text:
    Alice Bell, Appellee, v. Bankers Life & Casualty Company, Appellant.
    Gen. No. 43,478.

      Heard in the second division of this court for the first district at the October term, 1945.
    Opinion filed December 18, 1945.
    Released for publication January 2, 1946.
    McKinley & Price, of Chicago, for appellant; Paul E. Price and William McKinley, both of Chicago, of counsel.
    Braden, Hall, Barnes & Blakey, of Chicago, for appellee ; Zedrick T. Braden and Houston H. Hall, both of Chicago, of counsel.
   Mr. Justice Sullivan

delivered the opinion of the court.

Plaintiff, Alice Bell, was named beneficiary in a life insurance policy for $500 issued to her father, Frank Bell, by the defendant, Bankers Life & Casualty Company. After her father’s death Alice Bell brought this action to recover the face amount of such policy. The case was tried by the court without a jury. The issues were found in favor of plaintiff and judgment was entered against defendant for $500. Defendant appeals.

The only controverted issue in this case is raised by the affirmative defense alleged in defendant’s answer, which is in part as follows:

“Defendant admits that Alice Bell, plaintiff herein, was the beneficiary under said policy of insurance described in the Statement of Claim, and that proofs of loss have been filed and that a demand for payment of $500.00 was made, and admits that it refused to pay said amount, but denies that the said amount of $500.00 is due to the plaintiff, and on the contrary avers that said policy of insurance, among other things provided: ‘If the age of the insured be misstated, the amount payable hereunder shall be such as the premium paid would have purchased under this policy at the true age of the insured. ’

“That in his application for said policy of insurance, dated December 29, 1941, the said Frank Bell represented and stated himself to be fifty-five years of age, and gave, his birthday to be July 28,1886; that his age at his nearest birthday was not fifty-five years as set forth in his application, but ninety-three years; and pursuant to the provisions-of said age adjustment clause, above set forth, the amount payable under said policy of insurance would be such amount as the premium paid would have purchased if the true age of the insured had been given.

“That the amount of insurance the premium would have purchased at the true age of the insured, to-wit: ninety-three years, would have been $24.01, for which amount the defendant acknowledges liability, and tenders same in open court, and no more.”

There is no substantial dispute as to the facts. On December 29, 1941 Frank Bell’s written application for a policy of life insurance in the amount of $500 was presented to the defendant insurance company and he represented therein that he resided at 4939 South Parkway, Chicago, Illinois, and was born in Mississippi on July 28, 1886. If the insured was born on July 28,1886 he would have been fifty-five years of age at the time of his application. Pursuant to said application the policy of life insurance involved herein was issued to Frank Bell without medical examination and the proceeds thereof were made payable to his daughter, Alice Bell, as beneficiary. As heretofore shown, the policy contained the following provision: “If the age of the insured be misstated, the amount payable hereunder shall be such as the premium paid would have purchased under this policy at the true age of the insured.” The insured died April 26, 1944 and proof of his death was duly filed with the defendant but the latter declined to pay the beneficiary the face amount of the policy on the ground that Frank Bell was not born on July 28,1886, as stated in his application, but was born on May 25,1849.

In order to prove the correct age of Frank Bell when he made his application for the issuance of the $500 policy, defendant produced as a witness the medical record clerk of the Cook County Hospital who brought into court the records of Frank Bell, who was admitted to that hospital on April 24,1944. These records were kept in the usual course of business of the hospital and show that Frank Bell, residing at 4939 South Parkway and having a daughter, Alice Bell, was admitted to the hospital April 24,1944 and died therein April 26, 1944. His age is stated in such records to be ninety-seven years. A record of the Cook County Bureau of Public Welfare pertaining to Frank Bell was produced in response to a subpoena and introduced in evidence by • defendant. The cover sheet shows that the record so introduced relates to Frank Bell who resided at 4939 South Parkway and that he resided with his daughter, Alice Bell, at said address. This record also shows that on Septembér 16, 1936 Frank Bell made a sworn written application for old age assistance, in which he represented that he was born on May 25, 1849 and that Alice Bell was his daughter. The closing entry of this record recites that -Alice Bell, daughter of Frank Bell, 4939 South Parkway, informed the Bureau of Public Welfare of the death of her father on April 26, 1944, which is the date of death of the insured.

B. B. Nueske, an insurance actuary, testified that a man born May 25, 1849, who applied for a policy of insurance on December 29, 1941 and paid a monthly premium of $2.90 (being the amount of premium paid by Frank Bell), would purchase $27.97 worth of insurance. All of the foregoing evidence of defendant was introduced over plaintiff’s objection..

Plaintiff not only did not testify herself in rebuttal as to the correct age of her father when he applied for the issuance of the insurance policy in question but she made no attempt to refute defendant’s evidence as to her father’s correct age at that time.

While it is true that initially plaintiff made out a prima facie case for recovery, her prima facie case was completely overcome by the evidence introduced by defendant, if such evidence was admissible and competent. We think that the records of the Cook County Hospital and of the Cook County Bureau of Public Welfare were unquestionably competent as evidence tending to show the correct age of the insured at the time he applied for the $500 policy of life insurance under Rule 70 of the Municipal Court of Chicago, which is as follows:

“Any writing of record, whether in the form of an entry in a book or otherwise, made as a memorandum of record of any act, transaction, occurrence, or event, shall be admissible in evidence in proof of said act, transaction, occurrence or event, if the trial Judge shall find that it was made in the regular course of any business, and that it was the regular course of such business to make such memorandum or record at the time of such act, transaction, occurrence or event or within a reasonable time thereafter. Such finding may be based upon the testimony of any witness who is familiar with the regular course of the business at the time in question, without the necessity of producing the particular person who made the record or who furnished the information on which it was based. All other circumstances of the making of such writing or record, including lack of personal knowledge by the entrant or maker, may be shown to affect its weight, but they shall not affect its admissibility. The term business shall include business, profession, occupation and calling of every kind.”

In Section 1462 of Wigmore’s Code of Evidence, 3rd Edition (1942) it is stated that the foregoing rule is a substantial copy of the Federal Statute (sec. 695 of title 28, USCA) generally referred to as the “Business Entry Statute.” In so far as we have been able to ascertain, Bule 70 has not heretofore been cqnsidered or construed by any court of review in this State but it seems to us that its language and intent are so plain and clear that it requires no construction. The obvious purpose of the adoption of Bule 70 was to liberalize the rules of evidence pertaining to the introduction in evidence of business records. There are numerous Federal decisions which have construed and applied the aforementioned business entry statute and held that records and their contents, such as were received in evidence here, were admissible and competent.

In Pollack v. Metropolitan Life Ins. Co., 138 F. (2d) 123, an action was commenced by the beneficiary under a policy of life insurance. There was a clause in the policy in that case, as in the case at bar, which provided that if the age of the insured had been misstated the amount of the insurance payable shall be what the premiums paid would have purchased at the correct age. In his application for insurance the insured stated that he was born October 15, 1866 and at the trial the beneficiary claimed that to be the correct age. This was disputed by the insurer who offered evidence to prove that the insured had been born in the year 1862. There the court said at p. 128:

“Defendant offered into evidence records of the Memorial Hospital relating to the insured. These records disclose that the insured’s age was 75 in November of 1936. These records were excluded. We think they should have been admitted under the business entry statute just discussed. The hospital records were apparently made when the insured went to the Memorial Hospital for diagnostic purposes. Part of the history stated therein was the insured’s age and we think that that is part of the act, transaction or occurrence or event referred to in the statute. A patient’s age is, as a matter of common knowledge, a relevant part of medical history and the record should be admissible under the statute as proof of the fact.”

In Metropolitan Life Ins. Co. v. Brown, 45 F. Supp. 728, the court said at p. 730:

“From the evidence it is clear, and I find, that the insured misstated his age in his application for insurance; and that the defendant made a misrepresentation when she stated in the proof of death, sent by -her to the plaintiff, that the insured’s birth date was October 3,1904.

“Much difficulty is encountered in determining the true age of the insured, in view of the conflicting records. However, the most persuasive of all the evidence is the petition for naturalization. This was the earliest of the records considered. From it the insured derived his status as a citizen of this country and all the rights incidental thereto. His statement there was made directly by the insured under oath; and the importance of the occasion as well as the probable knowledge of the possible consequences of falsification would be more conducive to accuracy than would be the case with regard to any of the other records. I find, therefore, that the date, February 13, 1893, appearing in the petition for naturalization establishes the date of the insured’s birth. Compare New York Life Insurance Co. v. Sikov, 33 F. Supp. 115, 117.”

