author: Mr. Presiding Justice Gridley

text:
    Hegeman-Harris Company, Inc., Appellant, v. Tebbetts and Garland Company, Appellee.
    Gen. No. 34,903.
    Opinion filed October 9, 1931.
    Rehearing denied October 21, 1931.

      Taylor, Miller, Busch & Boyden and Evans & Robinson, for appellant; Eidlitz & Hulse, of counsel.
    Poppenhusen, Johnston, Thompson & Cole, for appellee ; Edward R. Johnston and Edward J. Fleming, of counsel.
   Mr. Presiding Justice Gridley

delivered the opinion of the court.

In an action in assumpsit, commenced on April 22, 1930, and based upon a building contract, plaintiff (contractor) sought to recover of defendant (owner) the sum of $17,024.88. The cause was tried before the court without a jury and on November 18, 1930, the court found the issues in favor of defendant and entered a judgment against plaintiff for costs. The present appeal followed.

Plaintiff’s declaration consists of two special counts and the common counts. In the first special count the contract, dated March 17, 1928, is set forth in full. It is signed.by defendant, as first party and designated as the “Owner” and by plaintiff, as second party ahd designated as the “General Contractor.” It recites that on December 14, 1927, the parties entered into another contract by the terms of which the contractor was to commence the erection of a building at Nos. 16-30 West Washington street, Chicago; that it commenced the work; that complete plans and specifications have been drawn by Schmidt, Garden and Erik-son, architects; that in pursuance of the work already, done various contracts have been let for parts of the work by the contractor “in the name of and as the agent of the owner ’ ’; and that it has been determined to make a contract between the parties by which the contractor “shall become the General Contractor for the erection and construction of said building, according to said complete plans and specifications.” Then follow 24 paragraphs, some of which are in substance as follows:

Paragraph 1. The General Contractor (plaintiff) is to furnish all labor, materials, etc. necessary for the erection and completion of the store and office building on the premises, as called for by the complete plans and specifications and under the directions of the architects.

Par. 3. The Owner (defendant) is to pay to the General Contractor “the actual cost of said erection and completion plus a fixed fee to the General Contractor of five per cent (5%) on said actual cost” (except on the cost of the steel delivered on which the 'fixed fee is to be 2%) subject to the following qualifications, terms and conditions:

“The General Contractor hereby guarantees to the Owner that the cost of the erection and completion of said building (including the cost of all work heretofore contracted for and/or completed or partially completed by the General Contractor under said contract of December 14, 1927), including the fixed fee of said General Contractor, will not exceed the sum of $2,254,418, which, sum is hereinafter referred to as the ‘Maximum Guaranteed Cost,’ and if the actual cost of said building, as above defined, inclusive of the fixed fee of the General Contractor, exceeds said Maximum Guaranteed Cost, then the General Contractor agrees to pay from its own funds all amounts in excess of said Maximum Guaranteed Cost.” (Then follows the statement that in said Maximum Guaranteed Cost no provision has been made for seven mentioned items entering into said construction. Two of these items are (4) “the cost of bonds, if any, furnished by subcontractors,” excepting one mentioned bond already given, and (7) “the amount by which any subcontract let at the direction of the Owner shall exceed the amount of any bid for the same work received by the General Contractor from a subcontractor, who shall be approved by the Architects and whom the Owner directs the General Contractor not to contract with”). . . .

“In no event however shall the Owner be required to pay to the General Contractor a greater amount than the actual cost of the erection and completion of said building according to said complete plans and specifications, plus said fixed fee of said General Contractor, as aforesaid.”

Par. 4. “The General Contractor may with the written approval of the Architects and the Owner, sublet all or any portion of the work required to be done hereunder.” . . . “The question of requiring surety bonds from the subcontractors, or any of them, shall be determined by the General Contractor.”

“The General Contractor shall, however, and does hereby, assume full responsibility for the performance by the subcontractors, in the manner and under the conditions provided and required under the complete plans and specifications and the terms of this agreement, of the work called for by such subcontracts, and full responsibility for the performance of all work remaining unfinished under any and all contracts heretofore let by the General Contractor in the name of and as agent of the Owner” (subject to certain qualifications mentioned in succeeding paragraphs.)

Par. 10. The General Contractor is to submit monthly requisition statements to the Owner and Architects, showing all work done by it and the cost thereof, and also all work done and/or materials furnished by any subcontractor together with the amount due therefor. ‘‘Architects’ certificates shall be issued within ten (10) days after such requisition statement is made therefor for the amounts as determined by the Architects to be due the General Contractor for the work done by said General Contractor, including the proportionate ámount of the fixed fee then due to the General Contractor and for 85 per cent of the amount due any and all subcontractors. ’ ’

Par. 11. After the work of any subcontractor has been completed and a sufficient time has elapsed to demonstrate that such work has been properly done, etc., “all or any part of said 15 per cent reserved from the amount due any subcontractor shall, upon architects’ certificates be paid to the General Contractor for such subcontractor.”

Par. 13. “All moneys at any time paid hereunder to the General Contractor shall be deposited by it in a special bank account-in the Bank of America, in which no other funds are to be deposited except the special trust fund of $10,000, hereinafter provided for. The moneys in such special bank account at any time are to be applied and disbursed prior to the final completion and payment in full for said improvements only as follows :

1. To the payment of the amount due the General Contractor, as shown by the 'Architects’ certificates issued to it.

2. To the payment of the amount due the subcontractors, material men and others as directed by Architects’ certificates theretofore issued.” . . .

Par. 20. ‘1 The Owner reserves the right to require the General Contractor to employ a subcontractor designated by the Owner and approved by the Architects on any part of the work which is to be sublet; and to require the General Contractor to take bids on any part of the work which the General Contractor itself proposes to do, . . .”

In said first special count it is alleged that “plaintiff has done all things necessary for the construction and completion of the building as required under said contract”; that the building “was substantially completed and accepted by the Owner (defendant) more than one year prior to the date of the institution of this suit and has ever since been occupied and used by it and its tenants”; that the total “actual cost” for the construction and completion of the building, “exclu sive of the cost of extras and additions. . . was $2,035,562.20”; that all of said amount, together with the contractor’s fee thereon, has been paid by defendant, except the sum of $17,024.88 (including plaintiff’s fee as contractor); that said last mentioned sum “is the balance of the cost of painting, decorating and wood finishing on said building as provided in the plans and specifications”; and that, although said sum is justly due and owing to plaintiff, defendant has refused upon request to pay the same to plaintiff, etc.

In the second special count similar allegations are made and it is also alleged that “the actual cost of additions and extras under the contract, . . . less deductions, was $253,132.56, which amount has been paid by defendant”; that the “maximum guaranteed cost of $2,254,418,” as provided in the contract, “was increased by said net amount of additions and extras of $253,132.56, making the maximum guaranteed cost, as adjusted, $2,507,550.56”; that “the total actual cost to the general contractor (plaintiff) for the entire work included under the contract, with said net amount of additions and extras, was $2,288,694.76, and the contractor’s fee . . . was $105,964.42, making a total of $2,394,659.18”-; that all of said last mentioned sum has been paid by defendant except the sum of $17,024.88 (including plaintiff’s fee as contractor); and that defendant, although often requested, has refused to pay to plaintiff said sum of $17,024.88, etc.

To the declaration defendant filed a plea of the general issue, and also an affidavit of merits in which it denied that the sum of $17,024,88, or any sum, was due to plaintiff. Prior to the trial defendant was allowed to file an amendment to its affidavit of merits in which it alleged, as an additional defense, the following:

' ‘ ‘ That, pursuant to the terms and conditions of said contract, all payments to be made by defendant to plaintiff were to be made only as shown by architects ’ certificates, issued by the architects named therein (Schmidt, Garden & Erikson) to plaintiff and upon the presentation of such certificates to defendant; and that plaintiff has never received from said architects a certificate for the whole or any part of said sum of $17,024.88, sued for by plaintiff herein, and has never presented an architect’s certificate therefor, or for any part thereof, to defendant. ’ ’

During the trial, in addition to the testimony of witnesses presented by the parties and to certain documentary evidence introduced by plaintiff, including said contract of March 17, 1928, various stipulations or agreements were entered into, one of which is as follows :

“It was agreed by counsel that the amount of overrun on painting was $16,214.17, for labor and materials, plus $810.71, for the contractor’s fee of five per cent, or a total of $17,024.88. It was also agreed that the work was done and the material furnished and had been checked by the architect and found to be actually furnished, and that the total amount in contest in this action, and for which plaintiff sues, is $14,408.41, for the work done by Plamondon-Gabriel and materials furnished. It was also agreed by counsel that Hegeman-Harris Co. (plaintiff) had no subcontract with Plamondon-Gabriel but employed them, and they did the work on a time and material basis, which was paid for by Hegeman-Harris Co.”

And it was further stipulated and agreed as follows:

“That after the default by the Sullivan Co. (subcontractor for the painting, etc.) and after Mr. Evans and Mr. Greenspahn (attorneys) were called into the matter, representing respectively the plaintiff and the defendant, Mr. Greenspahn took the position that under the contract it was the obligation of the contractor (plaintiff) to complete the painting job even though it cost more than the Sullivan contract, and Mr. Evans took the contrary position that it was the obligation of the owner (defendant), and those positions were maintained respectively by the representatives of the plaintiff and the defendant np to the time this suit was brought; and that it was further understood this Work should go ahead and the matter of the construction of the contract should be determined later.”

During the trial, also, plaintiff introduced two letters addressed to it and signed by defendant, by H. A. Loeb, Treas. One letter, dated January 2, 1930, is in part as follows:

“On your alleged claim for the excess cost of the painting, which the architects and ourselves have refused to approve, allow or pay, amounting to $17,024.88, . . . it is understood that you have not released this claim in final settlement, and that you are free to pursue such course as you may determine to collect on this claim.”

The other letter, dated January 13, 1930, is in part as follows:

“This is to acknowledge receipt of your letter of January 8,1930, reading as follows: ‘This is to certi'fy that the undersigned general contractor for the erection of the building at 16-30 West Washington street, Chicago, has completed said building in accordance with the plans and specifications therefor, and that the only outstanding claim in connection with the construction of the building under the contract with the undersigned is the claim of Ralph0 A. Bond & Co. for $2,129.11.’

