its essential terms and conditions. (39 Cye. 84; Wright v. Buchanan, 287 Ill. 468, 478; Marble v. Marble’s Estate, 304 Ill. 229, 235; 1 Perry on Trusts, 2d Ed., sec. 23.) Such a trust is not created where there is a mere intention to create it, or a voluntary agreement to do so, and the settler contemplates some further act for the purpose of giving it completion. (Lloyd v. Brooks, 34 Md. 27, 33; Lewin on Trusts, 12th Ed., sec. 71.) “Declarations of a purpose to create a trust not carried out are of no value, nor are direct promises to that effect unaccompanied with considerations turning them into contracts.” (Allen v. Withrow, 110 U. S. 119, 130.) “If a trust is perfectly created, so that the donor or the settler has nothing more to do, and the person seeking to enforce it has need of no further conveyances from the settler, and nothing is required of the court but to give effect to the trust as an executed trust, it will be carried into effect, although it was without consideration. * * * But if, on the other hand, the transaction is incomplete, and its final completion is asked in equity, the court will not interpose to perfect the settler’s liability, without first inquiring into the origin of the claim and the nature of the consideration given.” (Barnum v. Reed, 136 Ill. 388, 400.) “Where there is only a voluntary agreement for the creation of a trust, a court of equity will not regard the agreement as binding so long as it remains executory.” (McCartney v. Ridgway, 160 Ill. 129, 155.) In such cases, a court of equity will not lend its aid to establish a trust at the instance of mere volunteers, but will decline all interference in the matter. (Barnum v. Reed, supra.) It has also been held in this State that when a trust has been perfectly created, it is not revocable at the will of the party who created it, unless he has expressly reserved the power of revocation. (Trubey v. Pease, supra, 521; Light v. Scott, 88 Ill. 239, 245.)

Tested by these well-settled principles, we think the evidence in this case is insufficient to sustain the decree. Certainly it fails to show, by that degree of clear and convincing proof requisite to establish a voluntary oral trust, that Mr. Morse ever definitely declared, or definitely decided, what disposition he would ultimately make of the shares of stock in question. During the year prior to his death, Mr. Morse made several declarations as to his intentions regarding the disposition of these shares, and these declarations leave the matter involved in doubt and uncertainty.

In the fourth codicil to his will, made in June, 1920, he stated that he intended to place “10,000 additional shares” in trust for the benefit of his grandsons. But the codicil does not say when or under what circumstances, or upon what terms and conditions, this contemplated trust should become effective, and at the time he made this codicil, he orally declared to Mr. Boughey that he would not place such shares in trust for his grandsons at that time because of his promise to Bollins College. A certificate for those shares was made to complainant, but this was held by Mr. Boughey until after March 17, 1921, awaiting further instructions from Mr. Morse.

In his letter of February 18, 1921, above quoted, Mr. Morse directed “trust papers” to be prepared for bim to execute, which should provide for transferring the shares of stock and the accumulated dividends thereon to the First Trust & Savings Bank, “to be used,” first, to pay the Bollins College donation, and second, after his death, “for Mrs. Morse and such other beneficiaries” as he might designate, “say $2000 per annum to Mrs. Mtmger in quarterly payments during her lifetime.” There is no mention in that letter of any trust for the grandsons’ benefit, and if “trust papers” had been prepared in accordance with his instructions at that time, and had been executed by Mr. Morse, it is clear that the grandsons could not have compelled their grandfather, by any proceeding at law or in equity, to carry out his previously expressed intention to place those shares in trust for their benefit. Instead of following Mr. Morse’s instructions, Mr. Boughey inserted in the trust agreement which he prepared and sent to Mr. Morse, a clause providing that the “principal of the trust fund” — meaning, no doubt, the 10,000 shares and the remainder of the accumulated dividends thereon for fifteen years — should be paid in 1935 to the two grandsons, provided neither Mrs. Morse nor Mrs. Munger was living at that time. In his letter to Mr. Morse inclosing this draft, Mr. Boughey wrote that he was sending the draft without having it approved by complainant or Mr. Ashcraft, so as to give Mr. Morse “an opportunity of saying” whether he approved “the suggested disposition of the stock at the end of the period.” There is no evidence in the record that Mr. Morse ever approved this suggested ultimate disposition of the stock, unless such approval may be inferred from the absence of any evidence that he objected to it while discussing the draft with Mr. Ashcraft. We think no such inference is warranted, since the draft was handed to Mr. Ashcraft unsigned by Mr. Morse, with directions to prepare and submit to him, for his approval, two corrected drafts.

By the terms of the new agreement with complainant, which Mr. Morse signed, complainant’s only duties were to collect the dividends and turn over the same (together with the stock itself, whenever so required) to the First Trust & Savings Bank, to be held by it “as Trustee under an agreement with Charles Hosmer Morse, being Trust No. 2343.” If, in fact, no such agreement was ever made between that bank and Mr. Morse, it is obvious that “Trust No. 2343” remained at his death only a matter of intention on his part, — a trust “in the making” perhaps, but never in fact completed — half formed and indefinitely designed.

It is conceded that no written agreement was made with Mr. Morse, specifying the nature and purpose of “Trust No. 2343.” If any unwritten agreement was ever made of that character, a careful examination of the evidence fails to disclose it. There is evidence to the effect that both Mr. Boughey and Mr. Ashcraft several times discussed with the trust officers of the bank, the provisions of a proposed written agreement such as they thought Mr. Morse desired to make with the bank, and that a draft of such an agreement was prepared by Mr. Boughey, which, after being submitted to the bank’s officers and after some changes were made to suit their views, was tentatively approved by them; but there is no evidence, or claim, that Mr. Morse ever saw or heard of that draft after it was thus prepared, and there is no evidence, or claim, that either Mr. Boughey or Mr. Ashcraft had any authority from Mr. Morse to make any definite agreement for him or in his behalf. His last instructions to them were to prepare trust agreements for him to sign, containing not only his own ideas, but their suggestions as well. Whether he would have approved such suggestions, and the ultimate disposition of the stock as provided by the last draft, cannot now be told. To paraphrase an expression found in Coningham v, Plunkett, 2 Y. & C. (Eng. Ch.) 245, what was done was only preparatory; he did nothing which he could not have countermanded; had he lived he might have revoked his instructions; his death effectually did so.

Since, therefore, no agreement, written or unwritten, was ever made between the First Trust & Savings Bank and Mr. Morse concerning the disposition of the stock in question and the dividends thereon, “Trust No. 2343” never became effective as a “completed transaction in prcesenti.” In the absence of such an agreement, it remained merely “a trust number,” — a transaction existing only in contemplation. The shares of stock and accumulated dividends never passed beyond the control of Mr. Morse by any act or declaration of his during his lifetime, and they now belong to his estate. All his declarations, oral and written, shown by the evidence, are mere declarations of “a purpose to create a trust not carried out,” which, under the authorities cited, “are of no value” as evidence of a voluntary trust.

