text:
    The People of the State of Illinois ex rel. Edward J. Barrett, Appellee, v. State Bank of Herrick. Intervening Petition of American Surety Company of New York, Appellant.
    Gen. No. 9,048.

      Opinion filed April 16, 1937.
    U. G-. Ward, of Shelbyville, for appellant; Philip L. Turner, of Shelbyville, of counsel.
    J. C. Willard, of Shelbyville, for appellee.
   Mr. Justice Davis

delivered the opinion of the court.

On August 22, 1933, Edward J. Barrett, auditor of public accounts of the State of Illinois, took possession of the State Bank of Herrick and appointed William L. O’Connell, receiver, which appointment was after-wards confirmed by a decree of the circuit court of Shelby county.

On March 1, 1935, the American Surety Company of New York filed its intervening petition in said cause, alleging that one Charles F. Lee was, during the years 1921 and 1922, the duly qualified treasurer of the trustees of schools of township nine, North, Range two, East of the Third Principal Meridian of Fayette and Shelby counties, Illinois; that said company became and was surety for said Charles F. Lee as such treasurer from the second day of May, 1921, to the 15th day of April, 1922; that its bond as surety was for the principal sum of $42,000.

That said Charles F. Lee during said time did his banking business with the State Bank of Herrick, both as such treasurer and as an individual; that during such time said Charles F. Lee, by and with the consent and knowledge and through the officers and employees of said State Bank of Herrick, misappropriated large sums of money and funds of said school trustees, then in his custody and care as such treasurer, to his own personal account and to pay his individual indebtedness to the said State Bank of Herrick, in the sum of $7,319.58, together with other sums.

That said Charles F. Lee as such school treasurer also drew out of said school funds moneys, which were not drawn out by school orders but were paid to the said Charles F. Lee and appropriated by him to his own personal use.

That the trustees of schools brought suit against petitioner and said Charles F. Lee in the circuit court of Shelby county, and obtained a judgment for said amount of $7,319.58, which judgment petitioner fully paid and discharged. That petitioner’s claim is $7,319.58 with 5 per cent interest per annum thereon from the time the amount was paid to the trustees of schools; that petitioner is not informed as to the daily cash balances of the bank during the time complained of herein, but believes that the same exceeded the amount of petitioner’s claim and interest, and asks that defendant may make discovery and state the amount of such balance, and the amount received by the receiver of said bank.

On June 29, 1935, William L. O’Connell, receiver, filed his answer in which he neither admitted or denied the allegations contained in the first 11 paragraphs of petitioner’s complaint, and as for the allegations contained in paragraph 12 says that the books and records of said bank turned over to him by the auditor of public accounts does not show that said funds were misappropriated to the use of the bank. Admits that the trustees of schools obtained a judgment for $7,319.58 against petitioner and Charles F. Lee but asks strict proof as to the payment of said judgment by said petitioner. Denies that petitioner has a preferred claim or any claim against this trust.

Upon a hearing- of said cause the court allowed appellant a common claim, to share pro rata with other common claims, in the sum of $7,319.58 with 5 per cent interest from May 24, 1934, and denied its rig-ht to a preferred claim for any amount.

Appellant insists that the court erred in denying- it a preferred claim against the State Bank of Herrick and the receiver thereof, in the sum of $7,319.58.

Appellant takes the position that as surety of Charles F. Lee, treasurer, it having paid to the trustees of schools the amount of said judgment, on account of the misappropriation of funds by such treasurer, it is subrogated to the rights of the trustees of schools as of date of the payment. It also insists that the liability of the State Bank of Herrick and its receiver arose purely and simply from a misappropriation by the school treasurer of the school funds then in the State Bank of Herrick and that such misappropriation was made with the knowledge and consent of the officers of the bank and that the bank was directly the beneficiary of practically all of these misappropriated funds.

It is charged in the complaint that on May 19, 1921, Lee applied $1,521.60 of school funds to Ms own personal indebtedness to the bank and, on the same day, he deposited to his personal account $1,500 of school funds of the school trustees when there was an overdraft in his personal account of $887.37; on September 2, 1921, he deposited $414.91 in his personal account of school funds when there was an overdraft of $90.60 in said account; other items were alleged to have been misappropriated.

Notice was given by petitioner under the provisions of the statute to the receiver, calling- upon him to admit certain facts which were the transactions charged in the complaint of misappropriations of school funds to the total amount of $5,120.81. Appellee admitted the facts specified except as to items 12 and 14. Item 14 was as follows: “That the total of the foregoing amounts, namely $5,120.81, is $13.35 less than the shortage of the Treasurer’s account for the above period and included in a certain judgment rendered in the court against the American Surety Company in a suit on said bond. ’ ’

It is true that if a depositor seeks to pay his own debts to a bank by an appropriation of funds to Ms credit in a fiduciary capacity, the bank acting as depositary of the trust funds is charged with knowledge of the character of the appropriation and will be compelled to refund, as the bank, in honoring the checks payable to itself out of the trust account, participates in and aids the trustee in committing a breach of trust. It is also true that where checks are drawn by a trustee in his fiduciary capacity but payable to himself or to cash or currency, the bank is not justified in presuming that the money will be used by the trustee for trust purposes, and it will be bound by any information which it could have obtained had it pursued inquiry as to the use to which the withdrawals are to be put. Massachusetts Bonding & Insurance Co. v. Standard Trust Savings Bank, 334 Ill. 494, 166 N. E. 123.

The claim of appellant having arisen by reason of the payment of the judgment recovered against it by the trustees of schools it is subrogated to all the rights of such trustees of schools and is entitled to recover for the amount of the misappropriations of Lee from any who are responsible for, or assisted in the making of such misappropriations of funds. It was, however, incumbent upon appellant to produce evidence to prove what misappropriations of funds made up the judgment for $7,319.58 that the trustees of schools obtained against it and the amount of the various items entering into said judgment for which the State Bank of Herrick was liable.

U. G-. Ward, attorney for appellant, testified that all the items enumerated in the notice to Mr. Willard, attorney for appellee, on file in this case, were proven upon the trial in which the judgment was rendered and were included in the judgment as a shortage in the assets of such school treasurer. As these items, according to the calculation of appellant, only total the sum of $5,120.81 it is apparent that the judgment was made up in part of items other than those that it is claimed the State Bank of Herrick was liable for.

In its argument appellant states that it is admitted by the pleadings in this case that the trustees of schools obtained a judgment for an amount far in excess of the claim of appellant against the bank and that the amount of appellant’s claim was included in the judgment that the trustees of schools obtained. We are unable to find that the pleadings of appellee make any such admission.

It is admitted by appellant that it has not traced any part of the fund in specific property or securities or assets which came into the hands of the receiver, and it is therefore seeking to recover on the theory that the trust money is blended with other moneys of the bank. It takes the position that it is presumed that none of the trust funds have been dissipated and all moneys coming into the hands of the receiver is impressed with the trust. That appellee could have rebutted this presumption by showing that at some time the cash assets were lower than the amount going into the hands of the receiver, but this he has failed to do, therefore the presumption prevails.

There is no presumption of law that all moneys coming into the hands of the receiver is impressed with the trust. In arriving at the amount of the cash balance coming to the hands of the receiver that is impressed with the trust, withdrawals from and deposits added to the account from other sources, which cannot he attributed to the trust fund, from the time the trust funds were mingled with the funds of the bank and the time when the receiver took possession of the bank must be taken into account, and if at any time during said period the cash balance in the hands of the trustee was less than the trust money, the trust fund must be regarded as dissipated except as to said balance.

It was incumbent upon appellant to show that the receiver of the bank had possession of the whole or a part of the property or its proceeds, and unless, this was done appellant would not place itself in a relation to the insolvent’s estate which differs from that of an ordinary creditor and as a consequence no trust can be declared or enforced. The true owner of a fund wrongfully withheld by another has a right to have it restored not as a debt due and owing, but because it is the property of the former. No change of its state and form can divest it of such trust. The substitute for the original thing follows the nature of the thing itself, so long as it can be ascertained to be such; but the right of pursuing it fails when the means of ascertainment fails. It follows that a receiver of a bank in which a fund impressed with a trust was deposited cannot be required to repay it in preference to the claims of general creditors, unless the trust fund can be identified or traced into some other specific fund or property. People v. Peoples State Bank of Maywood, 354 Ill. 519, 534, 535.