“We acknowledge that the above letter was given by you in order that we might make an adjustment with the Trust Company who is holding funds on this job and is without prejudice to your claim for $17,024.88, being the excess cost of the painting, . . .

“As to the item of excess cost of painting above specified, it is understood that you have not released this claim in any way, and are free to pursue such course as you may determine to collect on the same. ’ ’

It further appears from the evidence that plaintiff, with the. approval of the architects and defendant, made in all about fifty-two (52) subcontracts for work on the building; that of these subcontractors plaintiff saw fit to require performance bonds of only four or five of them; that one of the subcontracts was made with J. P. Sullivan Co. for the painting, etc. work, whose accepted bid was $17,880; that plaintiff did not require or obtain from it a performance bond; that the Sullivan Co. entered upon said painting etc. work and furnished labor and materials to the value of $7,647; that it was paid $6,500, or 85 per cent thereof; that it abandoned its contract and did no further work on the building; that afterwards plaintiff, with the approval of the architects and defendant, made an arrangement with Plamondon-Grabriel Co., upon a time and material basis, to complete said painting etc. work and the same thereafter was completed to the satisfaction of the architects; that the amount of the Sullivan contract, “as adjusted by extras and additions,” was $17,083.82, which sum was paid to plaintiff; and that.plaintiff, in causing the painting etc. work to be completed through Plamondon-Grabriel Co., expended, in addition to the Sullivan contract prices as adjusted, the said sum of $14,408.41, as stipulated.

It further appears from the terms of the contract sued upon and from other stipulations and agreements made on the trial.as follows:

Maximum guaranteed cost as per contract $2,254,418.00
Stipulated extras to be added thereto .... 253,132.56
Maximum guaranteed cost including said extras .............................$2,507,550.56
Total actual cost of building, including architects’.fees, but excluding said sum of $14,408.41, in dispute for said painting work, as stipulated...............$2,377,634.30
Excess of maximum cost, as guaranteed, over total actual cost......•.......... $129,916.26

It thus appears that, if said sum of $14,408.41 should be allowed to plaintiff and paid by defendant, the total actual cost of the building to defendant would be less than said maximum guaranteed cost by about $115,500.

In urging that the finding and judgment of the trial court in defendant’s favor should be affirmed, defendant’s counsel make the following statements in their printed brief here filed:

“Obviously, the Sullivan Co. did not perform the work called for by its subcontract. By the provisions of paragraph 4 of the contract (referred to above) plaintiff assumed full responsibility for the performance by the Sullivan Co. of the work called for by its subcontract. In other words, it guaranteed that the Sullivan Co. would do the work which its contract obligated it to do in accordance with the plans and specifications. Had the Sullivan- Co. completed ‘the work called for by such subcontract’ there would have been no additional cost to either plaintiff or defendant, for the Sullivan Co.’s compensation was fixed. By reason of the Sullivan Co.’s default the work called for by its subcontract cost an additional $14,408.41. Who should pay this additional cost? That is the law suit.

“Defendant contends that, unless the language of paragraph 4 of the contract is to be robbed of all significance, the agreement of Hegeman-Harris Co., to assume full responsibility for the performance by Sullivan Co. of the work called for by its subcontract, amounts to a guaranty of performance: Sullivan Co. ’s failure to perform the work which it contracted to do was the sole cause of the additional expenditures made necessary in order to finish the Sullivan subcontract. Therefore, as between plaintiff and defendant, plaintiff, who had contracted to see that subcontractors fully performed their subcontracts, should bear the additional expense.”

Replying to the above contentions, plaintiff’s counsel contend that, although by the provisions of paragraph 4 of the contract plaintiff “assumed full responsibility for the performance by the Sullivan Co. of the work called for by its subcontract,” there is nothing in said paragraph 4, or in the entire contract, to sustain the claim that plaintiff guaranteed that the painting work on the building would be done at the price named in the Sullivan Co.’s subcontract. And plaintiff’s counsel further contend that the particular clause (relied upon by defendant’s counsel), in said paragraph 4, was inserted “not as a guaranty of cost, but as one of various clauses to maintain the relation of owner and independent contractor as distinguished from the relation of principal and agent.”

After considering the entire contract, and particularly the provisions of paragraphs 3 and 4, we agree with said contentions of plaintiff’s counsel. We do not find anywhere in the contract that plaintiff guaranteed that the work to be performed by any subcontractor should be performed at the price named in the subcontract. We do find, however, that in paragraph 3 the general contractor (plaintiff) guaranteed to the owner (defendant) that the cost of the entire work on the building, including the fixed fee of said contractor, should not exceed a certain named sum, which is termed the “Maximum Guaranteed Cost.” And in said paragraph 3 there is the further provision that “if the actual cost of said building, . . . inclusive of the fixed fee of the general contractor, exceeds said Maximum Guaranteed Cost, then the general contractor agrees to pay from its own funds all amounts in excess of said Maximum Guaranteed Cost.” And it appears from the stipulated facts and the evidence that if said sum of $14,408.41 (here involved) be paid to plaintiff by defendant, said Maximum Guaranteed Cost will not be exceeded. Furthermore, we are of the opinion that, if the construction as to paragraph 4 of the contract, as urged by defendant’s counsel, is to be adopted, the practical effect is to nullify the provisions of paragraph 3 as to the Maximum Guaranteed Cost of the entire work. It appears from the evidence that there were about 52 subcontracts let for the work on the building and that the aggregate amount of these contracts (exclusive of the “overrun” on the Sullivan Co.’s painting contract) was in excess of $2,150,000. We do not think that under all the provisions of the contract it was the intention of the parties that the general contractor, in addition to guaranteeing that the Maximum Cost of the entire work should not exceed a certain named sum, should also guarantee the performance of 52 separate subcontracts at the respective prices named therein. Such a construction of a “cost plus” contract, as is the present contract, would not in our opinion be fair to the contractor, and the tendency of the courts is to construe such contracts liberally. (Westinghouse, Church, Kerr & Co. v. Long Island R. Co., 145 N. Y. S. 201, 202; Standard Oil Co. v. United States, 264 Fed. 66, 69; see, also, R. F. Conway Co. v. City of Chicago, 274 Ill. 369, 378.)

Defendant’s counsel call attention to a clause in paragraph 4 of the contract where, as they state, the general contractor (plaintiff) is given the right at its discretion to require performance bonds from all subcontractors, and they contend that said clause “clearly indicates the intention of the parties to make the general contractor liable for performance by subcontractors, and at the same time to enable the general contractor to be fully protected against loss by reason of its guaranty.” We fail to see wherein this particular clause has any material bearing on the present issue. Plaintiff was not at fault in failing to require a performance bond from the Sullivan Co. Whether or not a subcontractor’s bond should be required of any subcontractor was, under the wording of said clause, solely within the discretion of the general contractor (plaintiff). And the evidence shows that it required performance bonds from only four or five of the 52 subcontractors.

Defendant’s counsel further contend in substance that, even if the trial court was wrong in construing the contract as placing an obligation upon plaintiff of seeing to it that subcontractors perform the work called for by these subcontracts and at the prices named therein, nevertheless the judgment appealed from was right, for the reason that it was made a condition precedent in the contract that, before plaintiff could recover for the amount here involved ($14,408.41), it must obtain an architect’s certificate therefor and no such certificate was issued, although requested. After considering the provisions as contained in paragraphs 10,11 and 13 (above mentioned) of the contract, wherein architects’ certificates are referred to, we do not think that, because of the provisions in said paragraphs or of any other provisions in the contract, it should be held that the obtaining by plaintiff of an architect’s certificate was a condition precedent to the payment to it of the particular sum which it now seeks. Furthermore, in view of defendant’s letters to plaintiff of January 2, and January 13, 1930 (above set forth), of .the stipulations made upon the trial, and of certain undisputed testimony of plaintiff’s witnesses, Hall and Baxendale, we are of the opinion that, even if the obtaining of an architects’ certificate might be considered as a condition precedent to the payment of said particular sum, the condition should be held to have been waived by defendant. In Andrew Lohr Bottling Co. v. Ferguson, 223 Ill. 88, 93 (a building contract case), it is said:‘1 There can be no doubt of the rule that a party having a right to insist upon a condition precedent to the payment of money or other performance on his part will waive the condition precedent by a total denial of liability or by placing his refusal to perform on other grounds. This rule has often been applied to contracts of insurance, but it is a salutary and well established rule of the common law, the application of which to all contracts will effect justice and cut off subsequently discovered excuses for the violation of contract engagements.” (See, also, Masek v. Chmelik, 169 Ill. App. 589, 592; Connelly v. Wallin, 181 Ill. App. 212, 214.)

Our conclusions are that the superior court erred in entering the judgment appealed from in favor of defendant, and that, under the undisputed and stipulated facts, plaintiff is entitled to recover of defendant the sum of $14,408.41, as a matter of law. Accordingly the judgment of the superior court is reversed, and judgment will be entered here in favor of HegemanHarris Co., Inc. (plaintiff), and against Tebbetts and Garland Company (defendant), in the sum of $14,408.41, together with costs in this and the superior court.

Reversed, and judgment here against defendant.

Keener and Scanean, JJ., concur.


source: Caselaw Access Project

license: Public Domain

text:
    Jeffry Hotel Corporation for the Use of Albert Pick & Company, Defendant in Error, v. Thomas Chicopulos, Plaintiff in Error.
    Gen. No. 34,913.

      Opinion filed October 9, 1931.
    Sinden & Hassell and Clyde C. Fisher, for plaintiff in error.
    Ringer, Wilharte & Hirsch, for defendant in error.
   Mr. Presiding Justice Gridley

delivered the opinion of the court.

On July 1, 1929, Albert Pick & Company, a corporation, caused a judgment by confession for $4,363.40 to be entered in the municipal court against Jeffry Hotel Corporation, on its ten judgment notes payable to Albert Pick & Co. Six of the notes are dated January 8, 1926, and state they are secured by a chattel mortgage. On July 1, 1929, also, an execution having been issued, the bailiff returned it “no property found and no part satisfied. ’ ’ On the same day, also, an affidavit for a garnishee summons against Thomas Chieopulos, together with the usual interrogatories to be answered by him, was filed. He entered an appearance and subsequently filed an amended answer to the interrogatories “no funds,” etc., which answer Albert Pick & Company contested. The cause was called for trial in April, 1930, before the court without a jury, and after hearings had on several days the court, on May 23, 1930, found the issues against the garnishee, and entered judgment against him for $4,363.40. He seeks by this writ of error to reverse the judgment.

