text:
    The People of the State of Illinois, by Otto Kerner, Attorney General, Appellee, v. The Canton National Bank of Canton et al., Appellants.
    Gen. No. 9,006.
    Opinion filed January 15, 1937.
    Glenn Eatcliff, of Lewistown, for appellants.
    Otto Keener, Attorney General, for appellee The People of the State of Illinois.

      Sears & Solfisburg, of Aurora, for other appellees.
   Mr. Presiding Justice Fulton

delivered the opinion of the court.

This is a complaint, filed in equity by the People of the State of Illinois, against the Canton National Bank of Canton, Illinois, et al., for an accounting from said bank as trustee of a trust created by the last will and testament of Van B. Eyerly, deceased, and for the appointment of a successor in trust. The controversy arises over the provisions of the will of Van B. Eyerly, who died September 27,1926, and his will was probated in the county court of Fulton county on November 15, 1926. The portions of the will under consideration in this case are the fifth, sixth and seventh clauses, which read as follows:

“Fifth: It is my Will and I do hereby direct that all of the rest, residue and remainder of my estate, both Real and Personal or Mixed, and of whatsoever kind or nature and wheresoever same may be found or located, shall be held in Trust by my Trustee, hereinafter named, and loaned and invested in first mortgage loans, bonds and safe securities and investments, at highest rate of interest consistent with entire safety to the principal, and the full Net Income therefrom shall be paid unto my wife, Charlotte Solfisburg Eyerly, for and during her natural lifetime, and I hereby direct that the said income shall be paid unto her at such convenient time as she may elect, either monthly, quarterly or semi-annually, but not less frequently than the annual income each year.

“Sixth: After the decease of my said wife, Charlotte Solfisburg Eyerly, it is my Will and I do hereby direct my said Trustee to pay over all of the net income from my residue estate unto a Board of Three Commissioners, one of whom shall be The President of the Board of Education and one shall be the Superintendent of the Public Schools of the City of Canton, Illinois, and the third member shall be the President or Manager of the Trust Department of the Canton National Bank of Canton, Illinois, and my residue estate thus held in trust shall be known and entitled as-The Mr. and Mrs. Van B. Eyerly, Educational Fund, and the full net income therefrom shall be used and expended by the said Three Commissioners in the higher education at some accredited College in the United States, of the eligible graduates of The Canton High School of Canton, Illinois under such' rules and regulational of examination for eligibility as may be devised, established and adopted by said Board of Commissioners, and the amount of income to be paid and allotted to each separate scholarship shall not be less than Eight Hundred Dollars ($800.00) for each year of the Four (4) years of each of said Scholarships.

“Seventh: I hereby nominate and appoint The Canton National Bank Trust Department, of Canton, Illinois, to be the Executor and Trustee of this, my Last •Will and Testament.”

Because of the public interest in the charitable features of this trust, the attorney general filed this suit.

The complaint alleged that the Canton National Bank qualified as executor and administered upon the estate, filing its final report as such executor in the county court. The report was duly approved on March 20, 1928. The bank procured an order of said court directing the bank as such executor to pay over to the bank as trustee under said will all of the remaining assets belonging to said estate, which consisted of bonds, stocks, contract for sale of real estate, savings account and cash in the Canton National Bank, of the total aggregate face value of $96,675.49.

The complaint further alleged that the Canton National Bank continued to act as trustee until the fourth day of March, 1933, on which date it was closed by presidential order, and has ceased to transact business as a banking institution; that the entire corpus of said estate, including any undistributed income, is in the possession of M. D. Lawlor, receiver of said bank; and that the said bank has ceased to function as trustee. The complaint also alleged that no reports had been rendered by the bank, as such trustee, and that it was its duty to present a report to the circuit court; that the accounts of said bank, with reference to said trust estate, should be settled and a new trustee appointed by the court.

Charlotte Solfisburg Eyerly, widow of Van B. Eyerly, the beneficiaries of the charitable trust, the receiver of the bank, the Canton National Bank and the trust department of said bank were made parties defendant to the complaint. The complaint asked for the following relief: That the receiver of the Canton National Bank be ordered to file a complete final settlement and accounting of said trust; that a successor trustee be appointed by the court; that the receiver be decreed to convey, transfer and assign all of the said trust estate to the successor in trust; that upon the approval of the account of said trustee the income accrued be directed to be paid to the parties entitled thereto under said will. The complaint also asked for general relief. An answer to the complaint was filed by the receiver and by the bank. A separate answer was filed by all of the beneficiaries under the charitable trust admitting the allegations of the complaint and that the appellee was entitled to the relief therein prayed. A similar answer was filed by Charlotte Solfisburg Eyerly.

M. D. Lawlor died before the trial of the case and Robert W. Albright, who was appointed receiver of the bank to succeed him, was substituted as a party defendant. An amended answer was filed by the Canton National Bank and by the receiver. This amended answer admitted the allegations of the complaint with reference to the death of Van B. Eyerly, the probating of the will and the contents thereof, the qualification of the Canton National Bank as said executor, the fact that the securities and moneys described in the complaint were delivered to the bank, as trustee under said will, and that said bank continued to act as such trustee until the fourth day of March, 1933, when it ceased to do business. The amended answer further admitted being in possession of the corpus of said trust and averred a willingness to file a full and complete report of the acts and doings of said bank as such trustee. Another amendment was filed to this amended answer showing that the comptroller of the currency of the United States of America made an assessment upon all stockholders of the Canton National Bank for the par value of each share of stock and that by virtue of said assessment the trust estate of Van B. Eyerly, deceased, became liable to pay to the receiver of said bank the sum of $12,000 on account of 120 shares of the capital stock which belonged to and were a part of said trust estate. The amendment further averred that the sum of $12,000 has been charged against said trust estate on account of said assessment and asked that the said receiver be authorized to sell sufficient securities belonging to said trust estate to pay the amount of said assessment. The amendment further averred that the bank was entitled to receive reasonable compensation for its services as trustee and a reasonable sum for the services of its attorneys in connection with the administration of said trust estate. This amended answer, together with the amendment thereto, was filed as a counterclaim in said cause and relief asked in compliance with the suggestions above enumerated.

A report of the income received from the trust estate was attached to said amended answer. This showed that the income received by said trustee amounted to $3,029.95 in 1928; $4,344.44 in 1929; $4,560.66 in 1930; $3,470 in 1931; $2,560.97 in 1932; and $1,939.12 in 1933. The dividends on the stock in the Canton National Bank, which were included in said income, amounted to $1,080 in 1928; $1,440 in 1929; $1,440 in 1930 and $720 in 1931. No dividends were reported for 1932 or 1933. The report also showed that the bank reserved for paying fees, covering its services as trustee, the sum of $1,000 and to pay attorneys ’ fees $500. Among the securities listed on hand in the report were 120 shares of the capital stock of the Canton National Bank of the book value of $36,000.

Objections were filed to this report by the appellee alleging that the trustee was not entitled to compensation for its services or for that of its attorneys, because it had so negligently handled the trust estate; denied that the trust estate was liable for the stock assessment levied by the comptroller of the currency, but averred that in the event the court should find said trust estate liable for said stock assessment, then the Canton National Bank, as such trustee, was liable to said trust estate for the amount of said assessment because of its failure to sell the bank stock. The objections further alleged that said bank stock was appraised in inheritance tax proceedings of said estate at the sum of $36,000 and that said stock was reasonably worth that amount for a period of more than two years after the bank received said stock as trustee; that said bank was qualified to do a trust business and had deposited with the auditor of public accounts $50,000 in bonds which are still in the hands of said auditor for the benefit of the trust creditors of said bank and that appellee was entitled to have its claim along with all other trust claims satisfied out of the proceeds of said bonds. Edward J. Barrett, auditor of public accounts, was made a party defendant, by amendment, and answered said complaint and objections. The bank and the receiver thereof replied to the objections denying liability for negligence and wrongful management of said trust. Charlotte Solfisburg Eyerly, and the representatives of the charitable trust, joined in the objections filed by the appellee.

There was no serious conflict about the facts in this case. The principal question upon which evidence was presented pertained to the value of the bank stock during the period of time that it was held by said bank as trustee. There was also testimony relating to the question of the advisability of selling said stock. The facts show that the capital stock of the Canton National Bank amounted to the sum of $125,000; that stock in said bank was purchased at $275 a share in July, 1929, and that the average sale price from 1913 to 1929 was $283 a share (this value prevailed up to a short time before the bank closed although there was no demand for the stock the last year or two the bank was operating); that Charlotte Solfisburg Eyerly, the widow of Van B. Eyerly, at various times during the year in which the estate was being administered requested the bank to sell this stock; that on May 5, 1928, she received an offer from one U. G-. Orendorff to buy said stock and that he was willing to pay the sum of $275 a share; that Mrs. Eyerly informed the bank that Mr. Orendorff desired to buy said stock. Mrs. Eyerly had told the president of the bank a number of times during that year that she thought the bank stock should be sold and that her brother-in-law had advised her said bank stock should not be held in the estate. The evidence also shows that U. Gr. Orendorff owned 100 shares of the stock at the time the bank was closed and that 90 shares of his stock were purchased between 1921 and 1929; that about the time he offered to buy the Eyerly stock he offered not less than $265 a share for 50 shares of stock held by the Piatt estate. One of the attorneys, who represented the bank as executor of this estate and solicitor of the trustee, testified that he advised the officers of the trust department on several occasions in reference to taking the bank stock as a part of the trust estate and told them the stock should not be carried as a part of the trust funds. The testimony further shows that the bank paid dividends on this stock from the date of its receiving* the same as trustee in 1928 until in July, 1931, and no dividends were paid after July 1, 1931. The dividend rate had been $12 per share annually up until April 1,1931. On that date a quarterly dividend of $1.50' per share was paid and a letter was sent to each of the stockholders explaining its reasons for reducing the dividend to $6 per share annually. Witnesses were produced on behalf of the appellants who testified that during the period of time from March 14, 1928, down to the time of the closing of the bank, the stock of the Canton National Bank was reputed among* men of business, experienced in that community, to be a safe and substantial investment; that during that period of time there was a reasonably ready sale of this stock at about its book value. The book value fluctuated from approximately $224 a share in February, 1928, down to $142 a share on December 31, 1932.

