text:
    In re Estate of Thomas J. Shields, Deceased. Aetna Casualty and Surety Company, Appellant, v. Marshall Shields, Administrator of Estate of Thomas J. Shields, Deceased, Appellee.
    Gen. No. 42,572.

      Opinion filed November 17, 1943.
    Timothy J. Murtaugh, of CMcago, for appellant.
    Deneen & Massena, of Chicago, for appellee; Boy Massena and Balph B. Mack, both of Chicago, of counsel.
   Mr. Justice Burke

delivered the opinion of the court.

On and prior to July 1, 1937 Thomas J. Shields was employed by Bobert G. Geyer and Martha Geyer, co-partners doing business as the Geyer Dairy, and was earning a salary in excess of $40 a week. On that day, while so employed and while operating a delivery truck, the truck was struck by an automobile operated by Mrs. F. H. Young. As a result of the collision Mr. Shields died. He was divorced and not remarried and left surviving him a son, Marshall Shields, and a mother, Mrs. Minnie S. Feddeler. The-son was in no way dependent upon his father. The deceased had been living with his mother and contributing to her support. On November 6, 1937, she filed a claim before the Industrial Commission of Illinois. On April 22,1938 a petition for a lump sum was approved by that commission and $1,100 was paid to her as compensation under the provisions of par. (c), sec. 144, of the Workmen’s Compensation Act, ch. 48, Ill. Rev. Stat. 1941 [Jones Ill. Stats. Ann. 143.22]. On July 27, 1937, Marshall Shields was appointed administrator of the estate of Thomas J. Shields, deceased, by the probate court of Cook county, and on September 28, 1937, as administrator, he compromised the cause of action for the death of Thomas J. Shields against Mrs. F. H. Young for $750, and, as administrator, gave Mrs. Young a full release. On November 22, 1938 the administrator’s final report and account was approved by the probate court of Cook county and the administrator was discharged. The employers were not notified of the settlement made by the administrator, nor were they notified of • the closing of the estate. On December 20, 1938 the Aetna Casualty & Surety Company, the insurance carrier of the employers and which had paid the $1,100 as compensation to Mrs. Feddeler, filed a petition in the probate court of Cook county, setting forth the above facts and praying that the order approving the final report and account and discharging the administrator, be vacated, that an order be entered awarding it (the insurance carrier) a lien on .the proceeds of the settlement, and that the administrator be directed to pay the carrier the sum of $750 and to revise his final report and account accordingly. The administrator filed his written motion to strike the petition on the ground that “it affirmatively appears from the face of the petition that the petitioner is not' entitled to the relief prayed for by virtue of the terms and provisions of section 29 of the Workmen’s Compensation Act of the State of Illinois.” The court sustained the motion and dismissed the petition. The insurance carrier prosecuted an appeal to the circuit court of Cook county, where, on motion of the administrator, the petition was also dismissed. This appeal followed. The facts are not in dispute.

The insurance carrier’s theory of the case is that where an employee is killed through no negligence of the employer or his employees, and under circumstances creating a legal liability for damages from a person other than the employer to pay damages, that the employer who has paid compensation under the Workmen’s Compensation Act is entitled, under section 29 of that act [Jones Ill. Stats. Ann. 143.44], to be repaid the amount of compensation from any settlement made with such person. The administrator’s theory is “that where the employer has paid compensation only to the mother of the deceased employee, he cannot be subrogated to the rights of the employee’s son, the sole next of kin of the deceased employee, against the third party. The son and the personal representative of the deceased employee did not receive any compensation from the employer. As the proceeds of the recovery on the right of action for wrongful death were not part of the assets of the estate, nor subject to the claims of creditors, the Probate Court did not have jurisdiction of the subject matter of the petition filed by petitioner in the decedent’s estate in an effort to reach the proceeds of the right of action for wrongful death. Even if there were jurisdiction in the probate court, the plaintiff’s petition was not filed within the time allowed for filing claims.”

The insurance carrier maintains that the primary purpose of section 29 of the Workmen’s Compensation Act is the reimbursement of the employer for compensation paid under that act, and that the right retained by an injured employee or the personal representative to sue or settle with the negligent third party not under the act, as set forth in the second and succeeding paragraphs of section 29, is qualified by the fact that such a suit or settlement is for the benefit of both the injured employee or his personal representative and the employer, and that section 29 should be construed to effect its purpose. The administrator responds by pointing out that the compensation under the Workmen’s Compensation Act was due and paid solely to decedent’s mother, while the right of action on the death claim was in the administrator and the proceeds of the settlement were for the exclusive use of decedent’s son as the only next of kin; and that the employer is not entitled, under the provision of section 29, to be reimbursed for compensation payments out of the proceeds of the settlement of the death claim. The administrator further contends that the mother, as the sole dependent, was the only, one who could receive workmen’s compensation, while the son as the sole next of kin was the only one who could receive the proceeds of any recovery by the administrator on the claim for wrongful death; that no workmen’s compensation was paid to the deceased or to the administrator as the personal representative of the deceased; that the administrator as personal representative of the deceased did not receive, or agree to receive or institute suit for workmen’s compensation as required by the third paragraph of section 29; that the employer’s right of action against the third party has not been prejudiced by the administrator’s settlement with the third party; that the cases cited by the carrier are based on subrogation of the employer to the rights of the person to whom the employer has paid workmen’s compensation, and that when, as here, the right of action is not in the person receiving compensation, there is no basis for the doctrine of subrogation. Section 29 of the Workmen’s Compensation Act (sec. 166, ch. 48, Ill. Rev. Stat. 1941 [Jones Ill. Stats. Ann. 143.44]) consists of five paragraphs, and reads:

