author: Mr. Justice Burke Mr. Presiding Justice Hebel, Mr. Justice Denis E. Sullivan,

text:
    A. G. Messick et al., Appellants, v. Brokaw and Company et al., Appellees. Brokaw and Company, Cross Appellee, v. A. G. Messick et al., Cross Appellants.
    Gen. No. 41,486.

      Opinion filed April 23, 1941.
    Tenney, Harding, Sherman & Rogers, of Chicago, for appellants; S. Ashley Guthrie and William W. . Miller, both of Chicago, of counsel.
    Albert H. & Henry Yeeder, of Chicago, for appellees ; Albert H. Yeeder, of counsel.
   Mr. Justice Burke

delivered the opinion of the court.

On July 7,1933, Allen G. Messick and W. C. Perkins filed their bill of complaint in the superior court of Cook county against Brokaw and Company, a corporation, J. Russell Forgan, Charles C. Cushing, John Clark, Woodruff J. Rankin, Arch E. Richards, Frank Donnelly, and Hortense M. Swift, Charles H. Swift, T. Philip Swift and Edward F. Swift, Jr., executors of the will of Edward F. Swift, deceased. The suit is based on Brokaw and Company’s liability to account for its transactions as manager of a pool or syndicate, in which Messick, Perkins and Brokaw and Company were equally interested, the purpose of which was to trade in the stock of the United States Radio & Television Corporation. Brokaw and Company filed a cross bill claiming Messick and Perkins were indebted to the syndicate on a certain note of the Robbins Body Corporation, held in the syndicate account and bearing their endorsement. The case was tried before a master, who filed a report recommending that the bill be dismissed and that the cause be re-referred to the master for an accounting on Brokaw and Company’s cross bill. Exceptions filed to the report were overruled and a decree entered physically embodying all the master’s finding’s and conclusions, and ordering, in accordance with the master’s recommendations, that the bill be dismissed and an accounting- had on the cross bill. Without objection, J. Bussell Forgan, John Clark, Woodruff J. Bankin and Arch E. Bichards were dismissed as defendants. During the pendency of the suit, W. C. Perkins died and Justina C. Perkins, administratrix of his estate, was substituted for him as plaintiff in the bill of complaint, but not as defendant to cross bill. The liability of the executors of the estate of Edward F. Swift, deceased, is predicated on the fact that the assets of Brokaw & Company amounting to $595,000, which were distributed to Edward F. Swift, the then sole stockholder, in the form of liquidating dividends without making provision for payment of the amount due plaintiffs and rendering Brokaw & Company insolvent to an amount in excess of the dividends paid. The parties agreed that if Brokaw & Company is liable the Swift estate is also liable to the extent of the dividends received. Plaintiffs also claim that the Swift estate is liable for interest on such dividends. Frank Donnelly, president and director of Brokaw & Company, was made a defendant because he was on the board of directors that declared the liquidating dividends. Plaintiffs assert that he is liable under the statute. Plaintiffs prosecute this appeal and ask that the decree be reversed and that the cause be remanded with directions to enter a decree sustaining plaintiffs’ exceptions to'the-master’s report, ordering* an accounting as prayed in the plaintiffs’ amended bill and fixing the scope and basis of the accounting, and dismissing the cross bill. For convenience, we will speak .of Messiclc and Perkins, the original plaintiffs, as “plaintiffs” and Brokaw & Company as “defendant.”

Brokaw and Company, regarded as the principal defendant, is an Illinois corporation, located in Chicago, engaged in the business of buying- and selling securities during 1928, 1929 and 1930. It was not a brokerage firm and was not a member of the stock exchange. Messick and Perkins were mature, experienced and successful businessmen, who for many years had carried on large scale business operations. Messick graduated from the law department of the University of Indiana in 1912. He coached football during the first year he was out of school and from the latter part of 1912 until 1928 engaged in the general practice of law in Marion, Indiana. Thereafter, he was engaged in the banking and manufacturing business, but continued with his law practice. He was successively associated with the Superior Body Corporation, The Gas and Electric Corporation, Grant County Gravel and Sand Company, Hogan McKinney & Company and The Commercial Belting Company. He was also president of the Bobbins Body Corporation of Indianapolis, Indiana, and a director of the Spencer Cardinal Corporation of Marion, Indiana. At the time he testified he was 46 years of age and was chairman of the executive committee of the General Household Utilities Company, a corporation engaged in the manufacture of radios and refrigerators. W. C. Perkins was president of Badio Allied Corporation of Indianapolis in the early part of 1928. This corporation bought radio chassis from the Case Electric Company. At the time Perkins testified on December 17,1936, he was ill and had not been engaged in any business since the preceding April. At the time he became ill he was first vice president of the Case Electric Company, with a factory at Marion, Indiana and with his office in Chicago. Plaintiffs, at the time of the transactions discussed in this case, were competent and able business executives and were men of substantial means. The subject matter involved in the pool or syndicate pertains to shares of common capital stock of the United States Badio & Television Corporation, a Delaware corporation, organized in 1928, by the acquisition of assets of certain other companies in which Messiek and Perkins were interested. For convenience, we will speak of the United States Eadio and Television Corporation as the “U. S. Corp.” The corporation was organized by plaintiffs. Perkins became president and a director and Messiek became chairman of the board of directors. They were also substantial stockholders. The certificate of incorporation was issued November 30, 1928, and provided for the issuance of 125,000 shares of common stock at no par value. An amendment dated April 26, 1929, authorized an increase of the capital stock to 250,000 shares without par value. During the active transactions of the pool only 125,000 shares of capital stock without par value were-authorized. The evidence does not show how many of these shares were issued and outstanding between January 1, and April 26, 1929. Plaintiffs requested defendant to finance the corporation by underwriting 62,500 shares of the common capital stock at $17.50 per share. Accordingly in December,. 1928, defendant purchased 62,500 shares of the stock at $17.50 per share and paid therefor in cash. 44,643 shares were purchased from the U. S. Corp., and 17,857 shares were purchased from plaintiffs. Defendant paid the corporation $781,252.50 for said stock and paid the plaintiffs $312,497.50 for their stock. On December 29, 1928, defendant sold back to Messiek 6,459 shares at $20 a share; on December 29, 1928 sold back to Perkins, 6,458 shares at $20 a share; on January 10, 1929, sold back to Messiek 91 shares at $20 a share, and 600 shares at $24.50 a share, being a total of 13,608 shares sold back to plaintiffs. During this period defendant also sold shares to certain customers at prices considerably higher than prices at which the stock was sold to plaintiffs, in some cases such prices being as high as $71 per share. No sales were made at lower prices than to plaintiffs during that period. On January 18, 1929, 7,601 shares of the underwritten stock was still in the hands of defendant and had not been sold. All of the rest of the stock had been sold by defendant to its customers. Defendant had no fixed or permanent interest in the U. S. Corp. The only concern or connection defendant had with such corporation was as distributor in the normal course of its business of the underwritten shares and as a participant in the pool. At all times in question defendant was the owner of a substantial amount of stock in the U. S. Corp. Charles C. Cushing was president, director and a stockholder of defendant during the period of the transactions of the pool. He was the officer who represented and acted for the defendant in nearly all of the transactions in question. He ceased to be president on January 18, 1931. He was not served and did not appear. It does not appear that any effort was made to take his testimony, or whether his whereabouts was known. Frank Donnelly subsequently became president of defendant and at the time of the filing of the master’s report was still president. He has been a director of defendant since January 18, 1931. After the purchase of the 62,500 shares by defendant the parties discussed the matter of the formation of a pool or syndicate to deal in such common stock, and on January 18, 1929, the following memorandum of agreement was entered into by and between plaintiffs and defendant:

“January 18, 1929.
“Messrs. W. C. Perkins and A. G-. Messick,
1340 South Michigan Ave.,
Chicago, Illinois.
‘ ‘ Gentlemen:
“The following is my understanding of agreement we have in connection with the United States Radio & Television Corporation pool:
“1. The pool has a 60 day call on approximately 10,000 shares of stock at $60.00 per share.
“2. The pool has a call on 10,000 shares of stock to be contributed jointly by Messrs. Perkins and Mes-sick at $60. per share.
“3. If the pool exercises the option on Messrs. Perkins and Messick’s stock, the pool will immediately reimburse them an additional $10 per share for their work in helping organize the pool.
“4. The pool account is divided as follows:
One third — W. C. Perkins,
One third — A. Gr. Messiek,
One third — Brokaw and Company.
“5. The pool will run for a period of six months from date with an option by the managers for the privilege of extending for another six months and with the further privilege of closing at any time at the discretion of the managers.
“6. Brokaw and Company shall act as sole managers of the pool, with power to act in their sole discretion in buying, selling or in any manner or method dealing in said shares of stock, and to borrow funds thereon and to pledge said shares for security therefor, without liability except for breach of gnod faith.
“Sincerely yours,
Brokaw and Company,
By Charles O. Cushing, Pres.
“Approved:
A. Gr. Messiek W. C. Perkins.”