To the same effect are Ulm v. Moore-McCormack Lines, Inc., 117 F. (2d) 222; Reed v. Order of United Commercial Travelers, 123 F. (2d) 252.

While the foregoing authorities determined the admissibility and competency of the contents of records offered in evidence under the Federal business entry statute, we think that they apply with equal force to the competency of the contents of the records received in evidence in this case. Moreover, there is an additional reason why the records of the Cook County Bureau of Public Welfare constituted competent evidence. The Cook County Bureau of Public Welfare is charged with the duty of administering the Old Age Pension Act (par. 410, ch. 23 and par. 67e% of ch. 34, Ill. Rev. Stat. 1943 [Jones Ill. Stats. Ann. 18.164, 18.061(1)]). Under the Act the pension is given to persons who have attained the age of sixty-five years (par. 411, ch. 23 [18.165]) and who otherwise meet the requirements described in said par. 411 of ch. 23. Before granting a pension the Bureau of Public Welfare is required to satisfy itself that the age requirement of the statute has been met by the applicant. (Par. 411-ch. 23.) Therefore, it must be unquestionably apparent that records compiled by the Bureau of Public Welfare in connection with the allowance or granting of a pension under the provisions of the Old Age Pension Act are such records as are required to show that the applicant has met the requirements of the Act.

It has been repeatedly held that records kept by persons in public office, which they are required either by statute or the nature of their office to maintain in connection with the performance of their official duties, are admissible in evidence and are evidence of those matters which are properly required to be maintained and recorded therein. (Lane v. Bommelmann, 17 Ill. 95; Chicago & Northwestern R. Co. v. Trayes, 17 Ill. App. 136, 140; Merchants’ Navigation Co. v. Amsden, 25 Ill. App. 307; 32 C. J. S.sec. 644, p. 509.) Production in court by the custodian thereof is sufficient proof of the authenticity of the records. “The admissibility of public records depends upon custody and authenticity and is not governed by handwriting or the original entry riile.” 32 C. J. S. sec. 643, p. 507. The official record of the Cook County Bureau of Public Welfare unmistakably shows that Frank Bell in order to obtain a pension made oath that he was born in Mississippi in 1849 and it will not be presumed that Bell in making his application under oath for the payment of the pension would do so with the fraudulent intent of obtaining a pension and violating the law.

There can be no question but that the records of the Cook County Hospital and of the Cook County Bureau of Public Welfare were properly received in evidence and that they showed that the person who was admitted to the hospital and who applied for an old age pension bore the identical name of the insured, that his place of residence was the same as that stated in his application for insurance and that he had a daughter bearing the same name as the plaintiff herein. This evidence in the absence of any evidence to the contrary proves without doubt that the Frank Bell mentioned in said records was the same Frank Bell who was named as the insured in the policy of insurance involved herein. It has been uniformly held in this State that in the absence of evidence to the contrary identity of name raises the presumption of identity of person. (Clifford v. Pioneer Fire-Proofing Co., 232 Ill. 150; Sharp v. Sharp, 333 Ill. 267.) It is significant that in the face of the documentary evidence that Frank Bell was at least ninety-three years old when he applied for the insurance policy that plaintiff did not see fit to offer any evidence in rebuttal, that she did not seek to show that the insured was not the same individual who was described in the aforesaid records as having been born in 1849 and that she did not produce any witnesses to testify as to the age or appearance of the decedent. In view of plaintiff’s failure in this regard it may be fairly inferred that if such evidence existed she would have produced it. (Mantonya v. Reilly, 184 Ill. 183.)

Plaintiff insists that the records of the Cook County Bureau of Public Welfare were inadmissible because of the prohibition contained in par. 419, ch. 23, Ill. Rev. Stat. 1943 [Jones Ill. Stats. Ann. 18.174], which provides as follows:

“Except for purposes directly connected with the administration of pensions, and in accordance with the rules and regulations of the Commission, no person shall solicit, disclose, receive, make use of, or authorize, knowingly permit, participate in, or acquiesce in the use of, any list of names of, or any information concerning, persons applying for or receiving pensions, directly or indirectly derived from the records, papers, files, or communications of the Commission or County Departments or acquired in the course of the performance of official duties. The violation of this provision is a misdemeanor.”

This prohibition was clearly intended to forbid voluntary disclosures but it was never intended to prevent the disclosure of the contents of official documents pursuant to the compulsion of a subpoena where the contents of such documents are pertinent to a legal inquiry. (Maryland Casualty Co. v. The Clintwood Bank, 155 Va. 181, 154 S. E. 492; Wilson v. United States, 59 F. (2d) 390.)

It clearly appears from the undisputed evidence that the finding and judgment of the trial court are against the manifest weight of the evidence.

However, we think that under the circumstances of this case plaintiff is entitled to recover from defendant the premiums paid by her father during his lifetime rather than the $27.97 tendered to her by the defendant. It is true that the actuary testified that a man born on May 25, 1849, who applied for a policy of insurance on December 29, 1941 and paid a monthly premium of $2.90 as Bell did, would purchase only $27.97 worth of insurance but it is also true that defendant would not knowingly have insured a man ninety-three years old, because it is a matter of common knowledge that a man of that age is not an insurable risk. Contracts, including insurance contracts, are what the parties intended them to be and it certainly cannot be said that defendant intended to sell an insurance policy to a ninety-three-year old man, upon which policy his beneficiary would be only entitled to receive $27.97 after her father had paid a monthly premium of $2.90 for 28 months. It seems to us that it would be highly inequitable to permit the defendant to retain the premiums paid by Bell and we are constrained to hold that such premiums, amounting to $81.20, should be returned to plaintiff.

For the reasons stated herein the judgment of the municipal court of Chicago is reversed and judgment is entered here in favor of plaintiff and against defendant for $81.20.

Reversed and judgment here.

Friend, P. J., and Scanlan, J., concur.


source: Caselaw Access Project

author: Presiding Justice Friend.

license: Public Domain

text:
    Mack Bernat, Plaintiff, v. H. Lawrence Hendrickson, as Trustee Under the 4602 N. Monticello Liquidation Trust, Known as Trust No. 7670 et al., Appellees. On Appeal of Barbara Kamm, Appellant.
    Gen. No. 43,082.
    Heard in the second division, first, district, this court at the June term, 1944;
    opinion filed December 18, 1945;
    rehearing denied January 2, 1946;
    released for publication January 2, 1946.
    William Henning Rubin, for appellant; Priedlund, Levin & Priedlund, for certain appellee; Emil N. Levin, of counsel.
   Opinion by

Presiding Justice Friend.

Not to be published

in full.


text:
    Clark R. Ebert, Appellee, v. Austin C. Armstrong, Appellant.
    Gen. No. 43,122.
    Heard in the second division, first district, this court at the June term, 1944;
    opinion filed December 18, 1945;
    rehearing denied January 2, 1946;
    released for publication January 2, 1946.
    Brown, Cox & Wexman, for appellant; Hurford, & Feigenholtz, for appellee; Harold L. Feigenholtz and Eugene A. Busch, of counsel.
   Opinion by

Presiding Justice Friend.

Not to be pub-

lished in full.


text:
    Vivian Helm, Appellee, v. Eli Kaplan and Faye Kaplan, Trading as Avenue Motor Sales, Appellants.
    Gen. No. 43,253.
    Heard in the second division, first district, this court at the October term, 1944;
    opinion filed December 18, 1945;
    released for publication January 2, 1946.
    Hummer, Van Ness & To well, for appellants; John J. To well, of counsel; Clarence M. Dunagan, for appellee.
   Opinion by

Presiding Justice Friend.

Not to be published in full.


text:
    Petronella Daraska, Appellee, v. Anna Dauksha, Appellant.
    Gen. No. 43,371.

      Heard in the second division, first district, this court at the April term, 1945;
    opinion filed December 18, 1945;
    released for publication January 2, 1946.
    Leon S. Mikelons and G. A. Buresh, for appellant; Callahan & Callahan and Ward H. Harris, for appellee; Francis J. Callahan and Ward H. Harris, of counsel.
   Opinion by

Presiding Justice Friend.

Not to be pub-

lished in full.


author: Justice Scanlan.

text:
    Relaco Rosin Products, Inc., Appellee, v. National Casein Company, Appellant.
    Gen. No. 43,293.
    Heard in the second division, first district, this court at the December term, 1944;
    opinion filed December 18, 1945;
    rehearing denied January 2, 1946;
    released for publication January 2, 1946.
    Francis J. Higgins, for appellant; Herbert F. Geisler and Thomas L. Owens, for appellee.
   Opinion by

Justice Scanlan.