It has been held that if a person intends to establish a trust and with that intention transfers the title to the trust property to a trustee, and orally states what the terms and conditions of the trust are to be, these facts, though clearly proved, are insufficient to create a voluntary trust, where it also appears that the donor intends the trust to be established by a written instrument or deed signed by him. (Lloyd v. Brooks, 34 Md. 27; Bayley v. Boulcott, 4 Russ. 345; Coningham v. Plunkett, 2 Y. & C. (Eng. Ch.) 245; Payton v. Almy, 17 R. I. 605.) Here, it was admitted upon the witness stand, both by Mr. Boughey and the younger Mr. Ashcraft, that all their conversations with Mr. Morse contemplated the execution of a written, and not an oral, declaration of trust; and where such is the fact, the authorities cited hold that the trust is not established until such written instrument is executed. Complainant’s counsel cite cases apparently holding the contrary. But, in such cases, there was a consideration involved, so that the trusts upheld or established were not voluntary and the beneficiaries were not mere volunteers, as in this case. The pledge to Rollins College is not dependent, as we understand the evidence, upon the disposition of the 10,000 shares of stock in controversy. Mr. Morse definitely promised to pay that college $100,000 in five annual instalments with interest, and then asked Mr. Boughey to suggest the best method of providing for such annual payments out of his income. Boughey suggested that the income from these shares might be used for that purpose, and Mr. Morse adopted the suggestion and directed Boughey to put the suggestion into the proposed trust agreement. The College was not intended to be a party to that agreement, however, nor would it be bound to collect its pledge from that source alone, even if any such trust agreement had been executed.

We conclude, therefore, that the only trust which is shown by the evidence to have been effectively declared and established by Mr. Morse was the trust agreement he made with the complainant, and that the provisions of that agreement as to the powers and duties of the First Trust & Savings Bank are so indefinite and uncertain that no trust with the latter was created; that upon the death of Mr. Morse a resulting trust therefore arose in favor of the heirs and devisees of Charles Hosmer Morse, deceased, as to any money or property received by said bank or the complainant; and that the 10,000 shares of stock held by complainant, together with the accumulated dividends and income collected upon the same, belong to the estate of said deceased, and should be paid to the executor. The decree of the superior court is accordingly reversed and the cause is remanded with directions to enter a decree in conformity with this conclusion.

Reversed and remanded with directions.

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

Additional Opinion Filed on Petition fob Rehearing.

Appellee’s counsel suggest that the foregoing opinion might be construed as requiring the superior court to eliminate from its decree all reference to the fees and expenses allowed to appellee and its solicitors, and the fees allowed to the guardian ad litem. The opinion does not so state, and it was not so intended. No error was assigned in which such allowances were questioned. Appellant did assign error upon the refusal of the trial court to allow solicitors’ fees to him as Well as to appellee, and in support of this assignment of error cited the case of Lombard v. Witbeck, 173 Ill. 396, where it is said (p. 413): “We said in Woman’s Union Missionary Society v. Mead, 131 Ill. 338: ‘As to the amounts allowed by the court to the respective parties, they are so far in the discretion of the chancellor that in the absence of proof of the abuse of that discretion we cannot interfere.’ ” In that case, it was also said that such allowances, when made, are usually treated as costs. There was no proof in this case that the discretion of the chancellor had been abused, and therefore, under the rule stated, there was no error in that respect in the decree.


source: Caselaw Access Project

license: Public Domain

text:
    Phillipson & Company, Appellee, v. Grand Trunk Western Railway Company, Appellant.
    Gen. No. 30,104.
    1. Carriers — liability for misdelivery. If property is misdelivered by a carrier through its negligence or that of its agents, it is liable in assumpsit for the value of the property; but if such misdelivery is caused by negligence of the consignee, carrier is not liable.
    2. Carriers — liability as insurer and warehouseman. Where consignee was notified that shipment had reached destination and had been placed in warehouse, the carrier’s liability became that of a warehouseman and not an insurer.
    3. Carriers — when misdelivery caused by negligence of consignee. Where carrier delivered notice of arrival of goods to consignee, and consignee stamped notice with rubber stamp and gave it to boy to be delivered to teamsters, but boy lost it or delivered it to a stranger, misdelivery of the goods was occasioned through the negligence of the consignee, and the carrier was not liable.
    Appeal by defendant from the Municipal Court of Chicago; the Hon. Mathew D. Hartman, Judge, presiding. Heard in the second division of this court for the first district at the March term, 1925.
    Reversed.
    Opinion filed October 6, 1925.
    Kretzinger, Kretzinger & Smith, for appellant.
    Theodore Rubovits, for appellee.
   Mr. Justice Fitch

delivered the opinion of the court.

The judgment appealed from in this case was for the value of one case of woolen cloth purchased by plaintiff from a manufacturer in Massachusetts and shipped to the plaintiff. When it reached Chicago over the line of the defendant company, the latter gave notice to the plaintiff of its arrival here upon a form which contains the following: “This notice does not constitute an order unless signed by the consignee.” Plaintiff received the notice, stamped its name upon it three times with a rubber stamp and gave it to a messenger boy to be delivered to a firm of teamsters who did all the plaintiff’s hauling. The messenger boy did not deliver the notice to plaintiff’s teamsters, but either lost it or delivered it to a stranger. The person who found it, or received it from plaintiff’s messenger boy, presented it to defendant, paid the freight charges, and took the goods from defendant’s freight house in Chicago.

In a suit of this character, if the proof shows that the property is misdelivered by the carrier through its negligence, or that of its agents, the carrier is liable in assumpsit for the value of the property (Chicago & N. W. R. Co. v. Ames, 40 Ill. 249), but if such misdelivery is caused by the negligence of the consignee, whereby the carrier is misled as to the person to whom delivery should be made, the carrier is not hable. (10 Corpus Juris 267.) “In such case the familiar principle would be applicable that where one of two innocent parties must suffer by the fraud of another, the loss should fall upon him who enabled such third person to commit the fraud.” (Raleigh & G. R. Co. v. Lowe, 101 Ga. 320, 330.) It appears from the evidence that both plaintiff and defendant followed their usual practice in similar cases. It was the custom of the plaintiff, upon receipt of such a notice of the arrival of goods, to stamp the notice with a rubber stamp and send it to its teamsters, and the notice thus stamped was used by the teamsters as evidence of authority to the person presenting the same to receive the goods from the defendant and was so treated by both plaintiff and defendant.