“[1] Where an injury or death for which compensation is payable by the employer under this Act was not proximately caused by the negligence of the employer or his employees, and was caused under circumstances creating a legal liability for damages in some person other than the employer to pay damages, such other person having also elected to be bound by this act, or being bound thereby under section three (3) of this act, then the right of the employee or personal representative to recover against sucli other person shall be transferred to his employer and such employer may bring legal proceedings against such other person to recover the damages sustained, in an amount not exceeding the aggregate amount of compensation payable under this Act, by reason of the injury or death of such employee. [2] Where the injury or death for which compensation is payable under this Act was not proximately caused by the negligence of the employer or his employees and was caused under circumstances creating a legal liability for damages on the part of some person other than the employer to pay damages, such other person having elected not to be bound by this Act, then legal proceedings may be taken against such other person to recover damages notwithstanding such employer’s payment of or liability to pay compensation under this Act. In such case, however, if the action against such other person is brought by the injured employee or his personal representative and judgment is obtained and paid, or settlement is made with such other person, either with or without suit, then from the amount received by such employee or personal representative there shall be paid to the employer the amount of compensation paid or to be paid by him to such employee or personal representative. [3] If the injured employee or his personal representative shall agree to receive compensation from the employer or accept from the employer any payment on account of such compensation, or -to institute proceedings to recover the same, the said employer may have or claim a lien upon any award, judgment or fund out of which such employee might be compensated from such third party. [4] In such actions brought by' the employee or his personal representative, he shall forthwith notify his employer by personal service or registered mail, of such fact and of the name of the court in which such suit is brought, filing proof thereof in such action. The employer may, at any time thereafter join in said action upon his motion so that all orders of court after hearing and judgment shall be made for his protection. No release or settlement of claim for damages by reason of such injury or death, and no satisfaction of judgment in such proceedings, shall be valid without the written consent of both employer and employee or his personal representative, except in the case of the employer, such consent shall not be required where said employer has been fully indemnified or protected by court order. [5] In the event the said employee or his personal representative shall fail to institute a proceeding against such third person at any time prior to three months before said action would be barred at law said employer may in his own name, or in the name of the employee, or his personal representative, commence a proceeding against such other person for the recovery of damages on account of such injury or death to the employee, and out of any amount recovered the employer shall pay over to the injured employee or his personal representative all sums collected from such other person by judgment or otherwise in excess of the amount of such compensation paid or to be paid under this Act, and costs, attorney’s fees and reasonable expenses as may be incurred by such employer in making such collection or in enforcing such liability.”

In O’Brien v. Chicago City Ry. Co., 305 Ill. 244, the Supreme Court said (253):

“The purpose of section 29 is to require this indemnification of the employer who has not been negligent, out of the recovery against the third person whose negligence caused the injury.”

In reviewing other cases decided by the Supreme Court, in the O’Brien case the court further said (255):

“From these cases it appears that we have held (1) that the common law right of action of an employee against his employer for negligently injuring him in the course of his employment is abolished; (2) that the common law right of action of an employee against any other person than his employer for negligently injuring him in the course of his employment where such other person is bound by the provisions of the Workmen’s Compensation Act is abolished; (3) that the common law right of action of an employee against any other person than his employer for negligently injuring him in the course of his employment where such other person is not bound by the provisions of the Workmen’s Compensation Act is not affected by the act but is preserved in its full extent to the employee; (4) while the right of action against the person negligently causing an injury who is not bound by the provisions of the act is unaffected by it, the employer who is free from negligence is entitled to indemnification from the proceeds of such cause of action for the compensation he is bound to pay, and the cause of action may be prosecuted in the name of either the employer or the employee, but in either case is for the benefit of both, in accordance with their respective rights; (5) that in cases of negligent injury caused by a person not bound by the act, the injured employee is not put to his election between compensation under the statute and damages at common law but may prosecute the common law action and the statutory claim for compensation at the same time.”

In Huntoon v. Pritchard, 371 Ill. 36, the Supreme Court said (45)

“Section 29 has as its object the reimbursement of the employer where he is compelled to pay compensation as a direct result of the negligence of another.”