The trial court held that it was the duty of the Canton National Bank, as trustee, to have sold the 120 shares of stock received by it as a part of the trust estate; that by electing to take from itself stock in its own bank as a part of the trust estate it might have an interest in this bank stock which was personal to it and might be in direct conflict with the interest of the trust; that the bank should be chargeable with the loss sustained to the trust fund by reason of the violation of its trust in negligently failing to dispose of said stock; that the stock was worth $275 a share and on May 5, 1928, it had an opportunity to sell said stock at that price; that it should be chargeable with interest at five per cent per annum from May 5, 1928, to the date of the decree, less any moneys that might have been paid to the life beneficiary as dividends on such stock. The court further held that the Canton National Bank should reimburse the trust for the amount of the assessment levied by the comptroller of the currency on this stock.

The decree named the Old Second National Bank of Aurora as successor trustee and ordered the receiver of the bank to transfer all the assets of the trust estate to the successor trustee. It further provided that the Old Second National Bank of Aurora pay the sum of $12,000, together with interest thereon, on account of the stock assessment levied by the comptroller of the currency. It further decreed that the Canton National Bank was indebted to the Old Second National Bank of Aurora for the amount of said stock assessment; also, that the Canton National Bank was indebted to said trust estate for the sum of $33,000, being the value of said-bank stock on May 5, 1928, together with interest at five per cent from that date, less the sum paid to the life beneficiary in dividends. Decree also provided that the securities held by the auditor of public accounts was subject to the lien of the new trustee for the said indebtedness and in the event said securities should not be sufficient to pay in full all of the trust creditors of said bank, then the new trustee and Charlotte Solfisburg Eyerly should be entitled to a general claim for the deficiency against the receiver of said bank. The question of the compensation for the trustee and attorney’s fees was reserved for the further consideration of the court.

The appellants contend that the record in this case discloses that the Canton National Bank has not been guilty of any breach of trust in administering the trust created by the last will and testamént of Van B. Eyerly, deceased; that the language of the will and the provisions of the statutes of Illinois in force at the time the' will was executed authorized the trustee to continue to - hold the 120 shares of bank stock as a part of the cor-. pus of said trust estate; that the only personal interest * which the bank had in this stock was the ordinary interest between a corporation and its stockholders; that. the trustee acted with reasonable diligence and pru-. dence and in accordance with the judgment of men of 1 experience in making investments and had not been < guilty of any negligence in the administration of the - trust.

The provisions of the will creating the trust was to the effect that the residue of the estate, both real and personal, should be held in trust by the trustee, and loaned and invested in first mortgage loans, bonds and safe securities and investments, at highest rate of interest consistent with entire safety to the principal. The appellants urge that because of the provisions of x “An Act concerning powers of trustees,” Ill. State 1 Bar Stats. 1935, ch. 3, if 144; Jones Ill. Stats. Ann.’ 135.05, adopted in 1905, providing for the character of1 investments which may be made by trustees and which concludes with the following language, “any trustee * or any and all successors in trust may continue to hold any investment received by him under the trust, or any ’ increase thereof,” that the bank was expressly author-’ ized to continue to hold the stock which it received as-a part of the trust estate. In support of their argu- - ment they rely chiefly upon the case of Merchants Loan & Trust Co. v. Northern Trust Co., 250 Ill. 86. In that case, however, it was clear that the testator intended to give his trustees uncontrolled discretion in the management of the estate, with full power to invest and reinvest the same and to vary the securities and property. He invested them with broad discretionary powers. The opinion also said, “the law does not give Trustees the same freedom of choice in investments that may be exercised by prudent business men in their own affairs. . . . The trustees must always and ever, in exercising their powers, act in the utmost good faith and with sound judgment and prudence.” There is nothing in that case that gives trustees an unlimited power to hold any investments received by them under a trust. In the case of Davenport v. Kirkland, 156 Ill. 169, where the court construed a will containing somewhat similar language to the fifth clause of the Eyerly will, the court said:

“It is manifest that the testator intended to include both his personal and real estate in the portion to be so held in trust and kept at interest. To carry out this mandate of the Will both real and personal property must be converted into cash. In no other way can it be made operative.”

„ In our judgment the statute above referred to does , not give trustees the power and authority to hold stock • received with the trust estate for any particular length of time but only for such period as the facts and circumstances of each particular case may warrant. It is doubtful whether the bank stock in controversy in this case is included as one of the securities the testator directed the trustee to carry as a permanent investment.

A large part of appellants’ argument is devoted to the proposition that the bank had no personal interest in the stock adverse to the interest of the trust and could not be charged with the loss of the bank stock on the theory of divided loyalty. It may be conceded that the primary responsibility of the bank was to protect the trust committed to its charge. No self interest can be allowed to conflict with this obligation. It could not derive any personal advantage at the expense of the trust nor put itself in a position antagonistic to the beneficiaries of the trust. In Bennett v. Weber, 323 Ill. 283, the court said: “A trustee is not permitted to place himself in a position where it will be difficult for him to be honest and faithful to his trust.” See also Joliet Trust & Savings Bank v. Ingalls, 276 Ill. App. 445; Thorp v. McGullum, 1 Gilm. 614. In this case Mrs. Eyerly advised the bank shortly after her husband’s death that this stock should be sold. She talked' to the trustee at various times and finally in May, 1928, found a purchaser for the stock. These suggestions were apparently entirely ignored by the bank for there is no proof of its ever making any effort to dispose of the bank stock. The trustee was in better position than anyone else to know what was happening to effect the value of this stock. They certainly knew that in case the bank should be closed that the estate would be subject to the superadded stock liability of $100 per share and still in the face of the request by the life beneficiary for the sale of the stock, the provisions of the will of Van B. Eyerly, deceased, and the advice of their attorney and solicitor they continued to hold this stock as a part of the trust. In thus holding this stock it can easily be seen why the trustee placed itself in a position where it would be difficult for it to be honest and faithful to its trust. With the depression coming on the bank would not care to offer such a large block of stock for sale for fear that the interests of the bank would be seriously affected. It is our judgment that the trustee so conducted the affairs of this trust that it could not give the utmost fidelity to this particular asset without coming in conflict with the personal interests of the bank. We believe the trial court was correct in holding that the trustee violated one of the duties imposed upon it when it failed to dispose of the bank stock at the time when there was an opportunity to sell at $275 a share and that the trustee should be charged with that valuation.

It is the further contention of the appellant that even though the Canton National Bank was held liable for loss to the estate on account of its failure to sell the bank stock, the life beneficiary Charlotte Solfisburg Eyerly was not entitled to a decree for interest and that it was reversible error for the court to award interest to her in the final decree. The basis for this assumption is that there is no proper pleading filed on behalf of the life beneficiary as the foundation of such decree; that affirmative relief cannot be granted to a defendant unless a cross-bill is filed or a counterclaim should be a part of the answer and should be designated as a counterclaim. In this case Charlotte Solfisburg Eyerly filed objections to the report of the Canton National Bank in which there was a prayer asking that the court take an accounting and ascertain the damages sustained by the said estate. It is well established in this State that where there had been a bill for an accounting, the trustee must account to every person for any amount that is due to the parties interested. Seybert v. Hoiles, 279 Ill. App. 110. For a further reason the appellants say that Mrs. Eyerly, with full knowledge of the alleged illegality of the investment in bank stock, accepted the dividends from the stock and that this amounted to a ratification of the investment. We do not think the facts warrant this presumption. Mrs. Eyerly sought in every way possible to induce the trustee to sell the stock and approached them on this subject on several different occasions. She even produced a buyer who was ready, able and willing to purchase the stock at an adequate price. There was no acquiescence, either express or implied, on the part of this beneficiary on the question of holding the bank stock as a part of the assets of the trust estate.

It is further the position of the appellants that where a statute or constitution establishes a liability in favor of the creditors of a bank, the proper construction of- such provision is that it shall be for the benefit of all creditors and that .they should share pro rata in the amount recovered; therefore, that the securities deposited by the Canton National Bank with the auditor of public accounts in order to qualify as a corporation, authorized to execute trusts, are held by the auditor for the benefit of all creditors of said bank and not merely for the benefit of trust creditors. The Appellate Court in the Second District in this State in the case of In re National Bank of Ottawa, 273 Ill. App. 545, had occasion to consider this exact question and held:

“The object and purpose of the Trust Company Act, as suggested by counsel for defendants in error, is to afford trust creditors a measure of protection at least that is not afforded general creditors of the bank. The creditors protected by the securities in the hands of the auditor are those whose claims arise because the bank accepted an appointment which it was authorized to accept by virtue of this act. The right to resort to these securities depends upon whether the bank was in possession of and liable for trust funds by virtue of an appointment it was authorized to accept under the act regulating trust coifipanies. ”

In our judgment the trial court correctly held that the amount of the decree should be satisfied out of the trust funds of the bank along with other trust claimants.

On the whole we are in accord with the findings of the trial court as expressed in its decree and the same is hereby affirmed.