Not to be published in full.


text:
    Elizabeth Mirza, Appellee, v. Sam Mirza, Appellant.
    Gen. No. 43,404.

      Heard in the second division, first district, this court at the June term, 1945;
    opinion filed December 18, 1945;
    rehearing denied January 2, 1946;
    released for publication January 2, 1946.
    Joseph Lustfield, for appellant; Joseph D. Teitelbaum, for appellee.
   Opinion by

Justice Scanlan.

Not to be published in full.


text:
    Nona Mable White, Plaintiff in Error, v. Steve Golleas and Anastasia Golleas, Defendants in Error.
    Gen. No. 43,472.
    Heard in the second division, first district, this court at the April term, 1945;
    opinion filed December 18, 1945;
    released for publication January 2, 1946.
    Ritsos & Ritsos, for plaintiff in error; Zack Ritsos and G. A. Bosomburg, of counsel; John D. Vosnos, for defendants in error.
   Opinion by

Justice Scanlan.

Not to be published in full.


author: Justice Sullivan.

text:
    Anna, Sometimes Known as Ona, Clark, Appellee, v. Lithuanian Roman Catholic Alliance of America, Appellant.
    Gen. No. 43,385.
    Heard in the second division, first district, this court at the June term, 1945;
    opinion filed December 18, 1945;
    released for publication January 2, 1946.
    Joseph J. Grish, for appellant; David H. Kraft, of counsel; Ringer, Reinwald & Sostrin, for appellee; Morris Sostrin, of counsel.
   Opinion by

Justice Sullivan.

Hot to be published in full.


text:
    Mabel New and Hilda Youngren, Appellees, v. Abell Howe Company, Appellant.
    Gen. No. 43,395.

      Heard in the second division, first district, this court at the June term, 1945;
    opinion filed December 18, 1945;
    released for publication January 2, 1946.
    Arthur P. Gruenwald and C. Helmer Johnson, for appellant; Lederer, Livingston, Kahn & Adsit and Clarence M. Dunagan, for appellees; Clarence M. Dunagan, of counsel.
   Opinion by

Justice Sullivan.

Not to be published in full.


text:
    Industrial National Bank of Chicago, Appellant, v. Harold Schor et al. N. H. Altenberg, Appellee.
    Gen. No. 43,499.
    Heard in the second division, first district, this court at the October term, 1945;
    opinion filed December 18, 1945;
    released for publication January 2, 1946.
    Reginald C. Darley and Osear G. Wahlgren, for appellant; Oscar G. Wahlgren, of counsel; C. A. Caplow, for appellee.
   Opinion by

Justice Sullivan.

Not to be published in full.


author: Mr. Justice Culbertson

text:
    A. M. Wilson, Appellee, v. Board of Education of School District Number 126 Union, et al., Appellants.
    Term No. 45F10.
    Heard in this court at the October term, 1945.
    Opinion filed October 26, 1945.
    Released for publication January 17, 1946.
    Harry Faulkner, of Granite City, and J. F. Eeck, of Edwardsville, for appellants.
    Jesse R. Brown, of Edwardsville, and Homer B. Harris, of Lincoln, for appellee.
   Mr. Justice Culbertson

delivered the opinion of the court.

This is an appeal from a judgment of the circuit court of Madison county, Illinois entered November 3, 1944, in which a writ of mandamus was ordered issued as prayed, and judgment was entered for appellee, A. M. Wilson (hereinafter called plaintiff), as against appellants, Board of Education of School District Number 126 Union, Township 3 North, Ranges 9 and 10 West, of the 3rd Principal Meridian, in the County of Madison, State of Illinois, and Ralph Z. Miller, President of said Board of Education, et al. (hereinafter called defendants), in the sum of $6,000, with costs, and directing and requiring that the defendant, Board of Education, employ the plaintiff as superintendent of schools of a certain school district, at- an annual salary of $4,800, and placing the plaintiff on contractual continued service.

The facts in the case disclose that plaintiff had been in the employ of the defendant, Board of Education of a certain school district, since 1912, when he began as a principal. He was superintendent of schools of the district for the year beginning* July 1, 1942 and ending June 30, 1943, and had been superintendent of schools for each of the nine consecutive fiscal years prior to July 1, 1942. He was 59 years of age at the time of the filing of the complaint in this cause, and has a state life supervisory certificate. It was the contention of plaintiff that he now is (and has been since June 30, 1943) superintendent of schools of said district under the Teachers Tenure Law, or contractual continued service.

On April 22, 1943, defendant Board of Education, elected one Wensel L. Brown, superintendent of schools for the defendant district for the year beginning July 1,1943, in place of the plaintiff. On June 8', 1943, defendant Board of Education elected the plaintiff as principal of the Webster school in said district, at a salary of $250 per month for the nine-month school term beginning September 1, 1943. The Board of Education never preferred any written charges as against plaintiff, and no written notice was given of change of employment 60 days before the school term ended in June 1943. He was told orally at the meeting at which Wensel Brown was designated as superintendent, that Wensel Brown was to take his position as superintendent of schools. The contract was later forwarded to plaintiff for the principalship of the Webster school at a salary of $250 per month for nine' months. Plaintiff had been receiving a salary of $400 per month as superintendent of schools. On June 7 of 1943, the plaintiff wrote a letter to the defendant, Board of Education, in which he referred to sec. 127¾ (Ill. Rev. Stat. 1943, ch. 122, par. 136c [Jones Ill. Stats. Ann. 123.161(1)]) of the School Law of Illinois, under which he contended that he continued to hold his position as superintendent of schools and informed the Board of his intention to continue his services as such superintendent, beginning July 1,1943. On August 11, 1943, plaintiff served a written notice before suit on defendant, Board of Education, in which he made a demand for his position as superintendent of schools for the fiscal year, beginning July 1, 1943, at a salary of $4,800 per year, under the Teachers Tenure Law, and informed the Board that he was unwilling to accept any other position or salary in defendant district, and in that notice he also demanded payment of $400 for the month of July 1943.

It was contended, and is contended in this court by defendant Board of Education, that plaintiff was not dismissed from its employ and that, therefore, no notice in writing and no' hearing was required; that the contractual continued service status of plaintiff did not restrict the defendant Board of Education from transferring the plaintiff from the position of superintendent to that of principal of the Webster school. It is the contention of the defendants that the court below erred in ordering the writ of mandamus entered as prayed for, and in entering the order for plaintiff as against the defendants in the sum of $6,000 and costs, being salary at the rate of $400 per month, from July 1,1943 to and including September 30, 1944, during which time plaintiff was not in the employ of the defendant school district, but was earning and being paid $200 per month while employed by the U. S. Cartridge Company in St. Louis, Missouri.

It is specifically contended by the defendant school board that under the School Law (Ill. Rev. Stat. 1943, ch. 122, par. 136c [Jones Ill. Stats. Ann. 123.161(1)]), the Board of Education was not restricted in its power to transfer a teacher to a position which the teacher is qualified to fill, or to make such adjustments as it shall deem desirable. That section provides, however, that unless reductions in salary shall be uniform or based upon some reasonable classification, any teacher whose salary is reduced shall be entitled to notice and a hearing as therein provided in cases of certain dismissals or removals. There was no notice or hearing had in the instant case.

It is urged by the defendant Board of Education that the public schools were not created nor are they supported for the benefit of the teachers therein, but for the benefit of the pupils and the resulting benefits to their parents and the community at large. It is necessary, however, that the Board of Education adhere to the statutory provisions regulating the employment and transfer of teachers, and the discretion of the Board of Education must be exercised in a manner and upon notice and hearing, as specified in the Teachers Tenure Act. It has been repeatedly held that the exercise of discretionary powers under civil service and under teachers tenure statutes must be in good faith and based on actual conditions, and the courts do not approve the discontinuance or abolition of a position, or transfer, or reduction of salary where the real motive is to remove the employee from his position, without justification (People v. Coffin, 282 Ill. 599; People ex rel. Gillespie v. Bundesen, 277 Ill. App. 169). In this case the transfer of the teacher to a position of lower grade, accompanied by a reduction in salary, without notice or a hearing, constitutes a removal, and is in violation of the Teachers Tenure Act. The action of the Board in removing the plaintiff from his original position, without assigning any cause,, and without-notice or a hearing, was justifiably found by the circuit court to be in violation of the provisions of the Act governing such transfers or removals.