The theory of plaintiff’s case is that on January 11, 1929, the garnishee purchased certain hotel furniture, etc. (located in a hotel building at 73rd street and Jeffry avenue, Chicago, and on which furniture, etc. Albert Pick & Co. held said chattel mortgage executed by the Jeffry Hotel Corporation) and afterwards sold the furniture, etc., to one Gus Zettas, without compliance with the provisions of section 1 of the “Bulk Sales Act,” which is in part as follows (Cahill’s St. ch. 121a, ¶ 1, page 2226):

“That the sale, transfer or assignment in bulk of the major part or the whole of a stock of merchandise, or merchandise and fixtures, or other goods and chattels of the vendor’s business, otherwise than in the ordinary course of trade and in the regular and usual prosecution of the vendor’s business, shall be fraudulent and void as against the creditors of the said vendor, unless the said vendee shall, in good faith, at least five (5) days before the consummation of such sale, transfer or assignment, demand and receive from the vendor a written statement under oath of the vendor . . . containing a full, accurate and complete list of the creditors of the vendor,. their addresses and the amounts owing to each as near as may be ascertained, and if there he no creditors, a written statement under oath to that effect; and unless the said vendee shall, at least five days before taking possession of said goods and chattels and at least five days before the payment or delivery of the purchase price, or consideration of any evidence of indebtedness therefor, in good faith, deliver or cause to be delivered, or send or cause to be sent personally or by registered letter properly stamped, directed and addressed, a notice in writing to each of the creditors of the vendor named in the said statement, or of whom the said vendee shall have knowledge, of the proposed purchase by him of the said goods and chattels and of the price, terms and conditions of such sale: . ,

The garnishee’s defense was in substance that at the time of said purchase he had reason to believe, and did believe, that one Harold C. Hayes was the owner and vendor of the furniture, etc.; that he procured a written statement, required by the statute, from Hayes under oath, and in good faith endeavored to comply with said statute and did not knowingly violate it; and, furthermore, that Albert Pick & Co. are estopped by their acts from claiming any violation.

On the trial plaintiff called as its witnesses Chicopulos, the garnishee; Lloyd E. Lee, a credit man in the employ of Albert Pick & Co., and said Hayes. Plaintiff also introduced in evidence an inventory of the furniture, etc., in the hotel building and a chattel mortgage (dated January 13, 1926, recorded January 14, 1926) by the Jeffry Hotel Corporation (By L. Oshman, president, and H. C. Hayes, secretary), conveying to Albert Pick & Co., certain described hotel furniture, etc. as security for an indebtedness of $7,794.83, evidenced by 24 notes, each (except the last) for $324.78, and dated January 8, 1926, and maturing monthly thereafter. Por the garnishee one of his attorneys, Albert Hassell, testified, as did also William W. Corlett, who in January, 1929, was Hayes’ attorney. The garnishee did not again testify. Certain writings were, however, introduced by him.

The garnishee (plaintiff’s witness) testified in substance that he owned the land on which said hotel building stood; that Hayes operated the hotel under the name of the Jeffry apartments; that Hayes owed him over $5,000 for rent due on a lease of the building; that it was agreed between them that, in consideration of the witness cancelling said indebtedness due for rent, Hayes would convey to him said furniture, etc.; that this transaction was consummated on January 11, 1929; that at that time Hayes executed and delivered a statement under oath in compliance with the statute as to creditors, etc.; and that subsequently the witness sold the furniture, etc. to one Gus Zettas.

Lloyd E. Lee identified the signatures of Oshman and Hayes on the chattel mortgage ( dated January 13, 1926) of the Jeffry Hotel Corporation to Albert Pick & Co. And he testified that the 24 notes mentioned in the mortgage were obtained by Albert Pick & Co. in part payment for the furniture, etc., delivered to the hotel building; that on January 11, 1929, there was due on the account to Albert Pick & Co. a balance of $3,414.28; and that no part thereof had since been paid.

Harold C. Hayes (plaintiff’s witness) testified on direct examination that he owned and operated several apartment hotels in Chicago; that he was an officer of the Jeffry Hotel Corporation; that in 1926 Albert Pick & Co. furnished the furniture, etc., for the hotel building known as the Jeffry Apartments; that in January, 1929, there was a balance still due to Albert Pick & Co. for said furniture, etc.; that on January 11, 1929, he had a deal with Chicopulos (garnishee); that “the deal was that the building was not paying, and he said that if I would turn over the furniture to him he would let me off the lease, — which I did”; that “I also turned over to him the accounts receivable, or, in other words, the whole hotel”; that the lease of the hotel building “was in my name, personally”; that he “thinks” he transferred that lease to the Jeffry Hotel Corporation prior to January 11, 1929; that when he made his deal with Chicopulos on January 11,1929', it was really made on behalf of the Jeffry Hotel Corporation; and that when the furniture, etc. was sold to Chicopulos its reasonable, market value was $4,500. On cross-examination Hayes testified that when he sold the furniture, etc. to Chicopulos, the corporation (Jeffry Hotel Corporation) “was not mentioned” and that the deal was made “in my individual name.” The witness then identified “Defendant’s Exhibit 1” (which was then shown to him and afterwards introduced in evidence) as bearing his signature, and testified “this agreement I drew up in my own handwriting and signed; it is the agreement whereby the settlement was finally made.” The agreement referred to is dated ‘1 Chicago, Dec. 18, 1928,” is in ink handwriting, is signed “Harold C. Hayes, ’ ’ and is as follows:

“I, Harold C. Hayes, agree to turn over the Jeffry Apt’s, free and clear of all indebtedness, to present owner of building, provided he releases said Hayes from all obligations on present lease and returns $2200 check to Hayes drawn on the Continental Bank. This agreement to be effective on twenty-four hours’ notice to me.”

The witness then was shown a lease from Chicopulos to him (Hayes) as “defendant’s exhibit 2” and further testified on cross-examination that “this is the lease I referred to, which was cancelled.” His attention was then directed to the fact that the lease did not show any assignment to anyone, and he was asked if he was not mistaken in his previous testimony as to the lease having been assigned to the Jeffry Hotel Corporation. He replied that he could not answer the question; that at the time the lease was drafted “he was an employee of Albert Pick & Co.”; that “there were other men in the corporation besides myself to •more or less help the concern”; that “he, Oshman and Henry Bobbe were stockholders in the Jeffry Hotel Corporation”; that “the lease was supposed to be transferred, but whether it was or not I don’t know”; that “either your office or George Lee’s office handled the transaction”; but that when Chicopulos took over the lease “it was in my individual name.” The witness was shown a check marked “defendant’s exhibit 3 for identification” and further testified that “this is the check I had given for rent on this particular lease, which was supposed' to be cancelled by this particular transaction”; that “his individual signature is on the check”; that “it is a Hayes-Metropole check,” is not the corporation’s check, and “it has nothing to do with the Jeffry Apartments”; and that “before this deal ' was closed I had negotiations with Albert Pick & Co. as to the balance due to it.”

Hayes further testified on cross-examination that on January 11,1929, he attended a conference in the office of William W. Corlett, who was his attorney and who “also represented Albert Pick & Co.”; that Mr. Hassell, defendant’s attorney, and others were present; that the witness executed certain documents at that time; that Corlett said “Now, Harold, you are signing an affidavit here that there are no debts on this property” ; that he (the witness) replied “Yes”; that he then signed an affidavit to that effect; that he “doesn’t know” whether or not a bill of sale was then executed; that some question was raised as to certain rents due in January; that certain documents were left with Corlett until it could be ascertained what the amounts of said rents were; and that Corlett asked Albert Pick & Co. for permission to sell the property and “took that up with Harold Ullman in my presence. ’ ’

Defendant’s principal witness was William W. Corlett. He testified that prior to January, 1929, he was associated as an attorney at law with a well-known Chicago law firm (naming it); that during January, 1929, he conducted certain negotiations concerning the Jeffry Apartments had between his client, Hayes, and Chicopulos and others; that in the deal Hayes was the seller and Chicopulos the buyer; that during the negotiations he (the witness) “had dealings with Albert Pick & Co. with reference to the deal”; that during the year 1928 he had acted as Hayes’ attorney in certain negotiations with Albert Pick & Co., whereby the Metropole Hotel Co. (of the stock of which Hayes had a controlling interest) had assumed liability of a number of chattel mortgages, on the furnishings of other hotels, held by Albert Pick & Co.; that it was finally arranged that “Hayes would turn back to the various owners of these leased apartments the leases he had, make some arrangements for them to take over the furniture, and that my slack that there would be in the transaction would then be assumed by the Metropole Hotel”; that for example, “if there was $25,000 due on furniture under the chattel mortgage on the premises and the owners had only paid $20,000, the Metro-pole would have to take the balance”; that during these negotiations he met Ira Krupnick, vice president of Albert Pick & Co.; that later he had negotiations with Krupnick and one Ullman (a credit man of Albert Pick & Co.) concerning chattel mortgages which Albert Pick & Co. held on the Jeffry Apartment Hotel and one other Chicago hotel; that he (the witness) “repeatedly told Krupnick that these two transactions involved such a small amount of money compared with the whole amount that the whole amount should be turned over against the Metropole”; that one of these transactions was $3,500 and this particular transaction was somewhere around $3,000; that “Krupnick told me that it would be perfectly satisfactory to throw these particular amounts of indebtedness over against the Metro-pole a hundred per cent”; that Albert Hassell, defendant’s attorney, then came into the negotiations and he informed the witness that, after investigation of the records, he (Hassell) had not found that Albert Pick & Co. had any chattel mortgage on the furniture, etc. in the Jeffry Apartment Hotel; that the witness telephoned either Krupnick or Ullman in Pick & Co. ’s office and was informed that there was such an existing mortgage; that the witness then said over the telephone “You understand if Hayes makes settlement of this thing and gives up these leases, that liability is going to go over against the Metropole,” and the reply over the wire was that “that is perfectly all right”; that shortly thereafter the witness closed the transaction in his office with Hassell, — the latter acting as defendant’s attorney; that the witness did not know the Jeffry Hotel Corporation in the transaction, but assumed that Hayes was the owner of the lease because it had been made to him, and the witness also assumed that Hayes had title to the furnishings, etc. in the Jeffry Apartments building; and that the witness concluded the transaction " on the authority received from Albert Pick & Co.”