At the time the above agreement was signed defendant had realized a profit of $209,786.25, plus 7,801 shares which it retained. During the period in question defendant also managed three other pools. The pool was very active until June 18, 1929. Thereafter, the activity was not so great. For all practical purposes the pool was closed with the completion of certain transactions in September, 1930. Dealings by defendant in the shares of the U. S. Corp. appear in six ledger accounts received in evidence as plaintiffs’ exhibits. We hold that the relationship of plaintiffs and defendant with respect to the pool was that of joint adventurers, and that as manager of the pool defendant’s relationship to plaintiffs was the same as that of a trustee to its cestuis qui trustent. In that respect we disagree with the master and the chancellor. Plaintiffs lean heavily on the case of Meinhard v. Salmon, 249 N. Y. 458, 164 N. E. 545. The statements of law announced in that case are sound, but we do not agree that they are applicable to the facts of this case. We are in agreement with the statement by plaintiffs that the burden is on defendants to account to plaintiffs and to show that the items of credit and debit in the account are proper, and that the burden is not upon the plaintiffs to show their impropriety. Here also we disagree with the master. We shall now consider the propositions in dispute in the order in which they are presented in the master’s report.

Plaintiffs contend that there is a balance in the pool account of $6,125.43. This item is admitted by defendant. Plaintiffs then maintain that there are twelve instances of wrongful purchases by defendant from the pool. Defendant introduced a letter dated June 17, 1929, which it contends ratified all accounts and transactions up to that time. Nine of the twelve instances of asserted wrongful purchases by defendant antedate the alleged ratification of June 17, 1929. Two of the items are purchases by defendant in the month of September, 1930, and the other item was a purchase from the pool by defendant of 275 shares on June 17, 1929. The letter of June 17, 1929, which defendant contends constitutes a ratification of the transactions to that date, is signed by plaintiffs and addressed to Charles G-. Cushing as president of defendant, and reads:

“June 17, 1929.
“Mr. Charles G. Cushing, President,
Brokaw <& Company,
Chicago, Illinois.
“Dear Sir:
“Referring to our pooling agreement on United States Radio and Television Corporation stock, dated January 18, 1929, we hereby agree that said agreement shall continue for a period of eighteen (18) months from date, and in consideration of your agreement to secure a loan for the Corporation, we hereby assign to you as socurit-y-fei — said loan, all of our in - terest in said pooling-agreement from the date thoreofup to and ■ including — the — termination thereof, and-give you an option on all of the stock of the corporation at present held in the pool for a period of eighteen (18) months, at Thirty Dollars ($30.00) a share, and you shall have the additional right to re-allocate any part of this option to the Corporation, to individuals now or hereafter connected therewith, or to outsiders, at any time hereafter, at Thirty Dollars ($30.00) a share or the market for said stock at the time of any re-allocation, whichever is lower.
“We also ratify and confirm all your accounts and proceeding’s as sole managers of the pool to the date hereof, and in addition to the powers granted to 'you as sole managers in the original pooling agreement, we hereby authorize you to invest the proceeds of the pool in any securities whatsoever in your sole discretion, including advances, secured or unsecured, to the Corporation.
“W. C. Perkins,
A. G-. Messick. ’ ’

The master found that this communication required no consideration and that it completely confirmed and ratified all prior acts of defendant with respect to the pool up to that date, and that plaintiffs are limited in their right to an accounting, if any, for the period subsequent to that date. Plaintiffs urge that the letter of June 17, 1929, did not operate as a ratification of defendant’s prior breaches of trust, or discharge it from liability therefor. They argue that a purported ratification from a beneficiary to a fiduciary is not effective without proof by the fiduciary that the beneficiary was informed or knew of the transactions claimed to have been ratified and of his legal rights. The evidence shows that plaintiffs visited defendant’s office almost daily. They conferred as to the operations of the pool and talked about the accounts. Plaintiffs were mature and experienced businessmen, one of them being a lawyer. They knew their rights. They organized and were the dominating force in the operation of the U. S. Corp. in whose stocks the pool was operating. The books were at all times available to plaintiffs. All the transactions were recorded in the books. The defendant was managing the pool. In addition, defendant was interested in trading in the stock on its own account. Plaintiffs also owned a large number of shares and were trading in the stock. Defendant, as the underwriter of the stock, paid $17.50 a share and plaintiffs repurchased a substantial number of shares from defendant for $20 a share. Under the operations of the plaintiffs and the defendant, the market value of the stock was ballooned until on February 4, 1929, it reached $141 a share. We adopt the finding that the letter of June 17, 1929, is a valid and effective ratification by plaintiffs of all the acts and transactions had in the pool operations up to that date. We find that the defendants sustained the burden of proving that at the- time of the ratification the plaintiffs knew of the transactions claimed to have been ratified and of their legal rights. Plaintiffs also insist that the letter of June 17, 1929, is ineffective as a ratification because of the failure of defendant to perforin the promise which was the inducement and consideration for its execution. It is well established that a ratification may be effective without a consideration. In fact, as a general rule, ratifications are not accompanied by a consideration. We agree with the plaintiffs that if a ratification or release is given for a consideration and the consideration fails, the claimant may treat the ratification or release as rescinded. In the instant case, however, we are satisfied that the ratification was not induced by the promise to secure a loan of $300,000 for the U. S. Corp.

As above stated, plaintiffs contend that there are twelve instances of wrongful purchases by defendant from the pool. Nine of these items antedate the ratification of June 17, 1929, and have been considered in our discussion as to the validity of the ratification. One of these twelve items was the purchase by defendant on July 18, 1929, of 275 shares from the pool at $3,224.68 under the market price, for which plaintiffs ask an accounting. The two remaining items of. this group were purchases by defendant in the month of September, 1930. On May 23, 1930, plaintiffs wrote defendant the following letter:

‘ ‘ Gentlemen:
“The United States Radio & Television Corporation Capital Stock Trading Account #2, in which the undersigned have each one-third interest, the other third belonging to yourselves, granted an option to Brokaw and Company on 11,500 shares of United States Radio & Television Corporation stock at $10 per share, good up to and including October 1st, 1930.
“The undersigned request that you now exercise that option for the following reasons:
“ (1) The Radio Allied Industries of Indianapolis, who have been manufacturing cabinets for the United States Radio & Television Corporation, are now in the hands of receivers. We propose to loan the proceeds from the sale of the aforementioned stock to this company or to a new company to be formed to take over the assets of this company in order to again continue the business.
“(2) We believe that the Radio Allied Industries has proved in the past and would prove in the future to be a distinct asset to the United States Radio & Television Corporation as one of their chief suppliers of cabinets. Our interest, therefore, is to see to it that this source of supply is not lost to the United States Radio & Television Corporation.
“We suggest that you consider this matter carefully in the light of the foregoing facts and let us have your reply within ten (10) days, as it is of utmost importance that the money be paid in at once, if we are to effect our plans.”

The option referred to in the letter was not taken up within ten days, nor was the money loaned to the Radio Allied Industries. Messiek testified that the letter was drafted by defendant and submitted to plaintiffs for their signatures. Defendant undertook to exercise the option mentioned in the letter of May 23, 1930, by the purchase of 4,500 shares on September 3,1930, and of 5,415 shares on September 11, 1930, at $10.00 per share. The purchase of 4,500 shares on September 3, 1930, was reported by defendant in a letter addressed to Perkins on September 3, 1930, and in a similar letter addressed to Messiek dated September 4,. 1930, reading:

“Dear Sir:
“Referring to the option granted to Brokaw and Company, expiring on October 1, 1930, confirmed in letter dated May 23,1930, signed by Mr. A. Gr. Messiek and yourself, covering’ the total amount of United States Radio & Television Corporation Common Stock held by the United States Radio & Television Corporation Common Stock Trading Account No. 2.
“We are exercising our privilege of buying from the Trading Account four thousand five hundred (4,500) shares of the above stock at the option price of ten dollars ($10.00) per share.
“We have credited today to the Trading Account No. 2, forty five thousand dollars ($45,000.00) in payment for the above mentioned stock and enclose check to your order for fifteen thousand dollars ($15,000.00), representing your share of this amount on your one-third interest in the Trading Account No. 2.
“Please sign and return to us copy of this letter enclosed, which will serve' as an acknowledgment for letter and check.
“Yours very truly,”

These letters were promptly acknowledged and the checks mentioned in them were cashed by plaintiffs without any comment or question. On September 11, 1930, defendant purchased the remaining shares of the syndicate amounting to 5,415 shares. This purchase was reported by defendant in separate letters to Messiek and Perkins dated September 15 and 16,1930, respectively. Each letter reads:

“Dear Sir:
“Under our option, we have purchased from the Trading Account No. 2, five thousand four hundred fifteen (5,415) shares of United States Radio & Television Corporation Common Stock at the option price of ten dollars ($10.00) per share. This leaves a credit balance in the account of two hundred twenty five thousand one hundred fifty two dollars and thirty four cents ($225,152.34) and after deducting the Robbins Body note amounting to one hundred forty nine thousand three hundred forty dollars and ninety six cents ($149,340.96) there remains a credit balance of seventy five thousand eight hundred eleven dollars and thirty eight cents ($75,811.38).
“We are declaring a liquidated dividend of seventy two thousand dollars ($72,000.00) from the Trading-Account No. 2 leaving- an undistributed balance of three thousand eight hundred eleven dollars and thirty eight cents ($3,811.38). We enclose check to your order for twenty four thousand dollars ($24,000.00) representing your share of the dividend on your one third interest in this account.
“Kindly acknowledge receipt of this check and letter by signing and returning to us copy of letter enclosed.”