Plaintiff cites and relies upon Pacific Exp. Co. v. Shearer, 160 Ill. 215, where it was held that an express company is an insurer of the safe delivery of a package of money to the real person to whom it is consigned and cannot escape liability for a misdelivery by showing that it was delivered to an impostor on the strength of a telegram addressed to the consignee, which the impostor had secured by using the name of the consignee without his knowledge or consent. There are two reasons why that case is not in point: First, the misdelivery in that case was not caused by any act or neglect of either the sender or the consignee, but was due to the company’s own negligence in accepting the telegram addressed to the real consignee as evidence of the identity of the impostor who presented it. Second, the liability of an express company is different from that of a railroad common carrier of goods. An express company belongs to that class of carriers who undertake to make a personal delivery of the goods to the consignee at his residence or place of business, and are held to great strictness in the performance of that duty. (4 R. C. L., sec. 281, p. 826.) This was the rule at common law as to all carriers of goods by land, but when railroads came into existence a modification of this rule was necessitated by the impracticability of actual personal delivery by them, and, hence, a deposit of the goods in the carrier’s warehouse, or such a deposit with notice to the consignee, was made a substitute for the actual delivery required by the common law. (4 R. C. L., sec. 220, p. 752; sec. 278, p. 823 et seq.) This modification was recognized in the early case in this State of Porter v. Chicago & R. I. R. Co., 20 Ill. 408, where it was held that “carriers by railway are neither bound to deliver to the consignee personally, or to give notice of the arrival of the goods, to discharge the liability of common carrier,” but that the duty of such a carrier, and therefore its liability as an insurer of the goods, ceases as soon as the goods are taken from the cars and safely stored in defendant’s freight depot or warehouse. Thereafter its liability is that of a warehouseman only. Speaking of the business of railroads, the court said in that case: “This mode of transportation is so essentially different from that by wagons and other vehicles, that a delivery to the consignee, at his place of business or residence, would be unadapted to their nature and the course of business by which they exist.” In Illinois Cent. R. Co. v. Carter, 165 Ill. 570, 575, it was said: “It is well settled that the duty of a railroad company as a common carrier terminates when it has carried the goods to their destination and there placed them in its own safe depot or other warehouse. The cases in this court so holding are cited in Gregg v. Illinois Cent. R. Co., 147 Ill. 550. Nor is notice to the consignee of the arrival or storage necessary to terminate liability as a carrier, but upon warehousing the liability is at once changed to that of a warehouseman.” To the same effect are the later cases of Gratiot St. Warehouse Co. v. St. Louis, A. & T. H. R. Co., 221 Ill. 418, 425, and Schumacher v. Chicago & N. W. Ry. Co., 207 Ill. 199, 207.

It appears from the evidence in this case that the goods in question had been unloaded from the cars and deposited in defendant’s freight house. It also appears that the notice sent by defendant to the plaintiff stated that the goods would remain there at the risk of the consignee, and (inferentially) that if signed by the consignee, the notice would constitute an order for the delivery of the goods to the person presenting the same.

Under the circumstances, it cannot be held that defendant’s liability was that of an insurer; and there is no evidence tending to prove that defendant was guilty of any negligent breach of its duty as warehouseman. Such being the case, the judgment will be reversed without remanding.

Reversed.

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


text:
    The People of the State of Illinois ex rel. Anton Leleikis, Appellee, v. William E. Dever, Mayor, etc., et al., Appellants.
    Gen. No. 30,125.
    1. Mandamus — right to issuance. A writ of mandamus is not a writ of absolute right, and should not be issued in doubtful cases.
    2. Mandamus — control or review of discretion of city officials. Mandamus cannot be used to control or review the discretion of properly authorized city officials in the matter of issuing licenses, unless there has been a clear abuse of that discretion.
    Appeal by defendants from the Superior Court of Cook county; the Hon. Waiter P. Steffen, Judge, presiding. Heard in the second division of this court for the first district at the March term, 1925.
    Reversed.
    Opinion filed October 6, 1925.
    Francis X. Busch, Corporation Counsel, for appellants; Albert H. Veeder and Bernard A. Condon, Asst. Corporation Counsels, of counsel.
    .No appearance for appellee.
   Mr. Justice Fitch

delivered the opinion of the court.

This appeal is from a judgment in a mandamus proceeding directing defendants to issue a license to the petitioner “to operate as a retail beverage dealer” at 1401 West 47th street, Chicago. No brief has been filed by the petitioner.

The evidence tends to prove that one Julius Bunis, who owns the premises mentioned, operated a “soft drink parlor” there prior to July 15, 1924, when his license was revoked; that he then leased the place to petitioner, who is a laborer living next door and who works for a man “in the scrap iron business”; that petitioner paid one month’s rent, but never took possession; that “as he couldn’t speak English very well,” he “sent somebody down to apply for the license”; that a policeman “investigated,” found Bunis in possession operating without a license, and after a talk with bim reported that in his opinion the use of petitioner’s name in the application for a license was a mere subterfuge to enable Bunis to obtain another license. Upon this report the application of petitioner was refused.

The writ of mandamus is not a writ of absolute right and should not be issued in doubtful eases. (People v. Blair, 292 Ill. 139.) Nor can it be used to control or review the discretion of properly authorized city officials in the matter of issuing licenses unless there has been a clear abuse of that discretion. (Harrison v. People, 222 Ill. 150.) While such officials may not arbitrarily refuse to issue such a license, neither will they be compelled to issue one when in their discretion, reasonably and fairly exercised, it has been refused by them. (Harrison v. People, supra, 153.)

No such abuse of discretion was shown in this case, and therefore the judgment was erroneous and is reversed.

Reversed.

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


text:
    Herbert Prentice Crane, Jr., for use of Grover C. Niemeyer, Appellee, v. Illinois Merchants Trust Company, Appellant.
    Gen. No. 30,137.
    1. Fraudulent conveyances — creation of spendthrift trust for trustor’s benefit. A debtor cannot create a spendthrift trust, and thus make his property not subject to existing debts, whether or not the trust is secret
    2. Execution — effect of return nulla bona. Returns of executions nulla bona are prima facie evidence that judgment debtor has no property other than that claimed to have been transferred in fraud of creditors.
    3. Fraudulent conveyances — when creation of trust presumptively fraudulent. Creation of spendthrift trust by debtor leaving no property for judgment creditors was presumptively fraudulent.
    4. Garnishment — personal property subject to spendthrift trust. General rule that a judgment creditor in garnishment acquires no greater rights against the garnishee than the debtor has and can only recover such indebtedness as could be recovered by debtor in action of debt, or indebitatus assumpsit, is subject to exception in cases of fraud affecting rights of judgment creditors, as where judgment debtor has created a spendthrift trust for his own benefit.
    Appeal by defendant from the Superior Court of Cook county; the Hon. Timothy D. Hurley, Judge, presiding. Heard in the second division of this court for the first district at the March term, 1925.
    Affirmed.
    Opinion filed October 6, 1925.
    McCulloch & McCulloch, for appellant; William D. Doggett, of counsel.
    Maclay Hoyne, for appellee.
   Mr. Justice Fitch

delivered the opinion of the court.