Affirmed.


source: Caselaw Access Project

author: Mb. Presiding Justice Fulton

license: Public Domain

text:
    Mary C. Michael, Plaintiff in Error, v. Orlo Jordan, Defendant in Error.
    Gen. No. 9,008.
    Opinion filed January 15, 1937.
    S. H. Cummins, of Springfield, for plaintiff in error.
    Hershey & Bliss, of Taylorville, for defendant in error.
   Mb. Presiding Justice Fulton

delivered the opinion of the court.

This was a suit in assumpsit instituted in the circuit court of Christian county on October 8, 1928, by the plaintiff in error against the town of Mt. Auburn as defendant. Subsequently, on January 7,1932, a motion was made for leave to substitute the highway commissioner of Mt. Auburn towmship as party defendant and to dismiss the town of Mt. Auburn. Thereafter, on April 30, 1932, the present defendant in error, Orlo Jordan, as highway commissioner of said township, was upon motion substituted as the defendant in the suit. Numerous pleadings were filed and ruled upon in said cause but finally a new declaration, based solely upon the common counts, was filed to which the defendant in error filed a general issue and also a plea of the statute of limitations. Later a stipulation of fact was filed by the parties and the cause submitted to the court without a jury. The court rendered judgment in favor of the defendant in error from which judgment this writ of error is being prosecuted.

The stipulation of fact shows that on or about the 13th of October, 1923, the plaintiff in error loaned to one O. W. Davis, who was then the sole highway commissioner of Mt. Auburn township, Christian county, Illinois, for the uses and purposes of said highway commissioner, the sum of $2,250. The said sum of money was used by said O. W. Davis as such highway commissioner for the purpose of improving and repairing roads and bridges within the limits of said township of Mt. Auburn. The stipulation further shows that no consent was given to the said O. W. Davis as such highway commissioner by the board of town auditors to make such loan or to borrow said sum of money and that no authority of any kind or character was given or granted to the said O. W. Davis as such highway commissioner to borrow said sum of money other than such authority as was granted to him by the statutes of the State of Illinois. The stipnlation also showed that no part of the sum of $2,250 had been paid.

It appears from the briefs of counsel that the said 0. W. Davis gave to the plaintiff in error a written road order for the money borrowed but the plaintiff in error in the trial of the suit relied upon a recovery, based solely upon the common counts for money had and received. It is the contention of the plaintiff in error that if a municipal corporation has received money for an authorized lawful purpose derived from the issue of illegal or void bonds and has applied it to that purpose, an action for money had and received may be maintained although the corporation had no authority to issue the bonds. However, in the case at bar, it is conceded that the highway commissioner was wholly without authority to contract the original indebtedness and therefore the contract was ultra vires from its inception which distinguishes it from the cases contained in plaintiff in error’s brief.

The defendant in error insists that the contract having been dated October 13, 1923, and the suit against the highway commissioner instituted January 7, 1932, some eight years after the alleged loan was made, that such action was barred by the five-year statute of limitations. In reply to this contention the plaintiff in error says that the plea of the statute of limitations was not filed until some time after the stipulation of fact was entered into and was therefore not an issue in the cause. Waiving that question entirely it seems to us that on the merits of the case the circuit court was correct in making its findings in favor of the defendant in error because it has been many times held in this State that a commissioner of highways has no authority to borrow money; that he is a municipal corporation; that he cannot incur any indebtedness other than that granted by statute and that the right to borrow money is not included. In the case of Randolph v. Town of Bernadotte, 243 Ill. App. 581, where a suit was brought against a township by a party who had loaned money to the commissioner of highways of said town, it was held that a highway commissioner was not vested with any power to borrow money; that the power to borrow money does not exist in a local government independent of statute and when money is borrowed under the provisions of the statute, the statute must be strictly complied with. Again in the case of Brownell Improvement Co. v. Highway Com’r of Town of Sumner, 280 Ill. App. 43, the court said:

“Iii the case we. are now considering the commissioner did not exercise his power in an irregular way but he attempted to enter into a contract that the statute did not give him authority to make, and therefore, the contract was void and unenforceable. In the case of Dement v. Rokker, 126 Ill. 174, our Supreme Court, in discussing the presumption of the legality of contracts, use this language: ‘There is a distinction between contracts where the parties have an inherent right to contract, and contracts where there is no inherent power to contract, but the contract is purely by virtue of a special statutory authority. In the former, the contract is presumed to be lawful, and it devolves upon those who deny its validity to show that it is unlawful; while in the latter instance the reverse is true. The burden rests upon those seeldng to enforce it, to show that the contract is within the statutory authority.’ ”

While a court dislikes to see an innocent person lose the money which she parted with on the occasion of loaning it to a highway commissioner who used the money for improving the roads and bridges within the limits of his township, it cannot overlook the well established principles of law set forth in the foregoing cases. To hold otherwise would, in effect, give any highway commissioner a power to go out and borrow money, spend the same for improvements upon the roads and bridges of his township and make the municipal corporation liable on the theory of money had and received. Public policy would not permit such expansion of powers where no authority to borrow money is given to a highway commissioner by statute.

The judgment of the circuit court is therefore affirmed.

Affirmed.


author: Mr. Presiding Justice Fulton

text:
    In re Estate of Peter Joseph Gillen. Fred J. Hempen, Executor of the Last Will and Testament of James Gillen, Deceased, Appellant, v. Mary E. Gillen, Executrix of the Last Will and Testament of Peter Joseph Gillen, Deceased, Appellee.
    Gen. No. 9,018.
    Opinion filed January 15, 1937.
    A. B. Lager, of Carlyle, and Smith & Murray, of Centralia, for appellant.
    John F. Pearl and Frank K. Lemon, both of Clinton, for appellee.
   Mr. Presiding Justice Fulton

delivered the opinion of the court.

This is an appeal from a judgment of the circuit court of DeWitt county. The action is based on a claim filed by Fred J. Hempen, executor of the last will and testament of James Gillen, deceased, in the county court of DeWitt and against the estate of Peter Joseph Gillen, deceased. The claim was disallowed in the county court and an appeal was heard in the circuit court where an order was entered denying the claim. There were, of course, no written pleadings in the case.

The facts in the case are not seriously in dispute and in the main are as follows: J ames Gillen was a Catholic priest residing at Aviston in Clinton county, Illinois. He died on June 20,1932, leaving a last will and testament which was admitted to probate by the county court of Clinton county and the appellant was appointed executor of said will. Peter Joseph Gillen was a brother of James Gillen and was a physician residing in Clinton, DeWitt county, Illinois. He died testate on April 20,1931. His wife, the appellee, Mary E. Gillen, was appointed executrix of his will by the county court of DeWitt county.

In the years of 1927 and 1928, Peter Joseph Gillen and Mary E. Gillen, his wife, borrowed the sum of $3,350 from James Gillen and to evidence this indebtedness three promissory notes aggregating said principal amount were executed by Peter Joseph Gillen and Mary E. Gillen, his wife. These three notes constitute the basis for the claim in this case. On May 28, 1930, James Gillen executed his last will and testament in which he provided first, for the payment of his just debts and funeral expenses, and second, that the balance of his estate be distributed by his executor in accordance with a letter of instructions. In the proceedings to probate the will to which all of the persons interested in this suit were made parties, the county court admitted the will, together with the letter of instructions, to probate as the last will and testament of Father James Gillen, deceased. Subsequently, a bill was filed in the circuit court of Clinton county for the construction of said last will and testament, to which suit Mary E. Gillen, together with all the children and heirs at law of Peter Joseph Gillen, were made parties to said suit and appeared by counsel. On a hearing the circuit court of Clinton county entered a decree construing the will of Father James Gillen, deceased. Par. 7 of the Letter of Instructions in the James Gillen will provided as follows:

“To Peter Joseph Gillen, M. D., Clinton, 0. Cancel notes of indebtedness to me and pay cash.. .$1000.00.”

While the language of that paragraph described the legatee as Peter Joseph Gillen, M. D. of Clinton, Ohio, it was conceded by all parties and decreed by the court that this paragraph referred to testator’s brother Dr. Peter Joseph Gillen, of Clinton, Illinois. The court further held, in that decree, that inasmuch as Peter Joseph Gillen had died prior to the death of said testator, that the legacy in said paragraph lapsed and did not become effective. The decree further provided that said legacy did not constitute payment or cancellation of the notes involved in this suit.

On November 26, 1931, James Gillen called at the former home of his brother in Clinton, Illinois, and had a conversation with Mary E. Gillen. She told him that she wanted to pay the amount due to him. He said he would take $500 for all the notes due him and then he changed his mind and said that she had better make a check for $520. Mary E. Gillen wrote out the check for that amount and Father James Gillen indorsed the check on the back by writing the words: “In full for notes,” and signed his name, “Rev. James Gillen.’’ He said he would accept this' money as full payment for all the notes that were due him, and the main reason he did that was due to the death of Dr. Gillen. Triunediately thereafter, James Gillen met the daughter of appellee, showed her the cheek and said: “I am going to relieve your Mother of some of her financial worries. She has given me this check in payment for the notes and the balance I will give — I am giving to you —or to Mother and the children to be used as she sees fit.” After the death of Peter Joseph Gillen, Father Gillen made two or three trips to Clinton to call on Mary E. Gillen. In talking over their affairs he told appellee that he was going to make his home with her and family the rest of his days after resigning his pastorate at Aviston, Illinois.