Defendant’s other witness was Albert Hassell, his attorney in all the negotiations with Corlett and others, which were consummated by the purchase from Hayes of the furniture, etc. in question. Hassell testified that he had numerous interviews with Corlett and that he once had a talk with Krupnick about the matter; that Krupnick said “that as far as Albert Pick & Co. were concerned they had teen taken care of”; that the transaction was consummated on January 11, 1929, in Corlett’s office; that Corlett, Hayes, he (the witness) and others were present; that defendant took over the property as of January 1, 1929; that in the meantime Hayes had collected some rents, which caused some trouble in making the final adjustment; that Corlett at the time presented an affidavit to Hayes for his signature under the Bulk Sales Law, Cahill’s St. ch. 121a, ¶ 1 et seq.; that the affidavit was to the effect that there were no debts against the property; that Hayes signed and delivered the affidavit; that at that time Corlett asked Hayes if he (Hayes) “had taken care of the Albert Pick matter,” and that Hayes replied that he had; that within a day or two thereafter the matter of rents was straightened out; that defendant then went to the hotel and Hayes turned over the possession of the hotel building to him; that that was the last he (the witness) heard about the matter until subsequently Pick & Co. presented their present claim; that he then called on Corlett and asked to see the affidavit which Hayes had signed; that Corlett searched for the affidavit and finally said that it could not be found; that it . had not been discovered at the time of the trial; and that his negotiations on defendant’s behalf were had principally with Hayes, whose individual lease of the building was cancelled when the purchase of the hotel furniture, etc. was made by defendant on January 11, 1929.

After a careful review of the present transcript we are of the opinion that the finding and judgment are not sufficiently sustained by the evidence. We do not think under all the facts and circumstances in evidence it can be said that the garnishee (defendant) intentionally violated the provisions of the Bulk Sales Act (above set out). On the contrary, the uncontradicted testimony of several witnesses discloses that the seller (Hayes) on the day of the consummation of the sale, in the office of Corlett and in the presence of Hassell, defendant’s attorney, made a “bulk" sales” affidavit to the effect that there were ho unsatisfied debts or claims on the property. And we think that the testimony of Hayes, taken in connection with that of defendant’s witnesses, Corlett and Hassell, and particularly what Krupnick (vice president of Albert Pick & Co.) had stated to them, discloses such a state of facts as should estop Albert Pick & Co. from claiming any violation by defendant of said Bulk Sales Act. (See section 24 Garnishment Act, Cahill’s St. ch. 62, ¶ 24; LaSalle Opera House Co. v. LaSalle Amusement Co., 289 Ill. 194, 199; Bondy v. Samuels, 333 Ill. 535, 545, 546; Oliver v. Ross, 289 Ill. 624, 640.)

The judgment of the municipal court is reversed and the cause remanded.

Reversed and remanded.

Keener, and Scanlan, JJ., concur.


author: Mr. Presiding Justice G-ridley

text:
    William J. Baird for the Use of Twerdahl & Stroemer, Inc., Appellee, v. Luse-Stevenson Company, Appellant.
    Gen. No. 34,947.
    Opinion filed October 9, 1931.
    J. C. Farwell, for appellant; Frank H. Madden, of counsel.
    Ader & Ader, for appellee; David B. Rothstein, of counsel.
   Mr. Presiding Justice G-ridley

delivered the opinion of the court.

On August 14, 1930, Twerdahl & Stroemer, Inc., a corporation, caused a judgment by confession for $356 to be entered in the municipal court against William J. Baird, on the latter’s note. On October 8, 1930, execution was returned “no property found and no part satisfied. ’ ’ On the following day garnishment proceedings were commenced under section 1 of the Garnishment Act (Cahill’s St. 1929, ch. 62, ¶ 1, p. 1420) against Luse-Stevenson Company, a corporation, and a summons was served upon it on October 10, 1930. Its answer as garnishee, filed October 15, 1930, was to the effect that it did not have, either at the time of the service of the summons upon it or at any time since, any moneys, rights, credits, etc., of said Baird in its possession or control. The answer was contested. There was a trial without a jury on November 17,1930, resulting in the court finding the issues against the garnishee and that it owed plaintiff the sum of $356. Judgment in that sum was entered against it and the present appeal was perfected.

The cause was tried on a stipulation of facts as follows:

“That the books and records of the garnishee disclose that between the service of notice of garnishment upon the garnishee and the filing of its answer, the sum of $530 was paid to the original defendant (Baird) as an advance or drawing account against future commissions to be earned by him; that at the time of the service of notice of garnishment upon the garnishee and at the present time there was and is due from the original defendant (Baird) to the garnishee a sum in excess of $4,000, for moneys advanced in the past to apply against commissions earned and to be earned by said original defendant in the employ of the garnishee. ’ ’

Considering the common law record and the facts as stipulated, as well as the law applicable thereto, we are of the opinion that the finding and judgment of the trial court were right and that the judgment appealed from should be affirmed. Although it is the law in this State that a judgment creditor can only recover from the garnishee that which the judgment debtor could have recovered in an action of assumpsit or debt brought by him against the garnishee (Swope v. McClure, 239 Ill. App. 578, 581; Webster v. Steele, 75 Ill. 544, 546); and although it is provided in substance in section 13 of our Garnishment Act, Cahill’s St. ch. 62, ¶ 13, that where there is money due from the judgment debtor to the garnishee the latter has the right to set off the amount in the garnishment proceeding; yet, as we understand it, it is also the law that the payment of money by the garnishee to his employee judgment debtor between the time of the service of a summons upon him as garnishee and the filing of his answer in the garnishment proceeding, is an admission of indebtedness to the employee by said garnishee. In Wilcus v. Kling, 87 Ill. 107,110, it is decided in substance that although a person may not be liable to be sued for money due from him for labor and materials used in the erection of a building at the time he is garnisheed, for want of an architect’s certificate, yet it does not follow that he owes nothing, and if he pays out moneys on orders drawn on him by the workman after service on him, this will be an admission that he owed the same, and from which a recovery may be had against bim by the garnishing creditor. In Paisley for use of Hooper v. Parle Fireproof Storage Co., 222 Ill. App. 96, a case decided by this division of the Appellate Court for the first district, it appears that Hooper recovered a judgment against Paisley for about $150; that after an execution had been returned unsatisfied, garnishment proceedings were commenced against the Storage Co. on May 8,1920; that its answer, “no funds,” was contested; that on the trial the evidence disclosed that Paisley was an employee of the garnishee at a salary or wage of $41 per week, that after the garnishee had been served with process it paid to Paisley (judgment debtor) $41 on May 11,1920, and $41 on May 18, 1920, that at the time of the service of summons upon the garnishee Paisley was indebted to it upon his demand note for $300, dated February 21, 1920, which sum had been advanced'*to him, and that the garnishee was the holder of the note and the entire amount thereof was payable to it at the time it was served with the garnishee summons. The trial court found that the garnishee was indebted to Paisley, (judgment debtor) in the sum of $82, and entered judgment in that sum against it. In affirming the judgment this court, after stating that appellant (the garnishee) relied upon sections 13 and 24 of the Garnishment Act, Cahill’s St. ch. 62, ¶¶ 13 and 24, said (pp. 98, 99):

“We are of the opinion that upon service of garnishment process the garnishee had the right to adjust the account between itself and the judgment debtor and apply the amount due Paisley for salary on his note for $300, in conformity with these provisions of the statute. Obergfell v. Booth, 218 Ill. App. 492. The garnishee did not see fit to do so, but after service of garnishment process paid Paisley $82, and in so doing admitted an indebtedness to that amount. Wilcus v. Kling, 87 Ill. 107.”

In Hudson for use of Topp v. Hudson Motor Co., 238 Ill. App. 391, a case decided by another division of this court, the holdings in the Wilcus and Paisley cases, supra, were followed, the court saying (p. 394) :

“Under section 13, ch. 62, of the Garnishment Act, . . . the garnishee had the right, upon service of garnishment process, to deduct from Hudson’s salary, as it was or came due, what he owed, but it could not refrain from adjusting the account and go on paying his salary for years, and so, simply by so doing, evade and avoid its statutory obligation.”

The judgment of the municipal court is affirmed.

Affirmed.

Kerneb. and S canean, JJ., concur.


text:
    Selma Weiss, Plaintiff in Error, v. Vincent M. Danilczik, Defendant in Error.
    Gen. No. 35,036.
    Opinion filed October 9, 1931.
    Dosland, Conner & Mayfield, for plaintiff in error.
    K. B. Czarnecki, for defendant in error.
   Mr. Presiding Justice Gridley

delivered the opinion of the court.

On May 16,1930, a judgment by confession for $140 was entered against the defendant, Danilezik, on a written lease, dated April 28, 1927, by virtue of which plaintiff, Selma Weiss, demised to defendant certain premises to be occupied as a drug store at No. 1756 W. Division street, Chicago, for the term of three years, commencing May 1, 1927, and ending April 30, 1930. The stipulated rental for the third year of the lease is $115 per month, payable in advance. The judgment as confessed is made up of the sum of $115, for rent claimed to be due for the month of May, 1930, by reason of defendant holding over after the expiration of the term, and of the sum of $25, as reasonable attorney’s fees. In addition to the usual paragraphs the lease contained a paragraph in part as follows:

“Fifteenth. If default be made in the payment of the rent hereinabove reserved, or of any installment thereof as herein provided, lessee does hereby irrevocably constitute any attorney of any court of record in this State attorney for him, and in his name, from time, to time ... to confess judgment in favor of lessor . . . and against lessee for the amount of rent which may then be due, by virtue of the terms hereof, or of any extensions or renewals hereof, or by virtue of any holdover after the termination hereof, and which may be in default, as aforesaid, together with the costs of such proceedings and a reasonable sum . . . for plaintiff’s attorney’s fees in or about the entry of said judgment, . . . ”

In plaintiff’s declaration, after setting forth the making of the lease, she alleged that defendant entered into possession of the premises and “was possessed thereof from May 1, 1927, and is still in possession thereof”; that on May 1,1930, “the sum of $115, of the rent aforesaid, for the holdover, for the month of May as provided in said lease, became and was due and payable from defendant to plaintiff”; and that thereby defendant became liable to pay to plaintiff said sum, as rent, together with the further sum of $25 “to be allowed to plaintiff for reasonable attorney’s fees as provided in said lease,” etc.