The older cases which held that when trust funds are mixed with other funds of the trustee so that the whole becomes an indistinguishable mass, the trust fund cannot be traced, have been modified by the later decisions of the Supreme Court. In People v. Peoples State Bank of Maywood, supra, the court stated that the former rule with respect to tracing of trust funds had been changed. It held that in such case the cestui que trust was entitled to a lien on the cash assets in the hands of the receiver of the bank. The law indulges a presumption that the trustee would spend his own funds before dissipating trust funds. However, if at any time the cash balance in the hands of the trustee becomes less than the amount of money held in trust it becomes clear that the trustee has dissipated trust money. Therefore, the fund in which the trust may be traced is confined to the lowest cash balance in the hands of the trustee between the time when the funds are mingled and the time when the receiver takes possession of the bank. People v. Cairo-Alexander County Bank, 282 Ill. App. 343, 353. In tracing the amount of the lowest cash balance in the hands of the trustee during such time, deposits from other sources-may not be attributed to the trust fund.

It was the duty of appellant tu prove that the First State Bank of Herrick was in possession of trust funds belonging to the trustees of schools which it, by subrogation to the rights of said trustees of schools, was entitled to recover and to not only prove the amount of such trust funds, but to also prove what, if any, part of the funds coming to the hands of the receiver upon taking possession of the bank as receiver, were trust funds belonging to appellant, and no presumption of law can be indulged in that impresses all of the funds coming to the hands of the receiver with the trust and casts the burden upon appellee to rebut such presumption by showing that at some time the cash assets were lower than the amount going into the hands of the receiver as contended for appellant.

That the burden was upon appellant to make such proof is shown by the opinion of the Supreme Court in the case of People v. Peoples State Bank of Maywood, supra, on page 536 where it is said: “In any event, until appellee traces or identifies specific assets as the product, in whole or in part, of the excess deposits or their proceeds, no decree subjecting assets in the hands of the receiver to the trust which arose out of the excess deposits may be entered.” And again, in its direction to the circuit court in remanding said cause, it was said: “and further to subject such assets in the receiver’s hands, if any, as the appellee may prove were produced by the excess deposits in the general village account when the bank was closed, or by the proceeds of such deposits, to a preferred lien, etc.”

Appellant having failed to prove what part, if any, of the funds coming to the hands of the receiver was impressed with a trust, the circuit court of Shelby county did not err in refusing appellant a preferred claim against the State Bank of Herrick and the receiver thereof in any amount whatever.

The decree of the circuit court is affirmed.

Affirmed.


source: Caselaw Access Project

author: Mr. Justice Eiess

license: Public Domain

text:
    Nelle P. Merriman, Appellant, v. Charles L. Merriman and W. A. Doss, Appellees.
    Gen. No. 9,030.

      Opinion filed April 16, 1937.
    N. E. Hutson, of Monticello, for appellant.
    Bedmon, Bedmon & Bodman, of Decatur, and W. C. Noel, of Urbana, for certain appellee.
   Mr. Justice Eiess

delivered the opinion of the court.

This case involves án appeal from a judgment in favor of the defendants, Charles L. Merriman and W. A. Doss, his attorney, which was entered by the trial court upon granting a motion to dismiss a suit for damages filed by the plaintiff, Nelle P. Merriman, for alleged malicious prosecution, abuse of legal process, and for unlawfully instituting certain suits against her, all of which grew out of litigation arising in Piatt county.

The amended complaint consists of five counts.

The first count states in substance that in 1932 the defendants, conspiring together, filed an action seeking a decree of divorce in favor of the defendant Merriman from the plaintiff herein on the ground of extreme and repeated cruelty, and that the suit was maliciously filed for the purpose of harassing and humiliating the plaintiff herein and coercing her into relinquishment of her half interest in a store jointly owned with the defendant, on account of which she suffered loss of health, was hindered in following her ordinary affairs, and was obliged to employ counsel to defend the suit, whereby she sustained damages for which she seeks recovery.

Count two is based on the theory that the two defendants wrongfully and maliciously defended a divorce proceeding filed by the plaintiff against defendant Merriman in 1934, and filed therein a counterclaim asking for a divorce, in which they charged that the plaintiff had been guilty of extreme and repeated cruelty, when they knew that this question had been adjudicated in favor of the plaintiff in the above mentioned divorce suit, for the purpose of harassing her and thereby-obliged her to employ counsel to defend against the counterclaim which was dismissed on a plea of former adjudication averring estoppel by verdict, whereby she sustained damages, etc.

Count three alleged that the defendant Merriman filed a voluntary petition in bankruptcy in the United States District Court, was duly adjudicated a bankrupt and Ms assets were distributed among Ms creditors, and that the defendant later paid Ms principal creditors the balance remaining due on their claims; that in the course of said proceeding an injunction was issued against the plaintiff which was later dissolved. Many other immaterial allegations are set forth, but the plaintiff predicates her alleged cause of action in said count on the theory that the procedure of the defendant in being adjudicated a bankrupt and in obtaining an injunction in the same court was done for the purpose of injuring her in her property rights and was a malicious abuse and misuse of the processes of the UMted States District Court, and that by means of the prosecution of the bankruptcy proceeding by the defendant, the plaintiff has been put to great expense and sustained damages for which she has brought suit.

The fourth count charges that the defendants filed an injunction suit in the District Court of the United States, seeking an injunction against the plaintiff, her solicitors and the trial judge from enforcing the lawful orders of the circuit court relative to the payment of certain alimony and solicitor’s fees by the defendant Merriman to this plaintiff; that said suit was wholly without merit and terminated in favor of the plaintiff; that the plaintiff had been put to great expense, was prevented from following and transacting her ordinary affairs and sustained damages, etc.

The fifth count alleges that defendants Merriman and Doss, Ms attorney, in pursuance of a conspiracy between them to annoy, harass and embarrass' the plaintiff and without the knowledge, authority, or consent of one Allan F. Moore, caused a suit to be instituted in the name of said Allan F. Moore against the plaintiff for alleged rents due said Moore before a justice of the peace in Monticello; that plaintiff was obliged to employ counsel and appear in defense thereof; that no one appeared in behalf of said Moore and that he had nothing to do with filing said suit and never appeared therein; that another suit was so instituted in the name of said Allan F. Moore for rent alleged to be due before a different justice of the peace wherein defendant Doss appeared as attorney and defendant Merriman appeared as a witness; in which suit the plaintiff was obliged to employ counsel and appear and resist same; that said Moore did not appear and neither knew of nor authorized either of said successive suits; that the same were wholly without merit and were dismissed; that said Doss and Merriman, without any authority or consent of said Moore, caused an appeal to be perfected to the county court of Piatt county in the suit before Justice Funk, which said suit so appealed was later dismissed at the instance of defendants on June 7,1935; that said suits were maliciously filed pursuant to a conspiracy and agreement between the defendants for the purpose of annoying, harassing and embarrassing the plaintiff, whereby she was put to great expense in employing counsel, necessary preparation, and attendance in court in defending said suits and was hindered and prevented from following her ordinary affairs of business during said time and by reason thereof suffered permanent impairment of health and sustained damages therein, which she seeks to recover in this suit.

Each of the five counts of the amended complaint undertakes to set up a separate cause of action. None of them alleges the arrest of the plaintiff or any seizure of her property. The first, second and fourth counts undertake to state a cause of action for malicious prosecution; the third count for malicious abuse of legal process. We are of the opinion that the trial court properly held that none of the four counts in question stated a good cause of action.

It is a well settled rule of law of this State that an action for malicious prosecution of a civil suit without probable cause will not lie where the process in the suit so prosecuted is by summons only and is not accompanied by the arrest of the person or seizure of the property or other special injuries not necessarily resulting in all suits prosecuted to recover for like causes of action. Smith v. Michigan Buggy Co., 171 Ill. 619; Bonney v. Kina, 201 Ill. 47; Schwarts v. Schwarts, 285 Ill. App. 560.

Our courts have repeatedly held that an action for malicious prosecution is not favored in law, and should be limited, as courts of law are open to all citizens, except as to the penalty for lawful costs, and a litigant should be entitled to have his rights determined without the risk of being sued, and having to respond in damages for seeking1 to enforce his rights. Smith v. Michigan Buggy Co., supra.

The cases referred t'o in each of the above mentioned counts were prosecuted by summons only and were not accompanied by the arrest of the person or seizure of the property nor are such facts alleged in any such count as would except it from the rule laid down in the case of Smith v. Michigan Buggy Co., supra, and other cases therewith cited.