On June 6, 1932, Rev. James Gillen wrote to the appellee Mary E. Gillen as follows: “I have surprising news. I am about to resign and retire within two weeks or so. The Chancellor was here yesterday and talked matters over. You have invited me to your home. I shall come, and then we can talk matters over. ...” Later on, but under no specific date, the Rev. Gillen again wrote the appellee, as follows:

“His Excellency, the Bishop, was here yesterday. He was very gracious. He said he thought he should come'to see me as I had no car to drive. He told me if I wanted to stay he would give me an assistant. But thought, too, I had done my share in the vineyard and was entitled to a rest. He said it might prolong my life. I told him in what kind and able hands I would fall into, how kind and self sacrificing you had been to my brother and that you would also take good care of me. I formally resigned the pastorate of this church, which is required by canon law, when one ceased to administrate. I am getting things straightened out here. . . . It is as yet to be kept quiet, because he has to consider whom to send here, and occasions another move, etc. ... I anticipate that you and I and the children will live happily together and I think my contribution will make your financial burden a little easier. ...”

The appellant based his appeal upon the principle of law, that where a debt is liquidated and the amount is not in dispute, the payment of an amount less than the amount due does not discharge the debt; that this rule applies even though the payment of the lesser amount may be accompanied with an agreement on the part of the creditor to release or forgive the balance of the indebtedness; that the promise of the creditor to accept the lesser amount in full payment of the debt is wholly without consideration and unenforceable. Hayes v. Massachusetts Mutual Life Ins. Co., 125 Ill. 626; Hart v. Stron, 183 Ill. 349. The main question in the case, therefore, is whether or not the testimony above set forth constitutes a sufficient consideration for the agreement to accept the check of $520 in full payment of the notes involved in this case. It must be remembered that this is not a suit at law but is a claim filed in the probate court and in such an action the court has the right and it is its duty to consider claims and defenses of both a legal and equitable nature. Foreman-State Trust & Savings Bank v. Tauber, 348 Ill. 280. While the common law doctrine that a debt cannot be settled by payment of a less sum is still the law in the State of Illinois, yet a slight variation in the way of added consideration will remove a case from the operation of this strict common law rule. Winter v. Meier, 151 Ill. App. 572. A very equitable rule is stated by the Court of Appeals of the State of New York, Jaffray v. Davis, 124 N. Y. 164, 26 N. E. 351, where the court said:

“The general doctrine in Cumber v. Wane (1 Strange 426), and the reason of all the exceptions which have been engrafted on it may be summed up as follows, viz.: That a creditor cannot bring himself by a simple agreement to accept a smaller sum in lieu of an ascertained debt of a larger amount, such agreement being nudum pactum, but, if there be any benefit, or even any legal possibility of benefit, to the creditor thrown in, that additional weight will turn the scale, and render the consideration sufficient.to support the agreement.”

It is clear from the testimony that the Rev. James Gillen never intended that the notes upon which this claim is based should be collected and that he took the steps he thought necessary to cancel the notes, showing plainly that the equities of this case are entirely against the claim. The surviving party to the agreement, Mary E. Gillen, the appellee, is because of the death of Rev. James Gillen, an incompetent witness; however, the testimony of the two children of Mary E. Gillen, the many surrounding circumstances, the letter of instructions attached to the will of Rev. James Gillen, and his letters to Mary E. Gillen lead us to believe that the Rev. James Gillen entered into this arrangement or agreement and that he was to receive benefits therefrom by living the rest of his lifetime with the family of Mary E. Gillen. Surely, there was a possibility of his receiving a benefit from being able to obtain a suitable home for himself upon his resigning and retiring from his pastorate. It is our judgment that this constituted a sufficient consideration to sustain the contract.

It is further contended by the appellant that the court improperly admitted the testimony of the two children of Mary E. Gillen because they were incompetent under the statute. The statute relied upon is sec. 2 of Ill. State Bar Stats. 1935, oh. 51, 1Í2; Jones Ill. Stats. Ann. 107.068, and reads as follows:

“No party to any civil action, suit or proceeding, or person directly interested in the event thereof shall be allowed to testify therein of his own motion, or in his own behalf, by virtue of the foregoing sectiqn, when any adverse party sues or defends as the trustee or conservator of any idiot, habitual drunkard, lunatic or distracted person, or as the executor, administrator, heir, legatee or devisee of any deceased person, or as guardian or trustee of any such heir, legatee or devisee, unless when called as a witness by such adverse party so suing or defending, . . .”

The will of Dr. Peter Joseph Gillen, deceased, devised and bequeathed his entire estate to Mary E. Gillen, and the children are not interested as beneficiaries in the will or in his estate. They are, therefore, not disqualified to act as witnesses in this case. In the case of Britt v. Darnell, 315 Ill. 385, the court said: “The interest disqualifying a witness must be such that pecuniary gain or loss will result to the witness from the judgment or decree of the court. ’ ’ The children of Dr. Peter Joseph Gillen could have no pecuniary interest in the judgment of the court in this case.

In accordance with the views above expressed, the judgment of the circuit court was correct and is hereby affirmed.

Affirmed.


text:
    D. Alice Taylor, Appellee, v. Champaign County Abstract Company and Fred Price, Appellants. James Edwin Filson and Lena Filson, Appellees.
    Gen. No. 9,028.

      Opinion filed January 15, 1937.
    Clark & Noel, of Urbana, and Asa S. Chapman, of Champaign, for appellants.
    R. E. Winkelmann, of Urbana, and Frank B. Leonard and John L. Franklin, both of Champaign, for appellees.
   Mr. Presiding Justice Fulton

delivered the opinion of the court.

This was a bill filed by the appellee, D. Alice Taylor, to foreclose a $3,000 mortgage and to enforce payment of the indebtedness secured thereby. The suit was based substantially upon the following facts: On December 1,1921, the note and mortgage described in the bill of complaint were executed by William E. Atkinson and Lena M. Atkinson, his wife, and delivered to Mary E. Webber in payment of part of the purchase price of a tract of real estate located in the city of Urbana, Illinois. The note was made payable to Mary E. Webber, due three years after date, and bore interest at the rate of six per cent per annum. On October 26,1923, William E. Atkinson contracted to sell the above mentioned premises to James Edwin Filson, one of the appellees, and on the same date a warranty deed was executed and placed in escrow with the contract at the Urbana Banking Company. On December 1, 1924, the indebtedness, evidenced by the note and mortgage, became due and the major part of the controversy in this cause arises over the nature of the transaction which took place between the appellee, James Edwin Filson, and Mary E. Webber on that date. Mary E. Webber was an elderly lady 88 years of age and testified that at the time of the transaction Filson came to her house and paid off the debt; that she turned over to Filson all of the papers and that she signed all of the papers Filson gave her to sign although, she does not remember the exact nature thereof; that she received her money and does not know what became of the mortgage or note afterwards. She further testified that she did not stamp the note paid or mark it in any way so far as she could remember. Filson testified that he visited Mrs. Webber at an earlier date for the purpose of securing an extension of the note and that she stated that she had made other arrangements for the use of the money and wanted the note paid; that he told her that he would make arrangements so that she would receive her money on the due date and that Mrs. Webber told him that she would send the papers to her son George Webber, and that the matter could be handled through him. Filson further testified that the transaction was consummated through George Webber; that he telephoned George Webber at the First National Bank of Urbana and told him to get the papers all together, have the note assigned in blank and to prepare a release deed .of the mortgage, as he wanted everything in shape to be handled by the lilinois Trust and Savings Bank; that he was president of that bank and in charge of the real estate loans at that time; that on the same date he took a check or draft from the real estate loan account of the bank and delivered it to George Webber, receiving in return the note indorsed in blank, the mortgage and the release deed; that he had previously made arrangements with the Illinois Trust and Savings Bank for the purchase of the mortgage and note by the bank and that the money paid to George Webber was funds of that bank; that the release was delivered in escrow to be held with all the other papers and to be delivered when the note was paid off; that all of the papers were delivered to S. A. Wright who handled the real estate loan accounts for the bank; that the abstract covering the premises was, together with the contract and deed from Atkinson, in the possession of and under escrow at the Urbana Banking* Company.

On the same date, James Edwin Filson and Lena Filson executed an extension agreement extending* the time of payment on the principal of said mortgage indebtedness to December 1, 1927. On October 15, 1927, Filson filed for record the deed executed by William E. Atkinson, pursuant to the contract of purchase, dated October 26, 1923. The deed was made subject to the mortgage of Mary E. Webber which indebtedness the grantee assumed and agreed to pay with interest. On December 1, 1927, Filson and wife executed a second agreement extending the date of payment of the principal of said mortgage debt to December 1, 1932. On December 3,1927, D. Alice Taylor, appellee, purchased said mortgage note from the Illinois Trust and Savings Bank.

Prior to December 1, 1927, the appellant, James Edwin Filson and Wallace T. Filson operated the Champaign County Abstract Company as a copartnership and Filson claimed to have held the title to the real estate described in said mortgage as an asset of said partnership. On December 1, 1927, the said James Edwin Filson, Lena Filson and Wallace T. Filson incorporated the Champaign County Abstract Company, one of the appellants, under the laws of the State of Illinois. On December 27,1927, the premises described in the mortgage were conveyed by the Filsons to the Champaign County Abstract Company, the conveyance being made subject to the mortgage of Mary E. Webber, which the grantee assumed and agreed to pay with interest. Interest was paid on the mortgage indebtedness by the new corporation each six months from June 1, 1928, up to and including June 1, 1931. On January 28, 1931, Walter E.- Price, Ben Price, Bay Price and the appellant Fred Price, purchased all of the stock of the Champaign County Abstract Company. On September 15, 1931, the Champaign County Abstract Company conveyed, by warranty deed, the premises described in said mortgage to Walter E. Price, which deed recited that the conveyance was made subject to existing liens, if any, which the grantee assumed, and agreed to pay. The appellant Fred Price subsequently obtained title to the same premises by warranty deed from Walter E. Price.