These letters were promptly acknowledged and the checks mentioned therein were likewise promptly cashed by plaintiffs without any comment or question. The only testimony with reference to the option is that of Messiek, who stated that the entire arrangement concerning the option was made at a conference between plaintiffs and Cushing at the Attic Club in Chicago in September, 1929. Messiek stated that in the conversation at the Attic Club, Cushing stated that an acquaintance of his was returning from Europe, who was a distributor of stock, and that Cushing- wanted to make a deal with this man to distribute the syndicate stock; that Cushing refused to divulge the man’s name; that Cushing stated that in order to distribute the stock it might be necessary to give calls or options to this man as low as $10 per share; that as the stock was distributed they were to give options from time to time to assure him a satisfactory profit and that the syndicate would receive the profits in excess of $10 per share as the stock was marketed, and that Cushing further stated it did not make any difference as to the base price as the members of the syndicate would participate equally in the profits in any event; that thereupon plaintiffs agreed to let Cushing go ahead with his negotiations for the distribution of the stock. The evidence does not show that defendants turned over any stock purchased at $10 to any distributor to market. The 4,500 shares taken over by defendants on September 3, 1930 at $10 per share were carried in the account known as “Sales Pool No. 3,” which was an account in which stock was carried which was distributed by defendant to its individual customers. The remaining 5,415 shares taken over by defendant at $10 per share on September 11, 1930, were carried in the TJ. S. Corp. capital stock account, in which defendant recorded its individual transactions. The master found that the option to defendant for the purchase of shares from the pool at $10 per share was valid and effective. Plaintiffs assert that the burden was on defendant to show the terms of the option,' the method of its procurement, and the right to take stock for its own benefit thereunder, and that the evidence shows that on the exercise of the option defendant was required to market the stock and to account to the syndicate for the profits, which was not done; and that plaintiffs’ acquiescence in the exercise of the option would create no estoppel. A careful reading’ of the testimony and exhibits convinces us that the master was .right in his finding as to the validity of the September, 1930 transactions. The terms of the option are set out in the letters. The term for which the option is to run is clearly set forth, the amount of shares is clearly stated and the purchase price under the option is clearly stated, and the parties to the option are definite. In the letter of May 23, 1930, plaintiffs urged defendant to exercise the option in order to obtain cash for their business enterprises. The reading of the letter shows there is no reference to any outside party, nor is there any expectation of obtaining more than $10 per share for the stock. Furthermore, we are of the opinion that plaintiffs are estopped by accepting benefits arising from the exercise of the option. The checks that were forwarded were accepted and promptly cashed by plaintiffs. It is inconceivable that plaintiffs would accept and cash the checks without comment if the right of defendant to purchase shares at $10 per share was in doubt. We are of the opinion that the testimony of Messick as to the conversation at the Attic Club should be rejected as unworthy of credence.

Plaintiffs argue that there are eleven instances of wrongful sales by defendant to the pool. Six of these items antedate the ratification of June 17, 1929, and are covered by our views as to the ratification. The other five items consist of the sale by defendant to the syndicate on June 18,1929, of 625 shares for $45,464.64. The market value on the date of sale was $19,375. In September, 1930, these shares were among those sold to defendant at $10 per share. Plaintiffs claim the difference between the price at which they were taken over by the defendant in September, 1930 and the market price of $39,214.64. Plaintiffs also complain of a sale of syndicate stock of 500 shares at $10 per share on May 20, 1930 to J. Clark Coit, when the market price was $16.50 per share, and of the sale of 1,000 shares of syndicate stock to J. O. McKinsey at $10 per share on September 4, 1930, when the market price was $23.75 per share, the loss to the syndicate on these two transactions being $17,000. Plaintiffs also demand an accounting for miscellaneous expenses which they assert were wrongfully charged to the pool account. Some of these items were expended prior to June 17, 1929. Such items subsequent to June 17, 1929, total $3,969.86. Plaintiffs also urge that defendant is obligated to account for its profits resulting from its trading as an individual, as distinguished from trading as a member of the syndicate in the shares of the U. S. Corp. from January 18, 1929, to September 11, 1930. We find that all of the parties traded in the stock of the U. S. Corp., and that the pooling agreement contemplated that they could so trade. It will be recalled that at the time the pooling agreement was signed, all of the parties, including the defendant, had large blocks of stock. The agreement contained no restriction against the sale of this stock. The subsequent conduct of the parties shows that they all understood that they had a right to and did deal in the stock.

Plaintiffs also urge a claim for an accounting as to commissions collected on transactions in the syndicate account. They contend that the compensation to be received by defendant was fixed in the pool agreement, namely one third, and that.the defendant should not be allowed to charge any commissions. Defendant points out that it was maintaining a large " office force, clerical help, bookkeepers and an expensive set of books. The testimony shows that commissions were paid to the salesmen for selling the stock. Commissions were charged by defendant from the inception of the pooling agreement. Hence, when the plaintiffs ratified the accounts of the defendant on June 17, 1929, they inferentially ratified the action of defendant in charging the commissions. Plaintiffs also maintain that defendant should pay the pool interest on credit balances in the pool account. They point out that except for a short period at the beginning of the transactions, there was always a credit balance in the account. This balance was kept on deposit in defendant’s general corporate bank account and was mingled with its own funds. The pool ledger account kept by the defendant credited interest at 6% per cent from January 18, 1929 to February 1, 1929, and at the same rate for the monthly period to and including July 31, 1929, or a total of $16,693.80. On August 1, 1929, there was a notation in the account reading “no interest hereafter.” There are reversing entries dated May 29, 1930, which have the effect of removing the interest theretofore credited. From the formation of the syndicate until July 31, 1929, defendant credited the syndicate with interest on its credit balances at the rate of 6% per cent per annum, compounded monthly. The syndicate was charged 8 per cent on its debit balances, but there was no debit balance after the first three months of the syndicate. The testimony as to the crediting of interest is somewhat confusing, but we are convinced that it preponderates in favor of the plaintiffs. The master found that plaintiffs are not entitled td interest. We disagree with this finding. At the time of the ratification of defendant’s accounts on June 17, 1929, the books showed that the syndicate was being credited with interest at the rate of 6% per cent per annum. We have held that the ratification is valid. It is binding on defendant as well as on the plaintiffs. We are of the opinion that interest should be allowed at the rate of 6% per cent per annum, compounded monthly. Plaintiffs also argue that they are entitled to an ac- • counting for losses aggregating $69,534.61 from transactions admittedly unaffected by either the defense of ratification or estoppel. Finding No. 60 of the master recites that:

“The proofs would warrant an accounting, (on the transactions had on and subsequent to June 17, 1929), only for a total gross amount of $69,534.61, made up of the following items taken from the preceding paragraphs of this report.
“A Admitted cash balance $ 6,125.43
“B Sales by pool to Brokaw and Company 3,224.68
“C Sales by Brokaw and Company to pool 39,214.64
“D Sales by pool to third persons 17,000.00
“E Miscellaneous expense items 3,969.86
“Total ' $69,534.61”

Plaintiffs state that the master and the court held that the losses so tabulated were offset by the counterclaim on the Bobbins Body Corporation note and gave that as the only reason for not ordering an accounting for those losses. Defendant replies that the master did not find that defendant committed breaches of trust causing the syndicate losses in the total sum of $69,534.61. We agree with the defendant. The master proceeded on the theory that assuming- all of plaintiffs’ claims for transactions occurring subsequent to the ratification (other than the exercise of the option) were correct, still there is no right to an accounting because plaintiffs are liable to the pool in a greater amount as endorsers of the Bobbins Body note. Under the finding of the master, the parties would still have an opportunity to submit evidence in support of their respective contentions as to each of the items included in the total sum of $69,534.61. The better practice would be to have the master definitely pass on all these items. However, no one has been harmed because of the procedure followed.