In Shedd v. Patterson, 302 Ill. 355, the declaration alleged and the proof showed that the defendant had filed five suits in equity and four actions at law, seeking relief in equity or damages in the actions at law, all relating to the same subject matter. In every case the decisions in the trial court, Appellate Court, Supreme Court, and in one case, the United States Supreme Court, were against every claim made by the defendant. The holding of the court on the facts in that case and the controlling facts alleged in separate counts in this case are clearly distinguishable.

The present case does not fall within the rule laid down in the case of Shedd v. Patterson, supra. It is sought here to state a cause of action for the prosecution or defense of four civil suits involving separate matters, and therefore the rule applied in the case of Smith v. Michigan Buggy Co., supra, should be applied here.

The action for malicious abuse of process lies only for the improper use of process after it has been issued and not for maliciously, causing the process to be issued. In the case of Bonney v. King, 201 111. 47, at page 50, the court uses the following language: “The declaration here under consideration does not aver that the process of the courts, in any of the actions against appellant, has been used for a purpose such process was not intended by law to effect. Two elements are necessary to an action for the malicious abuse of legal process: First, the existence of an ulterior purpose; and second, an act in the use of the process not proper in the regular prosecution of the proceeding. . . . The declaration does not aver either that the plaintiff was arrested or his property seized. The mere institution of civil suits does not constitute a malicious abuse of process.”

The trial court did not err in sustaining the motion to dismiss as to counts one, two, three and four of the complaint.

It remains for this court to pass upon the sufficiency of the fifth count, and in so doing it becomes necessary to decide whether or not the filing of an unauthorized suit, in another’s name, is actionable. That question has never been directly passed upon by the courts of Illinois.

The cause of action alleged in count five is distinguishable from malicious prosecution or the malicious abuse of civil process. In an action on the case for damages for prosecuting a suit against the plaintiff without authority, in the name of a third person, the gist of the action is not a want of probable cause, for there may be a good cause of action, but is based upon the improper liberty of using the name of another person in prosecuting a suit by which the defendant in the action is injured, nor is proof of malice essential to maintain the cause of action. So in the case of an unauthorized appearance and confession of judgment by an attorney, while the judgment may be regular, and the appearance without warrant a good appearance as to the court, the defendant has his remedy against the attorney. Vol. 2 R. C. L. 1014, par. 96.

It has also been held in other jurisdictions that it is an actionable wrong to bring suit in another’s name without authority, Bond v. Chapin, 8 Metcalf (Mass.) 31; 38 Corpus Juris, 385 (note 52); and if the defendant in such action suffers injury by reason of the prosecution of the unauthorized suit against him, he may maintain an action for the actual damages sustained by him in the loss of time, and for money paid to procure the discontinuance of the suit. If such suit is prosecuted wdth malicious motives, the defendant may also recover for “injury to his feeling's and reputation.” Bond v. Chapin, supra. In any event, the damages recoverable can never be speculative nor conjectural.

The action of the trial court in sustaining a motion to dismiss counts one, two, three and four is affirmed.

The judgment of the trial court in sustaining the motion to dismiss and in dismissing the suit as to count five of the complaint is reversed, and as to such count the.cause is remanded.

Reversed in part and remanded.


author: Per curiam.

text:
    Louis E. Amberg and George H. Best, Trustees Under the Last Will and Testament of Phoebe B. Buehler, Deceased, Appellants, v. Walter R. Meeker et al., Appellees.
    Gen. No. 9,033.
    Opinion filed April 16, 1937.

      L. E. Sutherland, of Peoria, and Homer H. Williams, of Carthage, for appellants.
    O ’Harra, 0 ’Harra & Roeth, of Carthage, for certain appellee.
   Per curiam.

Appellants brought a suit in equity to foreclose a mortgage. After issue was joined the cause was referred to the master in chancery to take evidence and report the same with his conclusions to the court. The evidence was taken and the master made his report, which was filed. The court rendered a final decree on March 11, 1936, in favor of appellees. This appeal grows out of the events following the entry of the decree on March 11, 1936.

After the entry of that final decree, appellants served appellees with a notice of appeal and filed the same on March 31, 1936. On the same date attorneys for appellants and appellees entered into a stipulation to incorporate the original report of the master with all evidence and exhibits thereto attached in the record on appeal. On April 9,1936, appellants filed a praecipe for record with the clerk of the circuit court of Hancock county, Illinois, which praecipe, among other things, contained the following:

3. Original report of master in chancery.

16. Original schedule of evidence filed with master’s report, together with all exhibits attached thereto.

On May 13, 1936, appellees moved the trial court to dismiss the appeal on the grounds that appellants had failed to file the transcript of the record of the circuit court on appeal in this court within 30 days of the filing of the notice of appeal, as provided for by Rule 1 of this court. On the same date, after a hearing on said motion, the court entered an order dismissing the appeal. It is this order that is questioned in this appeal. Thereafter, on June 6, 1936, appellants filed a motion to set aside the order. dismissing the appeal on the ground that the report of proceedings at the trial, duly certified by the trial judge, was filed in the circuit court of Hancock county on May 28, 1936, being within 60 days of the filing of the notice of appeal, and on the further ground that appellants had 30 days after the report of proceedings had been filed within which to file the record in this court. On July 7, 1936, the circuit court entered an order denying appellant’s motion, which had the effect of allowing the order of May 13, 1936, dismissing the appeal, to stand. The only error relied upon for reversal is that the circuit court of Hancock county erred in dismissing appellant’s appeal.

Appellees contend that appellants are in error when they state that the only question involved in this appeal is whether a report of the proceedings at the trial was specified in the praecipe and, if so, whether such report was filed within sixty days after notice of appeal.

Appellees insist that there is involved not only the question of the construction of the praecipe but a determination of the question as to whether in a chancery case the report of the master in chancery in a case referred to' him and filed in the case, a report of the proceedings is necessary or proper to incorporate that report and evidence in the record on appeal.

It is also contended by appellees that the master’s report of evidence and findings when filed in the ease, being a part of the record, the praecipe filed did not specify any of the proceedings at the trial and consequently the record on appeal should have been transmitted to the reviewing court not more than 30 days after notice of appeal had been filed and this not having been done, the circuit court was authorized to dismiss the appeal.

Appellees are upheld in their contention by the case of Strickland v. Washington Bldg. Corp., 287 Ill. App. 340, 4 N. E. (2d) 973; and in the West Side Trust & Savings Bank v. Damond, 280 Ill. App. 343, in which cases it is held that an appellant cannot extend the period allowed under the rules of the Supreme Court, for filing his record in the reviewing* court, by a specification in his praecipe for a report of proceedings where the record in the case shows that no such report is necessary or proper. Appellees are right in their contention that the report of the master in chancery, including* the evidence and exhibits, when passed upon by the court and filed, is a part of the record in the case.

We are of the opinion that the question presented by this appeal is this: When there is a hearing before the master in chancery and the original master’s report is to be incorporated in the record on appeal by order of the court, or by stipulation of the parties, must there be a report of proceedings at the trial!

Rule 36, par. 1 (b) of the Rules of Practice and Procedure of the Supreme Court provides:

“(b) All parts of the record, so designated, shall be incorporated in the record on appeal by copies certified by the Clerk; Provided, however, that the original copy of the report of proceedings at the trial as certified by the trial Judge, whether in the form of a complete stenographer’s report or a condensed statement, or the original of the Master’s report of evidence, may be incorporated in the record on appeal by order of the Court or by stipulation of the parties.”

In other words, the rule provides that only the original copy of the proceedings at- the trial, whether in the form of a complete stenographer’s report or a condensed statement or the original of the master’s report of evidence, may be incorporated in the record on appeal by order of the court or by stipulation of the parties when certified by the trial judge.

The report of the master when filed, being a part of the record in the case, we are of the opinion that when by order of the court or by stipulation of the parties the original master’s report is to be incorporated in the record on appeal, it is unnecessary to have a report of proceedings at the trial in order that such original master’s report may be certified by the trial judge.) To hold otherwise would be to require the court to certify into the record on appeal that which is already a part of the record in the case.

This is the interpretation placed upon the rule by McCaskill in his 1936 Edition of the Illinois Civil Practice Act Annotated, page 259.

Appellants by directing the clerk by their praecipe to include in the transcript of record the original report of the master in chancery and the original schedule of evidence, filed with the master’s report, together with all exhibits attached thereto, did not specify any of the proceedings at the trial and for that reason should have transmitted their record on appeal to the reviewing court within 30 days after the notice of appeal had been filed.