It is, likewise, contended by the defendants that in the event plaintiff was entitled to the writ ordering him to be reinstated as superintendent of schools, then the judgment for damages should not exceed $3,500, for the reason that during the period of 12% months, from the middle of September 1943, plaintiff was gainfully employed at $200 a month, and earned approximately $2,500. We are inclined to agree with the contention of the defendants that it is not the policy of the law to award plaintiff his full compensation at $400 a month for the period during which he performed no services for the defendant Board of Education, without giving any consideration to the sums which he earned during that period' of time. The $2,500 which plaintiff earned should be applied in mitigation and reduction of damages, and the judgment in the instant case should be for the sum of $3,500, or for the net sum by which the $6,000 exceeds the amount actually earned by plaintiff during the period for which he seeks compensation (School Directors v. Birch, 93 Ill. App. 499, 500).

■ This cause will, therefore, be reversed and remanded to the circuit court of Madison county with directions to enter a decree herein, modifying and changing the amount of the judgment only by reducing it by the amount which the plaintiff has been shown or will on remandment be shown- to have earned during- the period beginning September 14, 1943, and for the 12% months following immediately thereafter.

Reversed and remanded, with directions..


text:
    Veronica Leslie, Appellee, v. Standard Accident Insurance Company, Appellant.
    Term No. 45M10.
    Heard in this court at the October term, 1945.
    Opinion filed October 26, 1945.
    Released for publication January 17, 1946.
    Harold Baltz, of Belleville, for appellant.
    Harold J. Bandy, of East St. Louis, for appellee.
   Mr. Justice Culbertson

delivered the opinion of the court.

This is an appeal from a judgment in the sum of $400 in favor of plaintiff appellee, Veronica Leslie (hereinafter called plaintiff), and against defendant appellant, Standard Accident Insurance Company .(hereinafter called defendant), in the circuit court of St. Clair county, and which said case was tried before the court, without the intervention of a jury.

. The factual situation out of which this litigation arises is largely without conflict. It appears from the evidence that under date of May 18, 1942, the defendant herein issued to the plaintiff herein its liability policy number CA-67460. A photostatic copy of the policy was attached to the complaint and by reference made a part thereof.

It appears from the evidence that under date of July 23, 1942, a cancellation notice was mailed by the defendant to the plaintiff herein, providing that cancellation of the hereinbefore referred to policy would become effective on July 29, 1942, at 12:01 a. m. Subsequent to the mailing of said notice, the defendant’s agent Dowling talked to the plaintiff and as the result of the conversation, tried to replace the liability coverage in other companies, but was unsuccessful, except it does appear that he was able to secure collision coverage, with a $50 deductible clause, instead of a $25 deductible clause for the plaintiff herein. It appears that the premium for this collision coverage was paid for out of the balance due to the plaintiff herein, and that on September 1, 1942 Dowling sent to the plaintiff herein, his credit memorandum for $23.68. Plaintiff denies ever having received the credit memorandum from Dowling. On the 6th day of September 1942, plaintiff’s automobile was involved in an accident while being driven by an employee of the plaintiff, and in that accident one Kerrigan, a pedestrian, was injured, and also the car of one Kelley was damaged. These parties filed suit to recover their damages from the plaintiff herein, and plaintiff notified defendant upon being served with summons of said suits, but the defendant herein refused to accept responsibility for the litigation on the ground that the policy had been cancelled as of July 29,1942. It appears that plaintiff thereupon hired counsel of her own and defended in the two suits, and this action was brought for the recovery of attorney fees in the defense of said suits, and which attorney fees, it is stipulated, are reasonably worth $400.

An examination of the policy in question reveals that it contains the following language relative to cancellation :

"22. Cancelation.

“This policy may be canceled by the named insured by mailing to the company written notice stating when thereafter such cancelation shall be effective. This policy may be canceled by the company by mailing to the named insured at the address shown in this policy written notice stating when not less than five days thereafter such cancelation shall be effective. The mailing of notice as aforesaid shall be sufficient proof .of notice and the effective date and hour of cancelation stated in the notice shall become the end of the policy period. Delivery of such written notice either by the named insured or by the company shall be equivalent to mailing.

“If the named insured cancels, earned premiums shall be computed in accordance with the customary short rate table and procedure. If the company cancels, earned premiums shall be computed pro rata. Premium adjustment may be made at the time cancelation is effected, and, if not then made, shall be made as soon as practicable after cancelation becomes effective. The company’s check or the check of its representative mailed or delivered as aforesaid, shall be a sufficient tender of any refund of premium due to the named insured.”

It is not contended in this case that the notice of cancellation was not mailed, nor is it contended that it was not received, but it is claimed by the plaintiff herein that the failure on the part of the defendant herein to return to her the unearned premium upon cancellation of her policy, caused the policy to remain in full force and effect, and that it was in full force and effect on the day and date 'of the accident for which suits were brought against her, and it is the further contention of the plaintiff herein that upon the cancellation of her policy the return of the unearned premium was a condition precedent to the cancellation of the policy.

We now direct our consideration to the provisions of the policy hereinbefore set out. It is not the function of courts to make new contracts for parties by construction, and where the parties are competent to contract and the provisions of the contract are not against the public policy of the State, the parties are bound thereby (Coons v. Home Life Ins. Co. of New York, 368 Ill. 231; Soucie for use of Ziems v. Illinois Agricultural Mut. Ins. Co., 323 Ill. App. 456). The relationship existing between the insurer and the assured is a contractual relationship and there is no element of a trust relationship involved. If the parties are competent to contract they have the legal right to put into their contract such provisions as they deem fit, and the reasonableness or wisdom of the provisions used are not matters of moment to the court construing them.

We are very mindful of the rule of construction to be applied to insurance contracts that the construction is to be made most strongly against the insurer, applies- only where the language used is ambiguous, and where provisions of an insurance contract are not ambiguous, it is the duty of the court to apply to the words used their ordinary meaning and neither party can be favored in the construction (Abt v. National Surety Co., 230 Ill. App. 242). The rule of construing language of an insurance policy most strongly against the insurer does not permit the perversion of unambiguous language for the purpose of creating an ambiguity (Grimes v. Maryland Casualty Co., 300 Ill. App. 62).

The cancellation clause in the policy by its own terms definitely fixes the time when cancellation becomes effective. The provision that if the policy is canceled by the insured, the notice of cancellation shall state when cancellation becomes effective, and, likewise, when the company cancels, excepting that in the latter case, five days shall intervene between the notice and the effective date of the policy. The pertinent language in the clause is the third sentence, “The mailing of notice as aforesaid shall be sufficient proof of notice and the effective date and hour of cancellation stated in the notice shall become the end of the policy period.” Tó effect cancellation, nothing else need be done but the giving of this notice. By giving the notice, and upon passage of time, the end of the policy period occurs when the date and the hour stated in the notice is reached. An examination of the policy does not reveal any language therein contained which makes the return of the unearned premium a condition precedent to cancellation, but on the other hand, by its very terms, the cancellation clause provides that the return need not be made at the time the cancellation becomes effective. It would seem to us that the language of this clause makes the return of the unearned premium a consequence of cancellation, instead of a condition precedent to cancellation.

We, therefore, conclude that the policy having been canceled on July 29, 1942, in the manner provided by the policy itself for its cancellation, that said policy was not in effect on the 6th day of September 1942, and that, therefore, no liability attached to the defendant herein to pay the attorney fees herein sought to be recovered, and that the action of the trial court in holding to the contrary was -erroneous, and is, accordingly, reversed.

Reversed.


author: Mr. Presiding Justice Kiley

text:
    Aaron Weintraub et al., Trading as Anchor Window Cleaning Company, Appellees, v. John B. Sexton and Company, Appellant.
    Gen. No. 43,172.

      Heard in the third division of this court for the first district at the October term, 1944.
    Opinion filed December 20, 1945.
    Released for publication January 8, 1946.
    B. S. Quigley, of Chicago, for appellant; Ezra L. D’isa, of Chicago, of counsel.
    Kamin, Gleason & Kamin, of Chicago, for appellees.
   Mr. Presiding Justice Kiley

delivered the opinion of the court.

■ This is an action under Section 29 of the Workmen’s Compensation Act, Chap. 48, Par. 166, Ill. Rev. Stats. [Jones Ill. Stats. Ann. 143.44], based upon an injury to plaintiff’s employee while he was engaged in washing windows of defendant’s building in Chicago. The injured employee was paid an award under the Act. The jury found defendant guilty and assessed plaintiffs’ damages at $4,500. Defendant has appealed.

Hodges, the injured employee, was an experienced window washer at the time of the accident in May, 1941. For more than three years he had been assigned to defendant’s six story building at 500 North Orleans Street, where he worked, usually alone, twice a month. The window relevant to our consideration was above the main entrance and about 20 feet above the sidewalk. It was one of a set of three mezzanine windows facing east, recessed between brick panels. Each window had its own frame. The southernmost of the three opened from within a stockroom, the other two opened from within a mezzanine hallway. The former was separated from the latter two by a wall. We shall refer hereafter only to the two hallway windows.