The cause was referred to a special master in chancery who made report and found the equities in favor of appellants. On a hearing in the circuit ocurt of Champaign county, exceptions to the master’s report were sustained and foreclosure decreed in favor of D. Alice Taylor, appellee. The decree also found that appellant, the Champaign County Abstract Company, through the assumption clause in its deed was primarily liable for the payment of the debt secured by the mortgage and that the appellees, James Edwin Filson and Lena Filson, were secondarily liable for same. In seeking to reverse the decree the appellants rely chiefly upon the contention that the transaction between Mary E. Webber and James Edwin Pilson constituted a payment of the mortgage debt; that the delivery of a release of the mortgage by Mary E. Webber to James Edwin Pilson had the effect of abating the lien of the mortgage and that the transaction between James Edwin Pilson and the Illinois Trust and Savings Bank was a reissuance of the note which could not in any manner re-establish the lien. To support this contention the appellants are compelled to depend largely upon the testimony of Mary E. Webber. If the intention of the parties at the time of the transaction bears at all upon the legal significance to be given the business transacted between this witness and James Edwin Pilson, then her evidence is entirely unsatisfactory. Her advanced age, the period of time elapsing between December 1, 1924 and the year 1933 when she was called upon to testify, and her total lack of memory concerning the details render her testimony of little value in so far as the real transaction was concerned. She was only sure of two matters, one was that Pilson called upon her and the other was that she was paid the money due her. Pilson, although an interested witness, told a rather clear and convincing story of the transaction. He is corroborated, in the main, by documentary proof. The note shows that it was indorsed in blank by Mrs. Webber as per instructions given by Pilson to her son George Webber and also that it was not stamped paid or canceled. The fact that a release was given instead of an assignment does not vitiate the transaction. We do not commend the manner in which the loan was handled by Pilson through his own bank, and by the release instead of an assignment, but do not feel that the mortgage became void or was discharged because of the methods employed.

Appellants insist that the evidence fails to show Mrs. Webber knew the bank was interested in any way and there could be no meeting of the minds that would consummate a contract of sale. They urge that the testimony of Filson consists mainly of self serving statements which were not competent evidence. However, Filson’s testimony was given in rebuttal of the testimony of Mrs. Webber who was called to testify about the transaction by the appellants. This qualified Filson to testify concerning the same matter. The case of White v. Fisher, 62 Ill. 258, is presented as authority for their position. In that case a mortgagor paid certain matured notes to the payee, given by the firm of which he was a member, and with money which his brother had assisted him to raise through the loan of notes owned by the brother and used as collateral. The mortgagor had an agreement with this brother that the notes taken up should be assigned to him and held as security for the notes he had allowed the firm to pledge. At the time the notes were paid the payees were requested to indorse the notes in blank without any knowledge on their part that the notes were to be reissued. After the entire series of notes had matured the payees filed a bill to foreclose. The brother answered claiming to own the first matured notes and that he was entitled to priority of payments out of the proceeds of the sale. The court held that the brother, as holder of the notes, was entitled to the benefit of the mortgage security as against the mortgagor but as to the holders of the remaining notes his rights were postponed. There is no such question of preference in this case but appellants are insisting that the mortgage was definitely paid. We believe the evidence fairly shows that the indorsement of the note in blank and delivery of the note to the Illinois Trust and Savings Bank effected an assignment of the mortgage and that the transaction between Mary E. Webber and Filson did not amount to a payment.

Appellants strenuously insist that the court acquired no jurisdiction of the res in this case. The basis of this contention is that if a mortgage still exists that the mortgage title remains in Mary E. Webber as trustee for the holder of the note; that Mary E. Webber is not a party to this proceeding and consequently the mortgage title is not within the jurisdiction of the court and the decree directing foreclosure upon it is á nullity. Citing the cases of Hayes v. Owen, 69 Ill. App. 553, and Lambert v. Hyers, 22 Ill. App. 616. These were cases involving trust deeds and hold that the trustee is a necessary party. We know of no case which holds that where a mortgagee in an ordinary mortgage has indorsed and delivered the mortgage note and also delivered the mortgage deed itself and other title papers to an assignee, that such mortgagee is an indispensable party to foreclosure proceedings. . The transfer of the note or obligation evidencing a debt operated as an assignment of the mortgage securing the debt and it is not entirely necessary that the mortgage papers be transferred or that a written assignment be made. In Fountain v. Bookstaver, 141 Ill. 461, 466, the court held that if a legal title to the notes passed from the mortgagee to a third party that the latter thereby became the equitable assignee of the mortgage. In Sedgwick v. Johnson, 107 Ill. 385, the court said: “It was a matter of no consequence whether defendant indorsed the notes or not. The delivery of them to complainants was an equitable assignment of the notes, and that would enable complainants to commence and prosecute a suit to foreclose the mortgage securing the same, in their own names.” In our judgment Mary E. Webber was not a necessary party to the foreclosure proceeding.

It further appears to us that the appellants, as grantees under deeds which assumed and agreed to pay the mortgage, are estopped to question whether or not the mortgage was in fact paid. The Champaign County , Abstract Company accepted a deed of the premises in which the mortgage was specifically mentioned and described and which indebtedness the said corporation assumed and agreed to pay. It did pay semiannual interest upon the mortgage for more than three years and has little standing now in a court of equity to make any objections to the validity of the mortgage and the notes secured thereby. The estoppel of the Champaign County Abstract Company extends to its successors in title, one of whom was the appellant Fred Price. The claim of the latter grantee that he had no knowledge of the mortgage on the property until some time after he and his family purchased the stock in the corporation is not material. The mortgage and the deeds were all of record and it was the duty of the purchasers of stock to investigate the condition of the corporation before purchasing any interest therein.

It is further urged by the appellants that where the matter of estoppel is relied upon for defense it must be specifically pleaded as such. In this case the appellee, D. Alice Taylor, by leave of court, amended her bill of complaint upon the date of the ruling of the chancellor upon the exceptions to the master’s report and the date of the entry of the decree, by inserting a paragraph setting forth specifically that the Champaign County Abstract Company and its grantees and successors in interest were estopped to deny the validity of the mortgage referred to in the assumption clause of their deeds. It was entirely within the discretion of the court to permit this amendment at the time decree was entered even before the adoption of the new Practice Act.

Because of the views expressed herein the decree awarding foreclosure to the appellee D. Alice Taylor is hereby affirmed.

Affirmed.


author: Mr. Justice Davis

text:
    The People of the State of Illinois ex rel. Mae Oemke, Appellee, v. Harry Schuring, Appellant.
    Gen. No. 9,029.
    Opinion filed January 15, 1937.
    Steely, Steely, Graham & Dysert, of Danville, for appellant; Walter V. Dysert, of counsel.
    Y. W. McIntire, of Danville, for appellee.
   Mr. Justice Davis

delivered the opinion of the court..

This is an appeal by Harry Sehuring, appellant, from a judgment of the county court of Vermilion county adjudging him guilty of bastardy.

The judgment from which the appeal was taken was rendered upon a second trial of said cause. At the first trial the jury by their verdict found appellant guilty and the court set aside the verdict and granted a new trial.

Several errors are assigned for a reversal of the judgment of conviction, among which are: The judgment is contrary to the manifest weight of the evidence, and that the court erred in refusing to grant a new trial because of newly discovered evidence presented on the hearing of the motion for a new trial. The foregoing being the only reasons argued for a reversal of the judgment we will not consider the other causes assigned.

The record discloses that Mae Oemke, the relatrix, was a single woman who had been married and whose husband, Harry Oemke, had died on April 25, 1932. She became acquainted with appellant on September 20, 1933, having met him in her home. He came there with two of her girl friends. She saw him every night after that up until about August 23, 1934, when he quit coming. She went to the World’s Fair at Chicago with him. He asked her to marry him. She was at his mother’s quite frequently. She informed him of her condition, and he said that he would go ahead and take care of her and see her through with it. After that he kept going’ to see her until August 23,1934. She did not see him after that but talked to him over the phone and asked him why he did not come to see her any more, and he said it was on account of his mother, that she set her foot down and he could not come.

Appellant denied that he was guilty and testified that the relatrix had paid for the trip to the World’s Fair. He did not deny that relatrix informed him of her condition and that he said to her he would take care of her and see her through with it, and that he continued to visit her until August 23, 1934. He also contended that he had an operation and had been sterilized and for that reason it was impossible for him to beget children.

On the first trial of the cause John W. Blair, a physician and surgeon of Harvey, Illinois, testified on behalf of the defendant and, by stipulation of the parties, his testimony given at that trial was read in evidence- and treated and considered as evidence of the doctor the same as if the doctor was present and under oath gave the testimony.

He testified that he knew the defendant, Harry Sehuring; that he performed an operation for the defendant which was primarily for a large ventrical hernia, following a previous operation for a pus appendix. Before going into the operating room he asked me that morning, in the presence of Dr. Frank Van Wormer my assistant, if it would be possible to sterilize him. I told him yes, and, if he wished, we could do so. I advised him how it was done and told Mm there was no gravity. After the repair of the post operative ventrical herma I tied off both the right and left vasa entirely. The medical term, applied to that kind of an operation,, is sterilizing. The purpose of the operation is to make it impossible for the person to have children. Both vasa were divided by the ligatures and separated. I would say the effect of that operation was sterilization. Impossible to beget cMldren. From a scientific standpoint, and to a reasonable degree of medical certainty, that is the effect upon this particular patient. He entered the hospital on February 11,1924, and was operated on at 8:30 the 12th day of February, 1924. On cross-examination the witness testified: That just before we went into the operating room that morning he talked to me about a sterilization operation and requested me to sterilize him; didn’t give any reason why he wanted to be sterilized. Performed tMs sterilization operation myself. I have forgotten the girls who were in the operating room at the time, because they change from time to time; but my first assistant was Frank Van Wormer; not sure where he is now, but believe he is in Aurora, Illinois. To my knowledge, never knew tMs kind of an operation to fail to accomplish the purpose.