By this appeal, defendant seeks to have reversed a judgment against it for $2,878.60 in a garnishment preceding.

In August, 1924, Grover C. Niemeyer, an attorney, recovered a judgment against Herbert Prentice Crane, Jr., upon a promissory note for $2,500, given for services rendered prior to September 15, 1921. An execution was issued at once and returned nulla bona, whereupon a garnishment proceeding was instituted in the name of the judgment debtor, for the use of Niemeyer, against defendant. In its answer to the interrogatories filed, the defendant stated that it was not indebted to Crane and had no property of his in its possession except such property as was held under the terms of two trust agreements, copies of which are attached to the answer.

The first of these agreements was made December 5, 1910, between Crane and the Merchants Loan & Trust Company, as trustee. It recites that by a trust agreement made in 1898, Jessie D. Crane, the mother of Herbert Prentice Crane, Jr., assigned and transferred the sum of $61,141.66 to Thomas L. Chadbourne, Jr., in trust for the uses and purposes therein stated; that the Merchants Loan & Trust Company succeeded Chadboume as trustee; that by the terms of the trust agreement, the principal sum so transferred “is to be divided” on August 7,1913, and Herbert Prentice Crane, Jr., “shall then be entitled to the possession of his share of said trust fund”; that Crane, Jr., “desires to be relieved from the burden and care of the control and management of his share of said trust fund and desires to be relieved from the burden and care of the proper application of the income from said trust fund during the term hereinafter mentioned,” and therefore, in consideration of one dollar, he assigns and transfers to the Trust Company 6 ‘ all his share of the principal or corpus of said trust fund mentioned in said instrument of assignment and trust agreement, dated December 17, 1898, and any and all accumulations thereof, and all the right, title and interest of the said Herbert Prentice Crane, Jr., in and to the said trust property mentioned in said instrument,” and the securities in which the trust fund may be invested at the time for the distribution thereof, to be held by the Trust Company upon the following trusts: First, to hold and manage the same, invest and reinvest, etc.; second, to pay all expenses of the trust, taxes and assessments, and reasonable compensation for its services as trustee ; third, to pay over the net income from the trust estate, in convenient instalments, from time to time, to Jessie D. Crane, mother of Herbert Prentice Crane, Jr., to be used and expended by her “in her absolute discretion, for the support, maintenance and comfort of said Herbert Prentice Crane, Jr.,” and she may, in her discretion, pay all or any part of the income in her hands to him, “but no part of such income, principal or corpus of said trust estate or property shall be pledged, assigned, transferred, sold, or in any manner whatsoever anticipated, charged or encumbered by the said Herbert Prentice Crane, Jr., or be in any manner liable while in the possession of the trustee hereunder, or in the possession of said Jessie D. Crane, for the debts, contracts or engagements of the said Herbert Prentice Crane, Jr.”; fourth, that in case of the death of Jessie D. Crane, or her refusal or inability to act, Crane, Jr., shall have the right to appoint her successor, and in default of such appointment, the trustee “may pay, use and expend the said net income, in its discretion, for the support, maintenance and comfort of the said Herbert Prentice Crane, Jr., and may from time, in its discretion, pay over to said Herbert Prentice Crane, Jr., any part or all of the said net income in its possession”; fifth, that when Crane, Jr., attains the age of forty years, to wit, on January 5, 1924, the trustee shall deliver “all the principal or corpus of said trust estate” to said Crane, Jr., on his own personal receipt; sixth, that if Crane, Jr., should die before receiving the principal, then such principal, together with any income remaining in the possession of the trustee, shall be delivered as he may direct by his last will and testament or in default of such direction, then to his heirs at law; seventh, that- the trustee may resign at any time on thirty days’ notice in writing, in which ease Crane, Jr., may appoint a successor in trust, or, in default of such appointment, a successor may be appointed by any court of original general jurisdiction in Cook county, Illinois.

The second of such agreements was executed November 28, 1923. It is dated October 17, 1923, and is between Herbert Prentice Crane, Jr., and the defendant. After stating that the name of the trustee was changed to that of defendant, it contains the same recitals and provisions as the agreement of December 5, 1910, and extends all such provisions for one year, until January. 5, 1925.

The answer further states that under the first trust agreement the Merchants Loan & Trust Company received, on December 5, 1910, stocks, bonds and cash aggregating $56,250.96 as the distributive share of said Crane, Jr., in the trust estate created by his mother, and that the defendant now holds as trustee under the first agreement, “as extended” by the second, stocks and bonds aggregating $105,623.85.

The answer further states that on March 28, 1923, it received a notice from Grover Niemeyer that Crane, Jr., had given him a promissory note for $2,500 payable on January 5, 1924, and had executed an assignment of enough of the trust fund in its possession to pay the note with interest. y

The judgment order states that the cause .whs submitted to the court for trial without a jury upon the affidavit for garnishment, the answer of the garnishee, the replication of the plaintiff, a stipulation of the parties, and that the court heard “the evidence, the statements, admissions and arguments of the attorneys for the respective parties.” The bill of exceptions shows that no testimony was taken, but that the facts stated in the answer were accepted as true, that defendant stipulated on the trial “that the services for which the note was given, upon which judgment was rendered” in Niemeyer’s favor against Crane, “were rendered before September 15, 1921, and that the note was made payable January 5, 1924.” The bill of exceptions also shows that this case was tried with another in which Frederick A. Bangs was the beneficial plaintiff, brought upon a judgment in his favor against Crane, entered the same day, upon a like note given at the same time for $7,500 for like services, and payable at the same time.

From the agreements set forth in defendant’s answer, it is clear that but for the agreement of December 5, 1910, between Herbert Prentice Crane, Jr., and the Merchants Loan & Trust Company, Crane would have been entitled to demand and receive from that company on August 7, 1913, all his share of the trust fund created by his mother for his benefit in 1898, and that the amount of such share at that time was in excess of $50,000. It is equally clear, from the documents in evidence and the stipulations of the parties in these suits, that when the second agreement was made, in October or November, 1923, Crane, Jr., had become indebted for services rendered long prior to that time to Niemeyer in the sum of $2,500 and to Bangs in the sum of $7,500, and had given them his notes payable on January 5, 1924, and that but for the execution of the second agreement, Crane would have been entitled to receive and doubtless would have received from defendant, on the day his notes to Bangs and Niemeyer were due, the possession of personal assets worth over $100,000. By the execution of that agreement with defendant, Crane permitted and authorized defendant to retain all of that fund in its possession for another year, in order to provide for his own support, comfort and maintenance, and, as the agreement expressly states, to prevent any part of the fund from being charged with the payment of his debts during that time. During that year, he suffered executions against him to be returned: “No property found and no part satisfied,” thus giving rise to the presumption that he had no other property with which to pay his debts. Both such agreements were voluntary, without consideration, and for the expressly declared purpose of placing such property beyond the reach of Crane’s creditors. Under all the authorities, such an agreement is fraudulent and void as to creditors.