Subsequently defendant appeared and moved that the judgment be vacated, etc. The motion was supported by his verified petition. On June 28,1930, after a hearing on the petition, the court ordered that the judgment be opened and defendant be given leave to plead, the judgment to stand as security. Within apt time defendant filed a plea of the general issue and a verified special plea. In the last named plea, following substantially the allegations of said petition, defendant averred that “he did not hold over under said lease”; that “judgment could not be confessed upon an expired lease for a holding over, which required proof which could not be ascertained from an inspection of the records”; that “shortly before the expiration of said lease he informed plaintiff that he had already purchased his own building and did not desire to renew or extend the lease except as a month, to month, tenant, that his building would not be ready for occupancy by May 1,1930, and that, if desired, he would remain as a tenant from month to month until his building was completed”; that at first plaintiff demurred, but finally, “when she saw that this defendant would not extend or renew the lease but would only remain as a month to month tenant at $115 per month,” she consented, saying that “it was better than to have the place vacant”; that, accordingly, “on or about May 1, 1930, pursuant to such understanding and agreement . . . , defendant tendered to plaintiff .the sum of $115, as rent for the month of May, 1930, and demanded a receipt showing that he was remaining as a month to month tenant, which plaintiff refused to give”; and that defendant now “is ready and willing and now offers to pay into court the sum of $115, as rental for the month of May, 1930, already tendered, and also the rental for the month of June, 1930, $115.” On November 20,1930, the cause came on for hearing before the court without a jury, at which defendant and two witnesses for Mm, and plaintiff and one witness for her, testified. At the conclusion of the evidence the court ordered that the confessed judgment of May 16, 1930, for $140, be set aside and that “judgment be rendered herein for the sum of $115 in favor of plaintiff and against defendant on defendant’s special plea filed herein. ’ ’ To reverse this judgment plaintiff sued out .the present writ of error.

On the trial it appeared from uncontradicted testimony that defendant did not move out of the premises on the day of the expiration of the lease (April 30, 1930); that he continued in the possession and occupancy of them for a period of six months thereafter, until October 31, 1930, when he vacated them; that all rents stipulated to be paid under the lease prior to April 30,- 1930, were paid by defendant to plaintiff; but that he did not pay to plaintiff any moneys, as rent for the premises, for the month of May, 1930 (sued for) or, for any of the succeeding five months.

Defendant did not sustain the burden cast upon him of showing by a preponderance of the evidence that at the expiration of the lease on April 30, 1930, he “did not hold over,” or that a verbal agreement was made between him and plaintiff that after said date he was to remain “asa month to month tenant. ’ ’ While he gave certain testimony tending to show that some such agreement was made shortly prior to April 30, 1930, plaintiff’s testimony is to the contrary. And it further appears from defendant’s evidence that when, about May 6,1930, upon plaintiff’s demand for the May, 1930, rent, he tendered $115, in payment thereof but on condition that plaintiff sign a formal receipt, containing the statement that said payment was made “for one month ending May 31,1930, under month to month tenancy and not under lease, ’ ’ plaintiff refused to accept the money under such condition or to sign such a receipt. Plaintiff testified in substance that prior to the expiration of the written lease no definite arrangement was made as to defendant’s occupancy of the premises after said expiration; that about the middle of April, 1930, defendant called upon her and there was conversation “about a new lease”; that plaintiff finally offered to make a new three years’ lease to defendant at a rental of $115 per month for the first year and $125 per month for the next two years; that defendant did not accept the offer but said “I guess, maybe, that will be all right; I will see”; and that at no time thereafter was any new lease signed or any extension of the old lease made. Defendant further testified in substance that on April 28, 1930 (two days before the expiration of the written lease), he purchased another building and property in the immediate vicinity at a judicial sale and made a deposit on the purchase ; that he did not procure a deed for the building and property until May 19,1930; that immediately following said purchase he, on the afternoon-of April.28, 1930, called on plaintiff, informed her of his purchase and stated that he “was not going to renew any lease”; that the parties had a conversation about his remaining as plaintiff’s tenant in the premises on a month to month basis until he could move; and that plaintiff did not then say that he ‘ ‘ could stay as a month to month tenant, but that is what he understood it (the conversation) meant.”

We think it clear from the evidence that defendant “held over,” becoming after May 1, 1930, plaintiff’s tenant of the premises for another year (viz., until April 30, 1931), and that plaintiff elected to treat him as such a tenant and not as a trespasser. This election is further evidenced by the commencement of the present action on May 16,1930, and by the filing of her declaration containing averments substantially as above stated. In 1 Taylor’s Landlord and Tenant, sec. 22 (cited with approval in Clinton Wire Cloth Co. v. Gardner, 99 Ill. 151,159), it is said:

“A tenant for years, who holds over after the expiration of his term without paying rent or otherwise acknowledging a continuance of the tenancy, becomes either a. trespasser or a tenant, at the option of the landlord. Very slight acts on the part of the landlord, or a short lapse of time, are sufficient to conclude his election and make the occupant his tenant. But the tenant has no such election; his mere continuance in possession fixes him as tenant for another year, if the landlord so elects, although the tenant has refused to renew the lease, and given notice that he has hired other premises.”

In Weber v. Powers, 213 Ill. 370, 382, it is said:

“Where a tenant for a year or years holds over after the expiration of his lease, without having made any new arrangement with his landlord under which such holding over takes place, the landlord, at his election, may treat the tenant as a trespasser, or as a tenant for another year, upon the same terms as in the original lease, and this though the tenant has no intention of holding over for a year, or of paying the same rent. The law fixes the tenant’s liability for holding over, independent of his intention. The legal presumption of a renewal from the holding over cannot be rebutted by proof of a contrary intention on the part of the tenant alone. (Clinton Wire Cloth Co. v. Gardner, 99 Ill. 151.) The right of election as to whether the tenant, remaining in possession after the expiration of the lease, is holding over upon the same terms as in the original lease is a right, which belongs to the landlord, and not to the tenant. It is the landlord alone, whose intention on the subject is to be ascertained, as it is he alone, who may elect to treat the tenant as holding over under the terms of the old lease. (Keegan v. Kinnare, 123 Ill. 280.)”

We find it difficult to perceive why plaintiff sued out the present writ of error, unless she thought she was entitled to the $25 attorney’s fees included in the confessed judgment of May 16,1930. By the judgment as finally rendered by the court she recovered for the amount of the rent ($115) for the month of May, 1930, which she sued for on the theory that defendant was a hold-over tenant at her election. The present action being commenced on May 16, 1930, plaintiff could not therein recover any rents for succeeding months because said rents were not then due and payable.

Plaintiff here contends, among other contentions, that the trial court erred in not confirming the entry of the confessed judgment for $140, which included said attorney’s fees. The contention presents the question, whether under the law, and giving consideration to the italicized clause of paragraph fifteenth of the written lease as above set forth, judgment for said May, 1930, rent (including reasonable attorney’s fees) could be confessed. We are of the opinion that it could not. In Weber v. Powers, 213 Ill. 370, it is decided in substance that a power to confess judgment for rent accruing during the term of a written lease, to which it is attached, cannot be extended to the implied contract resulting from the tenant holding over, so as to authorize a confession of judgment for rent accruing after the term of said written lease under the implied contract. In said Weber case our Supreme Court said in part (pp. 381-2-3):

‘ ‘ The old, or written, lease is not the contract of the parties for a new term, but is only evidence to uphold the implied contract, resulting from the holding over of the tenant. . . .

“Parol evidence must be resorted to to show that, where the tenant remains in possession after the expiration of the written lease, he holds over under the terms of such lease. A power to confess judgment for the rent, due by the terms of the written lease, cannot be construed into a power to enter up judgment for rent accruing under an implied contract, resulting from the fact of a holding over by the tenant. In this case, to give the warrant of attorney such a construction, would be in violation of the rule, that such warrants of attorney should be strictly construed.

. . If it be a question of fact to be determined by the jury, under the instructions of the court, whether the holding over is such as to create a new tenancy, then such question of fact cannot be determined by a confession of it in a cognovit, and by a judgment of confession, entered in pursuance of such cognovit. So to hold would be to deprive the debtor of his right to a trial by jury. The debtor, in authorizing a confession of judgment against him for rent, due by the terms of a written lease which he has signed, cannot be thereby made to confess judgment in favor of a renewal of such lease, or in favor of a holding over under such lease. The fact of a renewal, or the fact of a holding over, is" a fact dehors the written lease and the terms of the written power of attorney, contained in the lease.”

While the confession of judgment clause (paragraph fifteenth as above set forth) of the lease now in question may be considered as being more comprehensive than the one in said Weber case (p. 381), we think that under the above holdings in that case the entry off the judgment by confession against defendant for $140 was without authority of law, and that the trial court did not err in setting aside said confessed judgment and in entering the judgment now in question for $115 against defendant.

No cross errors have here been assigned by defendant. Finding no reversible error in the present record, the judgment of the superior court, entered November 20, 1930, in favor of plaintiff and against defendant for $115, is, accordingly, affirmed.

Affirmed.

Keener and Scanlan, JJ., concur.


text:
    Atlas Securities Company, Plaintiff and Appellant, v. Blaine L. Ramsay et al., Defendants. Blue Bird Air Service, Inc., Appellee.
    Gen. No. 35,129.
    Opinion filed October 9, 1931.

      Jacob Kosbie, for appellant.
    Clarence H. Ross, for appellee.
   Mr. Presiding Justice G-ridley

delivered the opinion of the court.