Defendant’s answer to the plaintiffs’ complaint includes a denial that defendant owed plaintiffs any sum of money and asserts that plaintiffs are indebted to the pool as endorsers of the Bobbins Body Corporation note. On September 29, 1934, defendant filed a cross bill against the plaintiffs, setting forth such liability of plaintiffs upon the Bobbins Body Corporation note, and praying for an accounting and a decree requiring plaintiffs to pay into the pool the amount in which they are liable as endorsers upon said note. The master and chancellor found that the defense and the cross bill were true and correct in that there is a greater amount due defendant by the plaintiffs, as endorsers upon the note, than is due the plaintiffs by defendant, assuming that anything at all is due to plaintiffs. The chancellor held that the liability of the plaintiffs, as set forth in the cross bill, was established in the principal amount of the note, plus interest, and he re-referred the cross bill to the master for further hearing, to ascertain what credits, if any, Messiek could establish against his liability as endorser of the note. The note is on a printed form and reads:

“$149,340.96 No....... Due............
“Indianapolis, Ind. March 27, 1929.
“On demand days after, date, for value received, we and each of us promise to pay to the order of The Fletcher American National Bank of Indianapolis at the Fletcher American National Bank of Indianapolis, Indiana, One hundred forty-nine thousand three hundred forty 96/100 Dollars With interest at the rate of eight per cent per annum after maturity until paid and attorney’s fees; without relief from Valuation and Appraisement laws. The drawers and endorsers severally waive presentment for payment, protest, notice of protest and non-payment of this note. Proceeds used to pay Bobbins Body notes of Fletcher American National Bank, Indianapolis.
“Bobbins Body Corporation, “By A. Gr. Messiek,
“President.”

The date, the words “on demand,” the amount, the signature, the words “Proceeds used to pay Bobbins Body notes of Fletcher American National Bank, Indianapolis” and the words “W. C. Perkins, Chicago, ’ ’ are written in longhand with pen and ink, and the note is endorsed with the signatures of the plaintiffs. The printed words “The Fletcher American National Bank of Indianapolis” are stricken out by means of an ink line and above such name is substituted the words “W. C. Perkins, Chicago,” as payee. Messiek was president of the Bobbins Body Corporation, which corporation was one of the principal sources of supply for radio cabinets for the U. S. Corp. In March, 1929, the Fletcher American National Bank of Indianapolis held notes of the Bobbins Body Corporation in an amount of approximately $150,000, which notes had been guaranteed by Messiek and others. On March 27, 1929, the Fletcher American National Bank demanded payment of the amount due from the Bobbins Body Corporation, and Messiek drew the note in question, payable to that bank on demand and endorsed by plaintiffs, and tendered the note to the bank. The bank refused the same, stating that it did not' wish to renew the loan and demanded payment in cash. Perkins thereupon paid the loan in cash. At the same time Messiek changed the name of the payee from “Fletcher Amer: ican National Bank of Indianapolis” to “W. C. Perkins, Chicago,” and delivered the note to Perkins as evidence of indebtedness of the Bobbins Body Corporation. On April 3, 1929, defendant advanced to Perkins the amount which he had paid on the note and thereupon took over the note as evidence of indebtedness. On October 10, 1930, the note being unpaid, defendant transferred the note to the pool account, taking credit for the amount it had paid therefor. The Bobbins Body Corporation went into the hands of the Federal court the latter part of 1930 or the first part of 1931. It was dissolved on April 1, 1932, by the State of Delaware for nonpayment of its franchise taxes. In the original answer to the cross bill plaintiffs admitted that they had signed the Bobbins Body Corporation note. Testimony on the case was heard before master in chancery Harry Smitz. Following his death the case was then referred to William B. Swissler as a special commissioner. Proofs on the cross bill were commenced before commissioner Swissler on June 6, 1938. Defendant, as cross complainant, introduced a photostatic copy of the note. On July 24,1939, Messiek filed an amended answer to the cross bill. This answer was verified by Messick on July 20, 1939. In the amended answer Messick stated that he made out the note as set forth in the cross bill, except that the name of the payee was the Fletcher American National Bank of Indianapolis and not W. C. Perkins of Chicago; that Messick ‘ ‘ does not know when the note was altered by changing the name of the payee to W. C. Perkins, or by whom it was altered; that he has never seen the note, signed by him as president of Bobbins Body Corporation and endorsed by him and Perkins individually, since March 27, 1929, at which time it was payable to the Fletcher American National Bank of Indianapolis.” Messick took the witness stand and swore that although the original answer contained his admission to the effect that he signed the note in question, this was first called to his attention at a recent conference at his attorneys’ office and that he then discovered for the first time that the note had been altered. He then testified that at the time he filled out the form, signed it and endorsed it, the name “Fletcher American National Bank of Indianapolis” was not stricken out and the handwriting above it, “W. C. Perkins, Chicago,” was not on the note; that at the time he filled out and delivered the note the payee was shown as Fletcher American National Bank of Indianapolis; that he did not know who made the alteration, and that when it left his hands no alteration had been made. Defendants employed handwriting experts who made a series of photostatic enlargements and other exhibits in order to prove that the name “W. C. Perkins” had been written on the note by Messick. After the first handwriting expert had testified on behalf of defendants and had demonstrated that the name “W. C. Perkins” had been written on the note by Messick himself, Messick proceeded to retract his testimony and said that apparently he had been mistaken. Plaintiffs contend that the evidence shows that the liability of the endorsers on the Bobbins Body Corporation note was a syndicate obligation which was fully paid and settled. Messick testified that at the time the Bobbins' Body Corporation note was tendered to the Fletcher American National Bank,, Cushing was in Indianapolis, and that Cushing agreed with him that the pool would take over their liability on the note. Plaintiffs contend that the defendant was as much interested in keeping the Bobbins Body Corporation a solvent and going concern as plaintiffs. Both parties quoted from the records of Brokaw and Company in support of their respective contentions’. We find that the weight of the evidence supports the contention of defendant. The master found tlmt the note remains unpaid; that it remains an asset of the syndicate account and that the endorsers are obligated to pay the face amount thereof plus the interest thereon, according to the tenor of the note. As to the testimony of Messick, the master found: “It appears from his ' testimony that Messick had not seen the original note, or a photostatic print thereof, from at or about its date until more than ten years thereafter. I am convinced that when he first testified as to the written words ‘W. C. Perkins’ and ‘Chicago’, Messick labored under a sincere misapprehension; that he was honestly mistaken in his testimony; that his first testimony as to the words ‘W. C. Perkins’ and ‘Chicago’ should be disregarded.” We are unable to agree with this observation of the master. After viewing the photostatic copy of the note, Messick signed and swore to the amended answer to the cross bill. He then took the stand in order to support the defense that the note was invalid because it had been intentionally altered. To one not a handwriting expert, the words “W. C. Perkins” in the body of the note appear to be written by the same hand as the other writing on the note. Messick testified as to all phases on the transactions between the parties and his testimony was of a positive character. He was, at least, reckless of the truth in making such a serious charge and this conduct impels us to accord slight credence to his testimony, except where it is corroborated. His testimony as to a conversation with Cushing at the Attic Club concerning the option, is better understood in the light of his testimony as to the supposed alteration of the note. Plaintiffs insist that in any event the acquisition of the note by the syndicate, in which plaintiffs were partners, extinguished plaintiffs’ liability on the note, and support their argument by citing Logan County Nat. Bank v. Barclay, 104 Ky. 97, 46 S. W. 675. In that case it was held that when a note is acquired by a partnership and one of the partners is one of the makers, the obligation is extinguished by operation of law. This principle is embodied in the Illinois Negotiable Instruments Act (sec. 118, par. 140, ch. 98, Ill. Rev. Stat. 1939 [Jones Ill. Stats. Ann. 89.140]), providing that: “A negotiable instrument is discharged: 1. By payment in due course by or on behalf of the principal debtor. 2. By payment in due course by the party accommodated, wheré the instrument is made or accepted for accommodation. 3. By the intentional cancellation thereof by the holder. 4. When the principal debtor becomes the holder of the instrument at or after maturity in his own right. ’ ’ The fourth clause does not apply to the case at bar because plaintiffs were not the principal debtors. They were secondarily liable as endorsers. It has been held that the particular methods described in the Negotiable Instruments Act for the discharge of an instrument excluded all other methods of discharge. Since the note was not discharged under any of the four clauses of the quoted section, there is no other way in which it can be discharged. Sec. 119 of the Illinois Negotiable Instruments Act (par. 141, ch. 98, Ill. Rev. Stat. 1939 [Jones Ill. Stats. Ann. 89.141]) provides how a person secondarily liable on a negoliable instrument is discharged. It will be remembered that in the instant case the maker was the Robbins Body Corporation. This maker never acquired ownership of the note. The contention of plaintiffs that their liability was extinguished by operation of law is without merit. They also contend that defendant is liable to the syndicate in the amount of the note for failure to use due diligence in collecting from the maker. The record shows that at the time the note was given in March, 1929, the Robbins Body Corporation was not considered to be a good risk even with the endorsements of plaintiffs. Messiek was president of the Robbins Body Corporation. Any. delay in attempting to collect the note was to the benefit of plaintiffs. We agree with the master’s finding that “Messiek and Perkins at all times subsequent to the execution of the Robbins Body Corporation note, were under as great a duty to effect its payment as was Brokaw and Company to attempt to enforce its collection against the maker.”