The rule on this subject is expressed as follows in 27 Corpus Juris 600:

“The general rule is well settled that a person cannot settle his estate in trust for his own benefit, so as to be free from liability for his debts. * * *
The fact that the grantor is a spendthrift is of course immaterial. * * * Property, so settled is assets in the hands of the trustee for the payment of debts; and the giving of unlimited discretion to the trustee does not take the case out of the general rule. * * * The rule is founded upon the self-evident proposition that a man’s property should be subject to the payment of his debts, although he has vested a nominal title thereto in some other person. The intention of the parties to such transfer, whether honest or fraudulent, is wholly immaterial.”

To the same effect are 25 R C. L. 355, sec. 6, and Bump on Fraudulent Conveyances (3d Ed.), p. 210. In 12 R. C. L. p. 544, sec. 68, it is said:

“No effort of a debtor to hinder or delay his creditors is more severely condemned by law than an attempt to place his property where he can enjoy it, but require his creditors to await his pleasure for the payment of their claims out of it. A man cannot be the beneficial owner of property and still have it exempt from his debts. Subsequent as well as existing creditors may have such transaction declared fraudulent. A conveyance to the use of the grantor is fraudulent in law, and void as to creditors, -without regard to the intent with which it was made.”

That this is the law in Ulinois, as well as elsewhere, is shown by the following quotation from McKey v. Cochran, 262 Ill. 376, 384:

“A conveyance of real estate by a debtor to another, to be held wholly or in part in trust for him, is a fraud on creditors whether so intended or not, as it places beyond their reach a valuable right and gives to the debtor the beneficial enjoyment of what rightfully belongs to them. (Moore v. Wood, 100 Ill. 451; Mitchell v. Sawyer, 115 Ill. 650; Beidler v. Crane, 135 Ill. 92; Bostwick, v. Blake, 145 Ill. 85.) In such a case the conveyance is void as to existing and subsequent creditors. The fraud is a continuing one, and may actually operate as such, as well in reference to debts contracted after as before the conveyance. (Guffin v. First Nat. Bank, 74 Ill. 259; Jones v. King, 86 Ill. 225 ; Gordon v. Reynolds, 114 Ill. 118; Bostwick v. Blake, supra.)

That case was cited and followed in People’s Bank v. Wood, 207 Ill. App. 602.

The rule stated has been applied most frequently, perhaps, in cases where a conveyance of property has been made by one person to another in consideration of a promise by the latter for the future support of the former. Harting v. Jockers, 136 Ill. 627, was such a case. Jockers was planning to build a house on his farm and asked one Heuster for a loan of $2,000 for that purpose. Heuster was a widower, 81 years old, without a home and was possessed of $2,000 in money, $400 in personal property and some notes of the face value of $1,800, which were supposed to be good at that time but afterwards turned out to be worthless. He proposed to Jockers to pay Jockers the $2,000 he desired to borrow, if Jockers would build his house larger, so that Heuster could have a room of his own in it and Jockers would board him, do his washing, etc., and take care of him while he lived. Jockers consented to this and an agreement to that effect was entered into, which was fully carried out by both parties in good faith. Less than a year thereafter Heuster died and a claim was allowed' against his estate in favor of Harting upon a note which had been given by Heuster to his son nearly ten years before and which, was payable one year after its date. The estate being insolvent, Harting filed a bill to charge Jockers with the payment of his claim. The circuit and Appellate Courts held that no presumption of fraud, or intent to hinder or delay creditors, could be inferred from the transfer by Heuster to dockers, for the reason that Heuster retained property which he evidently believed at the time to be sufficient to satisfy all his existing creditors, viz., the notes for $1,800 executed by supposedly solvent makers; and the Supreme Court said that while the burden was upon dockers “to overcome the presumption arising from the conveyance or transfer of property to him, for the use and benefit of Heuster, by showing circumstances which rebut the presumption of fraud, we are not prepared to say that the lower courts have erred in their finding.” In its opinion the court said (p. 631):

“A debtor may not, by gift or other voluntary transfer of his property to others, or by transfer and conveyance of it for his own use, as, for his future support, hinder or delay his creditors in the collection of their just demands. * * * It is wholly immaterial that no actual fraud is shown to have been intended, for the result would be the same, — that is, to give the debtor the beneficial enjoyment of that which rightfully belongs to the creditor; and the transaction is therefore wanting in the good faith necessary to the validity of the contract. If the act done will necessarily have the effect of hindering and delaying creditors, the law presumes that it was done with that fraudulent purpose and intent.’'
In Annis v. Bonar, 86 Ill. 128, in which a debtor conveyed all his real estate to another, taking back a written instrument binding such other to support and maintain the grantor and his family during his lifetime, the court said: “The law allows no man, beyond the specific exemptions of the statute, by .any form of contract or mode of disposing of property, whatever it may be, to secure the use of his property to himself, to the exclusion of his creditors. ’ ’
In Petty v. Moores Brook Sanitarium, 110 Va. 815, it was held that the owner of property, even though a spendthrift, cannot convey his property to a trustee for the sole benefit of the grantor for life, with power to dispose of the trust property at his death, and yet exempt the property from the payment of debts he may thereafter contract. In that case, the court reviews some of the authorities on this question, and closes as follows: “No case has been cited and we are not aware of one which has carried the doctrine of spendthrift trusts to the extent proposed in this case. A man who enjoys the benefits of wealth, however imprudent and shiftless he may be, should also bear its responsibilities, one of which is liability for his just obligations.”

These quotations and citations could be multiplied almost indefinitely. There is no dissent in any of the decisions from the general principles thus stated. It is true that some of the decisions hold that such conveyances are void only as to existing creditors, while others, including McKey v. Cochran, supra, and many cases in other States (see 27 Corpus Juris 600), hold that the conveyance may be avoided by subsequent as well as existing creditors. But the question whether the right to attack such a conveyance is available to subsequent as well as to existing creditors is not material in the present case, for the reason that Niemeyer was a creditor of Crane, Jr., at the time the agreement of October 17, 1923, was made and for nearly two years before that time, and that fact was known to the defendant in March, 1923.