On October 25, 1930, plaintiff commenced an action in replevin against defendants in the municipal court to recover the possession of “one Parks P 1 Biplane; serial No. 1999-C 624 V.” On the same day, as appears from the bailiff’s return, the property was taken under the writ and delivered to plaintiff. In its statement of claim plaintiff averred that defendants wrongfully detained the biplane after demand made. Subsequently the Blue Bird Air Service, Inc., one of the defendants, appeared and filed an affidavit of merits, alleging in substánce that it is a corporation engaged in Chicago in the business of furnishing storage, materials, etc., for aircraft; that on October 25, 1930, $723.55 was due to it for storage, materials, supplies and labor, theretofore furnished for said plane at the request of the authorized agent of the owner thereof; that on said date defendant “asserted a lien” on the plane for said amount, under ¶ 45, chapter 82 of Cahill’s 1929 Statutes, which said lien “is superior to plaintiff’s claim of lien or right of property in said plane”; and that plaintiff has no lien on or right of property in the plane, superior to defendant’s, by reason of any chattel mortgage thereon, because said mortgage “is not bona fide, owing to the fact that the mortgagor never received title to the plane,” because the provisions of the Air Commerce Regulations (issued by the secretary of commerce of the United States under section 3 of the Air Commerce Act of 1926, 49 USCA 173, regulating the transfer of title of aircraft) were not complied with. And said defendant prays that “plaintiff be ordered to pay to it $723.55, with proper costs and charges, or within three (3) days return said plane.” On December 17, 1930, there was a trial without a jury, resulting in the court finding “that the right to the possession of the property replevied is in the plaintiff, except that said property, when replevied, was rightfully held by defendant (Blue Bird Air Service, Inc.) for payment of a sum of money, owing to defendant and amounting to $723.55.” And the court adjudged that judgment on the finding be entered, and further adjudged that “plaintiff (Atlas Securities Co.) pay to said defendant, within 20 days after this date, said sum of money, with legal interest, etc.”; that, in case said payment be made within the time, “plaintiff have and retain said replevied property”; but that, in default of said payment, “defendant recover from plaintiff the possession of said property, and that a writ of retorno habendo issue.” From the judgment plaintiff has appealed.

A correct statement of the facts in evidence on the trial, as stipulated by counsel for the respective parties and as certified by the trial judge, is substantially as follows: '

On July 25,1930, the Associated Aircraft, a corporation, then engaged in the business of selling aeroplanes at Chicago, sold to Blaine L. Ramsay the biplane in question, which was registered, under the U. S. Air Commerce Act, with the Department of Commerce as number “C 624 V”; that “to secure the unpaid balance of the purchase price, ’ ’ Ramsay, on the samé day, executed and delivered to said Associated Aircraft a note, secured by his chattel mortgage of even date on said plane, in the sum of $2,085.85, payable in 12 months in stated/monthly instalments; that said mortgage was duly acknowledged and recorded in the recorder’s office of Cook county, Illinois, as document number B-530616, in book 28428, at page 151 (mortgage introduced in evidence); that the note and all right, title and interest in the mortgage thereafter were duly assigned by said Associated Aircraft (mortgagee) to plaintiff; that shortly after Ramsay’s purchase of the plane he brought it to the hangar of defendant (Blue Bird Air Service, Inc.) and thereafter from time to time incurred indebtedness for storage, materials, etc., furnished by defendant for said plane, which indebtedness on October 25, 1930, amounted to $723.55; that when Ramsay brought the plane to defendant’s hangar, “the license card, furnished by the Department of Commerce and exhibited in the plane, showed that said plane was licensed in the name of Associated Aircraft, Inc., the mortgagee”; that defendant did not then know who owned the plane, but, by reason of the license card as so exhibited, “assumed that it was owned by Associated Aircraft, Inc.”; and that “the chattel mortgage records in said recorder’s office were not checked by defendant as to any chattel mortgages existing against the plane. ’ ’

On October 25, 1930, Ramsay demanded of defendant the delivery of the plane to him, which demand was refused by it “except on payment of said $723.55”, and thereupon plaintiff commenced the present action. Neither the Associated Aircraft, Inc., nor Ramsay registered the plane, in the name of Ramsay, with the Department of Trade and Commerce.

Defendant contended on the trial that the chattel mortgage, upon which plaintiff’s right to the possession of the plane is based, “is invalid and inferior to the lien of defendant,” in support of which contention defendant offered and there was received in evidence “the Air Commerce Regulations, promulgated by the Secretary of Commerce of the United States, having the force and effect of law by virtue of the Air Commerce Act of 1926, U. S. C., Title 49, Chapter 6, which provides, in section 1, as follows: ’ ’

“The Secretary of Commerce shall by regulation provide for the granting of registration to .aircraft eligible for registration if the owner requests such registration.” (Sec. 3 (a) Air Commerce Act of 1926, 49 USCA 173.)

“It shall be unlawful to navigate any aircraft in interstate or foreign air commerce unless such aircraft is registered as an aircraft of the United States.” (Sec. 11 (a) Air Commerce Act of 1926.)

Defendant also offered in evidence sections 6, 18 and 20 of the Regulations of the Department of Trade and Commerce, as follows:

Section 6.

“An aircraft to be entitled to license and registry must be airworthy and equipped in accordance with requirements of the Secretary of Commerce, shall not be registered under the laws of any foreign country, and shall be owned by:

(A) A citizen of the United States;

(B) A partnership of which each member is a citizen of the United States; or

(C) A corporation organized under the laws of the United States, a State, Territory, or possession of the United States, and of which the President and at least two-thirds of the Directors or managing officers are citizens of the United States, and of which at least 51 per cent of the voting interest in the corporation is controlled by citizens of the United States; or

(D) The G-overnment of the United States, a State, Territory, or possession, or a political subdivision thereof.”

Section 18.

“On the date of sale or transfer of title of licensed aircraft, the recorded owner shall report in writing to the Aeronautics Branch, Department of Commerce, Washington, D. C., giving the date and place of sale or transfer and the name and residence of the purchaser. ... No transfer of title will be made on the records of the Department of Commerce until the forms required by these regulations, properly executed, are received by this department. Recorded owner is the individual, partnership, company or corporation that has presented to the Aeronautics Branch, Department of Commerce, evidence of ownership acceptable for the purpose of licensing. ’ ’

Section 20.

“The aircraft license must be carried in the aircraft whenever it is in service and must be conspicuously posted where it may be readily seen by passengers and inspectors. Whenever the craft is unairworthy, and when the license is suspended or revoked, or when it is no longer in force, the license shall be surrendered to the Secretary of Commerce. The license must be presented for inspection upon the demand of any passenger, or of any authorized official or employee of the Department of Commerce or State or municipal officials charged with enforcing local regulations or laws involving Federal compliance.”

In sections 1 and 4 of “An Act for the better protection of any person, firm or corporation expending labor, skill or materials upon, or furnishing storage for, any chattel, creating a lien upon such chattel, etc.,” in force July 1,1921 (Cahill’s St. 1929, ch. 82, pp. 1666-7, paragraphs 45 and 48) it is provided:

“Sec. 1. Every person, firm or corporation who has expended labor, skill or materials upon any chattel, or has furnished storage for said chattel, at the request of its owner, reputed owner, or authorized agent of the owner, or lawful possessor thereof, shall have a lien upon such chattel beginning on the date of the commencement of such expenditure of labor, etc., or of such storage, for the contract price for all such expenditure of labor, etc., or for all of such storage, or in the absence of such contract price, for the reasonable worth of such expenditure of labor, etc., for a period of one year from and after the completion of such expenditure of- labor, etc., notwithstanding the fact that the possession of such chattel has been surrendered to the owner, or lawful possessor thereof.”

“Sec. 4. The lien created by this Act shall be subject to the lien of any bona fide chattel mortgage upon the same chattel recorded prior to the commencement of any lien herein created, but said lien herein created shall be in addition to, and shall not exclude, any lien now existing at common law.”

It is here contended by plaintiff’s counsel that the trial court erred in entering the alternative judgment (as above stated) whereby the court in effect decided that defendant’s lien under said Act to the amount of $723.55, for storage and materials furnished to said biplane, was superior to plaintiff’s lien, as assignee of a prior chattel mortgage on the same chattel. Under said Act, and decisions of courts of review in this State construing said Act, and considering the stipulated facts, we are of the opinion that there is merit in the contention. (Ehrlich v. Chapple, 311 Ill. 467, 471, reversing 228 Ill. App. 293; Nathan M. Stone Co. v. Ellerson, 230 Ill. App. 593, 596.) In the Ehrlich case our Supreme Court said (pp. 471-2):

“The contract was made between the artisan and the mortgagor without knowledge of the mortgagee. While the artisan has a lien against the mortgagor’s interest in the mortgaged property, yet his lien is junior'to the chattel mortgage, and if he would realize any benefit from his lien it is incumbent upon him, where the mortgagor becomes in default under the terms of the mortgage, to protect his own lien by satisfying the mortgage. Nor is this in any way a hardship upon the artisan. He can at all times know, before he puts his material and time upon the chattel, whether or not it is subject to a mortgage.

“It is urged in this case that commercial necessity requires that the artisan’s lien be preserved, and that where the mortgaged chattel is retained by the mortgagor, to "be used in the course of the mortgagor’s business, an artisan’s lien should, in the nature of things, be considered prior to the mortgage. What constitutes commercial necessity is by no means easy of determination. ... We know of no doctrine in the law which will countenance any necessity, commercial or otherwise, that would destroy the vested interest of a prior lien. The purpose of a mortgage is to furnish security while the mortgaged property is to be left with the mortgagor for his convenience. It is- of the basis of a contract of this character that nothing should be done or permitted by the mortgagor to impair the security, other than that which arises out of ordinary wear and tear. Courts should not, therefore, indulge in the presumption that an agreement existed between the mortgagee and the mortgagor that the mortgage lien should give way to a subsequent artisan’s lien, but such should be shown by clear and cogent evidence” (citing, with other cases, Howes v. Newcomb, 146 Mass. 76, 79, 82; Overland Automobile Co. v. Findley (Tex. Civ. App.), 234 S. W. 106).