For the reasons indicated, we are of the opinion that the judgment of the circuit court, dismissing the appeal of appellant, should be affirmed.

Affirmed.


author: Mr. Presiding Justice Matohett

text:
    National Bureau of Property Administration, Inc., Appellee, v. Tax Service Association of Illinois, Appellant.
    Gen. No. 39,507.
    Opinion filed April 30, 1937.
    Harold R. Schradzki, of Chicago, for appellant.
    Blanksten & Lansing, of Chicago, for appellee.
   Mr. Presiding Justice Matohett

delivered the opinion of the court.

This is an appeal by the defendant, Tax Service Association, from an order entered February 26, 1937, appointing a receiver of the defendant corporation upon motion of plaintiff supported by its verified bill of complaint filed February 8, 1937. The bill alleged that plaintiff is a corporation organized under the laws of the State of Delaware but licensed to do business in Illinois; that defendant is a corporation organized under the laws of Illinois, but not for profit, for the purpose of furnishing technical service pertinent to individual cases or instances of taxes, levies and collections of taxes; that its members consist of reputable citizens or taxpayers interested in obtaining just tax levies; that it operates on the basis, of soliciting individual taxpayers to become members and these enter into a contract with the defendant association whereby, in consideration of a membership fee paid, services are rendered for and on behalf of the member; that many members of the defendant association have retained attorneys or signified intentions so to do for the purpose of rendering the necessary legal service in obtaining their tax levies and collections, and have delivered certain sums of money to defendant as their agent and bailee with directions to pay said sums of money to such attorneys, as directed by the members, as retainer fees for legal services rendered or to be rendered by the attorneys so selected. The bill in substance charges that on June 1, 1935, plaintiff and defendant entered into a written agreement whereby it was agreed that plaintiff would for a period expiring May 31, 1940, render to each member of defendant association technical service such as appraisement and other clerical work, in consideration of which plaintiff was to receive from defendant 42 per cent of all fees or compensation collected by defendant from its members, to be paid within 10 days after receipt thereof by defendant; that plaintiff rendered services as agreed, and that there is now due and owing to the plaintiff from defendant for such services in excess of $5,000. The bill also averred by way of epithet and conclusion that defendant is completely usurping and violating the original purpose for which it was organized; that it, its officers and directors are exploiting all members and prospective members, are conducting the association upon a basis of personal aggrandizement and selfish gain, and “by artifices and conspiracies are debauching the corporate purpose so that the defendant has now degenerated into a private enterprise for the sole benefit of its directors.” The bill goes on to say that plaintiff had relied upon the good faith of defendant; that all books of accounts and records with reference to collections are in its exclusive possession; that it was the duty of defendant to account accurately as plaintiff’s agent, and to pay over the agreed percentage of all membership fees or compensation collected for services; but that defendant and its officers and directors “conspired by devious artifices and schemes to misappropriate the fees and compensation and to irreparably injure the rights and interests and ultimately destroy the benefits of the members of the defendant association and to deprive the plaintiff of its just share of the membership fees”; that to that end it has conspired and its officers and directors have failed to keep true and accurate books of account; have appropriated fees received from defendant members to their own selfish purposes; have failed to deposit such fees and compensation in the proper depositories; have appropriated to themselves large sums of money under the purported and unauthorized guise of salaries, bonuses, commissions, etc.; that the officers and directors have demonstrated their unfitness for their respective offices, have neglected the affairs of the association, being derelict in their duties, and have permitted the association to become hopelessly insolvent ; that defendant, its officers and directors have received large sums of money which they ought to pay over for and in behalf of the members to attorneys employed by the members for legal services, but have in violation of their duties appropriated these moneys to themselves, and now withhold from such attorneys an amount exceeding $8,000; that the association is in arrears in rent in excess of $1,200, owes $8,000 for legal services, $5,000 to plaintiff, and is indebted to other creditors in a sum exceeding $6,000; that defendant’s assets do not exceed $10,000; that defendant has outstanding and unpaid accounts receivable approximating $16,000; that collections on these accounts average between $3,000 and $4,000 a week; that collections therefrom are received by the defendant association, its officers and directors; that said officers and directors plan to appropriate as much of these receipts as possible within the shortest period of time, and are making special efforts to speed up collection with the special intent of depriving the plaintiff of its just share; that plaintiff served notice upon defendant association of the termination of the agreement of June 1, 1935, and demanded a full accounting; that on January 20, 1937, the defendant association, admitting its indebtedness to plaintiff, paid plaintiff $1,000 to be applied on account and agreed to furnish plaintiff with a complete accounting, but in violation thereof has concealed and altered its records, and since January 20, 1937, has been guilty of additional fraudulent conduct and has collected accounts receivable in which plaintiff has an interest, and in spite of demands has failed to pay over to plaintiff its share of the money so collected, and threatens that it will proceed to collect all outstanding accounts without accounting to plaintiff ; that the officers of defendant association are insolvent, and a receiver should be appointed to collect all of the accounts, etc. The bill prayed that defendant association and its officers and directors should be decreed to pay to the plaintiff amounts found to be due; that the writ of injunction might issue restraining defendants and each of them from selling, assigning, etc.; that a receiver might be appointed according to the course of practice and with the usual powers of receivers in like cases to take immediate charge and possession of all moneys and choses in action in the possession or under the control of defendant association, or any of its officers and directors, or which might be on deposit or placed for safekeeping in any vault, receptacle, bank, trust company or any other depository, and all outstanding accounts receivable and debts due and owing to defendant, and of all other assets of every kind, nature and description, and to proceed forthwith to collect and liquidate the said accounts receivable, debts and other assets of defendant association, for the benefit of all the parties herein concerned, and under the direction of the court.

The bill makes defendants thereto Roy G. Harris, president of the association, George P. Clayson, executive vice president, Mildred P. Voigt, treasurer, Ralph A. Simmons, secretary, and Clarence Meyer, assistant secretary, and prays for general relief. The record does not show that any summons was issued or served upon any of the defendants, but on February 25th plaintiff gave notice that on the following day it would apply for an order appointing a receiver, and upon that day the court entered an order finding that plaintiff had some right, title or interest in and to the proceeds of the outstanding accounts receivable and other assets; that plaintiff had stated on oath that defendant was insolvent and dissipating its assets; that plaintiff was entitled to an accounting; that it would be to the best interests of all parties that a receiver be forthwith appointed with the usual and customary powers of receivers, for the purpose of preserving the assets until final adjudication of the subject' matter of the suit. It was therefore decreed:

“That Sylvester J. O’Donoghue be appointed Receiver of all the assets of Tax Service Association of Illinois, a corporation, defendant, with the usual and customary powers of receivers, and specifically with the power and authority to immediately take over and proceed to collect and receipt for any and all accounts receivable, debts or obligations outstanding, and due the said defendant, and to operate and manage the business now conducted by the said defendant, Tax Service Association of Illinois, at 228 North La Salle street, Chicago, Illinois, and any other auxiliary, subsidiary or additional place or places of business or businesses of the said defendant, Tax Service Association of Illinois, to employ all necessary help, to make all necessary expenditures in the operation of said business, to employ counsel, and to take charge of any and all assets of the said defendant, including cash on deposit in any depository or receptacle, equipment, fixtures, and property of the defendant, both real and personal of every kind, nature or description, and generally to have any and all other powers of receivers in like cases, and subject to the further order of this Court. ’ ’

The order directed the receiver to give bond in the sum of $3,000, and that plaintiff file its bond in the penal sum of $500, with surety to be approved by the court within five days. March 3rd defendant association entered a special appearance for the purpose of objecting to the jurisdiction of the court and moving that the orders theretofore entered should be vacated. With other reasons the motion averred that the court had no jurisdiction to enter the order appointing the receiver; that the court had no general equity powers for such appointment and can only appoint by express statutory authority, and that the statute in such case made and provided had not been complied with. There were no facts stated in the bill of complaint sufficient to confer jurisdiction on the court to make the appointment of the receiver, and that such order was wholly void, illegal and of no force and effect. The motion was denied, and the defendant, Tax Service Association, has perfected this appeal.