Defendant’s counsel concedes that the rule in other States is as above stated, but insists that in this State the rule applies only in cases where there has been a conveyance of property with a secret trust reserved for the benefit of the grantor. If such a distinction exists, it cannot avail either Crane or the defendant, for although their agreement was in writing, there is no evidence that it was known to any one but them. So far as the evidence shows, the agreement of October 17, 1923, was as secret as if it had been a private oral understanding. It is apparent that it was not known to Bangs or Niemeyer, for their notes were made payable on January 5, 1924, — the very day the first agreement expired. In Tyler v. Tyler, 126 Ill. 525, 539, it is said: “It is quite manifest that a trust, though expressed in writing, may be secret,— as, if the fraudulent grantee or assignee, without the knowledge of any one other than the fraudulent grantor or assignor, execute a writing declaring the trust, and hand it to the fraudulent grantor or assignor, and he thereafter keep it secretly in his own possession. The writing may be as effectually hid from the world at large, as is the memory of the fact not reduced to writing.” However, no case has been cited, and we have found none, holding that the general rule applies only to cases where a secret trust was shown. The rule unquestionably applies to such cases, but it applies as well to all cases where the purpose or effect of the trust agreement is to hinder and delay creditors in the collection of their just claims, “whether it is open or secret — expressed in the conveyance, or the subject of a private understanding.” (Wilson v. American Nat. Bank, 7 Colo. App. 194, 42 Pac. 1037.) This quotation is taken from a case which was decided under a statute making such trusts void as to creditors, but the statute was only declaratory of the general rule apart from any statute, as is shown by the foregoing citations. In 2 A. L. B. 1438, the cases are collected in a note as to the question of the validity as against creditors of a conveyance made in consideration of an agreement to support the grantor. It states the general rule substantially as we have stated it, and adds that: “In a number of cases the invalidity of a conveyance in consideration of the future support of the grantor has been put on the ground that it created a secret trust for the benefit of the grantor, though, as appears from the cases heretofore cited, the' secrecy of the consideration is not essential to the application of the general rule.” Among the cases thus cited are Annis v. Bonar, supra, Harting v. Jockers, supra, and several others in Illinois, in addition to many from other States.

It has been held that the rule stated does not apply to a case where a solvent debtor conveys property to another to hold for the grantor’s benefit, provided he retains enough other property to pay all his existing creditors. This qualification or exception to the general rule was recognized in the two cases last cited; and on this theory, it is contended by defendant’s counsel that there is no proof that Crane did not have enough other property to pay all his debts when the trust agreement, dated October 17, 1923, was executed. While there is no direct proof that such was the fact, it does appear that less than a year after that time, the Niemeyer and Bangs judgments were entered against him for over $10,000 and that executions were returned nulla bona in both cases. Such returns are prima facie evidence that Crane had no other property at the time of such returns and we think such returns, together with the facts regarding the making of the notes and partial assignment to Niemeyer and Bangs of the funds which, by the first trust agreement, were payable to Crane by defendant on January 5, 1924, were prima facie evidence that he had no other property in October or November, 1923. (Vanston v. Davidson, 41 Ill. App. 646, 648; Strong v. Lawrence, 58 Iowa 55.) Moreover, the case of Harting v. Lookers, supra, holds that such a transfer of property as was made to defendant at that time is presumptively fraudulent, and that the burden of proof is upon the party asserting the validity of the transfer to overcome that presumption. Defendant made no attempt to sustain the burden of proof resting upon it to show, if it could, that Crane retained other property sufficient to pay his. existing creditors. Under the authorities, therefore, Crane’s transfer at that time of all his property to defendant, for the purposes stated in the agreement, was fraudulent and void as to such creditors.

The record shows that in the trial court the main, if not the only, contention of defendant was that the property in question could not be reached by garnishment process, but that the transfer thereof could only be attacked by a bill in equity. This contention is not made here in that form, but in substance it is repeated by including among the points and authorities in defendant’s brief, first, that such a conveyance, even though fraudulent as to creditors, is good as between the parties to it, and cannot be set aside at the suit of the grantor; and second, that “a garnisheeing creditor can only recover such property as the judgment debtor might recover at law from the garnishee.” These propositions, though stated in the brief, are not argued; and while they are generally correct, they are not applicable to a case of this character. The general rule that a judgment creditor in a proceeding by garnishment acquires no greater rights against the garnishee than the judgment debtor has, and therefore can only recover such indebtedness as could be recovered by the debtor in an action of debt, or indebitatus assumpsit, against the garnishee (Webster v. Steele, 75 Ill. 544), is subject to an exception in cases of fraud affecting the rights of judgment creditors (Drake on Attachment, sec. 456; Commercial Nat. Bank v. Kirkwood, 172 Ill. 563, 567; Humphreys v. Atlantic Milling Co., 98 Mo. 542, 549; First Nat. Bank v. Knowles, 67 Wis. 373, 390); and in cases where money or personal property of a debtor has been transferred by him for the purpose of defrauding creditors, the transferee may be held liable in a garnishment proceeding for the money or property so conveyed or its proceeds. (Drake on Attachment, sec. 458; Stevens v. Dillman, 86 Ill. 233; Henry v. Murphy & Co., 54 Ala. 246, 256; Cohn v. Malo, 198 Ill. App. 538, 545; 27 Corpus Juris p. 708, sec. 549.) If, as the authorities agree, a transfer of property by one person to another for his own benefit for the purpose of hindering and delaying, and thereby defrauding, his creditors, is void as to such creditors, the transfer is a nullity and may be so treated in a court of law as well as in a court of equity, except, perhaps, where the property transferred is real estate, in which case the aid of a court of equity may be necessary in order to subject it to the lien of a creditor’s judgment.

Finding no reversible error in the record the judgment is affirmed.

Affirmed.

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


text:
    George Hoffman, Appellee, v. Yellow Cab Company, Appellant.
    Gen. No. 30,165.
    1. Highways and stbeets — presumptions as to what is seen 6y taxicab driver. Since position of taxicab driver gave him a better opportunity than his passenger to see an approaching automobile, he must be presumed to have seen what was visible to passenger.
    2. Carbiebs — when contributory negligence of passenger in taxicab for jury. Whether failure of passenger in taxicab to warn driver of approach of another automobile was negligence, and whether it contributed in any degree to a collision, held for jury.
    3. Appeal and ebbor — variance not raised below not reviewed. Question of variance not being raised in trial court cannot be raised on appeal.
    4. Pleading — when variance immaterial. Where declaration of passenger in taxicab injured in collision alleged that cab “ran into and collided" with the other automobile, and the proof was that the other automobile “ran into and collided” with defendant’s cab, an objection that there was a variance was hypercritical.
    Appeal by defendant from the Superior Court of Cook county; the Hon. William N. Gemmill, Judge, presiding. Heard in the second division of this court for the first district at the March term, 1925.
    Affirmed.
    Opinion filed October 6, 1925.
    Samuels & Grossman and C. C. Cunningham, for appellant.
    Charles C. Spencer, for appellee.
   Mr. Justice Fitch

delivered the opinion of the court.