Dr. Taylor W. Funkhouser, a witness on behalf of plaintiff and who was the physician in attendance at the birth of the child, was recalled as a witness in rebuttal. He testified that he heard read the testimony of Dr. John W. Blair; that an operation performed on a man by tying off both the right and left vasa, commonly known as a sterilization operation, would not necessarily prevent a man from begetting a child. A simply tying off would obstruct that tube for the time being; if that is absorbed, the tube would re-establish itself. On cross-examination to the question: Sterilization, then, is not a perfect operation? His reply was: Well, not done by that method, no. It can be made a perfect operation, but it wouldn’t be by that method. The operation performed was just tying the cord.

On the motion for a new trial the affidavit of Dr. John W. Blair was presented, in which he described specifically the operation performed, and which materially differed from his testimony given on the trial. The affidavit was in part as follows:

Bach vas deferens was identified, separated from tissue about same, ligated in two places approximately one inch apart. The vas was then divided between these two ligatures with a small section, approximately three-eighths inch being removed. Ligature used was 10-day number “0” standard chromic catgut.

An affidavit by Dr. J. M. Fisher was also presented on the motion for a new trial, in which he deposes that he read the affidavit of Dr. John W. Blair and that to a reasonable degree of medical certainty, from a scientific standpoint, basing his opinion upon the matters related in said affidavit, he is of opinion, assuming said matters therein set forth to be true and the manner in which said operation was performed as therein described, that it would produce sterilization of said patient.

The affidavit of Anna Sehuring, mother of appellant, was also presented on said motion for a new trial, in which the affiant seeks to corroborate appellant as to his testimony that relatrix had taken him to the World’s Fair and as to other matters not material to the issue.

The affidavit of appellant was also presented on said motion, in which he stated that he had read the affidavit of Dr. John W. Blair as to the manner and technique of the operation covered by said affidavit, and that the new details of said operation contained in said affidavit are details of fact of which he had no knowledge and constitute newly discovered evidence of which he was not aware until reading* this affidavit today.

We are of opinion that the court did not err in refusing* to grant appellant a new trial on the ground of newly discovered evidence. The rule uniformly followed in this State is that a new trial will not be granted on the ground of newly discovered evidence unless it is shown that the evidence could not have been produced on the trial by the use of reasonable diligence, and it must also be shown that the newly discovered evidence is reasonably certain to result in a different verdict. (People v. Blanch, 309 Ill. 426.)

The only showing* in the record as to the use of any diligence on the part of appellant to produce the evidence on the trial is his affidavit, which is not sufficient to establish the fact that appellant used reasonable diligence.

Appellant complains because the court permitted Dr. Funkhouser to testify, and says that the same was not offered until rebuttal in the second trial and then without any notice and at a time when appellee knew that Dr. Blair could not be called to meet the testimony of Dr. Funkhouser. That when the stipulation was made to read the evidence given by Dr. Blair on the first trial, no surprise evidence should have been sprung in rebuttal which would require Dr. Blair’s presence in court to meet it.

It is insisted by appellant that because of the fact that he was operated upon by Dr. Blair on February 12, 1924, and sterilized that the judgment is contrary to the manifest weight of the evidence, and that therefore the judgment should be reversed and the cause remanded.

It was incumbent upon appellant to prove by a preponderance of the evidence not only that Dr. Blair performed such operation but also that, as a result thereof, he was unable to beget a child. If appellant was content to rest the proof of such facts solely upon the testimony of Dr. Blair he cannot now complain. Appellee had the legal right to call witnesses not only to disprove the contention of appellant that an operation had been performed by Dr. Blair but also that such operation would not necessarily prevent a man from begetting a child. The fact that the testimony of Dr. Blair, given at the first trial, was read in evidence by agreement of the parties would in no way change the rules of evidence.

Dr. Blair was called as a witness by appellant to establish the fact that an operation had been performed and to give his professional opinion as to the result of such operation, and had he been present in court he could not have been recalled to meet the testimony of Dr. Funkhouser, as contended for by appellant, nor could he have been recalled to testify more in detail as to just what was done by him in performing the operation. Appellee called Dr. Funkhouser to show that in his opinion the result of the operation was not as contended for by appellant.

After a careful consideration of the evidence we are of opinion that the jury was warranted in finding that appellant was the father of the child. The judgment of the county court of Vermilion county is affirmed.

Judgment affirmed.


text:
    George J. Dambacher, Administrator of the Estate of George F. Dambacher, Appellant, v. Illinois Central Railroad Company, Appellee.
    Gen. No. 9,031.
    Opinion filed January 15, 1937.
    Hoff & Hoff, of Springfield, for appellant.
    Graham & Graham, of Springfield, for appellee; Charles A. Helsell, Verhoh W. Foster and E. C. Craig, all of Chicago, of counsel.
   Mr. Justice Davis

delivered the opinion of the court.

On the evening of March 31, 1935, George F. Dambacher, intestate of George J. Dambaeher, administrator, plaintiff appellant, was killed at a crossing over the right of way of the Illinois Central Railroad Company, defendant appellee. Upon a trial of said cause in the circuit court of Sangamon county the jury returned a verdict finding defendant appellant guilty and assessing the damages of plaintiff at the sum of $10,000. Upon the hearing of a motion of defendant for a directed verdict in its favor, made at the conclusion of all the evidence, the court having reserved decision thereon until after verdict, entered judgment in favor of defendant appellee and in bar of the action. This appeal is from that judgment.

Appellant contends that the court erred in allowing the motion of defendant for a directed verdict of not guilty, made at the close of all the evidence, and in entering judgment for the defendant thereon.

The accident occurred at the village of Grlenarm. At this point the tracks of defendant run in a northeasterly and southwesterly direction. A highway known as Burtle avenue crosses the tracks of the defendant in an easterly and westerly direction. U. S. Route 66, a concrete highway, passes over defendant’s tracks on an overhead bridge at a point 1,218 feet northeast of the intersection of Burtle avenue and defendant’s right of way. Route 66 was a much traveled highway and on March 31, 1935, Sunday night, the traffic was pretty heavy in both directions. The headlights of automobiles passing south over the viaduct on U. S. 66 appear to be one headlight when viewed by a person located near the crossing in question, owing to the angle you looked at them.

Cars passing over the viaduct at the time they cross the railroad are about 25 feet above the rails. The approach to the overpass is pretty steep and the lights of automobiles are thrown upward a trifle. There is a guard rail consisting of a plank or metal strip some 12 inches wide, supported by posts about 2% or 3 feet high on the west side of Route 66 for the entire length of the rise coming up to the viaduct. The rail and posts show between you and the automobile when you are down at the crossing looking at the embankment whenever an automobile crosses over the viaduct.

About 7:40 p. m. plaintiff’s intestate was driving his automobile west on Burtle avenue and was struck by a passenger train of the defendant which was proceeding in a southwesterly direction at about 65 to 70 miles per hour. He was alone in the car at that time and it was dark. Clarence Alsup, the fireman on the train, was the only eyewitness to the accident. The accident occurred at 7:39 p. m. He first saw the automobile as it approached down the dirt road headed toward the west. At the time he first saw him the train was about 400 feet away. He was approaching from the fireman’s side. He made a stop at the crossing when the locomotive was 150 to 200 feet away. He started again just as soon as he stopped. He stopped 8 or 10 feet from the crossing. The fireman notified the engineer when he started across the track. The headlight on the engine was burning at this time. The engineer first saw the car when the front of it showed up about 50 feet in front of the engine on his side of the train. The tracks are straight for a mile and a quarter north of where the collision occurred. The headlight on the engine was about ten feet two inches above the rail. It was equipped with a nonglare glass reflector, 14 inches in diameter, with a 21/4 inch focal arrangement. The globe has a 250 watt latest type special globe. The glass reflector will give 10 per cent more illumination than the silver plated copper reflector used in automobiles. It will give about 5,000 times the reflection of an automobile headlight.

It is insisted by appellant that the evidence discloses that to one approaching the crossing in question at night, from the east, the lights of automobiles traveling along U. S. Route 66 over the viaduct across defendant’s tracks, and lights of a locomotive approaching from the northeast appeared similar, thus presenting a confusing situation; that immediately before the accident there were cars crossing the viaduct.

In order to recover it is incumbent upon plaintiff to prove by a preponderance of the evidence that deceased was in the exercise of the degree of care required of a reasonably prudent person for his own safety.

“Railroads travel, on fixed tracks and cannot be turned aside, and the danger to be encountered in entering thereon is so well known and is a matter of such common knowledge, that when a traveler on a public highway fails to use the ordinary precautions before driving thereon, the general knowledge and experience of mankind condemn such conduct as negligence.” Graham v. Hagmann, 270 Ill. 252, 110 1ST. E. 337.

It is said by appellant however that where there are circumstances which tend to explain or excuse why the approaching train was not seen, then the question of contributory negligence is for the jury.