There is nothing contained in the stipulated facts in any way tending to show that, when on July 25, 1930, Ramsay purchased of the Associated Aircraft the plane in question and executed and delivered said chattel mortgage as security for the unpaid balance of the purchase price, there was any agreement express or implied between said mortgagor or mortgagee that said mortgage lien should give way to a subsequent artisan’s lien. But defendant’s counsel, as we understand him, contends that said mortgage was not a “bona fide” one, because of the fact that said sale or transfer of title of the plane to Ramsay was not registered "with the U. S. Department of Commerce at Washington, D. C., in compliance with section 18 of the “Air Commerce Regulations,” above mentioned. While urging this contention counsel makes various admissions in Ms printed brief in substance (a) that the ownership of the plane is in Ramsay; (b) that the failure to make registration of the sale or transfer of title of the plane to Ramsay did not render said sale or transfer void; and (c) that said chattel mortgage would be superior to the rights of any subsequent purchaser or lienor “who had not relied upon the records of the Department of Commerce.” We find nothing in the stipulated facts showing that, when Ramsay brought the plane to defendant’s hangar or during the times he subsequently incurred said indebtedness of $723.55, defendant relied upon any records of such department. The stipulated facts disclose that, when Ramsay brought the plane to defendant’s hangar, “the license card, furnished by the Department of Commerce and exhibited in the plane, showed that said plane was licensed in the name of Associated Aircraft, Inc.”; that defendant did not then know who owned the plane but, by reason of said card, “assumed that it was owned by Associated Aircraft, Inc. ’ ’; and that the chattel mortgage records in.said recorder’s office “were not checked by defendant as to any chattel mortgage existing against the plane.” Furthermore, the stipulated facts do not disclose that after the sale of the plane to Ramsay in July, 1930, he, as then owner, requested registration of the plane with the Department of Commerce, or that after said sale he navigated the plane in “interstate or foreign air commerce.” Nor is it disclosed that after said sale the Associated Aircraft, Inc., as the prior “recorded owner” of the plane, did not make a report in writing to the Department of Commerce in compliance with the provisions of section 18 of said regulations. In view of the stipulated facts, and considering counsel’s said admissions, we think it sufficiently appears that said chattel'mortgage was a valid, bona fide one, <■ and that plaintiff, as assignee of Associated Aircraft (mortgagee) and by virtue of said mortgage, had such a property interest in and right to the possession of the plane as warranted it in maintaining the present replevin action.

Counsel for defendant further contends that the failure of Associated Aircraft, Inc. (the mortgagee and plaintiff’s assignor of the mortgage), to perform its legal duty to register with the Department of Commerce the sale or transfer of title of the plane to Bamsay, “thereby permitting defendant to assume that said mortgagee was the owner of record of the plane to the detriment of defendant,” estops said mortgagee (or plaintiff as its assignee) from asserting the lien of the mortgage. We cannot agree with the contention. When the indebtedness (on which defendant’s claim for lien is based) was being contracted, defendant, by examination of the chattel mortgage records in the recorder’s office of Cook county, could easily have ascertained whether or not the plane was mortgaged, but it appears that said records “were not checked”, and this being so we fail to see how defendant is in any position to rely upon any such estoppel as urged. In Vail v. Northwestern Mut. Life Ins. Co., 192 Ill. 567, 570, it is said: “A party claiming the benefit of an estoppel cannot shut his eyes to obvious facts, or neglect to seek information that is easily accessible, and then charge his ignorance to others.” And in Bondy v. Samuels, 333 Ill. 535, 546, it is said: ‘ ‘ The party claiming an estoppel must have relied upon material acts and representations and must have had no knowledge of, or convenient means of knowing, the true facts.”

For the reasons indicated the alternative judgment of the municipal court, entered December 17, 1930, is reversed, and, under the stipulated facts, judgment will be entered here, as a matter of law, that on October 25, 1930, when said biplane was replevied by the bailiff and delivered to plaintiff, plaintiff (Atlas Securities Co.) then was and is now lawfully entitled to its possession. All costs will be taxed against defendant, Blue Bird Air Service, Inc.

Reversed and judgment here in favor of plaintiff.

Keener and Scanlan, JJ., concur.


text:
    Central Life Insurance Company of Illinois, Appellee, v. George M. Sawiak and Pioneer Trust & Savings Bank, Appellants.
    Gen. No. 35,159.
    Opinion filed October 9, 1931.

      Frank H. Novak, for appellants.
    Reginald C. Darley, for appellee.
   Mr. Presiding Justice Gridley

delivered the opinion of the court.

This appeal is prosecuted to reverse a foreclosure decree, entered February 6,1931, wherein the superior court, following the master’s report, found that there was due to complainant on January 7, 1931, the sum of /$1,912.50, and adjudged that the premises be sold if said sum, including interest and costs, be not paid, etc.

In complainant’s bill, filed August 27, 1930, it is alleged.that on September 7, 1926, George M. Sawiak, a bachelor, being indebted in the sum of $1,500, executed and delivered his promissory note in that sum, payable to bearer five years after date at the office of the Ridgeway State Bank, Chicago, with interest , at seven (7) per cent per annum, as evidenced by ten interest coupon notes, each for $52.50, payable to bearer on March 7 and September 7 in each year; that to secure the payment thereof Sawiak, on September 7, 1926, and as owner, executed and delivered a trust deed (containing usual covenants) conveying to the Chicago Title & Trust Co., as trustee, “lot sixteen (16) in block twelve (12) in Sawiak & Co.’s first addition to Addison Heights” in Cook county, Illinois, which trust deed was recorded in the recorder’s office of Cook county on September 9, 1926, and is a first mortgage on the premises; that the interest coupon notes Nos. 1 to 6 inclusive have been paid; that complainant is the owner and holder of the principal note and of the remaining interest coupon notes, Nos. 7 to 10 inclusive; that default has been made in the payment of interest coupon note No. 7, for $52.50, due on March 7, 1930; that by reason thereof complainant elected to declare the principal note due and payable (as it had the right to do under the trust deed); that there is now due to complainant said principal sum, accrued interest due on March 7, 1930, and other accrued interest; that Sawiak conveyed his equity in the premises to Pioneer Trust and Savings Bank, as trustee, under the provisions of a trust agreement, dated February 14, 1928, and known as trust number 1820; and that said bank now claims to be the legal owner of the premises, subject» to complainant’s lien. The bill claimed reasonable solicitor’s fees and other expenses incident to a foreclosure, and concluded with the usual prayer.

In the joint and several answer of Sawiak and the Pioneer Trust & Savings Bank, as trustee, filed October 29,1930, they denied that complainant was entitled to have said principal note declared to be due because of the non-payment of interest note No. 7, and alleged that “said loan of $1,500, as represented by the note and trust deed described in the bill, is usurious,” etc. Defendants further alleged that, at the time of the making of the loan, “the Ridgeway State Bank, in addition to the seven (7) per cent interest reserved to be paid on said loan as represented by the note and trust deed being foreclosed, and in addition to the proper charges for recording fees, guaranty title policy and fire insurance premium, wrongfully and illegally charged and retained five per cent of the loan, or $75, as a commission for making said loan”; that the $75, so withheld by said bank, in addition to the interest on said loan of 7 per cent and said proper charges, “is usury, and unlawful and contrary to the statutes of Illinois”; and that complainant “is not entitled to recover any sum as interest,” and is “only entitled to a lien on said real estate for the legal amount found to be due, after deducting the usurious payments of interest and any moneys retained by the Ridgeway State Bank as a commission.”

After defaults had been taken of other defendants including Norman Gilbert and Myrtle Gilbert, his wife, and after the cause had been put at issue, there was a reference to a master, and hearings were had before him during November and December, 1930. Early in January, 1931, he drafted a report in which, after making numerous findings, he recommended the entry of a decree of foreclosure in the sum of $1,912.30, including the sum of $200 as complainant’s solicitor’s fees. Among the findings of the master are:

Fifth. That on and prior to March 7, 1930, complainant was the owner of the principal note for $1,500; that by reason of the default in the payment of interest note No. 7, due on March 7, 1930, complainant, as the legal holder and owner of the unpaid indebtedness, became entitled to declare the whole of said indebtedness due and payable and to foreclose the trust deed.

Thirteenth. That there is now due to -complainant, for principal, interest, cash advanced, stenographer’s charges and solicitor’s fees, the sum of $1,912.30, as shown by the following itemized statement:

Interest Coupon No. 7 due March 7, 1930. $52.50
Interest thereon at seven per cent from March 7, 1930, to date hereof......... 3.07
Interest Coupon No. 8 due September 7, 1930 ............................... 52.50
Interest thereon at seven per cent from September 7, 1930, to date........... 1.23
Principal note........................ 1,500.00
Interest at seven per cent from September 7, 1930, to date.................. 35.00
Amount paid to Chicago Title & Trust Co................................ 43.00
Amount paid for photostatic copies..... 2.10
Amount paid stenographer’s charges.... 22.90
$1,712.30
Amount allowed to complainant for solicitor’s fees.......................... 200.00
Total...........$1,912.30

which amount the master finds to be a valid, existing indebtedness due to complainant from defendant, Sawiak, and for which amount complainant is entitled to a valid, existing, first lien on said real estate.

To these two findings the defendant, Sawiak, filed objections with the master, to the effect that the master in making them had erred, and should have found that the loan of $1,500, made by the Ridgeway State Bank to defendant, as well as the note and trust deed evidencing the loan, “were usurious, and that complainant was not entitled to any sum for interest, and that defendant was entitled to have credit for all the interest paid on account of the loan, and also for the five per cent commission ($75) paid to said Ridgeway State Bank.” Thereafter, on January 14, 1931, the master drafted a supplemental report, in which he stated that, after giving “due consideration” to the objections, he overruled them. He gave no reasons why he did so; nor did he discuss defendant’s “usury” contention at all. Nor did the superior court in the decree appealed from make any finding's concerning said “usury” contention. The objections were ordered to stand as exceptions, and the court in the decree, after overruling the exceptions, confirmed the master’s report, and fixed the master’s fees at the sum of $56 to be taxed as costs.

Some of the other findings of the master, sustained by the evidence, are as follows:

Sixth. That on October 9, 1926 (about one month after the execution of the trust deed) Sawiak entered into a written, agreement (recorded October 28, 1927) with Norman Gilbert and Myrtle Gilbert, his wife, whereby Sawiak agreed that if they made certain payments and performed certain agreements, he would convey the premises to them.