By this appeal the defendant seeks to reverse a judgment against it for $1,500 for damages sustained by plaintiff, who was a passenger in one of defendant’s cabs, on the night of November 19, 1922. Plaintiff lived east of Washington park and took the cab in front of an elevated railroad station on 55th street west of Washington park. The cab driver drove east on 55th street into the park and along the road through the park nearly to a point where the road forks, one branch going to the left towards 54th street, and the other going to the right towards 57th street. After the cab entered Washington park, the driver turned to the left of the center of the street, apparently to go into the left-hand fork of the road. At that time, the plaintiff, from his position on the rear seat of the cab, saw the lights of an automobile approaching about 250 feet to the east, but did nothing and said nothing to the driver. A little further on, the cab driver turned abruptly into the south fork of the road and was struck and overturned by the other automobile.

Defendant contends that the court erred in not directing,. a verdict for the- defendant at the close of the plaintiff’s evidence, for the, reason, it is said, that plaintiff was guilty of contributory negligence as a matter of law; in failing to warn the driver of the approach of the other automobile. The driver did .not testify. His position gave him a better opportunity than the plaintiff had, to see the approaching automobile, and he must be presumed to have seen what was visible to the plaintiff. But, if he did not see it, it does not follow, as a matter of law, or a necessary conclusion of fact, that plaintiff’s failure to warn the driver was negligence on his part or that it contributed in any degree to cause the accident in question. Whether he was guilty of contributory negligence was a question of fact upon which reasonable minds may reasonably differ. A warning to the driver from a rear-seat passenger might well distract the driver’s attention, thereby tending rather to cause than to prevent such an accident. As is aptly said in Hedges v. Mitchell, 69 Colo. 285, 289: “The rear seat driver is responsible for enough accidents as the score stands without the aid of judicial precedent. The place for a passenger who knows better than the driver * * * when, where, and how it should be operated is at the wheel.” The court did not err in refusing to direct a verdict. The only other point urged is that there was a variance between the proof and the declaration. As to this, it might be sufficient to say that the question of variance was not raised in the trial court, and therefore cannot be raised here. However, the alleged variance consists in this, that the declaration alleges that defendant’s cab “ran into and collided” with the other automobile, while the proof is that the other automobile “ran into and collided” with defendant’s cab. The objection is hypercritical. The declaration alleges there was a collision, and the proofs show that allegation to be true.

The judgment is affirmed.

Affirmed.

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


author: Mr. Justice Gridley

text:
    John Harris, Appellee, v. Frank Mickle, Appellant.
    Gen. No. 30,067.
    1. Appeal and error — points not argued considered as waived. Assignments of error not argued in the brief are considered as waived.
    2. Landlord and tenant — leasehold proper subject matter of sale. Leasehold of one operating restaurant was proper subject matter of a sale along with the business.
    3. Landlord and tenant — purchase of business as equitable owner of leasehold. Under an agreement for sale of restaurant business and assignment of lease, held that purchaser became equitable owner of leasehold, seller of business retaining legal title thereto as additional security for payment of mortgage notes.
    4. Landlord and tenant — implied warranty as to right to assign lease. Agreement on sale of restaurant business to assign lease when notes were paid amounted to an implied warranty on seller’s part that he had a legal right to assign the lease.
    5. Landlord and tenant — measure of damages for failure to assign lease. Where lessee operating restaurant sold business and agreed to assign lease on payment therefor, but after payment lessor refused to accept purchaser as tenant except on payment of higher rent, and seller assisted in obtaining a new lease at higher rent, measure of damages for breach of agreement to assign lease was difference between old rent and new rent.
    6. Landlord and tenant — when agreement to assign lease not void. Agreement of lessee selling business to assign lease was not void because the lease provided that it could not be assigned without written consent of the landlord, such provision being for the benefit of the landlord only.
    7. Appeal and error — no review in absence of assignment. No complaint can be made on appeal of the giving of a certain instruction where no error has been assigned on the giving of instructions.
    Appeal by defendant from the Circuit Court of Cook county; the Hon. Kickham Scanlan, Judge, presiding. Heard in the second division of this court for the first district at the March term, 1925.
    Affirmed.
    Opinion filed October 6, 1925.
    William: A. Bither, for appellant.
    B. F. Richolson, for appellee; James P. Graham, of counsel.
   Mr. Justice Gridley

delivered the opinion of the court.

This is an appeal from a judgment against defendant for $1,935, rendered after verdict by the circuit court of Cook county in an action in assumpsit for damages occasioned by the failure of defendant, lessee, to assign a certain lease of a building, known as 3852 South State street, Chicago, and used as a restaurant, in accordance with the terms of a written agreement.

The suit was commenced on March 14, 1922. Plaintiff’s declaration, consisting of one count, alleged in substance that on January 27, 1920, defendant was the owner and possessed of certain goods and fixtures used in said building, which building had been leased to him by one Bunde under written lease, expiring April 30, 1924, and providing for the payment by defendant of the monthly rental of $115 during the term; that by written agreement, dated January 27, 1920, defendant sold said goods and fixtures and said restaurant to plaintiff and agreed to assign to him said lease for the total consideration of $7,500; that it was recited in the agreement (set out in Time verba) that plaintiff had paid $3,500 in cash on account of the purchase price and had received a bill of sale from defendant of said goods and fixtures, and had given a chattel mortgage thereon to defendant, securing the balance of the purchase price of $4,000, to be paid in instalments, as evidenced by seventeen notes, the first being due on April 1, 1920, and the last on August 1, 1921; that, in consideration of the foregoing, it was agreed that from and after the date of the agreement plaintiff would pay to the lessor, Bunde, the monthly rent of $115, during the term of the lease, and that “as soon as second party (plaintiff) shall complete the payments due on the notes given under the chattel mortgage aforesaid, first party (defendant) will thereupon assign all his right, title and interest in and to the said lease * * * to said second party (plaintiff) that plaintiff completed the payments due on the chattel mortgage notes, and although he often requested defendant to assign to him all of defendant’s right, title and interest in said lease, the latter failed and refused so to do; that, in consequence thereof and to secure his enjoyment of the use and occupancy of said building, plaintiff “was forced to and did upon September 25, 1920, enter into a lease with the said Bunde as lessor and himself as lessee,” for a term beginning October 1, 1920, and ending April 30,1926, at a monthly rental of $160; and that thereby he has paid or has become obligated to pay from October 1, 1920, until April 30, 1924 (the end of the term of the former lease), $45 more each month for 43 months, to his damage in the sum of $1,935, for which sum he brings his suit, etc. Defendant filed a plea of the general issue.