It is well settled by a long line of decisions in this State that the courts of chancery have no general power to appoint receivers of corporations and can do so only when expressly authorized by statute, except at the instance of the attorney general. People v. Weigley, 155 Ill. 491; Blanchard Bro. & Lane v. Gay Co., 289 Ill. 413; Steenrod v. Gross Co., 334 Ill. 362; Nelson v. Toluca State Bank, 334 Ill. 83; People ex rel. Palmer v. Peoria Life Ins. Co., 357 Ill0. 486. The cases are reviewed in People v. Shurtleff, 353 Ill. 248, where the court said:

Courts of chancery have no general power to appoint receivers for corporations and can appoint them only when expressly authorized by statute. (Coquard v. National Linseed Oil Co., 171 Ill. 480; Wheeler v. Pullman Iron and Steel Co., 143 id. 197; Chicago Steel Works v. Illinois Steel Co., 153 id. 9; People v. Weigley, 155 id. 491.) ... It was held in Blanchard Bro. & Lane v. Gay Co., supra, that appointing a receiver to take possession of the assets of a corporation and distribute them is tantamount to dissolving the corporation by a decree in equity, and that when the property of a corporation is all sold and distributed and its officers are powerless to obtain further means to carry on its business, it is powerless to exercise its corporate franchise and is then for all practical purposes dissolved.”

These decisions involve cases where receivers were asked for corporations organized for profit, but the reasoning of the opinions requires the same rule to be applied to a corporation organized not for profit, and it has been so held in People ex rel. Seemann v. Greer College, 302 Ill. 538.

The Business Corporation Act of July 13, 1933, provides (see Ill. State Bar Stats. 1935, ch. 32, If 86; Jones Ill. Stats. Ann. 32.088) the circumstances under which courts of equity may have full power to liquidate the assets and business of a corporation. Individuals who may maintain a bill for such purpose are divided into two classes. First, those who are shareholders in the corporation. Secondly, creditors of the corporation whose claims have either been reduced to judgment and an execution thereon returned unsatisfied, or whose claim is admitted by the corporation, and in either case it must be made to appear that the corporation is unable to pay its debts and obligations in the regular course of business as they mature. There is no provision in the act which has been called to our attention which would authorize under any circumstances the appointment of a receiver for a corporation organized not for profit. Without such statutory authority we hold a court of equity is without jurisdiction to make such an appointment. We so hold notwithstanding the facts appearing in this record indicate that the defendant association might be subject to a proceeding by way of information in the nature of quo warranto, as was held in the recent case of People v. Universal Service Ass’n, 365 Ill. 542. In that case the defendant was organized as a nonprofit corporation. Speaking of the plan on which the business of the defendant was conducted, the Supreme Court said:

“The scheme, when reduced to its essentials, is a business arrangement designed to produce a profit. There is no material difference between respondent and a corporation organized under the Business Corporation act, with a board of directors, officers, stockholders and provisions for stockholders meetings and control over the management of the corporation. To permit respondent to thus evade the strict supervision imposed by the Business Corporation act would be sacrificing substance to form.”

This proceeding, however, is not by way of quo warranto. For the reasons stated, the court was without jurisdiction to enter the order of February 26th appointing a receiver for the defendant association, and the order is therefore reversed.

Reversed.

O’Connor and McStjrely, JJ., concur.


author: Mr. Presiding Justice John J. Sullivan

text:
    Minnie King, Appellant, v. Theodore G. King, Appellee.
    Gen. No. 39,071.
    Opinion filed May 4, 1937.

      William C. Scherwat and George R. Katzmann, both of Chicago, for appellant.
    Robert E. Cantwell, Jr., of Chicago, for appellee; Martin W. G-rosse, of Chicago, of counsel.
   Mr. Presiding Justice John J. Sullivan

delivered the opinion of the court.

A consent decree of divorce, including property settlement, which provided inter alia that defendant, Theodore C. King, pay plaintiff, Minnie King, $10 weekly for two years, commencing January 27, 1936, and $150 attorney’s fees within 75 days, was entered January 3, 1936. February 21, 1936, upon plaintiff’s petition and notice to defendant’s counsel, a rule was entered against defendant returnable March 3, 1936, to show cause why he should not be held in contempt for failure to pay $70 past due under the terms of the decree. The rule was continued until March 6, 1936, when the petition for the rule was denied without any disposition as to the rule itself. Defendant persisted in his refusal to make the payments provided and stipulated in the decree until the arrearages amounted to $190 on April 2, 1936, when, after notice to defendant’s counsel, plaintiff filed a petition to vacate the order of March 6, 1936, and for a renewed rule upon defendant to show cause why he should not be held in contempt for such wilful refusal. Defendant was ordered to answer this petition within 20 days and the hearing was set for April 24, 1936. Defendant filed no answer and, after overruling plaintiff’s motion that he be held in default for want of an answer, the court heard the sworn testimony of the parties.

Defendant admitted that $190 was due under the decree and that he was able to pay but asserted that he should not be compelled to make payment until certain alleged papers and books belonging to him and necessary in the conduct of his business as an accountant, which he claimed were taken from his trunk and retained by plaintiff, were turned over to him by her. Plaintiff testified that she did not take and did not retain any of defendant’s papers or books.

The order appealed from of May 1, 1936 (nunc pro tunc as of April 24, 1936), after finding that “the plaintiff is wilfully withholding the said papers from defendant,” directed “that the defendant deposit . . . $190 with the Clerk of the Court to be held there subject to this court’s orders with the further order that the Clerk does not pay the said sum to plaintiff until she delivers to the defendant the papers and documents contained in said trunk prior to the time said trunk was broken open by the complainant herein.” The order then vacated the rule of April 2, 1936, upon defendant to answer plaintiff’s petition of that date, overruled plaintiff’s motion for defendant’s default for his failure to file a written answer to such petition, denied plaintiff’s petition that the trial court “review and reverse” its order of March 6, 1936, and overruled plaintiff’s petition of April 2, 1936, for a rule upon defendant to show cause why he should not be held in contempt for his refusal to comply with the terms of the decree.

The decree does not mention defendant’s papers or books or any promise by plaintiff to turn them over to him and the real question presented for our determination is whether matters collateral to a consent decree of divorce and having no bearing on defendant’s ability or inability to make the payments to his divorced wife provided in such decree, which are raised as an excuse or defense by defendant in a proceeding to enforce such payments, may properly be considered on the hearing of a petition for or the return of a rule to show cause why defendant should not be held in contempt for failure to make payments he agreed to make and which were incorporated in the decree.

That portion of the decree providing for a property settlement was by consent and must be regarded as a contract between the parties. (Adams v. Storey, 135 Ill. 448; Smith v. Smith, 334 Ill. 370.) While husband and wife may not enter into an agreement for divorce, yet the amount of alimony the husband shall pay to the wife or the amount he shall pay in lieu thereof, the terms of payment and the length of time payment is to be made may be arranged between them by consent. When they agree upon alimony or payments releasing alimony, the court will embody the agreement in its decree and it will thereafter conclude the parties. (Storey v. Storey, 125 Ill. 608.) The consent decree did not affect the question of divorce, which is beyond the power of the parties to adjust by agreement or collusion. As a contract it is binding on the parties unless induced by fraud. If so, it must, like any other contract, be attacked by some method recognized by courts of equity for relief from fraud. (Smith v. Smith, supra. )

The only excuse offered by defendant upon the hearing of plaintiff’s petition for a rule, and the rule itself theretofore issued to compel payments he had agreed to make under the decree, was that plaintiff failed and refused to keep her promise to turn over to him the aforementioned papers and books, which he claimed had been in his trunk. If plaintiff did promise to return to defendant his trunk and the papers, documents and books claimed to have been contained therein, such promise constituted no part of the consideration for the payments he agreed to make to his divorced wife as part of the property settlement of the parties and was entirely extraneous to the matters embodied in the consent decree.

It would be dangerous and unwise to allow a decree to be in effect nullified or modified by the character of defense offered here, and such procedure could result only in interminably prolonging the litigation. Defendant, if aggrieved by plaintiff’s alleged retention of papers and books belonging to him and necessary in the conduct of his business, had and has the undoubted right to seek relief in an apt proceeding, but the interposition of such collateral matter as a defense to a proceeding to compel the payment of money due to his former wife under the decree cannot be permitted to impair the obligation of the contract of the parties or detract from the finality of the decree as to the matters determined therein. The only defense open to defendant under the law of this State for his noncompliance was that he could not. He demonstrated his ability to pay the amount due by depositing it with the clerk of the court and he should be compelled to comply with the terms of the decree.

For the reasons stated herein the orders of the superior court of March 6,1936, and May 1,1936 (nunc pro tuno as of April 24, 1936), are reversed and the cause is remanded with directions to enter a rule upon defendant, returnable within a short day, upon plaintiff’s petition of April 2, 1936, to show cause why he should not be held in contempt of court for failure to pay plaintiff $190, the amount he was in arrears to her as of April 2,1936, under the terms of the decree of divorce granted plaintiff by the superior court January 23, 1936.