In City of Chicago v. Pizel, 315 Ill. App. 216, we said (220):

“It seems, upon the whole, quite clear the intention of the legislature was to leave third parties, who by their negligence brought about an injury, responsible to the person injured and to the employer who without fault of himself or employees, was required to pay out money by reason of such negligence. A liberal construction should prevail to that end, and courts are not confined to the literal meaning of words used. In Uphoff v. Industrial Board, 271 Ill. 312, the Supreme Court said: ‘A thing within the intention is regarded within the statute though not within the letter. A thing within the letter is not within the statute if not also within the intention. When the intention can be collected from the statute, words may be modified or altered so as to obviate all inconsistency with such intention. Hoyne v. Danisch, 264 Ill. 467. When great inconvenience or absurd consequences will result from a particular construction that construction should be avoided, unless the meaning of the legislature be so plain and manifest that avoidance is impossible.’ ”

The administrator calls our attention to the provision of section 2 of the Wrongful Death Act (sec. 2, ch. 70, Ill. Rev. Stat. 1941 [Jones Ill. Stats. Ann. 38.02]) that every such action shall be brought by and in the name of the personal representatives of such deceased person, and the amount recovered in every such action shall be for the exclusive benefit of the widow and next of kin of such deceased person, and shall be distributed to such widow and next of kin the proportion provided by law in relation to the distribution of personal property left by persons dying intestate; and in every such action the jury may give such damages as they shall deem a fair and just compensation with reference to the pecuniary injuries resulting from such death, to the wife and next of kin of such deceased person, not exceeding the sum of $10,000. Marshall Shields, the son, was the only heir-at-law and next of ldn, and under this section he had the right to bring action for the wrongful death of his father. Section 6 of the Workmen’s Compensation Act provides that no common law or statutory right to recover damages for injury or death sustained by any employee while engaged in the line of his duty as such employee, other than the compensation provided, shall be available to any employee who is covered by the provisions of this act, to any one wholly or partially dependant upon him, the legal representatives of his estate, or any one otherwise entitled to recover damages for such injury. Section 7 of the act provides the amount of compensation which shall be paid for the injury to an employee resulting in death. Paragraph (c) of section 7, under which Mrs. Feddeler received $1,100, provides that if no amount is payable under paragraphs (a) or (b) of that section, and the employee leaves any parent or parents, child or children, who at the time of the injury were partially dependant upon the earnings of the employee, then such proportion of a sum equal to four times the average annual earnings of the employee as such dependency bears to total dependency, but not less in any event than $1,000 and not more in any event than $3,750 shall be paid. Paragraph (g) of section 7 provides that the compensation to be paid for injury which results in death shall be paid to the persons who form the basis for determining the amount of compensation to be paid by the employer, the respective shares to be in the proportion of their respective dependency at the time of the injury on the earnings of the deceased. This paragraph also provides that: “In a case where any of the persons who would be entitled to compensation is living at any place outside of the United States, then payment shall be made to the personal representative of the deceased employee. The distribution by such personal representative to the persons entitled shall be made to such persons and in such manner as the commission shall order.”

It cannot be disputed that if the person causing the death of the employee had been operating under the act that there would have been no right in the administrator to sue for or to recover anything for anyone. The first paragraph of the act transfers to the employer any action for causing the death of an employee, where the death was not proximately caused by the negligence of the employer or his employees, and was caused under circumstances creating a legal liability for damages in the third person, such third person being under the act. From this it appears that the persons who could sue for wrongful death and the persons who would be entitled to the proceeds of the recovery have been changed by section 29. Under the Workmen’s Compensation Act it was the duty of the carrier representing the employers to pay Mrs. Feddeler, who was partially dependent upon the earnings of her son, the amount provided by paragraph (c) of section 7 of the act. Paragraph (g) also provides that payment shall be made direct to the claimant, or to Mrs. Feddeler. Pursuant to the compensation act and the order of the Industrial Commission, payment of the $1,100 was so made. Marshall Shields could have presented a dependency claim under the compensation act, as did his grandmother, providing he was dependent on his father; but we understand he was not dependent. Without consulting the employers of the deceased, the administrator compromised the cause of action. In view of the fact that the settlement was for a sum less than the amount of the compensation paid to Mrs. Feddeler, the only one who could complain about the compromise would be the employers or their insurance carriers. The administrator had a clear right to file an action for the wrongful death. Under section 29, however, it was his duty to pay over to the employers or their insurance carriers out of any recovery from the third party all sums received, less costs, attorney’s fees and other expenses of litigation up to the $1,100 paid to Mrs. Feddeler. Marshall Shields, as the only heir-at-law and next of kin, would be entitled to receive only that which remained after the reimbursement to the employers. Our view is that the employers, represented by the insurance carrier, have a right to be reimbursed to the extent of the $750 paid to the administrator by Mrs. Young in settlement for the wrongful death of the employee. We assume that the attorney who represented the administrator in effecting the settlement and carrying on the proceedings in the probate court has been paid his fee and that the $750 represents the amount which was ready for distribution after the payment of all fees and costs.