The windows were about 8 or 10 feet in height and the inside sill was about 5 feet 9 inches above the floor. Each consisted of a lower and upper sash which moved independently. In cleaning the windows on the inside Hodges used a 12 foot ladder. In washing the outside of the windows he used a safety belt. This was made of leather carrying two ropes, one end of each fastened to the belt and the other end carrying a metal safety catch. In practice each of these catches was attached to a corresponding metal hook set into either side of the outside window frame. This permitted Hodges freedom for both hands, in washing the outside windows, being held secure by the ropes fastened to the hooks and his belt.

To reach the outside sill Hodges faced the window, his right knee on the inside sill and his left foot on the ladder, and raised the lower sash. He then grasped the right handhold attached to the lower part of the lower window sash with his right hand, took the rope looped to the left side of his belt in his left hand and reached out through the opening to fasten the catch to the hook on the south side of the outside frame. While doing this the lower part of the lower sash and the metal hooks in the window frame were about level with his head. Fastening the safety catch to the hook required that Hodges turn his body somewhat to the south as he leaned through the opening. As he did this 60 percent of his weight was upon the metal handhold.

After fastening the one hook, his weight was transferred to the rope and he passed through the opening to the outside sill and fastened the other safety catch to the hook in the north outer frame. He followed this custom at least 50 times at defendant’s building.

May 21,1941, the day of the accident, Hodges worked at the building from 5:00 until 10:30 a. m. He followed his customary procedure. As he leaned through the opening of the northernmost window to fasten the left safety hook to the outside frame, the handhold grasped in his right hand gave way. He somersaulted to the pavement and was injured. The handhold came off the sash and was in his right hand when he fell.

Hodges says he noticed that that particular handhold was loose on one side three months before the accident. He reported it and two weeks later it was hanging. He reported it to the janitor and told him to put in 2 inch screws instead of 1 inch. It was repaired with 1 inch screws. He used the handhold two weeks or so before the accident and it held him. It looked all right the day of the accident. He “tested” it and confirmed his view. One inch screws in the handhold when he fell indicated that his advice to the janitor had not been heeded.

No testimony was introduced by the defendant. It admitted maintaining the building. It made motions for a directed verdict and for judgment notwithstanding the verdict. The court denied both. Defendant contends this was error and that judgment should have been entered in its favor. This poses a question of law, whether under the evidence and legal inferences considered most strongly in plaintiff’s favor, defendant was guilty of negligence.

It is agreed that plaintiffs are not, if Hodges would not be, entitled to recover under the evidence.

Plaintiff contends the record does not disclose Hodges’ demonstration of his “rhythm and coordination” in fastening the safety catch to the hook. Since we must decide the case on the question whether Hodges should have used the handhold to support his weight, the demonstration could not be of much help. It may have enabled the jury to better visualize the facts. We are to determine whether the case should have gone to the jury.

Plaintiff says that, in view of Hodges’ three and a half year assignment, defendant’s servants must have known how Hodges performed his work. The only evidence on the subject is that defendant’s maintenance foreman, called by plaintiff, did not know how Hodges performed his work. Plaintiff also refers us to the testimony that Hodges told defendant’s janitor that one inch screws were not long enough to properly fasten the handhold. We have examined the record closely for evidence that Hodges told the janitor one inch screws were not long enough to fasten the handhold sufficiently secure to bear 60 percent of Hodges’ weight. We fail to find such evidence. We cannot infer that the janitor knew Hodges meant what plaintiff suggests. There was no proof that the janitor knew how Hodges performed his work. We find, therefore, there is no evidence that defendant knew through its servants that Hodges was using the handhold in the manner to which he testified.

The question is narrowed to the inquiry whether defendant was negligent in failing to foresee that Hodges would use the handhold in the manner described and in failing to render it sufficiently secure for his protection as he held, it to fasten the safety catch. If there was no obligation on defendant to fasten the handhold so as to bear Hodges’ weight, in view of the lack of notice, then the use of one inch screws was proper for it seems admitted the handholds were sufficient for the purpose of raising and lowering the sash.

Defendant owed Hodges the duty of providing a reasonably safe place to work and of warning him against danger of which it knew, or should have known, ■and of which he was not, unless he should have been, aware and which it should have anticipated he would encounter in his work. National Builders Bank of Chicago v. Schuham, 319 Ill. App. 546; 38 Amer. Juris. 754.

We must decide whether defendant as a reasonably prudent person should have anticipated danger to Hodges from his use of the handhold to support the greater part of his weight as he leaned through the frame to fasten the safety catch. If it should have, then defendant is guilty of negligence. If reasonable men would differ on the question it was for the jury to decide.

■ Plaintiff cites Alexander v. Scoville’s Village, Inc., 278 N. Y. Supp. 201, decided in 1935 by a New York Supreme Court, Appellate Division. The facts are not given, the opinion merely states that plaintiff died from injuries caused by a fall from a window he was washing. The court held that there was evidence in the record which supported the jury’s finding that after notice defendant agreed to and made repairs to the window, but did so negligently. We infer that the defendant had notice .of the use to which the window Was being put., Because of our finding, however, that there was no notice to the defendant here of the use to which Hodges was putting the handhold, and, therefore, no knowledge of the extent of the repair needed, we do not find this case helpful.

Furthermore, in view of our finding of the lack of knowledge of defendant, if the use to which Hodges put the handhold was foreign to its intended use or uses,.plaintiff should not recover. Walsh v. Frey, 101 N. Y. Supp. 774; Glain v. Sparandeo [119 La. 339], 44 So. Rep. 120; Carroll v. Intercolonial Club of Boston [243 Mass. 380], 137 N. E. Rep. 656; DeMotte, et al. v. Arkell [77 Cal. App. 610], 247 Pac. 254; LaVeer v. Hanke Iron & Wire, Works, 187 Ill. App. 481; Miller v. El Mirasol, 297 N. Y. S. 380. While these are generally Landlord and Tenant cases, the principle, nevertheless, can apply here.

Defendant cites Culbreath v. M. Kutz Co. [37 Ga. App. 425], 140 S. E. 419, decided in 1927 by the Court of Appeals of Georgia. In that case the window washer had stood on the outside sill supporting himself by holding to the top of a window sash. The frame, guides and sash gave way and he was injured. In affirming a decision for defendants on pleadings, the court of appeals took judicial notice that the use by plaintiff was a foreign use-of the sash and decided that the indulgence of a custom of a foreign use by a particular trade did not impose upon the defendant the duty to anticipate that use; and that without knowledge' of the use and notice of defects, in the light of the use, there was no liability. If that use of a window sash is a foreign use, then with greater force was Hodges’ use of the handhold foreign.

Owners of buildings must anticipate that windows will become dirty and have to be cleaned and, where prudence requires, they must anticipate that window washers, will have to clean the outside of the windows by standing on the outside sills. They must foresee that a window washer cannot with safety stand unsupported while -washing windows on outside sills. They must, therefore, in accordance with the general rule use reasonable care in providing safé working conditions for the window washers. It is pursuant to this necessary foresight, we assume, that hooks sufficiently strong to support window washers’ weights are provided to accommodate the safety catches at the ends of the ropes attached to safety belts. These safety hooks are not attached to the window sashes but to the framework of the window if not to the .building proper. The nature of the movable sash does not lend itself to that use.

Ordinarily, handholds are on .only the lower sash. Certainly, their use to raise and lower the sashes is the primary intention. If Hodges’ use -could be said to"be a secondary intention, handholds wdtild have to be made and secured to withstand the leverage and weight involved in that use. Builders generally do not so make or secure them. New types of handholds appear to fall far short of that use. They are either recessed in the sash, or made simply of a small curved metal projection sufficient to accommodate the fingers. -We do not believe the use to which Hodges put the handhold in this case can be said to be consistent with the nature of handholds.

We can understand that a. window washer might complain in a particular case that a handhold of some kind should have been provided to support his weight as he leans through an opening as Hodges did here. It might be shown that there would be danger of a window washer’s hand slipping, or his being unable to hold steadily on to the bare framework or inside wall. That is not the case here, however. No other contention is made but that the handhold on the sash should have borne the weight Hodges put on it. We cannot hold that defendant was negligent in failing to foresee Hodges’ use, even if customary to his trade, if the use was unreasonable. We agree with the Georgia court that, if Hodges’ use could not fairly be anticipated, the “daring” of the trade in indulging the custom, should not alter the principle.