Reversed and remanded with directions.

Fbiend and Scanlan, JJ., concur.


text:
    Central Illinois Company, Appellant, v. W. E. Swanson, Appellee.
    Gen. No. 39,137.
    Opinion filed May 4, 1937.
    Rehearing denied May 18, 1937.
    Bell, Boyd & Marshall, of Chicago, for appellant; Earl K. Schiek, of Chicago, of counsel.
    Miller, Gorham, Wales & Adams, of Chicago, for appellee; Herbert C. De Young, of Chicago, of counsel.
   Mr. Presiding Justice John J. Sullivan

delivered the opinion of the court.

November 12, 1935, plaintiff, Central Hlinois Company, filed an amended statement of claim in scire facias to revive a judgment for $482.86 entered July 20, 1926, in favor of Greenebaum Sons Bank and Trust Company and against R M. Pederson, W. E. Swanson and Mutual Service Corporation. Said amended statement of claim alleged that the Central Illinois Company was the assignee of such judgment, admitted satisfaction of the judgment to the extent of $58.09, and as to the balance prayed for a revival of the judgment against the three judgment debtors. Scire facias writs were issued and returned served as to Pederson and Swanson and unserved as to the Mutual Service Corporation. Pederson was thereafter defaulted. After Swanson’s motion to dismiss was overruled he filed an answer denying that William L. 0 ’Connell as receiver for the Central Republic Trust Company was the owner or holder of the original judgment, that O’Connell as such receiver had the power, right or authority to make an assignment of the aforesaid judgment to the Central Illinois Company or to anyone else, and that the Central Illinois Company “is the owner and holder, or has any interest in, or any claim to, the aforesaid judgment.” Swanson demanded a jury trial, which was accorded him over the objection of plaintiff. The jury found the issues against plaintiff, and, after overruling the latter’s motion for a new trial and for judgment notwithstanding the verdict, the trial court entered judgment upon the verdict against plaintiff. This appeal followed.

It is first necessary to trace the history of the judgment sought to be revived. The judgment for $482.86 was originally secured July 20, 1926, by G-reenebaum Sons Bank and Trust Company against R. M. Pederson and W. E. Swanson and the Mutual Service Corporation. April 30, 1927, Greenebaum Sons Bank and Trust Company changed its name to the Bank of America. January 14, 1929, the Bank of America consolidated with the Central Trust Company of Illinois (hereinafter for convenience referred to as the Central Trust Company) under the name of the latter. July 25,1931, the Central Trust Company consolidated with the Chicago Trust Company, forming the Central Republic Bank & Trust Company, which changed its name to the Central Republic Trust Company November 26, 1932. William L. O’Connell was appointed receiver for the Central Republic Trust Company by the auditor of public accounts of the State of Illinois November 21, 1934.

It is admitted that as the result of the consolidation of the Bank of America and the Central Trust Company title to the judgment, originally in Greenebaum Sons Bank and Trust Company, passed to the Central Trust Company, and it must be conceded that, if the ownership of and title to said judgment were not in some manner recognized by law alienated by the Central Trust Company, such ownership and title, upon the consolidation of the Central Trust Company and the Chicago Trust Company to form the Central Republic Bank and Trust Company, became vested in the latter, which thereafter changed its name to the Central Republic Trust Company. It necessarily follows that if the Central Republic Trust Company owned the judgment when William L. O’Connell was appointed receiver for that bank, the title to same became vested in him as such receiver.

The only apparent difficulty in this case results from the execution of a written instrument by the Central. Trust Company July 25, 1931, the date of its consolidation with the Chicago Trust Company, which instrument assigned or purported to assign “certain of its assets” to plaintiff. Swanson claims on the one hand that such instrument was not legally effective to assign to plaintiff the original judgment against him and the other judgment debtors, and on the other hand that this instrument and the written articles of consolidation had the legal effect of severing the chain of title to said judgment so that the ownership of and the title to same did not pass from the Central Trust Company to its successor consolidated bank and ultimately to O’Connell as receiver thereof.

It is elementary that when two corporations consolidate the property of both of them vests in the consolidated corporation. In recognition of this rule the following paragraph is found in the Articles of Consolidation of the Central Trust Company and the Chicago Trust Company:

“ (K) The consolidated corporation shall possess and be vested with all of the rights, privileges, powers, franchises, licenses, estates, effects, things in action, moneys, debts due upon whatever account, trusts and property, real, personal and mixed, of every kind and character of said Chicago Trust Company and said Central Trust Company of Illinois, and shall be subject to all of their respective debts, liabilities and duties. ’ ’

With respect to certain assets of both of the consolidating banks said Articles of Consolidation provide:

“ (L) As a part of the terms of consolidation,
“(1) The National Republic Company, a corporation of the State of Illinois, which acquired from Chicago Trust Company certain of its assets not going into the Consolidated Corporation, has entered into an agreement embodying certain guaranties made by the National Republic Company for the benefit of the Consolidated Corporation in respect of certain assets going into the Consolidated Corporation and against certain undisclosed and . . . other liabilities to which under some circumstances the Consolidated Corporation may be subject, and
(2) Central Illinois Company, a corporation of the State of Illinois, which acquired from Central Trust Company of Illinois certain of its assets not going into the Consolidated Corporation, has entered into an agreement embodying certain guaranties made by Central Illinois Company for the benefit of the Consolidated Corporation in respect of certain assets going into the Consolidated Corporation and against certain undisclosed and . . . other liabilities to which under some circumstances the Consolidated Corporation may be subject.”

The “assets” of the Central Trust Company above referred to as having been acquired by the Central Illinois Company were transferred to the latter by a written instrument captioned “Central Trust Company op Illinois to Central-Illinois Company — Assignment and Bill op Sale — July 25, 1931,” which provided in part as follows:

“Know All Men By These Presents: that Central Trust Company of Illinois, a Banldng corporation of the State of Illinois, in consideration of the sum of One Dollar . . . and other good and valuable considerations in hand paid, the receipt whereof is hereby acknowledged, and as a part of plan of reorganization, has granted, bargained, sold and delivered, assigned, transferred and set over, and does hereby grant, bargain, sell and deliver, assign, transfer and set over unto Central-Illinois Company, a corporation of the State of Illinois, all of the following described notes, securities, and . . . other property, to wit :

“Mutual Service Corp. $316.91. . . . “ [This item was included in an attached list of numerous assigned assets.]

“And said Central Trust Company of Illinois does hereby covenant and agree to and with said Central-Illinois Company, its successors and assigns, that it, said Central Trust Company of Illinois, is the lawful owner of said notes, securities and . . . other property; that the same are free from liens and encumbrances ; that it has good right, full power and lawful authority to grant, bargain and sell the same in form as aforesaid; and that it will, and its successors and assigns shall, warrant and defend the same unto said Central-Illinois Company, its successors and assigns, against all lawful claims and demands whatsoever.

“Said Central Trust Company of Illinois further covenants and agrees that it will from time to time, upon demand of Central-Illinois Company, its successors and assigns, execute, acknowledge and deliver all such instruments of conveyance or further assurance as may be advised or reasonably required for the purpose of more fully vesting in arid confirming unto said Central-Illinois Company, its successors or assigns, the notes, securities and . . . other property covered hereby or intended so to be.”

The note for $375 signed by the Mutual Service Corporation, Pederson and Swanson, upon which the original judgment was confessed was also attached to said assignment and bill of sale and bore on its face the following stamp:

“Judgment entered For $482.86 July 20,1926
The Municipal Court oe Chicago,
James A. Kearns,
Clerk.”

[It should be noted that $316.91, the amount of the claim against defendants as indicated in the schedule of assets assigned to plaintiffs by the Central Trust Company, represents the difference between $375, the principal amount of the note upon which the original judgment- in question was confessed, and $58.09, which was paid on same and credit given therefor.]

April 17, 1935, just prior to the institution of the instant action, plaintiff procured and filed in the municipal court an assignment to it of said original judgment by 0 ’Connell as receiver of the Central Republic Trust Company. Thereafter plaintiff procured from the Central Republic Trust Company a written assignment of whatever right or interest it might still have in said judgment and in the same instrument a second assignment from O’Connell as receiver of said Central Republic Trust Company, which was approved by the court in which the receivership proceeding was pending.