As a further point the administrator urges that the-probate court, as a court of limited jurisdiction, does not have jurisdiction of the subject matter of plaintiff’s petition. That court appointed the administrator. While the record is silent, the usual procedure in cases of compromise is for the administrator to ask for the approval of the probate court. We recognize that the money so received by the administrator cannot be treated as part of the estate of the deceased and the creditors are excluded from any interest therein. The administrator declares that the disposition of the proceeds of the settlement of the death claim is neither a probate matter nor is it involved in the settlement of the estate of the deceased employee, because such proceeds are not part of the estate. Apparently, the administrator recognized that the probate court had jurisdiction to approve his account and to discharge him. We are of the opinion that the probate court had jurisdiction over the money which was held by the administrator as a result of the compromise. When he sought to distribute it in a manner contrary to the provisions of the Workmen’s Compensation Act, it cannot be doubted that the insurance carrier had a right to appear and object to such distribution. Marshall Shields did not suffer any pecuniary loss in the death of his father. While there is a presumption of pecuniary loss, that presumption may be overcome, and the record before us shows that he did not suffer any pecuniary loss. The administrator also contends that petitioner is barred from relief as he did not file his petition within the time allowed for filing claims. Neither the administrator in his capacity as an heir, nor the insurance carrier filed a claim. It was the duty of the administrator to determine who was entitled to the money and until an attempt was made to make distribution to persons other than the insurance carrier, it had no reason to file a petition. Furthermore, the written motion to strike, on which the court acted, was based on the contention that the petitioner was not entitled to the relief prayed for by virtue of the terms and provisions of section 29' of the Workmen’s Compensation Act. So far as appears from the record, the point that the claim of the carrier was not filed in time is made for the first time in this court. In our opinion it is without merit. Finally, the administrator asserts that “the employer who has paid death benefits is entitled to sue the third party who caused the injury only if the third person is under the act, or would have been under the act but for his election not to be bound by it. He relies on the case of Agar Packing & Provision Co. v. Becker, 301 Ill. App. 237, where the court said (241): “It is conceded that the third party in this suit is a farmer and by section 3 of the act [Ill. Rev. Stat. 1937, ch. 48, sec. 139; Jones Ill. Stats. Ann. 143.18] expressly exempts farmers from the operation of the act.”

This case was decided on the sole point that a farmer was involved and that farmers are exempt from the provisions of the Workmen’s Compensation Act. Mrs. Young was a housewife and housewives are not exempt. We are unable to agree with the contention of the administrator that the Agar case is applicable to the situation in the case at bar.

The order of the circuit court of Cook county is reversed and the cause remanded for further proceedings in harmony with these views.

Reversed and remanded with directions.

Kiley, J., concurs.

Hebel, P. J., took no part.


source: Caselaw Access Project

author: Mr. Justice Burke

license: Public Domain

text:
    August F. Kovich et al., Appellees, v. Live Stock National Bank of Chicago and Estelle F. Keller, Defendants. Appeal of Estelle F. Keller, Appellant.
    Gen. No. 42,594.
    Opinion filed November 17, 1943.
    James P. Moore and George A. Lane, both of Chicago, for appellant; George A. Lane, of Chicago, of counsel.
    Vito B. Cuttone and Ode L. Rankin, both of Chicago, for appellees.
   Mr. Justice Burke

delivered the opinion of the court.

On July 21,1930 Plinio Rigon and Maddalena Rigon filed a bill of complaint in the circuit court of Cook county against August F. Kovich, John Sorich and Adam Singer to recover $3,000 because of the alleged violation of the Blue Sky Law. The cause was referred to a master in chancery, who, on June 2, 1941, filed his report with findings of fact and a recommendation that a decree be entered against the defendants. On April 21, 1942 a final decree was entered against the defendants, 'awarding a judgment in the sum of $3,842.10, plus interest on $3,000 from March 14, 1939 to the date of the decree. On June 2, 1942 an affidavit for garnishment was filed and the Live Stock National Bank of Chicago was summoned as a garnishee. On June 30, 1942 plaintiffs filed another affidavit for garnishment, naming Estelle F. Keller as garnishee. The bank and Mrs. Keller answered the usual interrogatories and denied that either possessed any credits or effects of the judgment debtors. There was an account in the name of Mrs. Keller. She did not file an intervening claim to this account. Plaintiffs gave notice that they would contest the answers. . The cause was tried before the court without a jury, resulting in a finding and judgment that the plaintiffs recover from the garnishee, the Live Stock National Bank of Chicago, a corporation, the sum of $1,360.56. Estelle F. Keller appeals.