Hodges expected the window sash handhold in the instant case-to bear 60 percent of his weight as he leaned through the- opening to fasten the safety catch. Sixty percent of another window washer’s weight might Be equal to, or total that of, Hodges’ weight. A prudent, owner should anticipate that a window washer must, in some reasonable manner, reach the outside sill so as to fasten the catch to the hook. Defendant herq was not bound, however, to anticipate the rise indulged by Hodges. That use was unreasonable.

. The Georgia case pointed out that, the plaintiff there should have tested the sash before using it. We wish to point out that in this case a true test involved the same risk as the use. Plaintiff had used the handhold successfully on previous occasions. This may be said to have been the test. This fact, however, does not change our view. It may be that the one inch screws were sufficient to stand the foreign use for a while.

The only Illinois casé cited which resembles the case at bar is National Builders Bank of Chicago v. Schuham, 319 Ill. App. 546, cited here on another point. The question presented here was not considered in that case.-

We believe there is no evidence of negligence on the part of defendant. We need consider nothing further.

The judgment of the Circuit Court is reversed and the cause is remanded with directions to enter judgment for defendant.

Reversed and remanded with directions.

Lews and Burke, JJ., concur.


text:
    Melville O. Parks, Appellee, v. Lumbermans Mutual Casualty Company, Appellant.
    Gen. No. 43,186.

      Heard in the third division of this court for the first district at the October term, 1944.
    Opinion filed December 20, 1945.
    Rehearing denied January 8, 1946.
    Released for publication January 8, 1946.
    Rowe & Bailey, of Chicago, for appellant; Joseph A. Bailey and James P. Moore, both of Chicago, of counsel.
    Irving Breakstone, of Chicago, for appellee.
   Mr. Presiding Justice Kiley

delivered the opinion of the court.

This is an action to recover on a public liability and property damage insurance policy. The trial by the court without a jury resulted in judgment April 21, 1944 for plaintiff for $159.50 and costs. Defendant has appealed.

The facts are stipulated. The policy issued April 11, 1943. Defendant gave plaintiff notice June 24, 1943 of its cancellation of the policy, effective July 6, 1943. Plaintiff was involved in an accident July 9,1943. He' reported the accident to defendant the next day. Following tjie accident, plaintiff was sued for damages arising therefrom which resulted in a judgment against him on December 8,1943 of $79.50. Defendant refused to defend plaintiff in the suit and the latter as a result was obliged to pay attorney’s fees of $75.00. At the time defendant sent its notice of cancellation there was due plaintiff $3.65 unearned premium which he had paid on the policy. This sum had not been paid him at the time the judgment appealed from was entered.

A question of law is presented whether refund to plaintiff of the unearned premium was a condition precedent to cancellation of the policy.

Construction of the cancellation provisions of the insurance policy is involved. Bach party was empowered to cancel the policy upon written notice and the defendant’s notice had to be given at least five days before cancellation became effective. The notice could be mailed or delivered. The essential provision recited :

“If the named insured cancels, earned premiums shall be computed in accordance with the customary short rate table and procedure. If the company cancels, earned premiums shall be computed pro rata. Premium adjustment may be made at the time cancellation is effected, and, if not then made, shall be made as soon as practicable after cancellation becomes effective. The company’s check or the check of its representative mailed or delivered as aforesaid shall be sufficient tender of any refund of premium due to the named insured. ’ ’

The parties were free to contract for insurance, subject to legal restrictions. It is not contended that there is any Illinois statute which restricted the right of these parties to make whatever agreement they wished with respect to the time of payment of the unearned premium. The question is what the parties meant. If the meaning is ambiguous, the construction will have to favor plaintiff. .

We have read the cases cited, by the parties, and many others. The language of the unearned premium refund provision differs widely in the cases we have read. There are many decisions covering the so-called “standard cancellation clause” and a conflict manifested therein in a majority and minority view with Illinois joined to the majority. 127 A. L. R. 1347. The majority rule requires refund of the unearned premiums as a prerequisite to cancellation. The so-called “standard cancellation clause” is considered in, and the conflict can be observed in a reading of, the following cases. Damen & Jarvis Bldg. Corp. v. Mechanics Insurance Co., 83 Fed. (2d) 793; Schwarzchild & Sulzberger Co. v. Phoenix Insurance Company, 124 Fed. 52; Department of Labor & Industry v. Northwest Mutual Fire Ass’n [13 Wash. (2d) 288], 124 Pac. (2d) 944; (The standard clause was not in the contract in this case, but was discussed.) Hartford Fire Insurance Co. v. McKenzie, 70 Ill. App. 615; Peterson v. Hartford Fire Insurance Co., 87 Ill. App. 567; Kinney v. Caledonia Ins. Co., 148 Ill. App. 256; Kinney v. Rochester German Ins. Co., 141 Ill. App. 543; Hartford Fire Ins. Co. v. Tewes, 132 Ill. App. 321.

We are not concerned here with a standard cancellation clause and those cases are not applicable in view of the contracting rights of the parties. It is interesting to note, however, that the McKenzie case, the first Illinois case to announce the rule on the “standard cancellation clause”, based its decision upon Peoria Marine Fire Insurance Co. v. Botto, 47 Ill. 516 and Aetna Insurance Co. v. Maguire, et al., 51 Ill. 342. In the Botto case the policy provided that the company could elect to cancel “in which case the company will refund the premium for the unexpired time.” In the Maguire case the cancellation clause is not set out, and the court said that under the fifth provision of the policy there could be no cancellation unaccompanied by a return of the unearned premium. Most of the later Illinois Appellate Court cases repeating the rule, cited the McKenzie case as authority..

The United States Court of Appeals for the 7th Circuit in the Damon & Jarvis Bldg. Corp. case, pointing out that the Illinois Supreme Court had not construed the standard cancellation clause, did not consider itself bound by the Illinois decisions and construed the clause in accordance with the minority rule. It said of the several Appellate Court cases on the subject, that only the National Hotel Company v. Merchants Fire Assurance Corp., 183 Ill. App. 71 based its decision solely on the ground that the refund was a condition precedent to cancellation. The opinion in the National Hotel case does not set forth the cancellation provision, but says that “The policy . . . authorized the Company to cancel . . . and required the Company, in such case, to return the unearned pro rata premium.” This is not the standard clause and appears to be precisely the same as the provision in the Botto case.

In the Annes v. Carolan, 336 Ill. 542, 549, the Supreme Court of Illinois said its attention had not been called to any case wherein it had decided that the refund was a condition precedent to cancellation where there was no provision for its return but “this has been the holding of the Appellate Court in several cases.” The court then decided that payment to Annes of the unearned premium was required prior to the cancellation. There was, so far as the opinion shows, no provision in the policy with respect to the refund. The court did not name the Appellate Court cases referred to. We assume they are those which we have cited hereinabove. We have stated that they contain the ‘ standard cancellation clause ’ ’ and the inference may be justified in the language of the Supreme Court that it might hold that the standard clause did not provide a return of the unearned premium.

In Summers v. Travelers Ins. Co., 109 Fed. (2d) 845, the Circuit Court of Appeals for the 8th Circuit considered a provision that the company “upon demand” should refund the excess premium. It held that the refund was not a condition precedent, but was a “consequence of cancellation.” In Department of Labor & Industry v. Northwestern Mutual Fire Ass’n, the Supreme Court of Washington considered a provision that the company could cancel by notice in writing “with or without tender of the excess of paid premium . . . . ” It held that a notice without tender was effective to cancel the policy.

We have been referred to no Supreme Court opinion construing either the standard cancellation clause” or the precise clause before us. The United States District Court for the Eastern District of Illinois pointed out the desirability of a construction of the instant provision by the Illinois Courts. Standard Accident Insurance Company, et al. v. Leslie, et al., 55 Fed. Supp. 134.

Where the policy provides that the refund shall be made as a condition precedent to, or simultaneously with, cancellation there is no difficulty. The obligation of the insurer is clear. Where the policy is silent on the subject, Annes v. Carolan, applies to require the refund prior to cancellation. Where there is an ambiguous provision with respect to the refund, it should be construed to require the refund prior to cancellation. The provision before us is not silent on the subject, nor is it ambiguous. It provides that the company may adjust the premium at the time of cancellation but shall as soon as practicable thereafter. It is not contended here that the refund was not made “as soon as practicable” after the cancellation no-, tice. It is insisted that the cancellation was not effected because the refund was not made with notice of cancellation.