The only questions presented by this appeal are whether plaintiff is the assignee of the original judgment entered in favor of Grreenebaum Sons Bank & Trust Company July 29, 1926, and whether as such assignee it is lawfully entitled to revive such judgment. For a proper determination of these questions it is only necessary to consider the legal effect of the various assignments and other documents in writing offered by plaintiff and received in evidence. It appears conclusively from an inspection of the assignment and bill of sale of July 25, 1931, by the Central Trust Company to the Central-Illinois Company and of the portions of the Articles of Consolidation heretofore set forth that the only assets of the Central Trust Company that did not pass to and become vested in its successor consolidated bank, the Central Republic Bank & Trust Company, were those transferred to plaintiff under the aforementioned assignment of July 25, 1931. It cannot be doubted that said instrument was intended by the parties to transfer and assign to plaintiff whatever claim the Central Trust Company had against Swanson and the other makers of the note upon which the original judgment was confessed. The claim upon the note was included in the list of assets attached to the assignment and the note itself bearing the judgment stamp upon it was properly indorsed and likewise attached to said assignment. We agree, however, with Swanson’s contention that the claim on the note having been reduced to judgment several years prior to the execution and delivery of this assignment, such claim as well as the note itself had been merged in the judgment, that the note no longer evidenced the indebtedness, and that without a specific assignment of the judgment itself the instrument of July 25, 1931, was ineffective as a means of transferring the legal title to the original judgment to the Central Illinois Company.

It logically follows that, since the assignment of July 25, 1931, was not legally effective to transfer and vest the legal title to the judgment in plaintiff, it remained vested in the Central Trust Company. Plaintiff did become the equitable owner of the judgment and became entitled to demand that the Central Trust Company or its successor transfer and assign the legal title to the judgment to it under the following provision of the assignment and bill of sale of July 25, 1931: “Said Central Trust Company of Illinois further covenants and agrees that it will from time to time, upon demand of Central-Illinois Company, its successors and assigns, execute, acknowledge and deliver all such instruments of conveyance or further assurance as "may be advised or reasonably required for the purpose of more fully vesting in and confirming unto said Central-Illinois Company, its successors or assigns, the notes, securities and . . . other property covered hereby or intended so to be.” Thus the legal title to the original judgment, which it was intended should pass to plaintiff but inadvertently did not because of the aforesaid defective assignment became vested as a result of the merger of the Central Trust Company and the Chicago Trust Company in the consolidated bank, the Central Republic Bank & Trust Company, which thereafter changed its name to the Central Republic Trust Company, and ultimately in William L. O’Connell when he became receiver for the latter. The receiver, recognizing plaintiff’s equitable ownership of the judgment and its right to the legal title thereto, when called upon to do so, assigned such title to the Central Illinois Company. To remove any possible doubt as to its title to the judgment plaintiff secured an assignment from the Central Republic Trust Company, the last bank in the chain of title, of any possible remaining right or interest it might have in such judgment as well as a second assignment from the receiver, which latter was authorized and confirmed by order of the court where the receivership proceeding was pending.

We fail to perceive any flaw in plaintiff’s title to the original judgment and its right to prevail in this proceeding to revive it has been clearly shown. This case did not present a single issue of fact. The only questions involved were as to the legal effect of the several written instruments in evidence and the trial court clearly erred in permitting the jury to attempt to decide what were purely questions of law. Defendant Swanson’s demand for a jury trial in this cause should have been refused. The judgment sought to be revived was for $482.86. This included interest, costs and attorney’s fees, as well as $375, the principal amount of the note upon which the judgment was confessed. Defendants are entitled to a credit of $58.09 on account of a satisfaction of the judgment to that extent. The balance due on the judgment is $424.77.

For the reasons stated herein the judgment of the municipal court is reversed and the cause is remanded with directions to enter an order reviving the original judgment to the extent of $424.77 as to R. M. Pederson and W.’E. Swanson.

Reversed and remanded with directions.

Friend and Soanlan, JJ., concur.


author: Mr. Justice Friend

text:
    Elizabeth Schaffner, Appellee, v. The Equitable Life Assurance Society of the United States, Appellant.
    Gen. No. 39,174.
    Opinion filed May 4, 1937.
    Mayer, Meyer, Austrian & Platt, of Chicago, for appellant; Frederic Burnham and Miles Gr. Seeley, both of Chicago, of counsel.
    Nathan Schwartz and Bernard Allen Fried, both of Chicago, for appellee.
   Mr. Justice Friend

delivered the opinion of the court.

Elizabeth Schaffner brought an action in assumpsit against Equitable Life Assurance Society of the United States to recover $1,000, as beneficiary under the double indemnity provisions of a life insurance policy issued by defendant on the life of Louis M. Schaffner. The cause was heard by the court without a jury, resulting in findings and judgment for plaintiff of $1,100. Defendant appealed.

Following Schaffner’s death defendant paid plaintiff $1,000, but refused to pay the additional $1,000 of insurance claimed under the following provisions of the policy:

“The increased amount of insurance, as stipulated on the face hereof, in case of accidental death shall be payable upon the receipt of due proof that the death of the insured occurred while this policy was in full force and effect and resulted solely from bodily injuries caused directly, exclusively and independently of all other causes by external, violent and purely accidental means, providing that death . . . shall not he the result of or he caused directly or indirectly hy . . . any violation of law hy the insured.” (Italics ours.)

Schaffner was shot and killed by a railroad police officer June 14, 1935, and died at the Bridewell hospital three days later. Upon trial of this cause plaintiff made a prima facie case by putting in evidence the policy and a statement of the coroner’s physician that he had performed a post mortem on the body of Louis M. Schaffner, which had been identified by Schaffner’s wife, and that in his opinion death resulted from a “bullet wound of the back with lacerations of the spinal cord. ’ ’

To show the circumstances leading up to Schaffner’s death, as a basis for the defense that his death occurred as the result of the violation of one or more laws, and that his beneficiary was therefore not entitled to the increased insurance under the double indemnity provisions of the policy, defendant first introduced a blueprint plan of the elevated railroad tracks and environs at the intersection of Morgan street and 15th place, in Chicago, and called one Thelander, division engineer of the C. & N. W. Railway to explain the plan. It shows that Morgan street runs in a northerly and southerly direction. The railroad tracks which intersect it are elevated some 18 feet above the ground, the northerly group of tracks being those of the C. & N. W. Bailway, while those of the south belong to the C. B. & Q. Bailroad. 15th place lies parallel and adjacent on the north to the C. & N. W. right of way. At the northeast corner of the intersection of Morgan street and the tracks is the Griswold & Walker warehouse, having an elevated platform adjacent to the tracks along the south side.

Following the Thelander testimony, defendant called Harry F. Brooks, a sergeant of police commissioned and under bond to the City of Chicago as a special policeman, but drawing his wages from the C. & N. W. Bailway. Brooks was employed to patrol the yards and protect the merchandise cars at 15th place and Morgan street during the night. He testified that June 14, 1935, at about 10:30 p. m., while standing at the “shanty” along the right of way, he saw two men on the C. B. & Q. tracks to the east and south of him. They walked north across those tracks and on to the C. & N. W. right of way. Brooks walked from the shanty east on the tracks to the Griswold & Walker warehouse where he found the men standing in the door nearest Morgan street. He approached them with his star in his hand and advised them that he was a police officer, and asked what they were doing. They said they were waiting for a train for Boston. The men were later known to Brooks as Joe Franks and Cecil Smith, “Franks” being Louis M. Schaffner, the deceased. Brooks drew his revolver and ordered the men down from the platform. He observed that they were well dressed, with white Panama hats and laundered shirts. Brooks asked them if they had any identification, and they had none. He thereupon placed them under arrest, and ordered them to the shanty, which was a small building on the south side along the tracks, containing two rooms divided by partition and door. The entrance to the shanty was through the east room. Upon proceeding through the door into the west room with the two men, Brooks called the police and requested a squad car, and then searched Smith and found no identification. He then took the hat from Frank’s head, and on the band found the inscription “Jack Bell, Plaza Hotel, Hollywood, California.” While holding the hat Brooks turned to a desk to copy the name and legend in the hat band, and as he did so Smith picked up a tacking machine and threw it at Brook’s head, at the same time crying out “Give it to the son-of-a-B, Joe.” As Brooks raised his left arm to guard his head the tacking machine hit him on the arm and glanced through the window out on to the tracks. At the same time Smith ran out the door. Brooks testified that Franks thereupon jumped from his chair, reached as if to draw a weapon from his right hip pocket, and lnnged toward Brooks. Believing that Franks had a gun, and fearing for his life, Brooks fired two shots in rapid succession. Franks fell to the floor, was later taken to the Bridewell hospital, and died two or three days later. The evidence further shows that no gun was found on deceased’s person, either before or after death.