Seventh. That on February 14, 1929, Sawiak conveyed the premises to Pioneer Trust and Savings Bank, as trustee, and that on the same day it, as trustee, executed a certain trust agreement, known as Trust No. 1820, wherein it certified that it was about to take title to certain described real estate, including the real estate now involved, and that Sawiak “is the person entitled to the entire interest in said real estate. ’ ’

Eighth. That the two Gilberts, under the agreement of October 9, 1926, made a down payment of $300; and certain regular monthly payments (of about $35 per month and aggregating in principal and interest about $1,500) until April 14, 1930, when they defaulted and abandoned the premises and surrendered said agreement to Sawiak; and that on September 20, 1930, they executed and delivered their quitclaim deed (recorded November 22, 1930) of all their right and interest in the premises to said Pioneer Trust & Savings Bank, as trustee for Sawiak under said trust agreement known as Trust No. 1820.

It appears from said written agreement (introduced in evidence) that the two Gilberts agreed to pay to Sawiak the total sum of $4,250 — $300 cash down and the balance in payments of $35, or more, per month, commencing November 9, 1926; that “when $2,750 of the purchase price had been paid,” together with all interest, costs, taxes, assessments and other charges, Sawiak agreed to deliver a deed of the premises to the Gilberts and to accept from them notes and a trust deed upon said premises, “subject to a first mortgage of $1,500, bearing interest at the rate of 7 per cent” (being the trust deed herein sought to be foreclosed) ; and that the Gilberts further agreed “to pay the cost of the renewal of said mortgage.”

On the hearing before the master it appeared from complainant’s evidence that some time prior to March 7, 1930, complainant purchased for a valuable consideration and in the usual course of business the principal note of $1,500 “from the Ridgeway Bond & Mortgage Company”; that the first six interest notes had been paid; that interest note No. 7, due on March 7, 1930, was not paid; that in consequence thereof complainant elected to declare the entire indebtedness due and payable and to commence the present foreclosure proceeding; that the sums of $43, $2.10 and $22.90, mentioned in the master’s report, were actually expended by complainant and were proper charges; and that the sum of $200 was a reasonable charge for services rendered by complainant’s solicitors.

On the hearing it also appeared from the undisputed testimony of defendant, Sawiak (corroborated in some particulars by a written statement delivered to him by the Ridgeway State Bank, dated October 18, 1927), substantially as follows: Early in September, 1926, and shortly prior thereto, Sawiak, engaged in a real estate and building business, was building 16 houses on different lots in his “Addington Heights” subdivision. Desiring to obtain 16 separate building loans he negotiated with the Ridgeway State Bank, through its vice president, John Schrik, for the loans, and the bank agreed to make them, each on the basis of “7 per cent interest per annum and a commission of 5 per cent on the particular sum loaned to be paid to the bank.” The loans aggregated $28,000. The one here involved is for $1,500 and known as Loan No. 698. The amount of each loan was credited to Sawiak’s account in the bank, less said commission of 5 per cent, and expenses for bringing down the title, recording fees, fire insurance premiums, etc. As the building work progressed the bank, at Sawiak’s request, paid out such sums as were required for payment of labor and materials, — debiting Sawiak’s said account therefor— and also paid certain sums direct to Sawiak. It clearly appears that the 5 per cent commission was retained by the bank and was not paid to any broker for negotiating the loans.

Considering the evidence and the law applicable thereto, we are of the opinion that there is merit in defendants’ defense of usury, as pleaded in their answer, and that the decree appealed from should not be allowed to stand in its entirety and should be modified. In 3 Bouvier’s Law Dictionary (Rawle’s 3rd Rev.) p. 3380, usury is defined to be “the excess over the legal rate charged to a borrower for the use of money; taking an illegal profit for the use of money.” In Clemens v. Crane, 234 Ill. 215, 229, it is said: “To constitute usury, in contemplation of law, the following essential elements must be present: (1) There must be a loan or forbearance; (2) the loan must be of money or something circulating as money; (3) it must be repayable absolutely and at all events; (4) something must be exacted for the use of the money in excess of and in addition to the interest allowed by law.” When the loan in question was made to Sawiak (September, 1926) it was provided in sections 4, 5 and 6 of chapter 74, Cahill’s Ill. St. 1925, ¶¶ 4, 5 and 6, pp. 1466-7, as follows:

“Sec. 4. In all written contracts it shall be lawful for the parties to stipulate or agree that seven (7) per cent per annum, or any less sum of interest, shall be taken and paid upon every one hundred (100) dollars of money loaned or in any manner due and owing from any person to any other person or corporation in this State, and after that rate for a greater or less sum, or for a longer or shorter time, except as herein provided; . . .

“Sec. 5. No person or corporation shall directly or indirectly, accept or receive, in money, goods, discounts, or thing in action, or in any other way, any greater sum or greater value for the loan, forbearance or discount of any money, goods, or thing in action, than as above prescribed, except from a corporation.

‘ ‘ Sec. 6. If any person or corporation in this State shall contract to receive, except from a corporation, a greater rate of interest or discount than seven (7) per cent upon any contract, verbal or written, such person or corporation shall forfeit the whole of said interest so contracted to be received, and shall be entitled only to recover the principal sum due to such person or corporation, and all contracts executed after this Act shall take effect, except contracts in which a corporation shall be the obligor, which shall provide for interest or compensation at a greater rate than herein specified, on account of non-payment at maturity, shall be deemed usurious, and only the principal sum due thereon shall be recoverable.”

In Hirsh v. Arnold, 318 Ill. 28, 42, 43, it is said: “The court was warranted in its conclusion from the evidence that the loan was. made to appellants by Dreyer & Co. (mortgage bankers), and that the notes were later sold and transferred to Hirsh (complainant); that the interest was usurious, as the bankers charged seven per cent interest in the notes, which appellants agreed to pay, and in addition thereto" two and a half per cent commission. The record does not disclose that Hirsh had notice of the fact that the notes were tainted with usury. Nevertheless, a purchaser of a mortgage or trust deed takes it subject to all the infirmities to which it is liable in the hands of the mortgagee, and in equity the mortgagor is entitled to every defense against the assignee which he could have made against the original mortgagee. . . . The defense of usury in a foreclosure suit is just as effectual against an innocent purchaser before maturity as it is against the original mortgagee.” In Payne v. Newcomb, 100 Ill. 611, 623, it is said: “The rule in this court is, that usury paid with the principal cannot be recovered back, but so long as any portion of the principal remains, out of or in connection with which the usurious interest accrued, it may be deducted from or set off against such principal. ’ ’ This rule has been followed in many later cases. (Ammondson v. Ryan, 111 Ill. 506, 511; Harris v. Bressler, 119 Ill. 467, 472-3; Cole v. Guyer, 237 Ill. 568, 573; Stober v. Ehrhart, 223 Ill. App. 543, 547; Loldell v. Williams, 255 Ill. App. 489, 493.) In the last cited case it is said (p. 493): “It is also insisted by appellee that the payments on interest by appellant were voluntarily made and that, that being true, he is not entitled to credit therefor. While usurious interest, voluntarily paid, cannot be recovered back where the note or loan tainted with usury has been paid in full and the transaction has been closed, yet, where any part of the principal or interest remains unpaid, the maker of the note is entitled to have credited thereon all payments made on interest, either on the original note or on the note or notes given in renewal thereof.” But the fact that the note or loan here involved is tainted with usury does not render the trust deed, securing the indebtedness, void. Its covenants and provisions remain binding. In Union National Bank v. International Bank, 123 Ill. 510, 514, it is said: “It (the statute in relation to usury) does not declare the mortgage securing indebtedness on which usurious interest is charged, void. It merely declares the interest contracted to be received, void. . . . The mortgage, in such case, therefore, is valid, and must be enforced, to secure the payment of the money actually loaned. The usury only affects the accounting.” (See, also, Matzenbaugh v. Troup, 36 Ill. App. 261, 264.)

Counsel for complainant contends in substance that because Sawiak made the written agreement with the Gilberts of October 9, 1926 (wherein he agreed that when they had made payments to him in the aggregate sum of $2,750, he would convey the premises to them subject to the trust deed herein sought to be foreclosed, etc.) and because he accepted from them partial payments to a considerable amount, these acts of his constitute an. affirmance by him of the validity of the indebtedness secured by said trust deed (even though tainted with usury) and estop him from raising the question of usury. We cannot agree with the contention. It appears that prior to the filing of the present bill the Gilberts defaulted on their agreement, abandoned the premises and surrendered the agreement to Sawiak. It further appears that Sawiak, when the present bill was filed, was the equitable owner of the premises, — the legal title, subject to said trust deed, being in the Pioneer Trust and Savings Bank, as trustee for Sawiak. Had the Gilberts, prior to the filing of the present bill, made payments on said agreement to the aggregate sum of $2,750, or more, and had Sawiak (or his said trustee at his direction) conveyed the premises to the Gilberts subject to said trust deed, and the amount of the indebtedness secured thereby had been assumed by the Gilberts or been deducted from the purchase price, neither they nor Sawiak could have been heard to complain of the usury in the indebtedness secured by said trust deed. (Essley v. Sloan, 116 Ill. 391, 397-9; First Nat. Bank of Atwood v. Drew, 226 Ill. 622, 626.) But the Gilberts did not consummate the agreement that they made with Sawiak, and the latter did not convey to them his equity in the premises. And the situation, as it seems to us, is the same as if Sawiak had never made any agreement with the Gilberts. And we fail to see wherein, under the facts disclosed, any such estoppel as claimed by counsel can arise as against defendants and in favor of complainant. The essential elements of an estoppel are lacking.

Our conclusion is that the decree appealed from should be modified as to the amount adjudged to be paid to complainant. In the account as stated by the master as above mentioned (restated in the court’s decree) all interest items therein should be eliminated, but we think that the charges of $43, $2.10 and $22.90, are proper, as is the allowance of $200, for complainant’s solicitor’s fees. The indebtedness as evidenced by the principal note is $1,500, and this sum should be allowed — less the following deductions (a) $315 (being the aggregate of the interest payments as evidenced by the six paid interest coupon notes of $52.50 each), and (b) $75, the amount exacted for the five per cent commission by the Ridgeway State Bank. The aggregate of these deductions is $390.

For the reasons indicated the decree of the superior court is reversed and the cause is remanded with directions to enter a modified decree against defendants, not inconsistent with the views herein expressed.

Reversed and remanded with directions.

Keener and Scanlan, JJ., concur.