The defendant had the privilege of adjusting the premium at the time cancellation was effected. It had the obligation, in the event it did not exercise the privilege, to do so as soon as practicable after the cancellation became effective. In view of these considerations, we believe the apparent ambiguity in the last sentence in the provision of the policy under consideration is dissipated. We think it means that the defendant in exercising the privilege or fulfilling the obligation, in making the premium adjustment, may mail or deliver its check in the same way that mailing or delivering of the notice of cancellation was made. The provision with respect to the notice of cancellation provided that delivery by either party should be equivalent to mail, and that mailing of notice should be sufficient proof of the notice. We believe, therefore, that the policy had been canceled prior to the accident and that defendant was not liable upon the policy.

Because of that conclusion we need not consider the question which plaintiff has raised with respect to attorney’s fees for defendant’s vexatious refusal (Ill. Rev. Stats. Chap. 73, Par. 767 [Jones Ill. Stats. Ann. 66.830]) to pay the amount of the judgment against plaintiff.

For the reasons given the judgment of the Municipal Court is-reversed and the cause is remanded with directions to enter judgment for the defendant.

Judgment reversed and cause remanded with directions.

' Lews and Burke, JJ., concur.


text:
    People of State of Illinois ex rel. Orville L. Miles, Realtor, Appellee, v. Bowen Industries, Inc. et al., Appellants.
    Gen. No. 43,244.

      Heard in the third division of this court for the first district at the October term, 1944.
    Opinion filed December 20, 1945.
    Released for publication January 8, 1946.
    Thomas L. Murphy, of Chicago, for appellants.
    Louis R. Connell, of Chicago, for appellee.
   Mr. Presiding Justice Kiley

delivered the opinion of the court.

This is a mandamus action filed December 11, 1943 to compel defendants to make the books of the Bowen Industries, Inc., available for inspection by plaintiff, owner of three shares of stock. The court ordered the writ to issue for inspection of all books and records except the stockholder’s list. Defendants have appealed.

It appears from the pleading and proof that plaintiff was general manager of the Corporation from December 12, 1942 to April 8, 1943. On August 10, 1943 after his employment was terminated, he wrote the Corporation for a convenient appointment to inspect its books. The letter was disregarded and plaintiff filed suit.

Plaintiff’s petition alleges that he has been a stockholder for more than six months; the serving of his “demand” and its refusal; defendants duty to permit his inspection of the books; and misconduct of the business.

The answer admits plaintiff’s stock ownership for longer than six months; denies plaintiff’s “letter” was a demand; and refers to paragraph 157.45, chapter 32, Illinois Revised Statutes [Jones Ill. Stats. Ann. 32.045] for its only obligation to afford stockholders’ inspection.

The Corporation Act in the paragraph referred to, provides for the keeping of corporate books and records and for their examination by stockholders. Under it a stockholder for six months or more, or who owns at least 5 percent of the stock, has the right to examine the books and records at reasonable times for any proper purpose/ a penalty is provided in favor of such “stockholder” where any officer, etc. refuses to permit the examination for a proper purpose; and the right of a stockholder, irrespective of the time or amount of his holding, to mandamus, etc., upon proof of a proper purpose is protected. Morris v. Broadview, Inc., 385 Ill. 228.

Defendants argue here that the suit was premature, since the petition does not show the “demand” specified a proper purpose, and therefore there was no right to be enforced through mandamus, and that neither the petition nor proof made any showing that the demand contained facts from which a proper purpose could be seen.

Defendants did not attack the petition. At the close of plaintiff’s case, however, they made a motion to dismiss on the ground that no proper purpose was shown in the “demand” or proof.

The question, therefore, is one of law whether proof of a demand showing a proper purpose is a prerequisite to the issuance of the writ.

Plaintiff’s written “demand” simply stated that plaintiff would like to know when it would be convenient for him to “go over the books.” Clearly, there is no showing of proper purpose in that document. The Act does not require a written demand, Hohman v. Illinois-Iowa Power Co., 305 Ill. App. 17; and plaintiff alleges he followed up his writing by an oral “demand”. He does not allege the conversation from which a proper purpose may be seen. He alleges simply that Bowen told him to take the matter to court. Plaintiff had the burden of proof. Morris v. Broadview, Inc., and Morris v. Wacker Hotel Co., 321 Ill. App. 366. His proof of demands was no more particular than the allegations. Clearly, therefore, if the Act requires that the demand make a showing of proper purpose, the defendant should prevail. The question is not whether plaintiff proved a proper purpose, but whether he proved a proper demand.

In a case of a private nature such as this, demand as a general rule is a prerequisite in a suit for mandamus. People v. Green, 281 Ill. 52; 34 Amer. Juris, p. 869; 35 Amer. Juris, pp. 64 and 65.

The first subparagraph of the paragraph of the Act in question provides the requirement of proper purpose in the demand. The second subparagraph refers to its refusal and the penalty therefor. The final sub-paragraph, the amendment of 1941, protects the mandamus action for all stockholders, irrespective of time or amount of holding, upon proof of “proper purpose”. This last provision does not expressly refer to a demand. Such a demand, we have already noted, however, is a prerequisite to the mandamus action. Furthermore, that demand must be of the same quality as that required of the stockholders classified in the first subparagraph. If that is not so, we must assume the purpose of the Act was leveled rather at those who held for more than six months, or at least 5 percent of the outstanding stock, than at stockholders of recently acquired, and of insignificant amounts of, stock.

The legislative purpose in limiting the previous absolute right of stockholders’ inspection of corporate books was to eliminate harassment and annoyance to corporate officers from insincere demands. Nieman v. Templeton & Co., 294 Ill. App. 45. This purpose cannot be served if the officers are not informed of the reason for the demand. It would be unjust to provide this protection and penalize corporate officers for availing themselves of it. This would be the effect of permitting them to refuse a demand if a proper purpose was not shown and subjecting them to liability where that deficiency is later supplied by proof at the trial. It seems clear that the trial should be a test of the corporate judgment that the reason given for the demand at that time did not constitute a proper purpose. We think this decision is consistent with the reasoning of our Supreme Court in Morris v. Broadview, Inc. in construing the section in question with a history of the stockholders’ right to inspect. In conclusion, therefore, we hold that since plaintiff did not yrove that his demand contained facts from which the corporation or its officers could infer a proper purpose, his action was premature.

The judgment of the Circuit Court ordering the issuance of the mandarqus is, accordingly, reversed.

Judgment reversed.

Lews and Burke, JJ., concur.


text:
    Elisabeth P. Mills, Appellee, v. William A. Susanka, Appellant.
    Gen. No. 43,254.
    Heard in the third division of this court for the first district at the October term, 1944.
    Opinion filed December 20, 1945.
    Released for publication January 8, 1946.

      Ode L. Rankin, of Chicago, for appellant.
    Bradburn & Dammann, of Chicago, for appellee.
   Mr. Presiding Justice Kiley

delivered the opinion of the court.

This is an action in equity filed May 24, 1939, in which plaintiff seeks a retransfer to her of 15 shares, the controlling segment, of the stock of the Pabst Pharmaceutical Company, referred to herein as Corporation. The decree, based on a master’s report, impressed a trust on the 15 shares in plaintiff’s favor and ordered their return to her. Susanka has appealed.

. Pabst was the inventor and patentee of certain medical formulas. From 1914 to 1931 he produced the medicines under the name of the Pabst Chemical Company, not incorporated. Susanka was his friend and had sold the Company essential oils for many years. In 1931 Pabst was indebted to his son Adolf Pabst, his daughters Mrs. Keith and Mrs. Mills, and to Susanka. He agreed with these debtors to form a corporation, transfer his assets to it and to liquidate the debts through the issuance of stock of the corporation. The Corporation was thereafter organized, with 48 percent of the stock issued to Susanka and 52 percent to Pabst and his children named hereinabove. Susanka was also given a Corporation note. Pabst dominated the corporate affairs, although he held but one share of stock, until his death in November, 1937.

In 1932 the Red Star Laboratory sued Pabst in the Federal District Court for damages for violation of copyright. The trial commenced in December of 1936. A verdict was expected on January 2, 1937. On that morning there was a meeting in the corporate offices, attended by the Pabsts and Hicks, who was a corporate employee and officer. Plaintiff was expected, but had been delayed in her trip from the West. These conferees adjourned to meet Susanka at his.Gas Station. Attorney Berglund attended this later meeting to represent the Pahsts. At the Gas Station an agreement was made under which 15 of plaintiff’s 100 shares were transferred to Susanka. He gave his check for $375 and a note for a like amount, both payable to plaintiff. Subsequently, the check was cashed and the proceeds returned to him. The note was never paid. In the pleadings and at the trial plaintiff tendered the note and defendant tendered payment. Each refused the other’s tender.