Appellant contends that “the money in the account of Estelle F. Keller at the Live Stock National Bank of Chicago was her own money, having been paid to her on July 10, 1941, in settlement of a pre-existing indebtedness and such a payment made upon sufficient consideration and in good faith should be sustained.” Plaintiffs maintain that the finding and judgment is supported by the great weight of the evidence and should be affirmed. Appellant maintains that a judgment creditor has no greater right to property in the hands of the garnishee than has the judgment debtor and that it is only the judgment debtor’s property and credits which can be reached by process of garnishment. Appellant also maintains that “where the legal title to money on deposit in a bank is in one name it cannot be garnisheed by the judgment creditor of another.” We reject this contention. The judgment creditor in a garnishment proceeding may prove that a bank credit listed in one name is in reality the credit of the judgment debtor. Garnishment as a remedy is administered upon equitable principles. A bare legal title is no shield against garnishment process. The case presented a question of fact as to whether the credit of $1,360.56, in the account of Estelle Keller at the bank at the time of the service of the garnishment summons, was in fact the credit of her father, August F. Kovich, the judgment debtor. A corporation known as Delizia Sausage Manufacturing Company, in which August F. Kovich, the judgment debtor, was the dominating personality, went out of existence in 1935. August F. Kovich, as an individual, then began doing business as Delizia Packing Company, and on February 1, 1935 opened a checking account in his name with the Live Stock National Bank of Chicago, making an initial deposit of $700. At the same time Kovich executed a power of attorney to his daughter, who later married and is now known as Estelle F. Keller, appellant. The power of attorney granted wide powers to his daughter. She was authorized to check upon all funds standing to his credit on the books of the bank, to indorse all checks, promissory notes, bills of lading and other negotiable instruments made payable to him or presented to the bank in his name for deposit, discount or collection. Pursuant to the power of attorney, Estelle Keller made out and signed all checks in conjunction with the disbursements made by, for and on behalf of the Delizia Packing Company until July 10, 1941. The exhibits introduced by plaintiffs consisting of original ledger sheets of the bank, show that August F. Kovich had a fairly good sized commercial account and an active one. These records show that from January 2, 1941 to July 10, 1941 the Delizia Packing Company deposited a total sum of $24,628.05. From 1935, up to the date of the trial Estelle Keller had charge of and was the bookkeeper and office worker, making all deposits and signing all the checks for all the transactions of the Delizia Packing Company. The exhibits show that August F. Kovich, doing business as Delizia Packing Company, took in his business an average of $4,000 a month, and that in the month of July 1941 only $623.47 was deposited in his account. On July 10, 1941 there was left in his account a balance of $8.25, which was withdrawn and the account was -closed. On that day (July 10,1941) Estelle Keller opened a checking account in her own name with an initial deposit of $2,293.24. It is admitted that this account was opened with checks from her father’s business. The signature card of the daughter shows that her business was sausage manufacturing under the name of Delizia Packing Company, 3737 S. Halsted street, Chicago. She gave her father a power of attorney. He also signed the signature card at the bank. On the date the account was opened, July 10, 1941, Estelle Keller signed “a declaration of sole ownership” to the bank, and stated that she was the sole owner and proprietor of the business and that no one else had any interest therein. The initial deposit of $2,293.24 thus made by Estelle Keller was the identical money received by her father in due course of business from the Delizia Packing Company, as shown by the book. It was represented by cash, checks, etc., received by the Delizia Packing Company from July 3 to July 10, 1941, and subsequent thereto Estelle Keller discharged the same identical duties in and about the business of the Delizia Packing Company as she had for and on behalf of her father. On September 10, 1941 August Kovich filed with the county clerk of Cook county an affidavit of ownership showing that he was the only person conducting and transacting the business of the Delizia Packing Company at 3737 S. Halsted street, Chicago. The wholesale food establishment license required by the ordinances was issued by the city to August F. Kovich continuously from 1935 up to and including 1942. The cash ledger account book was introduced and shows all moneys taken in from time to time by the Delizia Packing Company from 1935 to and including July 13,1942. This ledger shows a continuity in the business of the Delizia Packing Company before and after July 10, 1941.

There was testimony on the part of Estelle Keller that shortly after her father commenced business in 1935 he required additional capital and about that time she loaned him $700 to start in business, and that on April 9, 1935 she loaned him $300; that on May 20, 1935 she loaned him $400; that on June 25, 1935 she loaned him $200; that on August 8, 1936 she loaned him $175; and that on July 25, 1938 she loaned him $200. Testimony in her behalf tended to show that she loaned her father a total of $2,200. When she made these loans she did not obtain any written evidence of the obligation. She stated that she had an agreement with her father that he was to repay her whenever he was able to do so, that from time to time she asked for repayment and that on July 10, 1941 the loan was repaid. She testified further that she opened a checking account in her name with the sum so repaid with the Live Stock National Bank; that at that time she had a conversation with her father wherein she agreed to take care of his “payable checks” and that she alone would handle the money. She contends that she maintained that account at the bank to the date of the service of the garnishment summons and wrote checks on the account for the accommodation of her father for almost one year after she opened the checking account. These checks bear the following imprint from a .rubber stamp“Delizia Packing Company, 3737-39 South Halsted Street, Chicago, Illinois .(Bonl. 4123).” Estelle Keller testified that on July 10, 1941 the account was changed from the name of her father to her name. Interrogated as to the ownership of the bank account (which the parties frequently referred to as “money”), at the time the garnishment summons was served, she answered that it was her “dad’s money.” Appellant contends that at the time she testified that the account was her “dad’s money” she was confused and excited, and that on two other occasions she stated that it was her own account; that •she showed in detail why it was hers; that she lent her father money; that he repaid it to her; and that subsequently and until the date of the service of the garnishment summons she had written various checks on her account for the accommodation of her father. From a careful reading of the transcript of the testimony and the exhibits, we are convinced that the court correctly decided that the credit in the bank account at the time of the garnishment proceeding was in fact the credit of August F. Kovich, the judgment debtor and that he was the true owner of the account.