In the case of Gills v. New York, C. & St. L. R. Co., 342 Ill. 455, 174 N. E. 523, where the plaintiff approached a crossing upon which there were several tracks, and on the second of which a freight train was passing, having waited until the freight train had passed, he proceeded to cross and was struck by a passenger train running on the first track. In affirming the judgment for the plaintiff, the court said:

“Only where the court can say that it was the only reasonable inference which can be drawn from the facts should a verdict be directed. Plaintiff in this case testified that he both looked and listened for an approaching train. It has been held that as a matter of law it cannot be said that a traveler is bound to look or listen, because there may be circumstances excusing him from doing so. (Chicago S N. W. Ry. Co. v. Hansen, 166 Ill. 623, 46 N. E. 1071.) The-facts in that case are somewhat similar to the facts in this case. In that case the court said, that what particular thing a person is bound to do for his protection in the diversity of cases that may arise and what a reasonably prudent person would do for his own safety must be left to a jury as a question of fact.”

It is contended that the evidence discloses that immediately before the accident there were cars crossing the viaduct.' This contention is based upon the testimony of David C. Smart who testified he was in the club car on the train, facing west, when he saw a string of headlights and that indicated to him that there was a highway near, which was- approaching the railroad at an angle. He discovered that there was an overhead crossing and, just then, as we approached the overhead bridge, the engineer sounded his whistle which indicated to me that there was another crossing* farther on, probably 1,200 to 1,500 feet.

There is some conflict in the testimony as to the traffic passing over the viaduct at the time the train passed under it. Olin Peder, a witness for appellant, who lived two miles south of G-lenarm on a farm, was on the overhead crossing on the evening of March 31, 1935, at about 7:40 p. m. on his way to Springfield, in an automobile headed north. He testified that there was a passenger train just northeast of the viaduct at that time; that as he was crossing there were no other automobiles close; that he met very little traffic and none right there; that the train was probably 50 to 100 yards east of the viaduct when he noticed it.

"When deceased stopped his car, within 10 feet of the crossing before proceeding tó cross, the evidence discloses that the train was within an estimated distance of 200 feet from the crossing with headlight burning with an estimated reflection of 5,000 times that of an automobile headlight, he should have seen the headlight of the train and this is the only reasonable inference that can be drawn from the facts, and the light of the headlight of the train could not be mistaken for automobile lights coming up the approach to the overhead bridge. If there was the continual procession of cars passing up the approach to the overhead bridge on U. S. Route 66, as is claimed by appellant, that fact alone would easily distinguish those lights from that of the headlight of a train.

Deceased was alone and there was no obstruction at the crossing and nothing to distract his attention; the evidence fails to disclose that at the time of the accident there were automobiles passing over the viaduct, the lights from which could not be distinguished from the headlight of a locomotive.

We are of opinion that the circuit court of Sangamon county did not err in entering the judgment complained of and that the same should be affirmed.

Judgment affirmed.


text:
    Louis Rodgers, Administrator of the Estate of Darrell Rodgers, Deceased, Appellant, v. W. E. Beach and Herbert Beach. Illinois Independent Oil Company and The Alton Railroad Company, Appellee.
    Gen. No. 9,034.

      Opinion filed January 15, 1937.
    Londrigan & Londrigan, of Springfield, and Trapp & Trapp, of Lincoln, for appellant.
    Covey & Woods, of Lincoln, for appellee; Silas H. Strawn, of Chicago, of counsel.
   Mr. Justice Davis

delivered the opinion of the court.

The plaintiff appellant, Louis Rodgers, administrator of the estate of Darrell Rodgers, deceased, filed his amended complaint in the circuit court of Logan county, consisting of three counts, count one of which was substantially as follows:

That Louis Rodgers was the duly appointed administrator of the estate of Darrell Rodgers, deceased, by order of the county court of Logan county.

That on May 7, 1935, the Alton Railroad Company, a corporation, moved a certain tank car which had theretofore been filled with gasoline or other volatile oil, and from which gasoline and other volatile oil said tank had been partially emptied, leaving remaining therein gasoline and other volatile oil and substances^ which upon evaporation formed lethal gases in said tank car and caused a dangerous condition to exist.

Said tank car was moved to a point upon the tracks of said railroad company, about 100 feet south of the intersection of said track with Tremont street in the city of Lincoln, and placed at a point adjacent to and approximately 10 feet from a lot of ground which was constantly used by children of that neighborhood for a place to play baseball and other games, all of which matters and things were well known to defendant, or would in the exercise of due care and caution have been known by the said defendant.

That the said tank car was so placed without having the manhole cover at the top of said tank car closed and securely fastened, and plaintiff alleges that said condition of said manhole cover with regard to its being open or insecurely fastened was such that it could be seen and was seen by children and persons passing or playing near said tank car before and after such children mounting upon or climbing* upon said tank car.

That children from the surrounding* neighborhood frequently and constantly played upon said adjoining lot and upon the tracks of the defendant, and that by reason of the premises and the matters and things set forth the said tank car was attractive to children, and was likely to attract and allure children to the same, and did attract and allure children to come to the same and play on or about the same, and that defendant and their servants and agents knew or, by exercise of ordinary care, would know all of said matters and things above set forth and have knowledge that said children played near said track and that the said tank car in the condition aforesaid, without having* the manhole cover closed and securely fastened, was attractive to children and would be likely to attract and allure children to the same.

That Darrell Rodgers, a child 10 years of age, while playing upon said lot adjacent to said tracks on said Tremont street, discovered the manhole cover of said tank car was not closed and securely fastened, and that, after having made said discovery, he went away from the premises for a short period of time but being attracted by said condition and said tank car in said condition aforesaid, afterwards returned to play upon said tank car.

That the defendant carelessly and negligently placed and caused and allowed said tank car to remain upon its track, at the time and place aforesaid, without having said manhole cover closed and securely fastened, so that by reason thereof and as a direct and proximate consequence thereof said Darrell Rodgers was attracted thereby and allured thereto without fault on his part, he not being aware of the danger thereof, and being drawn and attracted by the said dangers and attractive nuisance, to wit, the said tank car in the condition aforesaid, entered said tank car through said manhole and was overcome by fumes which then and there, to wit, on the day aforesaid, caused his death while in said tank car.

That the negligence of said defendant was the direct and proximate cause of the death of the plaintiff’s intestate; that said Darrell Rodgers left him surviving as his next of kin his father and mother, sister and half brother, who were, at all times herein mentioned, in the exercise of due care for the safety of Darrell Rodgers, and by reason of the death of the said Darrell Rodgers said next of kin sustained pecuniary damages.

Said amended complaint contained two other counts, but it is not contended by appellant that those counts stated a good cause of action.

Defendant appellee filed a motion to dismiss said amended complaint, which pointed out specifically why the same should be dismissed, among which are: That the amended complaint does not set forth any description or facts showing* that the tank car in question was attractive to children, or likely to attract or allure children to the same.

That it is not shown that defendant violated any duty which under the law it owed to plaintiff’s intestate or plaintiff.

It is not alleged or shown that this defendant knew, or by the exercise of ordinary care would have known, of the alleged dangerous condition in and about said tank car.

It is nowhere alleged or stated that defendant had anything* to do with the creation or maintenance of the alleged dangerous condition in and about said tank car, or caused the same or had knowledge of it.

The amended complaint does not alleg*e or show any facts showing negligence on the part of this defendant, or a breach of any duty by this defendant to plaintiff’s intestate.

Upon a hearing of said motion the same was sustained and judgment entered for the defendant against plaintiff in bar of his action, from which judgment this appeal was taken.

The suit was dismissed as to W. E. Beach and Herbert Beach, doing business as Illinois Independent Oil Company, prior to the filing of the amended complaint.

If the owner or occupant of premises leaves a dangerous machine or appliance exposed under such conditions, that it may be reasonably expected that children of such tender age as to be incapable of exercising proper care for their safety may by their own instincts be attracted to the dangerous thing and thereby exposed to danger, he will be liable for a resulting* injury. McDermott, v. Burke, 256 Ill. 401, 100 N. E. 168.

We are of opinion that the doctrine of attractive nuisance cannot be extended to the tank car in question. There are numerous tank cars in" use by every railroad and almost any freight train has one or more. Children who are in the vicinity of railroads see them almost daily. There is nothing alleged in the declaration that would take it out of the class of an ordinary tank car, and nothing about it that would lead defendant appellee to reasonably expect that children of tender years would be attracted to it.

It is a necessary element of the liability that the thing which causes the injury is tempting to children and to constitute a means of attracting them upon the premises which the owner should anticipate. Another essential condition to liability is that the attractive thing, or something inseparably connected with it, must be the proximate cause of the injury. McDermott v. Burke, supra.

It cannot be claimed that the thing that caused the injury tempted children and constituted a means of attracting- them upon the premises, and that the owner should have anticipated this. The car itself, as described in the declaration, did not constitute a means of attracting children, and the means of injury could only be discovered after one had climbed upon the car and removed the cover to the manhole.

It was for the court to say, in passing upon the motion, whether as a matter of law the complaint stated a good cause of action and in so doing could determine whether there was an element of attractiveness in the dangerous agency that the complaint alleged was likely to attract and allure children to come to and play about the same.

In the case of Burns v. City of Chicago, 338 Ill. 89, 98, 169 N. E. 811, our Supreme Court said: “Counsel for defendant in error suggest that to deny recovery in this case would be to recede from or modify a position already taken by this court. The issue presented is rather whether this court will proceed beyond such position, which might fairly be said to be already well advanced. To say that, whenever the claim is made that an injury to children engaged in play has been occasioned by a dangerous agency, the case must always be submitted to the jury to determine whether there was an element of attractiveness present is going too far. The situation has been aptly expressed in a recent Minnesota case, in which the court said: ‘To the irrepressible spirit of curiosity and intermeddling of the averag’e boy there is no limit to the objects which can be made attractive playthings. In the exercise of his youthful ingenuity he can make a plaything out of almost anything and then so use it as to expose himself to danger. If all this is to be charged to natural childish instincts and the owners of property are to be required to anticipate and guard against it, the result would be that it would be unsafe for a man to own property, and the duty of the protection of children would be charged upon every member of the community except the parents or the children themselves.’ ”

We are of opinion that the circuit court of Logan county did not err in sustaining the motion of defendant appellee to dismiss said cause and in entering judgment in bar.