Defendants maintain that the pool agreement of January 18, 1929, and the pool operations were contrary to public policy; that the contract is illegal and unenforceable, and therefore plaintiffs are not entitled to an accounting. This defense was not raised in the trial court. Defendants cite cases in support of their statement that where it appears that the contract sought to be enforced is against public policy, its validity is not waived by failure to plead it, and that such a defense may be urged for the first time in a reviewing court. (Berge v. Berge, 366 Ill. 228.) Plaintiffs do not challenge the statement that. the point may be urged for the first time in a reviewing court. They do assert, however, that they are not barred from recovery on the grounds of public policy. They state that there is no evidence that the parties intended to participate in any manipulation of the market. Furthermore, they assert that if there, was an attempt to manipulate the market there is no evidence that plaintiffs had knowledge thereof. As the defense of illegality was not pleaded, the parties did not intentionally put in any evidence for or against such a contention. The record shows that at the time of the underwriting agreement whereby defendant took over 62,500 shares, the stock was worth $17.50 per share. The stock was listed on the Chicago stock exchange. Defendant, Brokaw and Company, which now asserts that the pool was for the purpose of manipulating the stock, employed persuasive salesmen because in a few days the stock which it had purchased for $17.50 was selling at $74. The day the pool agreement was signed, January 18, 1929, the stock was selling at as high as $121. It continued to climb until February 4, 1929, when it reached a “high” of $141. On February 18, 1929, it closed at $117; on March 28, 1929, it closed at $111; on April 30, 1929, it closed at $81; on May 31, 1929, it closed at $68.50; on June 29, 1929, it closed at $28.75, and on July 31,1929, it closed at $26.50. The market prices are not given between July, 1929, and May, 1930. In May, 1930, the price was $16.75. On July 10, 1930, the closing price was $19.75. In September, 1930, the market price varied between $23 and $30%. The stock was at no time worth more than $17.50 a share, if it was worth that. Boosting the price to as high as $141 a share was not due to any increase in the real value of the stock as measured by assets and operations, but to manipulation of the market by plaintiffs and defendant. The record shows that the stock of the U. S. Corp. was given a fictitious value. This corporation was never in a sound position. It is surprising that the Chicago stock exchange permitted the public to be mulcted by such operations. We are of the opinion that through the stock that was sold by defendant to its individual customers, and the stock that was held by plaintiffs and defendant in their individual capacities and by them as members of the pool, and that which they controlled through options, they were able to manipulate and regulate the market. .They did so. All of the three parties came off with handsome profits. The innocent outsiders were victimized by the operations of the pool and the individual operations of the parties to the pool. Plaintiffs were the officers and controlling parties in the operation of the U. S. Corp. They knew the intrinsic worth of that corporation. They knew that the stock was worth in the neighborhood of $17.50 per share. Plaintiffs and defendant sold this stock to the general public without any regard to its true value. We find that the pool agreement of January 18, 1929, and the operations of the plaintiffs and defendant were for the illegal purpose of regulating or controlling the market for their own profit and to the injury of the general public, and that such agreement and all such operations are contrary to public policy. The Bobbins Body Corporation' note represents $149,340.96 taken out of the pool account, and to allow the defendant to prevail in its counterclaim would be equivalent to recognizing the pool operations as valid. We are of the opinion that neither the plaintiffs nor the defendants should be allowed to use the processes of the courts for the purpose of enforcing the illegal contract.

Because of the views expressed, the decree of the superior court of Cook county is reversed and the cause is remanded with directions to dismiss the bill of complaint and the cross bill, and to tax the costs equally between plaintiffs and defendants.

Reversed and remanded with directions.

Mr. Presiding Justice Hebel,

specially concurring:

I am unable to agree with all that is stated in the opinion but concur in the court’s conclusion.

Mr. Justice Denis E. Sullivan,

specially concurring : I agree with conclusions but not with all that is said.


source: Caselaw Access Project

author: Mr. Justice Burke

license: Public Domain

text:
    Florence R. Delling, Appellee, v. Lake View Hospital Association and Training School for Nurses and John J. Flavin, Administrator De Bonis Non of Estate of Ezra C. Porter, Deceased, Defendants. Appeal of Lake View Hospital Association and Training School for Nurses, Appellant.
    Gen. No. 41,533.
    Opinion filed April 23, 1941.

      Edward W. Rawlins and James F. Wright, both of Chicago, for appellant; Fat Warren Johnson, of Chicago, of counsel. Robert M. Woodward and Robert J. Spahr, both of Chicago, for appellee.
   Mr. Justice Burke

delivered the opinion of the court.

On October 28, 1935, plaintiff filed her complaint in the superior court of Cook county against the Lake View Hospital Association and Training School for Nurses, a corporation, and Ezra C. Porter, a physician. After the cause was placed at issue, Dr. Porter died. His death was suggested and John J. Flavin, administrator de bonis non of his estate, was substituted as a party defendant. An amended complaint was filed, which charged that while plaintiff was in the care, custody and control of Dr. Porter and the Lake View Hospital Association and Training School for Nurses, for a cervix operation, a certain electrical wire instrument was used and that through the alleged negligent, careless, wanton and malicious use of said instrument by Dr. Porter and the other defendant, the electrical cord was caused to burn and break off and part of the wire remained in the abdomen of the plaintiff to the disturbance of her vital organs. The answers denied all the acts of negligence and damage.

The trial was before the court and a jury. The court directed a verdict in favor of the defendant, John J. Flavin, administrator de bonis non of the estate of Ezra C. Porter, deceased. The jury returned a verdict in favor of plaintiff and against the defendant, Lake View Hospital Association and Training School for Nurses, and assessed plaintiff’s damages at the sum of $2,000. Motions for a directed verdict, for a new trial and for judgment notwithstanding the verdict, were overruled, and judgment was entered on the verdict, to review which this appeal is prosecuted. For convenience, the Lake View Hospital Association and Training School for Nurses, a corporation, will be referred to as the defendant, or the hospital.

Plaintiff’s theory of the case is that the hospital while under the duty, failed to exercise reasonable care and caution in furnishing a cautery apparatus in a reasonably fit and safe condition for use in the operation, whereby electric current escaped from said apparatus and burned plaintiff and caused wires from the cord of the apparatus to become imbedded in the body of plaintiff, and that the court properly entered judgment on the verdict against the hospital. The theory of defendant is that it was not guilty of any negligence whatever in supplying the electrical cautery apparatus to Dr. Porter for the operation on the plaintiff; that there is no evidence tending to show that there was any defect in this electrical apparatus; that there is no evidence whatsoever to support plaintiff’s theory that some part of the insulated cord was broken or was burned off by the electric current, or that any piece of wire became embedded in the person of the plaintiff during the operation; that the court erred in refusing to instruct the jury to find the defendant not guilty at the close of all the evidence, in overruling its motions for judgment notwithstanding the verdict and for a new trial; in admitting improper evidence, in giving improper instructions and in refusing proper instructions. Defendant also contends that the verdict is against the manifest weight of the evidence and that it is for an excessive amount.