An additional point advanced by plaintiff is that on Mrs. Keller’s own theory that she owned the initial deposit in the account opened in her name, she lost title to it by using the account as a depository and checking account for the transaction of her father’s .business, and became a general creditor. The initial deposit in the new account, made on July 10,1941, was $2-,293.24. It is conceded that the new account was used exclusively for the convenience of the judgment debtor’s packing business. Mrs. Keller denied any .interest in the business of her father. She maintains that her father paid her a pre-existing debt and that with such payment she opened up the account in her own name. She claimed only the initial deposit. The receipts of her father’s business, approximately $60,000, were all rim through the account. She had no interest in the funds going through that account. The daily balance shown by the bank account went as low as $133.07 on October 14, 1941. It is apparent that at that time all of the initial deposit had been checked out except $133.07, and that all credits thereafter going into the account were credits of her father. Mrs. Keller did not keep up a daily balance of $2,293.24, the amount of the initial balance, which she claims, but overdrew this deposit. We agree with counsel for plaintiff that she is not now in a position to say that she is entitled to all of the original deposit and that under her own theory she would be entitled to only the lowest daily balance or $133.07. We are of the opinion that this case was correctly decided and the judgment of the circuit court of Cook county is affirmed.

Judgment affirmed.

Kiley, J., concurs.

Hebel, P. J., took no part.


text:
    Home for Destitute Crippled Children and Robert F. Carr, Trustee, Appellees, v. Paul Chamberlain Boomer et al., Defendants. Appeal of Paul Chamberlain Boomer and Laura Boomer, Appellants.
    Gen. No. 42,614.

      Opinion filed November 17, 1943.
    Rehearing denied December 27, 1943.
    Harris F. Williams, of Chicago, for appellants.
    Cameron, Heath & Burry, of Chicago, for appellees; John R. Heath, of Chicago, of counsel.
   Mr. Justice Burke

delivered the opinion of the court.

In an amended and supplemental complaint filed in the superior court of Cook county on March 21, 1938, the Home for Destitute Crippled Children, a corporation, and Robert P. Carr, as trustee, plaintiffs, sought to compel Dr. Paul Chamberlain Boomer and Laura Boomer to deliver to the trustees certain stock certificates constituting the corpus of the trust as described in the trust instrument dated August 27, 1924, from Boomer as grantor, and for other incidental relief. Dr. Boomer and Ms wife Lanra Boomer defended on the principal ground that there had never been any delivery of the stock certificates and that the trust instrument, in and of itself, was not sufficient to create a trust. The master and chancellor held that the trust instrument was sufficient to create a trust without the physical delivery of the certificates, and a decree was entered on February 14,1940 to that effect, directing that the certificates be delivered as prayed. This court affirmed the decree, holding that the physical delivery of the certificates was not necessary, and further that if such delivery were necessary, there had been delivery at a date subsequent to the execution of the trust instrument. The case is reported as Home for Destitute Crippled Children v. Boomer, 308 Ill. App. 170. A petition for leave to appeal was denied by the Supreme Court of Illinois. Paragraphs J, K and L of the decree of February 14, 1940 read:

“J. Defendants Paul Chamberlain Boomer and Laura Boomer shall pay the costs of this cause, and the court hereby retains jurisdiction of tMs cause for the purpose of entering herein a subsequent order or decree touching the fixing of master’s fees herein and the taxing of such fees and costs.
“K. The court hereby retains jurisdiction of this cause for the purpose of entering a subsequent order or decree touching the allowance and payment out of the corpus of the said trust of plaintiffs’ costs and expenses of suit and solicitors’ fees and of the reasonable fees of The First National Bank of Chicago as custodian of the said certificates under order of this court.
“L. The court hereby retains jurisdiction of this cause as to matters adjudicated hereby, and leave is hereby granted to all parties hereto and to any successor trustee or trustees under the said trust instrument to apply to this court hereafter for such other and further relief and instructions in the premises, as they or any of them may deem necessary. The service of a copy of any petition filed pursuant to this paragraph, or paragraph J or K above upon the parties defendant or plaintiff herein personally, or upon their respective solicitors of record shall be sufficient to give this court jurisdiction over the persons so served with respect to the subject matter of such petition.”

On September 19, 1941, after the case came back to the trial court, plaintiffs filed a petition for an order relating to the distribution of funds. On October 21, 1941 an order was entered pursuant to an agreement of the parties, substituting the First National Bank of Chicago as sole trustee. On November 21, 1941 plaintiffs filed another petition for an order respecting the payment of accumulated dividends to the trustee, and for the allowance of plaintiffs’ attorneys’ fees and expenses of suit, including reimbursement to plaintiffs for certain expenses and also for $1,947.10 which they had paid to Master John J. Kelly, to whom the original reference had been made. Plaintiffs sought by these petitions to have the costs taxed against the defendants Boomer, and the attorneys’ fees and expenses paid out of the income of the trust rather than out of the principal. Since Boomer is entitled to receive the net income, of the trust estate during his lifetime, he strenuously resisted plaintiffs’ efforts in this respect. The chancellor referred the matter to Master Herbert C. Paschen, who filed his report recommending the taxing of costs against defendants and the allowance to plaintiffs of their expenses incurred, including an allowance for attorneys’ fees of $30,000, but recommending, with certain minor exceptions, that such sums be paid out of the corpus of the trust rather than out of the income of the trust estate. Both sides filed exceptions to the master’s report. The chancellor and masters who passed on the ease in chief are not the same as those who passed on the reserved issues. On November 20, 1942 tbe chancellor entered a supplemental decree, which, in substance, sustained the master’s report in all respects except that it directed that the amounts allowed to plaintiffs as attorneys’ fees and expenses be paid out of the income rather than the principal of the trust. From this supplemental decree the Boomers have appealed.