The trial was had in November, 1924, and the jury returned a verdict finding the issues for plaintiff and assessing his damages at $1,935. After defendant’s motions for a new trial and in arrest of judgment had been overruled the judgment appealed from was entered against defendant on January 3, 1925. It was stipulated that the original bill of exceptions, instead of a copy, might be incorporated in the transcript to be filed in this Appellate Court; and in said bill, duly certified by the trial judge, there is the statement, evidently in the handwriting of said judge, that “on the motion for a new trial defendant’s counsel said he relied on only two points in support of his motion (1) a variance between the allegations of the declaration and the proof; (2) there was no evidence that the plaintiff paid the rent called for in the second lease.” Even if these points could be held as being included in defendant’s ten 'assignments of error as made in this Appellate Court, they are not argued in his counsel’s brief here filed, and, hence, must be considered as waived. (Glos v. Davis, 216 Ill. 532, 534; International Harvester Co. of New Jersey v. Industrial Board of Illinois, 282 Ill. 489, 492; Sellers v. Puritan Product Co., 217 Ill. App. 617, 619.) Such of defendant’s assignments of error as may be considered as having been argued in said brief are (1) the refusal of the court to instruct the jury to find the issues for defendant as per motions to that effect made by him at the close of plaintiff’s evidence and at the close of all the evidence; and (2) the verdict and judgment are against the law and the evidence.

Plaintiff and defendant were the only witnesses who testified. Plaintiff introduced in evidence the agreement of January 27, 1920, defendant’s bill of sale to him, the chattel mortgage, certain of the mortgage notes marked paid, and the second lease from Bunde to plaintiff, all as mentioned in the declaration. It appears that plaintiff paid to defendant the last mortgage note on September 12,1921, about one month after its maturity, but about six months before the present suit was commenced. Both before and after the payment of all of the mortgage notes plaintiff frequently requested defendant that he assign to him, or give him possession of, the first lease from Bunde to defendant, but defendant refused these requests, and said lease was not introduced in evidence. It was not disputed,- however, that its terms were as stated in the declaration. Further facts were disclosed from the testimony, in substance as follows: Plaintiff took possession of the building on January 27, 1920, and thereafter conducted a restaurant business therein. He had been an employee of defendant in the restaurant. On February 1, 1920, he mailed a check of $115 to Bunde for the February, 1920, rent, but the latter returned the check to him without comment. He immediately informed defendant of these happenings, and, at defendant’s suggestion, he paid the monthly rent to defendant and the latter sent a' check therefor to Bunde until and including September, 1920. During that month Bunde, by' ágent, informed plaintiff that he did not sanction plaintiff’s tenancy and would not agree to any assignment of the lease to plaintiff (evidently because his consent thereto had not previously been secured), and that plaintiff would have to vacate the building or sign a new lease himself to Bunde at the increased monthly rental of $160. Plaintiff immediately notified defendant of the position Bunde had taken, and thereafter negotiations were had between the agent of Bunde and plaintiff and defendant and their respective attorneys, which finally resulted in the execution on September 25, 1920, with defendant’s knowledge and consent, of the second lease from Bunde to plaintiff at said increased monthly rental, and for a term two years longer than the unexpired term of the first lease. Defendant signed this lease as a guarantor, guaranteeing to Bunde that plaintiff would pay the stipulated rent and would perform all of his covenants and agreements mentioned in the lease. Thereafter plaintiff continued to run the restaurant in said building, retaining possession under said second lease.

Under all the facts and circumstances disclosed we are of the opinion that the trial court did not err in refusing to instruct the jury to find for the defendant, and that the verdict and judgment are not against the law or the evidence. The total consideration for the sale to plaintiff of the goods and fixtures in the restaurant, the good will of the restaurant and the unexpired leasehold of the building, was $7,500, as disclosed from said agreement of January 27, 1920. The evidence is undisputed that the value of the goods and fixtures at the time did not exceed $3,500, so that it appears that said good will and the leasehold agreed to be assigned represented about $4,000 of said total consideration, of which the unexpired leasehold at its stipulated rental formed a considerable part. Such leasehold was the proper subject matter of a sale. (Barrett v. Trainor, 50 Ill. App. 420; Potts Drug Co. v. Benedict, 156 Cal. 322, 328.) And we think, under the terms of the agreement, that plaintiff became the equitable owner of the leasehold, — defendant retaining the legal title thereto as additional security for the payment of plaintiff’s mortgage notes. Defendant allowed plaintiff to take the possession which he formerly had under the lease, and positively agreed that, when plaintiff’s notes were paid, he would assign to him all his interest in the lease, which had several years to run. We think that this agreement amounted to an implied warranty on his part that he had the legal right to assign the lease. (Scaling v. Knollin, 94 Ill. App. 443, 448; Linton v. Porter, 31 Ill. 107.) Plaintiff enjoyed the possession of the building until September, 1920, when the landlord notified both parties that either plaintiff must vacate the building or sign a new lease therefor at an increased rental. Under the terms of the agreement we think that defendant was then bound to make an arrangement with the landlord, whereby plaintiff could continue in the possession of the building, until the expiration of the term of the existing lease, without paying a monthly rental of more than the $115, mentioned therein, and, if defendant did not do so, plaintiff might have treated the agreement at an end and then have sued for damages. (McDonnell Motor Hauling Co. v. Morgan Const. Co., 151 Ark. 262.) While defendant did not make such arrangement with the landlord, another arrangement was made, with defendant’s consent, whereby the landlord made a new lease to plaintiff at the increased monthly rent, and defendant, in writing on the new lease, guaranteed the payment by plaintiff of the rent as increased, which increase amounted to $45 per month, or a total sum of $1,935 for the remainder of the term of the former lease. We think that under the circumstances this sum, as found by the jury, properly represents the amount of damages suffered by plaintiff by reason of defendant’s breach of the agreement of January 27, 1920, to assign the former lease to plaintiff. Said former lease was not introduced in evidence, but if it contained a clause (as it probably did) to the effect that defendant should not assign it without the written consent of the landlord, that clause and the fact that defendant agreed to assign the lease to plaintiff when he had paid his mortgage notes did not render said agreement void. (Webster v. Nichols, 104 Ill. 160.) Such a clause is for the benefit of the landlord only (Webster v. Nichols, supra), and, in our opinion, should not prevent, under the peculiar facts in evidence, a recovery by plaintiff of the damages, as assessed by the jury.

Defendant’s counsel also complains of the giving to the jury of a certain instruction offered by plaintiff. The point is not properly before us as no errors are assigned on the giving of instructions. We have, however, examined the instruction and think it contains a correct statement of the law as applied to the facts in evidence and that it was properly given.

Our conclusion is that the judgment of the circuit court should be affirmed and it is so ordered.

Affirmed.

Barnes, P. J., and Pitch, J., concur.