Plaintiff went to the hospital on Saturday, May 11, 1935, for an operation on her uterus to be performed by Dr. Ezra O. Porter. She was then 34 years of age and resided with a minor daughter. She had been a registered nurse for 11 years, and at the time she entered the hospital was regularly employed as a registered nurse. For about six months previous to her admission to .the hospital, she had been having slight hemorrhages from the uterus. On the morning of Monday, May 13,1935, the operation was performed by Dr. Porter. Plaintiff was placed on her back on an operating table, her limbs held in an apparatus described as “stirrups.” Dr. Porter sat on the seat of a high stool between the patient’s knees. An interne, Dr. Maurice Goldstein, was immediately to her left. Frances Borchert, a registered nurse employed by the hospital as surgical supervisor, and who had charge of all activities in the operating rooms, the central dress rooms and the emergency rooms, stood immediately to the right of the patient. Dr. Goldstein was admitted to practice in 1933 and was resident interne at the hospital from June of that year. He assisted at surgical operations. The patient was subjected to anesthesia. Dr. Porter performed the operation on the mouth of the uterus of plaintiff. This operation took approximately thirty minutes. Then a “regular cautery machine” into which electricity was introduced, was used by Dr. Porter. This machine is also spoken of as a “radio knife.” The nurse, Frances Borchert, supervised the cautery machine. It was kept in a supply room next to one of the operating rooms. Whenever it was to be used it was inspected by her in order to determine whether it was in condition to be used. The cautery machine used consisted of a cord and plug which is plugged into an outlet and leads to a box. The interior of the box consists of one or two vacuum tubes which changes the current in the hospital to a high frequency alternating current. A cord to which a cauterizing tool is attached, leads from the box. This cord terminates in a small pencil-like holder for the particular tool that is to be used at the time. The tool to be inserted may be a cutting blade or a cauterizing tool. The part of the instrument that is applied to the- flesh in cauterizing is called the tip. When the instrument is used for cauterizing it is frequently called a “cauterizing ■pencil.” Inside the handle are mainly connections between the cord and the tip and suitable insulation so that the tip can be handled and conveniently used. The holder is designed to allow the wire which comes into the handle to carry electric current through to the tip which is used for cauterizing. The patient had a piece of linen over her, known as a lithotomy sheet, designed to cover all areas except a sufficient area exposed for the doctor to work. The cabinet of the machine was on the patient’s right, the same side on which the nurse was standing. The doctor held the cauterizing pencil in his right hand. There was sufficient slack in the cord so that it could be handled with ease. The power was controlled by the doctor by a foot switch. When he wanted electric current to come through he put down his foot, and when he wanted the current discontinued he lifted his foot. The nurse did not operate the instrument. She did, however, control a separate switch to cut in the current or to shut it off. Dr. Goldstein, called by plaintiff, testified that he saw Dr. Porter using the instrument during the cauterizing process; that he heard a sparkling or sizzling noise and the operation was stopped; that this sputtering or sparkling sounded a little louder than normal; that after he heard this sizzling or crackling noise, some ointment was applied by him to a burn on the surface of the pubic .bone directly above the opening of the vagina; that he saw the wound the following morning arid it looked a little redder and that the surface skin had started to come off; that when he first saw the area over the pubic bone the skin was not broken; that when he examined the area the next day he did not see any wires in it and that he did not see any wires in it the first time he applied ointment; that the apparatus belonged to the hospital; that he had been present when that same cautery apparatus had been used in other operations; that the cord of the apparatus, running from the box to the cautery pencil, was not lying across the patient’s abdomen at the point where he saw the burn; that he would not say definitely that the extension cord came across or over her body; that he did not see any wires break off or burn. Ealph Manley, an associate professor of chemistry at Armour Institute, called by plaintiff, testified that he made an analysis of some particles of copper wire which were exhibited to him; that such analysis showed them to be predominantly copper. Plaintiff testified that after she came out of the anesthetic she noticed a pain over her pelvic bone, about one inch to the left of the vaginal orifice; that ointment had been placed on the skin with a gauze covering; that she remained in the hospital until Thursday, May 16,1935; that Dr. Porter continued to treat her at home; that he came almost every day to take care of her uterus condition and also the burn; that she noticed the tissue around the burn began to slough and in three or four weeks she had quite a large abscess; that the abscess protruded about one inch from the wound and that it was perhaps an inch and a half wide; that it was opened and drained; that before it was opened and drained she felt a pricking sensation, as if being “stuck with some little thing”; that Dr. Porter cleaned it out; that he found “something” in the abscess, which he showed to her; that there were three particles of metal which he showed to her; that after Dr. Porter had taken out the pieces of metal the abscess healed over; that it then opened up again; that he continued to treat her until about August 1, 1935, when she went to Dr. Channing W. Barrett for treatment, at whose direction she went to the Henrotin Hospital on August 13, 1935, where an X-ray was taken; that Dr. Barrett operated on the abscess and removed a piece of metal, which he gave to her; that Dr. Barrett drained the abscess ; that it opened up at the end of ten days and' then healed up; that she went on a boat trip to South America for about a month and then returned to the position which she had left at the time she entered the hospital; that she spent many sleepless nights in 1935 until the burn was completely healed. She further testified that her normal weight prior to May 13,1935, wqs 116 pounds, and that by October, 1935, her weight had declined to 89 pounds. Dr. Barrett testified for plaintiff that he examined her about August 1, 1935; that she had a condition in the vagina, the cervix was swollen and raw, with a little growth there; that he saw her later on in August, and that she had a sore place on the vulva; that it was about the size of a dollar and indurated; that it had an opening down into it from which discharges came; that he directed her to go to the Henrotin Hospital, where an X-ray was taken; that he operated; that the operation consisted of cleaning out the wound and taking out the little piece of wire which was disclosed by the X-ray; that it was probably two months following the operation which he performed before the sore healed over so it would not break open again; that it healed over and left a tender scar; that he treated her for about a year and a half; that the treatment was partly for the wound and partly for a bad condition of the cervix; that she came to him for treatment of the cervix for quite a while; that he recommended that she go to a hospital or that she take a trip for a rest; that the pus conditions and changes in the cervix and uterus and the swelling would cause a woman to become nervous and would bring about a run down condition, lower resistance and loss of weight and appetite. In answer to a hypothetical question, Dr. Barrett gave his opinion that something had happened to the electrical apparatus and that these wires were driven through a very small opening. He further testified that at the time he saw the wires, there did not have to be a breaking of the skin for their insertion. Paul GK Andres testified for the plaintiff that he was a teacher of electrical engineering at Lewis Institute, Chicago. In answer to a hypothetical question, over the objection of the defendant, he gave a lengthy opinion to the effect that the electrical cord part of the cautery apparatus is composed of many fine wires; that when that conductor is abraded or a portion of that wire becomes exposed, then that wire acts as a secondary electrode and starts to cut or cauterize; that “in the handling of that wire these wires after a period of time become broken, have sharp edges on them, and may project beyond the cord,” and, assuming the escape of a piece of wire from the insulated cord, that he thought the tip would be heated and burned off by the current into the flesh of the patient. He also gave his opinion that the cord could not have been away from the point of plaintiff’s skin where the pieces of wire were found. The pieces of copper wire were identified and received in evidence. The nurse, Frances Borchert, testified on behalf of defendant that she inspected the apparatus and cord prior to its use on the plaintiff and there was no fraying of the insulation and no wires were protruding from the insulation; that the cord from the box passed over the patient’s right thigh; that the patient had a lithotomy sheet over her, which was designed to cover all areas except a sufficient area exposed for the doctor to work; that this area was in the mid line and over the pubic bone; that the cord did not at any time pass over that area; that the handle of the radio knife did pass over that area; that at the time the radio knife was laid on the pubis there was a buzzing sound and all work was discontinued to investigate the sound; that she looked at that portion of plaintiff’s body and saw a red spot on the symphysis pubis, about the mid line and slightly to the left; that the cord at this time was over the plaintiff’s right thigh and 12 to 14 inches from the place she saw the red spot; that the spot was less than the size of a dime and Doctors Porter and Goldstein examined it; that she saw no breaking of the skin and no bleeding; that after the operation she assumed charge of the cautery machine, examined the cord and put it away; that it appeared in good condition the same as before the operation; that the machine was used afterwards and the same cord was used and that it was in good condition; that there was sufficient slack in the cord so that it could be handled with ease; that it laid on plaintiff’s thigh in front' of her and that she was sure no part of the cord ever touched the front part of plaintiff’s body; that the cord was inserted permanently into the handle; that the handle was of solid material and that she did not see any place about the handle where any wire could have come out.

The first point urged is that the trial court erred in overruling the motion of the defendant for judgment in its favor notwithstanding the verdict. The second point is that the trial court erred in refusing to instruct the jury to find the defendant not guilty at the close of all the evidence. Defendant maintains that there is no evidence in the record tending to show or from which it could be inferred that the defendant was guilty of the negligence charged against it, or of any negligence whatever in and about its electrical cautery equipment furnished by it for plaintiff’s operation by her own doctor, and that a verdict cannot be sustained where essential facts are left in the realm of. conjecture and speculation. Plaintiff came to the hospital and was brought to the operating room. An anesthetic was administered. She, of course, did not know what happened. She was in the hands of her own physician and the nurse and an interne in the employ of the hospital.- There can be no doubt that the burn which she suffered was caused by the cauterizing machine. Dr. Goldstein and the nurse both testified that when the sparkling, sizzling, crackling noise, which sounded louder than normal, came from the cauterizing machine, the operation was stopped. This indicates that both of them recognized that there was something wrong with the machine. The cauterizing' machine was not again used in the operation. It is apparent that but for the unusual noise Dr. Porter would have continued with the use of the machine. The record clearly establishes that the abscess developed in the place where the burn was inflicted by the cautery pencil. Dr. Porter removed three pieces of wire from the wound so caused. The wound then healed over. However, it opened up again. She then consulted Dr. Barrett and at his suggestion she entered the Henrotin Hospital, where an X-ray revealed a small piece of wire. He operated and removed this piece of wire. Thereafter, the wound healed. The pieces of wire are similar to the wire in the cautery apparatus. We find that the jury had a right to draw the inference that the cauterizing machine inflicted the burn and that this machine also caused the pieces of wire to enter her body. We are satisfied that the jury had ample evidence on which to base a finding that the defendant was guilty as charged in the amended complaint.

The next point advanced by the defendant is that the court erred in admitting improper evidence and in refusing to strike out such improper evidence. Defendant complains of a hypothetical question propounded to Dr. Barrett which he was allowed to an- • swer, and also insists that it was error to allow Paul G. Andres to answer a hypothetical question. The questions are based upon the testimony and are not misleading. The testimony of these witnesses related to matters of peculiar knowledge and skill not common to the average man. Owing to the nature of this case we ■ find that the court did not err in allowing the hypothetical questions to be answered.