The Bed Star suit resulted in a verdict and judgment against Pabst for $25,000. Malice was found to be the gist of the action and a capias issued for his arrest. A subsequent creditor’s bill to enforce payment of the judgment was instituted against the Corporation stockholders. This suit was directed at setting aside the stock holdings. The federal court decided it adversely to Bed Star. It found that the transaction between the stockholders and the Corporation was bona fide. After the legal proceedings were finally disposed of, demand was made upon Susanka for a return of the 15 shares of stock. He refused the demand, claiming ownership under the transfer which he claims was a bona fide sale.

The master found that Susanka and Pabst “were also good friends and associated together socially” ; that the Corporation was capitalized at $25,000, 48 percent thereof representing $12,000 was issued to Susanka and $13,000 issued to the Pabsts; that the balance of Susanka’s debt was represented by a Corporate note for $3,607.16; that Susanka understood that he was a minority stockholder and was agreeable; that Pabst and his associates anticipated the verdict against him in the copyright suit; that Hicks had been an employee of Pabst for many years prior to the Corporation, and thereafter became a Secretary, working intermittently from 1932 to 1935; that thereafter the employment of Hicks was regular; that he was' elected Director and Vice President in 1936 and served thereafter in that capacity; that Hicks told Pabst and his associates during the trial that the Red Star attorney informed him that should a judgment be entered against Pabst, a creditor’s suit would be instituted against the Corporation stockholders to show that Pabst was the actual owner of the stock; that at the meeting on the morning of January 2nd, Hicks informed Pabst and his children that Susanka was worried lest in such a probable creditor’s suit Red Star would gain control of the Corporation, putting Susanka at a disadvantage; that Hicks advised Pabst to allay Susanka’s fears by inducing Pabst’s children to . transfer 15 shares to Susanka, so that even though the creditor’s suit should succeed against the stock of the Pabst children, Susanka would have management and control; that Pabst, therefore, agreed upon Hicks’ advice to meet Susanka and make the transfer; that at the Gas Station meeting Attorney Berglund advised Susanka there was no basis for his fear, since Pabst’s children were bona fide owners and that, moreover, Red Star could follow the 15 shares to Susanka in the event of a creditor’s suit; that Susanka persisted in his fears and asserted that the 15 shares would be safer in his hands; that the Pabst family and Susanka, therefore, agreed that plaintiff transfer 15 shares to Susanka to hold the same until there was no longer danger of acquisition by Red Star, then to be reassigned plaintiff; that Susanka desired the purported sale to appear legitimate; that, accordingly, the check and note were executed but the proceeds of the check were returned to him; and that the parties present agreed that plaintiff was to receive no benefit from either the check or the note.

On the basis of those findings the master further found that no consideration was paid plaintiff by Susanka for the purported assignment; that no consideration was intended to be paid; that it was not intended Susanka should become the actual owner; and that plaintiff has continued to be and still is in equity the rightful owner.

The vital question is whether equity should lend its aid to plaintiff on the facts found by the master. The general rule is that where the grantor and grantee of property carry out the transaction in fraud of creditors, equity will leave the parties where it finds them. Rosenbaum v. Heubner, 277 Ill. 360; Bellin v. Bloom [217 Ind. 656], 28 N. E. (2d) 53; 24 Am. Juris. 267; 37 C. J. S. 1098. Where such a grantor sues to enforce a contract to reconvey, equity will not intervene where the parties are equally guilty. 24 Am. Jur. 270; 37 C. J. S. 1100; Lang v. Lang, 284 Ill. 148; Ford v. Caspers, 128 Fed. Rep. (2d) 884. Where the, parties are not equally guilty, equity may give relief to the one who is comparatively innocent, not for the sake of that party, but on the ground of public policy. Duncan v. Dazey, 318 Ill. 500, 524; Herrick v. Lynch, et al., 150 Ill. 283. Where, however, a conveyance for the purpose of defrauding creditors is induced by one in whom confidence has been reposed by the grantor, a court of equity will give relief notwithstanding fraud. Lang v. Lang, 284 Ill. 148; Prickett v. Prickett, et al., 379 Ill. 181.

Plaintiff contends Susanka was a fiduciary. The only finding which has any bearing upon the relationship of Susanka to plaintiff is that Susanka and Pabst were friends and associated together socially. She was not present when the agreement was made by her relatives and the others present at the Gas Station to transfer 15 shares of her stock to Susanka. The master found that Susanka persisted in his fears of the creditor’s suit and thus induced the transfer. He also found, however, that Berglund, the lawyer, advised that there was no basis for Susanka’s fear and insisted that the corporate organization was valid and that even if the affairs were justified, 15 shares would be traced to Susanka. Thus, it would seem that the Pabsts had Berglund’s advice to offset Susanka’s persistence in his fears. Moreover, the master had already found that pursuant to Hicks ’ entreaties to allay Susanka’s fears, Pabst agreed to transfer the stock before going to meet Susanka.

Under these circumstances we see no basis for any contention that there was a fiduciary relationship of which Susanka took advantage to induce the conveyance. Certainly, there can be none that he induced plaintiff to make the transfer. This was necessary. Lang v. Lang, 284 Ill. 148. Plaintiff was not present. It is clear from the findings that if she were induced to make the transfer it was by her father on a later day. We shall not consider, therefore, contentions based upon the alleged fiduciary relation.

Plaintiff was not present when the agreement was made but later adopted the transaction and executed the documents and performed the actions to carry it out. There is no question that her object, regardless of the motive, was to place the stock, which was the balance of power, beyond the grasp of Red Star, probable suitors in an expected creditor’s action. It seems quite clear, therefore, that under the findings of the master, plaintiff and Susanka were equally guilty.

A further element in the case before us is the conduct of plaintiff in the creditor’s suit. Susanka there, in his answer, stated that he had purchased the 15 shares and was the bona fide owner of 256 shares. Plaintiff filed an answer in which she stated only that she was the owner of “certain shares.” She is presumed to have known the contents of Susanka’s answer. She objected in no way to the claim of Susanka that he was the bona fide owner of the 15 shares. She permitted the Court to determine the case without disclosing her claim. She made no claim until that case had been disposed of and time for appeal had passed.

Plaintiff relying on Rossow v. Peters, 277 Ill. 436, says that since no creditors or third persons were injured in the transaction with Susanka, she should be permitted to enforce Susanka’s alleged agreement to retransfer. In that case Rossow conveyed his homestead to defraud creditors. The court decided his creditors could have no interest in the homestead, which was exempt property, could not be defrauded of it and the intention to defraud was, therefore, impossible of fulfillment. It decided that Rossow could compel reconveyance of the homestead. It referred to the conflict of decisions on the question whether property fraudulently conveyed could be recovered where none was harmed. It then said that the general rule to which we have hereinbefore referred to, does not obtain where neither creditors nor third persons are injured or defrauded. It is this last statement in the Rossow case upon which plaintiff relies.

The case of Rosenbaum v. Huebner is reported in the same volume as the Rossow case, at page 360. There Rosenbaum conveyed property to Huebner, while a suit was pending against him, to place it beyond a possible judgment. Later, in furtherance of the scheme, Huebner conveyed to Rosenbaum’s relatives. Rosenbaum, in the suit, sought to recover the property in a cross-bill. The court held that, because of the fraud which prompted Rosenbaum to make, or have made, the two conveyances, equity would leave the parties where it found them.

An important distinction between these two cases is that in the Rossow case the conveyance was of property exempt from claims of creditors; in the Rosenbaum case the property was, as in the instant case, not exempt property. In the Rosenbaum case furthermore, as well as in the instant case, no third parties were harmed. It is true that in the Rosenbaum case it is not disclosed how the pending litigation terminated, so that it cannot be said that later there may not have been a judgment creditor. In the instant case the litigation had terminated.

When the transaction with Susanka was carried out, the creditor’s suit was not pending, as was the suit in the Rosenbaum case. The transaction, however, was tiarried out under the threat and fear of the creditor’s suit. The influence on the transferor was present in both instances. Where anticipated danger of litigation has influenced the conveyance, equity will not interpose to restore to the transferor the title to property. Rosenbaum v. Huebner. Under all the circumstances in this case we believe that that rule is decisive of this case against plaintiff. We believe the Rosenbaum case and not the Rossow case is the precedent we should follow.

For the reasons given we believe that the plaintiff should not be permitted to recover back the stock she transferred. It may be said that this decision will benefit Susanka who does not deserve the benefit. If true, the courts have held that such an evil is less than the evil which would follow giving relief under circumstances such as are presented' in this case. We need consider no other points.

The decree of the Circuit Court is reversed and the cause remanded with directions to dismiss the complaint for want of equity.

Decree reversed and cause remanded with directions.

Burke and Lews, JJ., concur.