Based upon the report of the coroner’s physician Dr. Harry E. Mock, a qualified physician and surgeon called on behalf of defendant, stated that the bullet which struck Schaffner (or Franks) entered the back just below the point of the left shoulder blade, about 8 inches below the coat collar and slightly more than three inches to the left of the spine. It there fractured the sixth rib, then pursued a course slightly downward and to the right, fracturing the laminae and spines of the seventh and eighth vertebrae at a depth of about 2Vs inches beneath the skin, damaging the right pleura, passing through and fracturing the eighth rib on the right side and lodging outside the eighth rib in a muscle about 5% inches to the right of the spine. One of the bullets fired by Brooks lodged in the sash of the window directly behind the chair from which Sehaffner had risen.

Thomas F. O’Brien and Frank Rowder, two Chicago policemen called on behalf of defendant, testified that about 3:15 a. m. June 15,1935, they found a closed car, with the doors locked, in front of 1622 South Halsted street, bearing Illinois license No. 518-286. Upon opening the car they found two jimmy bars, a flashlight, a bar of laundry soap, a chisel and a pair of leather gloves, and officer 0 ’Brien stated that such articles were the kind ordinarily used as burglary tools. Defendant also introduced in evidence a certified copy of an application for an automobile license, signed by Louis M. Sehaffner, showing that Illinois license No. 518-286 had been issued to him for the year 1935.

It is urged that Sehaffner came to his death “as the result of” and “directly or indirectly”, because of.one or more violations of law, including a conspiracy to commit robbery or burglary, trespass upon elevated railroad tracks contrary to law, assault, assault with a deadly weapon and aiding or attempting to aid another to escape from lawful arrest. To sustain the contention that Smith and Sehaffner had entered upon the railroad right of way in pursuance of the conspiracy to commit robbery or burglary, defendant’s counsel made the following offer of proof, which was objected to by plaintiff and sustained by the court:

That Captain Norton of the Chicago Police Department and two police officers had a conversation with Sehaffner on June 15, 1935, shortly before his death, wherein Sehaffner stated that he felt very weak and was sure he was going to die of the wounds inflicted; that Norton asked him how he came to be shot, and Sehaffner replied that in the early evening of June 14, 1935, he had encountered on Halsted street a man known to him as Cecil Smith, who told him that he was going “to look over a job.” Captain Norton asked Sehaffner if by that he meant that he was going to look over some premises for the purpose of burglarizing them, and Sehaffner said “yes.” Sehaffner said that he then accompanied Smith to the neighborhood of Morgan street and 15th place in Chicago, and on the way over Smith told him that arrangements had been made with the watchman in the Griswold & Walker warehouse at the corner of the Northwestern tracks and Morgan street to leave the door of the warehouse ajar when he went out for supper, about 11:00 o’clock that night, so that Smith and Sehaffner might enter; that Sehaffner said he accompanied Smith upon the elevated embankment and they crossed the tracks at or near Morgan street, went to the door of the Griswold & Walker warehouse and were standing there waiting for the watchman to go to supper when they were accosted by Brooks, placed under arrest and taken to the shanty nearby; that Sehaffner said to Captain Norton that if he had had a gun he never would have gone to the shanty with Brooks, but would have killed him at that time; that Sehaffner admitted ownership of the automobile bearing Illinois license No. 518-286, which was found near the scene of the shooting, admitted that the burglary tools found in the car belonged to him.

The foregoing proof was offered upon the theory that where the right is reserved to insured to make a change of beneficiary, and the latter has no vested interest in the insurance contract, any admissions against interest of insured are admissible in an action brought by the beneficiary. It is argued that, if admitted, this evidence would have tended to prove that Sehaffner was the owner of burglary tools found in his car, that he had committed other crimes in the chain of events which led to his death, and that he admitted conspiring with Smith to rob the Griswold & Walker warehouse on this particular occasion, and such conspiracy, coupled with the overt act of actually going upon the premises to be robbed, constituted a crime under sec. 46, par. 116 of the Criminal Code (ch. 38, Illinois State Bar Stats. 1935; Jones 111. Stats. Ann. 37.102). A discussion of the foregoing rule of evidence relating to admissions against interest is contained in 86 A. L. R. Annotated, 160 et seq., and the cases cited therein, both from Illinois and other States, sustain defendant’s contention that the offer of proof was erroneously rejected. In Wirthin v. Mutual Life Ins. Co., 56 F. (2d) 137, it was held that declarations of the insured under a policy providing for double indemnity in case of death by accident, that he had shot himself with suicidal intent, such declarations being corroborated by circumstances, were competent evidence against the beneficiary, where, by reason of reservation to the insured of the right to change the beneficiary, the latter had no vested title to the insurance money.

In Benefit Ass’n of Ry. Employees v. Armbruster, 221 Ala. 399,129 So. 78, a statement by an appendicitis patient that he was not hurt when the ambulance, in which he was being taken to the hospital for an operation, jerked violently, was admitted in evidence against the beneficiary, who did not have a vested interest in his insurance, to disprove an allegation that the jerk caused the rupture of the appendix and resulted in his death. In Brown v. Mystic Workers, 151 Ill. App. 517, it was held that the statements of one insured under a mutual benefit policy, to the effect that she had taken pills to cause an abortion, were admissible, death in fact resulting from an abortion, regardless of the question of res gestae, since, the beneficiary, having no vested interest, the declarations were against interest. Statements of the insured in a similar policy concerning her pregnancy and an abortion which resulted in her death were likewise admitted in evidence against the beneficiary in Lundholm v. Mystic Workers, 164 Ill. App. 472. In Gilchrist v. Mystic Workers, 188 Mich. 466, in a suit on a fraternal benefit life policy, the testimony of the nurse as to an admission by the insured that an abortion, which was a breach of the policy, was the cause of her last sickness, was held admissible, the court saying that the beneficiary could recover only according to the contract which the insured had made with the society, and that, if the insured admitted a breach of the policy which would void it, the beneficiary ought not to recover. In Treat v. Merchants’ Life Ass’n, 198 Ill. 431, suit was brought by the beneficiary of a life insurance policy and the issue was whether the insured had" committed suicide, which would have precluded recovery. It was held that the trial court erred in not permitting a witness to testify that, after signing the application for the policy, the insured had asked whether the company paid losses on suicides, thus possibly indicating that he had suicide in mind at the time.

Plaintiff’s counsel seek to justify the exclusion of this proffered testimony on the ground that Schaffner’s statements were not admissible, either as dying declarations or as part of the res gestae. They were not offered upon either of these theories, but solely as admissions against the interest of the insured.

It is argued by plaintiff’s counsel that Schaffner’s statements to Norton in the presence of other witnesses with reference to the contemplated robbery or burglary were purely hearsay, being based upon plans disclosed to him by Cecil Smith. However, we think these statements tended to prove admissions made by Schaffner that he had entered into a conspiracy with Smith to rob or burglarize the warehouse, and that he accompanied Smith over the railroad right of way in pursuance of that conspiracy. The statements tended to disclose his state of mind, and that he had agreed with Smith to engage in the unlawful enterprise and had actually embarked upon their joint unlawful mission. Having so conspired with Smith, Schaffner would be equally guilty with his fellow conspirator of any collateral crimes committed by the latter in assaulting Brooks and escaping from arrest. (People v. Payne, 359 Ill. 246.)

Defendant’s counsel earnestly argue that Schaffner violated the law in trespassing on the railroad right of way, that he committed an assault upon Brooks, and that he aided or attempted to aid in the escape of Smith from lawful arrest, and that any one or all of these violations constituted an unbroken chain of circumstances resulting in Schaffner’s death, so as to preclude recovery under the double indemnity provisions of the policy. Inasmuch as the cause will have to be retried, we refrain from unnecessary comment upon the evidence pertaining to the assault and Smith’s escape. Defendant’s ability to sustain by competent evidence the conspiracy to rob or burglarize may have a material bearing upon the interpretation to be placed upon the acts of Schaffner in connection with the other charges of law violation. For the reasons stated herein the judgment of the circuit court is reversed and the cause is remanded for a new trial.

Reversed and remanded.

John J. Sullivan, P. J., and Scanlan, J., concur.