Plaintiffs’ (appellees) theory of the case is that in litigation of this type, brought by a trustee to recover possession of the trust res, for enforcement of the terms of the trust and for an accounting, the plaintiff is not required to bear the expense out of his own pocket, but is entitled to reimbursement out of the trust estate; that where, as in this case, the suit and expense thereof have been necessitated by the wrongful conduct of the income beneficiary in denying the existence of the trust and refusing to deliver the res to the trustee, the plaintiffs’ reimbursement should come out of the income rather than principal; that the trust indenture, under which the plaintiff Carr was acting as trustee, contains in paragraph 8 an express provision that all legal charges and expenses incurred by the trustees shall be paid out of income; and that the amounts allowed by the chancellor as reimbursement were reasonable and proper. Defendants’ (appellants) theory of the case is that plaintiffs, because of their secretive conduct in paying the “excessive fees of Master Kelly” in violation of the laws and rules of court and without notice to defendants and without an order of court therefor, are not in court with clean hands and are entitled to recover nothing in this proceeding; that the fees of Master Kelly, so improperly paid, are excessive under all of the decisions of the courts of review in this State; that the fees of Master Paschen, as fixed by the decree, are excessive in the amount of $118.14; that the item of $331.90 for the bank as custodian, the expense item of $868.74 for plaintiffs, the item of $30,000 for plaintiffs’ attorneys’ fees, and the sum of $355 for the bank’s attorney and appearance fee, all charged against Dr. Boomer’s income, cannot stand, for the additional reason that there is neither contract nor statute to support them; and that the decree of February 14,1940, being incomplete, and plaintiffs having come into a court of equity seeking its enforcement, are entitled to no relief until they have shown that such decree is just and equitable, and that their conduct in respect thereto has been above legal reproach, which the plaintiffs have utterly failed to do, and that a court of equity, in the light of the record, cannot enforce the decree of February 14, 1940 now or at any other time under the law of this and other States.

It appears that all the costs of the case which had been taxed against him up to the date of the supplemental decree of November 20, 1942, have been paid by Dr. Boomer. Master Kelly’s fees had never been taxed up to the date of the supplemental decree, but were actually paid on November 3, 1939 by the Home. In his certificate Master Kelly showed $347.10 as having been charged for taking testimony at the statutory rate, and in addition thereto $1,600 for time devoted to the consideration of the case, etc., being 160 hours at $10 per hour. The charge of $347.10 is in accordance with the statutory rate of 15 cents per folio (100 words). The allowance of a fee of $1,600 was based on the statutory provision that the master shall receive such compensation as the court may deem just. (Section 20 of an act concerning fees and salaries, sec. 38, ch. 53, Ill. Rev. Stat. 1941 [Jones Ill. Stats. Ann. 48.020]). Master Kelly issued his original report on September 19, 1939. Attached to this report was his certificate of fees and charges showing total charges of $1,947.10. Objections to the report were filed by the Boomers and also by the plaintiffs. On October 21, 1939 Master Kelly made a supplemental report. Objections were filed by the Boomers to the master’s supplemental report. On October 30, 1939 Master Kelly made a second supplemental report. On November 3, 1939, four days after tbe issuance of the second supplemental report, the Home paid and the master accepted the fees in the sum of $1,947.10, without such fees having been taxed and without an opportunity to the defendants to make objection thereto. Master Kelly’s report, including the supplemental report and the second supplemental report, was filed in the clerk’s office on November 8, 1939, five days after his fees were paid. At the hearing before Master Paschen an amended certificate was filed by Master Kelly giving more details as to the time which he spent on the case. One of the criticisms voiced by defendants is that the fees to the master were paid without the knowledge of the defendants. The record shows that at the time the parties were discussing the form of the original decree, the defendants then knew that the master’s fees had been paid by plaintiffs. Defendants call our attention to the following from sections 2 and 3 of rule 58 of the rules of the superior court:

“Within ten days after publication and service of notice of the report, the parties desiring so to do shall file their objections thereto. The Master shall dispose of all objections so filed within fourteen days thereafter, and upon the disposition of all such objections shall promptly apply for an order taxing his fees upon the reference. No Master shall, prior to the disposition of all objections to such report, request of or accept from any party litigant, or his counsel, any stipulation as to the amount of his Master’s fees. Nor shall he, prior to the taxation of his fees, request or receive any payment on account of his services upon the reference, except for fees already accrued for the tailing and reporting of testimony at the statutory rate and taxable stenographer’s fees.” Master Kelly did not “promptly apply for an order taxing his fees upon the reference.” The chancellor was well aware that the master did not apply for an order taxing his fees. The failure of the master to promptly apply for an order taxing his fees, while a technical violation of the rule, did not harm any one. No doubt, the chancellor felt, as we do, that his failure to tax his fees would not affect the rights of the parties. Accordingly, the court retained jurisdiction for the purpose. of entering a subsequent order fixing and taxing the fees of the master. We are of the opinion that the payment of Master Kelly’s fees, without securing the consent of defendants and without having such fees taxed, should not deprive Master Kelly of his fees or the right of plaintiffs to require defendants to pay such fees. The proper practice under the rules of court is for the master, upon the disposition of all objections, to promptly apply for an order taxing his fees upon the reference. He may mate such application, having disposed of all objections, and before filing his report. It will be observed that Master Kelly did not, prior to the disposition of all objections to such report, request or accept any stipulation as to the amount of his fees, or receive any fees. The purpose of the rule is to prevent a situation from arising where the master could be influenced in any way before the rendition of his final report by reason of the payment of his fees by any of the parties litigant. In the instant case the master rendered his report and disposed of all objections before he accepted his fees. We are of the opinion that the plaintiffs are entitled to be reimbursed for the fees so paid.