The defendant also argues that the court erred in giving to the jury instructions Nos. 6 and 16, requested by plaintiff. The criticism voiced against these instructions is that the evidence does not support them. We do not agree with that contention. Defendant insists that the court erred in refusing to give instructions Nos. 24, 25 and 26, requested by it. We agree with plaintiff that instructions Nos. 24 and 25 are peremptory in their nature and misleading, and that the court was right in declining to give them. Instruction No. 26 is a proper instruction. It tells the jury that the defendant was not responsible for the ailment or malady from which she was suffering at the time she came to the hospital for treatment. We find that instruction No. 7, given in behalf of defendant, told the jury that “with respect to the ailments and disabilities claimed by the plaintiff in this case the burden is upon the plaintiff in that respect as it is with respect to the question of liability to show by a preponderance of the evidence not only that such ailments really existed but also that such ailments and disabilities are the result of the acts in question.” As the latter instruction covered the subject, the court did not err in refusing to give instruction No. 26.

The fifth point advanced by defendant is that the court erred in overruling its motion for a new trial for the reason that the verdict is against the manifest weight of the evidence. We are of the opinion that the verdict is not against the manifest weight of the evidence, and that the jury was fully justified in the verdict that it returned. Finally, defendant maintains that the verdict is excessive. We cannot agree with this contention. The sum of $2,000 awarded by the jury is not excessive. The record establishes that the jury was fully warranted in fixing the damages at $2,000.

Because of the views expressed, the judgment of the superior court of Cook county is affirmed.

Judgment affirmed.

Hebel, P. J., and Denis E. Sullivan, J., concur.


author: Me. Justice Bubke

text:
    Calhoun Thomas and William M. Shand, Appellees, v. Benjamin Ritholz et al., Individually and as Copartners, Trading as National Optical Stores Company, Appellants.
    Gen. No. 41,627.
    Opinion filed April 23, 1941.
    Stein & Coopee, of Chicago, for appellants.
    No appearance for appellees.
   Me. Justice Bubke

delivered the opinion of the court.

On July 5, 1940, plaintiffs filed their statement of claim in the municipal court of Chicago. They are lawyers practicing in South Carolina and seek to recover for professional services rendered in that State at the special instance and request of the defendants. A summons was issued, returnable July 19, 1940. The bailiff filed a return showing service on the defendants. On July 18, 1940, the attorneys for the defendants filed what they called a special appearance for the sole purpose of quashing service of summons on the defendants. On July 19, 1940, the return day, the court ruled the defendants to file an affidavit in support of their special appearance. Defendants filed an affidavit by Lillian Gerew. On September 26, 1940, plaintiffs, by leave of court, filed two counter affidavits, one by the deputy bailiff who served the summons, and the other by another deputy bailiff. On October 1, 1940, the court entered the following order:

“This cause coming on for hearing upon motion of the defendants heretofore entered herein to quash service of summons and the court being fully advised in the premises overrules said motion. It is further ordered by the court that the defendants’ Special appearance heretofore filed herein stand as the General appearance and rule on defendants to file affidavit of merits in ten (10) days.” Defendants prosecute this appeal from the order overruling their motion to quash the service of summons and ordering the special appearance to stand as a general appearance, and pray that the order be reversed. As plaintiffs did not file any appearance in this court, we do not have the benefit of any discussion of the case as viewed from their standpoint.

Section 77 of the Civil Practice Act (par. 201, ch. 110, Ill. Rev. Stat. 1939 [Jones Ill. Stats. Ann. 104.077]) provides that appeals shall lie to this court where any form of review may be allowed by law, to revise the final judgments, orders or decrees of the trial courts, and from orders granting a new trial where leave to appeal is allowed by us. Section 78 (par. 202, ch. 110) of the act provides for appeals from certain interlocutory orders concerning injunctions and receivers. The appeal in the instant case is from an interlocutory order, but not from such an interlocutory order as is contemplated by section 78 of the Civil Practice Act. The order of the trial court overruling the motion to quash the service of the summons and ordering the special appearance to stand as a general appearance, is not a final' order or final judgment. An appeal does not lie from an interlocutory order overruling a motion to quash the return on the summons. It will be observed that the defendants were ruled to file an affidavit of merits within 10 days. The record before us shows that the cause is still pending. It is interesting- to note that the record shows that the so-called special appearance which served the office of a plea was filed by the attorneys for the defendants. In the case of Pratt v. Karris, 295 Ill. 504, 507, our Supreme Court said:

“The common law rule is, that a plea to the jurisdiction of the person must be pleaded in person and not by attorney. If pleaded by attorney it admits the jurisdiction of the court.” We also call attention to rule 21 of the Supreme Court (par. 259.21, ch. 110, Ill. Rev. Stat. 1939 [Jones Ill. Stats. Ann. 105.21]) which reads:
“Where, after denial by the court of a motion under section 48 of the Civil Practice Act, the defendant pleads over, this shall not be deemed a waiver of any error in the decision denying such motion, and the defendant shall have the right to assign such error on appeal from the final judgment. This rule shall extend to the case where the motion is one attacldng the jurisdiction of the court over the person made under a special appearance, and the pleading over by the defendant has involved the entry on his part of a general appearance.” Substantially the same language appears in rule 44 of the rules of the municipal court of Chicago.

As the record does not show an appealable order, the appeal is dismissed.

Appeal dismissed.

Rebel, P. J., and Denis E. Sullivan, J., concur.


author: Mr. Justice Denis E. Sullivan

text:
    Frances R. Garvy, Appellant, v. A. Cosmas Garvy, Appellee.
    Gen. No. 41,332.
    Opinion filed April 23, 1941.
    Rehearing denied May 16, 1941.

      George A. Curran, of Chicago, for appellant; W. H. Meyer, of Chicago, of counsel.
    Benjamin B. Davis, of Chicago, for appellee; Harry J. Lurie, of Chicago, of counsel.
   Mr. Justice Denis E. Sullivan

delivered the opinion of the court.

This is an action in chancery for separate maintenance filed by Frances R. Garvy against her husband A Cosmas Garvy, based upon the alleged refusal of the defendant A. Cosmas Garvy to permit his wife to return to their home and live with him as his wife. Upon the action of the chancellor of the superior court a decree was entered whereby the complaint of the plaintiff was dismissed for want of equity.

No point is raised as to the pleadings.

In 1932 the parties hereto became estranged when the plaintiff Frances R. Garvy left the home of the defendant A. Cosmas Garvy. Thereafter, a suit was commenced by the defendant herein against the plaintiff Frances R. Garvy for divorce, to which the plaintiff herein filed a cross bill asking for separate maintenance. The trial court in that case dismissed the complaint of Andrew C. Garvy (who is named in this case as A. Cosmas Garvy) and granted the plaintiff separate maintenance. Thereafter, on appeal this court affirmed the decision of the trial court denying divorce and this court reversed the cross bill of Frances R. Garvy and directed the trial court to dismiss the cross bill. Thereafter, plaintiff herein, sought to become reestablished in her home and to resume marital relations with her husband. She went to their home but was ejected by her husband, defendant herein.

Plaintiff’s theory of the case is set forth substantially as follows:

Although the plaintiff and the defendant began living separate and apart on July 16, 1932, the opinion of the Appellate Court entitled Garvy v. Garvy, 282 Ill. App. 485, finding both parties, the present plaintiff and defendant, at fault and affirming the decree of the circuit court of Cook county, Illinois, dismissing the bill for divorce filed by A. Cosmas Garvy and reversing the decree of said court granting separate maintenance on the cross complaint of Frances B. Garvy, and the Supreme Court of the State of Illinois in February 1936, denying the petition of Frances B. Garvy for leave to appeal from said decision of the Appellate Court, left both of the parties as it found them, husband and wife. Thus in February 1936, neither party was living separate and apart without fault. By the refusal of A. Cosmas Garvy, defendant, to accept the offer of Frances B. G-arvy, plaintiff, made in good faith on March 19, 1936, to return to her home and her husband and resume her marital relationship, a new cause of action became vested in the wife to maintain a complaint for separate maintenance because she was forced to live separate and apart from her husband without her fault.

Defendant’s theory of the case is not set forth as is required by the rules of this court. Under the heading “Statement” which appears in appellee’s brief we have adopted the following as defendant’s theory. It is as follows:

“The defendant’s position is that when plaintiff separated from the defendant on July 16, 1932, she did so without good cause, not without her fault, and by agreement; that, consequently, her living apart on and subsequent to said date has not been for good cause and without fault on her part; that the decision of this Court [the Appellate Court] in the case of Garvy v. Garvy, 282 Ill. App. 495 [485], finding and holding, as it did, that the plaintiff was not ‘living separate and apart without fault on her part’ as a result of the separation of the parties on July 16, 1932, is res judicata between the parties, establishing an estoppel by judgment or an estoppel by verdict against the plaintiff from again attempting to assert a claim for separate maintenance, based upon the same separation, the parties never having resumed marital relations thereafter; that plaintiff did not, within one year from the date of her departure from the domicile of the parties on July 16, 1932, make any offer in good faith to return to the defendant (as was also adjudicated in the prior proceedings) and that, therefore, the defendant was not legally bound_to receive her on March 19, 1936 or resume the marital status. It is further the position of the defendant that the question of the good faith of the plaintiff’s offer to return on March 19, 1936 (over three years and eight months from the time she left the defendant) is not an issue in the case.