Judgment affirmed.


author: Mr. Justice Riess

text:
    Pacific States Life Insurance Company and Henry G. Miller, Appellees, v. E. H. Richcreek, Appellant.
    Gen. No. 8,988.
    Opinion filed January 15, 1937.
    J. N. Moore, of Danville, for appellant.
    Beckman, Todd, Hough & Woods, of Chicago, and Mann & Stieler, of Danville, for appellees.
   Mr. Justice Riess

delivered the opinion of the court.

In this suit, the Pacific States Life Insurance Company, a corporation, and Henry GL Miller, its ancillary receiver, appellees herein, filed a hill in chancery in the circuit court of Vermilion county to foreclose a mortgage executed on March 13, 1923, by J. C. McKibben and Sadie J. McKibben, his wife, on real estate therein described, which was given to secure payment of their promissory note in the sum of $5,500, due five years after date, with interest coupons attached, payable to the order of the mortgagee, Chicago National Life Insurance Company, and which said note and mortgage were thereafter assigned to the above named plaintiff on June 8, 1932.

Plaintiff’s bill, as such assignee, contains averments usually set forth in similar foreclosure proceeding*s. The defendant, E. H. Richereek, trustee in bankruptcy of mortgagor, John C. McKibben, appellant herein, and certain other defendants named in the bill, filed an answer averring that plaintiffs’ assignor, Chicago National Life Insurance Company, procured the execution of the said note and mortgage as such mortgagee by fraud; that at the time of the execution thereof, the real estate described in said mortgage was worth $7,000, and was held subject to a lien for the unpaid balance of a prior mortgage in the sum of $1,631.51, given to the Hoopeston Building and Loan Association ; that said named mortgagee paid said balance due on the prior mortgage, but falsely represented to the mortgagors that it had paid $2,000 in satisfaction thereof; that said mortgagee then took the note and mortgage sued on in the sum of $5,500 from said mortgagor and wife and delivered to him certain capital stock of the mortgagee company, falsely represented to be of a value of $30 per share, but, in fact, of little value, and immediately gave in exchange therefor to said mortgagor certain worthless stock of the Chicago National Underwriters Company, and subsequently exchanged the same for certain other worthless stock of the United States General Agency Company, knowing all of said stock to have been worthless and that same was delivered with intent to defraud mortgagor, who relied upon such false and fraudulent representation concerning same; that the only consideration received for said note and mortgage was the amount of $1,631.51, paid by mortgagee for a release of the prior mortgage lien hereinabove mentioned; that said mortgagor, McKibben, paid to said mortgagee, Chicago National Life Insurance Company, interest on said note and mortgage for eight successive years in the total amount of $2,640; that the plaintiff appellee, Pacific States Life Insurance Company, procured the assignment of said note and mortgage from the mortgagee after it knew of the alleged fraud so practiced on said mortgagor and was a party to said fraud and was not entitled to equitable relief in said cause.

The defendants filed a cross-bill, which was later amended, by leave of the court, wherein they averred that for eight years after execution and delivery of the note «and mortgage, the mortgagors were continuously deceived by the agents and officers of said mortgagee company and its associated corporations, as to the value of the stock delivered to them, and did not know that they had been defrauded until after the mortgagor, McKibben, had been adjudicated a bankrupt on October 15, 1931; that during all of this time, a fiduciary relation of confidence and trust had arisen and existed between said mortgagees and its agents and officers on one hand and said mortgagor on the other hand, which were relied upon by him and thereby kept him from making any outside investigation.

Specific allegations of fraud and deceit in the procurement of said note and mortgage in exchange for allegedly worthless stock were made. In the cross-bill, the cross complainant, as mortgagor, asks that he be given judgment against the complainant for the difference between the $2,640 interest money paid thereon and the $1,631.51, advanced by mortgagee to cancel the prior mortgage lien.

Defendant in cross-bill admits delivery and execution of the mortgage, but denied that the same was procured through any fraud or deceit on the part of said mortgagee and denied any knowledge of or any part in any such alleged fraud or deceit on the part of the defendant assignee thereof; and denied that the cross complainant was entitled to the relief prayed.

Said cause was referred to a special master in chancery to take and report proofs, findings of facts, conclusions of law, and to recommend form of decree. The special master, after hearing the proofs, found that the material allegations of the cross-bill had been sustained and that the note and mortgage had been procured by the mortgagee by deceit and fraud; that the stock in the sum of $3,510 given by the mortgagee was worthless and known by the mortgagee to be worthless at the time it was delivered to McKibben; that the amount actually paid by mortgagee on the prior mortgage held by the Hoopeston Building and Loan Association was $1,631.51, but that mortgagee claimed and took credit for $2,000 therefor in the new note and mortgage; that all the advantages and benefits of said fraudulent transaction were received and retained by said mortgagee company; that these constituted partial failure of consideration in the giving* of said mortgage and were so procured by fraud; that the knowledge of such fraud was not obtained by the mortgagor until after he was adjudicated a bankrupt and was not ratified or affirmed by him at any time; that the Pacific States Life Insurance Company, appellee plaintiff, was not an innocent holder of said note and mortgage as assignee, for value before maturity; that the complainant is not entitled to a decree of foreclosure or any relief therein as prayed in his original bill except a credit for the sum of $1,631.51, paid to satisfy the prior mortgage lien; and that the amount of interest paid by the mortgagor to mortgagee was $904.59 in excess of the amount so advanced by mortgagee in payment of said prior mortgage lien.

Sixteen specific objections were filed by the complainant to the master’s report, which were overruled by the master and heard upon exception thereto by the court, serially numbered 1 to 16, of which all but exception No. 15 were overruled by the court and said exception No. 15 was sustained.

The exceptions overruled by the court include the following: that the master erred in not holding that the complainant was the holder of said note and mortgage in due course; that complainant had notice of the fraud before purchase; that the National Life Insurance Company induced defendants to purchase stock by false and fraudulent representation; in finding that there was a mere form of delivery of the National Life Insurance Company stock, and the subsequent acceptance of other stock was in pursuance of an original fraudulent transaction; that he erred in finding that any fraud had been shown; or that McKibben did not discover failure of consideration and a scheme to defraud, until after the time he went into bankruptcy; in not recommending a decree for foreclosure of the mortgage. The court sustained exception to objection No. 15, recommending a decree in accordance with the prayer of the cross-bill.

The court entered a decree under the prayer of the original bill against the defendant, E. H. Bichcreek, trustee in bankruptcy of J. 0. McKibben, for the sum of $738.03, and for foreclosure of mortgage for that amount. The decree further allowed plaintiff: $150 as solicitor’s fee, and ordered that the defendant pay one-third, and the plaintiffs two-thirds, of the cost of suit.

We have carefully examined the testimony taken before the master, and we find that the defense of fraud as set forth in the answer of the defendants has been fully sustained.

In overruling exceptions to master’s report from 1 to 14, and in overruling exception No. 16, the court necessarily found that the note and mortgage in ques-. tion had been obtained by fraud, and were subject to the defense of fraud and partial failure of consideration.

The decree of foreclosure and for payment of $738.03 and solicitors’ fees in favor of complainant and against defendant in the original bill was, therefore, contrary to and not in accordance with the findings of the court on the facts.

It remains to be determined whether or not the cross complainant is entitled to a judgment against the assignee herein for the amount of the interest paid in excess of the amount paid by the mortgagee to satisfy the prior mortgage lien.

The following uncontradicted facts appear from the record, viz.: that the original note and mortgage were executed and delivered on March 13, 1923; that all of the interest payments made by the mortgagor, Mc-Kibben, were made to the Chicago National Life Insurance Company, as mortgagee; that the mortgagor, McKibben, was adjudicated a bankrupt on October 15, 1931; that upon such adjudication, the real estate in question became part of the assets in the hands of the trustee in bankruptcy; that thereafter, on June 8,1932, the note and mortgage in question were assigned to the plaintiff, Pacific State Life Insurance Company. In view of these facts, we hold that the finding of the trial court that plaintiff was a party to the prior fraudulent transactions and representations of the mortgagee was erroneous and contrary to the manifest weight of the evidence.

However, the assignment of the above note and mortgage was made after the same had become due and payable, and were therefore taken subject to all defenses that would have prevailed against the mortgagee. Dunlap v. Peirce, 336 Ill. 178; section 13 of chapter 98, Negotiable Instruments, Ill. State Bar Stats. 1935, ch. 98, ffl4; Jones Ill. Stats. Ann. 89.014 (Smith-Hurd Illinois Annotated Statutes).

Defendant’s counterclaim in the nature of a set-off could not be allowed against plaintiff herein (who was not a party to the fraud) in excess of the amount of said note and mortgage indebtedness for which suit was brought. Section 12 of chapter 98, Negotiable Instruments, Ill. State Bar Stats. 1935, ch. 98, li 13; Jones Ill. Stats. Ann. 89.013 (Smith-Hurd Illinois Annotated Statutes); Bradley v. Progressive Metal & Refining Co., 205 Ill. App. 552; Reid v. McKinney, 202 Ill. App. 129.

The trial court erred in entering a decree in favor of the plaintiff for the reasons stated. The cross complainant is not entitled to relief beyond the amount of indebtedness sued for by the complainant. The decree of the trial court will therefore be reversed, and the cause remanded with directions for the trial court to enter a decree in accordance with the holdings of this court.

Reversed and remanded with directions.