Even if this Court [meaning the Appellate Court] were to review the evidence, the record clearly shows that no bona fide offer to return was made by the plaintiff within one year from the separation by agreement, and the offer of March 19, 1936 was no more sincere than her prior offers.”

After hearing the evidence in this case, the trial court evidently relying upon a former decision of the circuit court, as well as an opinion of this court in reversing in part the decision of the circuit court in the former case, adopted the theory that res judicata applied and would forever thereafter prevent the parties from resuming their marital relations.

The decree entered in the trial court on January 15, 1940, in the instant case, among other things, sets forth the following:

“3. That on March 19, 1936 the plaintiff appeared-at the home of the defendant and again offered to return to live with him but the defendant refused to be reconciled with her.
“4. That the offer of the plaintiff on March 19, 1936 to become reconciled with the defendant does not differ substantially from her prior offers which the Appellate Court, in its decision, found the defendant was justified in refusing; that by reason of such Appellate Court decision the Court feels that it is not necessary to pass on the question of whether the offer of plaintiff on March 19, 1936 to become reconciled with defendant was made in good faith.”

The difficulty with this decree is that it relies upon a decision of this court as its basis for the invocation of the doctrine of res judicata. The interpretation of the language used in the Appellate Court opinion as made by the trial court and the deductions which were drawn therefrom, were not justified. The former case did not find that she had presented herself at the home of defendant, in fact it was specifically pointed out that the efforts which she had made up to that time for the resumption of the marital state, consisted only of having written a letter to defendant on St. Valentine’s Day and also by going to defendant’s office one evening when she asked him to take her home in his automobile, which defendant refused to do. We did not construe these actions on the part of the plaintiff to have been a return to the home of her husband. It is pertinent, we think, to point out the fact, although it was not argued in the former suit, that the defendant when he filed his original bill for divorce obtained an unusual injunctional order commanding the plaintiff herein to leave their home and preventing her from returning thereto. That order was entered November 3, 1933, and reads as follows:

“This cause having come on to be heard on the sworn bill of complaint, and the court having considered the said bill of complaint and having listened to the arguments of counsel for complainant in support thereof, and it appearing to the court that an injunction should issue as prayed in said bill of complaint,
“It IS HEREBY ORDERED, ADJUDGED and DECREED that a ■ writ of injunction issue without notice, restraining the said defendant from occupying the house occupied by complainant and his said minor children at 6000 Sheridan Road, Chicago, and to cease and desist from entering the said premises, or molesting the minor children of complainant, or complainant, until further order of this court.”

In our opinion in the former case, it was found that the testimony of the plaintiff herein declared that she did not know why she left their home and this court further found that there was not sufficient evidence to justify us in saying that she had made an effort to return to her home and husband. In the instant case, however, the facts as heretofore stated, are entirely different. Plaintiff went to their home on Sunday, March 19, 1936, taking’ her wearing apparel with her preparatory to remaining there, some of her clothes had remained there during her absence. She was admitted to the residence where her husband was having dinner with the children and others. Plaintiff herein testified that the following conversation took place between them:

“ 'C.os, I have come home again. ’ He immediately arose, very much excited and said, 'Home, this is not your home, and you are not going to stay here. You cannot stay here. The courts made that plain.’ I said, 'No, I believe not. We are still husband and wife.’ And then, more excitedly he exclaimed, 'Nothing of the kind. Nothing of the kind. Nothing of the kind. Why did you have to drag all this divorce matter through the courts for ? ’ And I answered, ‘ I — I never wanted the suit. You filed the suit for divorce. ’ ”

Referring to the same conversation defendant testified that he stated:

"I said, 'I would advise you to leave here peaceably because I have been told by my lawyer either to have you put out, or call the police.’ Immediately she started across towards the door. I preceded her, and opened the door, and my son took her baggage and laid it out there as a gentleman would. She told me, ‘I came home because I had no money and no place to go.’ ”

Eloise Williams, a witness on behalf of defendant, testified relative to the above, as follows:

. “When she had already walked into the study and when he walked in he ashed her if she ioould leave peacefully or he would have to call the police or have-her put out, that accordingly — that she must leave.”" We have set forth this testimony practically verbatim so that it may readily be seen there was quite a material difference between the plaintiff returning' home and her offer to remain at home and resume marital relations as was done in the instant case, as distinguished from her having written a letter to her;/ husband and going to his office and asking that he ’ drive her home in his automobile. It must be borne in mind that these parties are still husband and wife and it is the duty of the husband to support his wife. This is a continuing obligation and, even though the wifé should leave the husband for a time, she has a right to return to their home as was done in the instant case for the purpose of resuming the status of husband' and wife. In this case the plaintiff was prevented from doing that by her husband.

The following testimony of the defendant and the ruling of the court thereon relative to the attitude of the defendant toward his wife, is as follows:

“Subsequent to the entry of the final decree in the former case I did not ask Mrs. Garvy to return. I might have been willing to have her return since the date of the decree. I cannot say one way or the other.
“Q. Are you now willing to take Mrs. Garvy back?
“ (Whereupon attorney for defendant objected and the Court sustained the objection).”

In sustaining this objection, when an endeavor was being made to find out the attitude of the defendant toward Ms wife, the court committed error. The attitude of the parties, one toward the other, whether they liked each other or disliked each other and whether they wanted to resume marital relations or not, is quite important in a case of this nature and we believe the defendant should have been permitted to answer.

It is contended by defendant that the year of limitation as provided by statute, in which suit shall be commenced, would prevent the filing of the bill for separate maintenance in this case. We do not think that the time which elapsed when the original suit was pending and appeals were made to the Appellate and Supreme Courts, could be considered as chargeable against plaintiff, nor do we think the time during which plaintiff was absent and was being supported by her husband could be considered as chargeable against plaintiff.

The parties to this suit originally separated on July 16, 1932, and from that time on lived separate and apart. On November 4, 1933, the defendant herein filed his bill for divorce in the circuit court of Cook county, Illinois, and plaintiff herein filed her cross bill seeMng separate maintenance to which an answer was filed. This court in its opinion in that case found that neither party was living separate and apart from the other without fault, and no relief was granted. The petition for leave to appeal from the opinion of the Appellate Court was denied by the Supreme Court. Travelers Ins. Co. v. Wagner, 279 Ill. App. 13, p. 17; ch. 110, sec. 74, Ill. Rev. Stat. par. 198 [Jones Ill. Stats. Ann. 104.074].

In Floberg v. Floberg, 358 Ill. 626, the court at page 629, said: “It is manifest that the one-year period during which it is charged the complainant deserted her husband embraces the time during which her bill against her husband was pending and undisposed of in the circuit court, Her suit for separate maintenance, as the action under the statute is commonly designated, corresponds with the divorce of a mensa et thoro, which was the only kind of a divorce granted by the ecclesiastical law. The general rule is where a suit for divorce is brought and the same is pending between the parties to the marriage contract, the parties are not only justified in living apart but necessarily must do so. Such living separate and apart does not constitute willful desertion without reasonable cause within the meaning of the Divorce act. It would be incompatible with a pending suit for the dissolution or modification of the marriage contract for the parties to live together. If the suit is carried on bona fide, it is not incumbent, during its pendency, upon either party to resume the marital status. The time so consumed by the litigation cannot be reckoned in the calculation of the statutory period of desertion. The rule applies alike to pending proceedings for separate maintenance under the statute and for divorce. It is ‘time out.’ ” We do not think the filing of the bill for separate maintenance was barred by the statute.

Again referring to the fact that the trial court refused to permit inquiry to be made as to the good faith of the plaintiff and the defendant, and so ruled we cite from the case of Haley v. Haley, 209 Ill. App. 153, page 155, wherein it was said:

“It is the law in this State that under such circumstances it is the duty of the husband to receive the wife and properly provide for her, and that should he refuse to perform this duty it cannot then be said that she is living apart from her husband through her fault. The language of the Supreme Court in Thomas v. Thomas, 152 Ill. 577, 579, is directly applicable: ‘Even though the original separation was without any fault of the husband, still if she afterwards, in good faith, offered to return and live with him, it was his duty to receive her back and there properly provide for her;’ This rule was applied by a branch of the Appellate Court to facts exactly like those now before ns, in Pratt v. Pratt, 197 Ill. App. 530. Applying this rule to the facts of this case it follows that the complainant was living apart from her husband without her fault and, under the statute, was entitled to a decree of separate maintenance. ’ ’

Under the evidence and the law as defined in this ■case, we are convinced that the plaintiff in this case is now living separate and apart from her husband, defendant herein, without fault on her part according to the terms of the statute. Should the intention of the •statute be construed to be otherwise and, by its terms, the husband become immune from the duty to provide for his wife, then he would be having the benefits of a separation or divorce from his wife without a court decree and be relieved of all responsibility. That was not the intention of the legislature.

For the reasons herein given, the decree of the superior court is hereby reversed and' the cause is remanded with directions to enter a decree for separate maintenance in favor of plaintiff Frances E. Garvy and against the defendant A. Cosmas Garvy, with an allowance for support and maintenance commensurate with the defendant’s means.

Decree reversed and cause remanded with directions.

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