Master Kelly charged at the rate of $10 per hour for 160 hours taken up in consideration of the case, etc., or $1,600. Defendants state that if we consider 6 hours to constitute a day’s work, Master Kelly put in 26% days, and that at $34 per day, which counsel asserts is “the highest amount ever allowed,” the fee would be approximately $906, and that this sum, added to the $347.10, gives a total of approximately $1,253.10, the maximum that Master Kelly could charge. Defendants point out that the Supreme Court held $35 a day to be too much. (Klekamp v. Klekamp, 275 Ill. 98, 107.) Defendants state further that Master Kelly’s fees at the rate of $10 per hour were excessive; that his charges are equivalent to $60 a day for a six hour day, $70 a day for a seven hour day or $80 a day for an eight hour day, whereas $34 a day is the largest amount that has ever been approved for masters’ fees by courts of review in this State, citing Klekamp v. Klekamp, 275 Ill. 98,107; Herpick v. Williams, 300 Ill. 540; Comstock v. Morgan Park Trust & Savings Bank, 367 Ill. 276, 283; Norton v. Jordan, 360 Ill. 419, and several other cases. We have read all of the cases cited and arrive at the conclusion that they do not lay down a hard and fast rule that a master cannot receive more than $34 per day. The cost of living is greatly increased, and particularly in the City of Chicago, since the Klekamp opinion. The standard court day in Cook county is five hours. We are of the opinion that the charge made by Master Kelly of $10 per hour is just compensation and is not in conflict with the Illinois cases cited to us. Defendants insist that Master Paschen’s fees for examining questions in issue and reporting his conclusions thereon at the rate of $10 an hour for 23 hours, or $230, are subject to the objections raised against similar charges by Master Kelly. Each of the parties paid to Master Paschen one half of his fees. We are of the opinion that the chancellor was correct in directing that the defendants pay to the Home the sum of $374.60, which was the amount paid by it as its share of Master Paschen’s fees. Our remarks as to the reasonableness of the fees of Master Kelly are applicable to the fees of Master Paschen.

Master Paschen recommended the allowance of $30,000 attorneys’ fees for the plaintiffs to be paid out of the corpus, but the chancellor in the supplemental decree entered November 20, 1942 provided that the $30,000 should be paid out of income. Defendants maintain that the $30,000 awarded to plaintiffs as attorneys’ fees and the sum of $355 for the bank’s attorney and appearance fee, all charged against income, caiinot stand, for the reason that there is neither contract nor statute to support them, and for the further reasons that such fees are unreasonable and that the decree of February 14, 1940, “being incomplete and the plaintiffs having again come into a court of equity seeking its enforcement,” are entitled to no relief until they have shown that such decree is just and equitable and that their conduct in respect thereto has been above legal reproach. Defendants voice similar objections to the amount of $868.74 allowed to the Home for its out-of-pocket expenses covering the fees of the court reporters, printing bills and so forth, and to the item of $331.90 allowed to the bank as custodian of the securities. Plaintiffs insist that the amounts so allowed were reasonable and proper, and state that their attorneys spent 189% hours before the master and the various courts, all of which time was spent by partners. In addition thereto 1,158 hours were devoted to the matter by plaintiffs’ attorneys, of which 940% hours were partners’ time, and 217% hours associates’ time. Thus, a total of 1,347% hours, of which 1,130 hours were partners’ time and 217% hours were associates’ time, were devoted to this case by plaintiffs’ attorneys. This was a complicated and hard fought case. The object for which the services were required was fully accomplished. The trustee’s title to the stock was established, the certificates were recovered from Dr. Boomer and are now safely in the hands of the trustee. These services resulted in bringing into court a very valuable trust fund against the contention of the defendants that no such trust existed. The value of the stock at the time suit was commenced was approximately $200,000; at the time the decree was entered $224,000, and at the time the certificates were turned over to the trustee approximately $234,000. In addition at the time the supplemental decree of November 20, 1942 was entered, there was in the hands of the trustee over $36,000 in accumulated income. The fee of $30,000 allowed for the services of the attorneys for plaintiffs is approximately 13 per cent of the value of the stocks at the time they were turned over to the trustee. Following the practice of the courts in analogous factual situations, this fee is reasonable, and we so find. The record is clear that the $868.74 allowed to the Home for its out-of-pocket expenses represented amounts actually paid out, and that such amounts were reasonable. The item of $331.90 for the bank as custodian and the item of $355 for the bank’s attorney and appearance fee are reasonable charges.

Defendants assert that the decree of February 14, 1940 is incomplete and unenforceable, and that plaintiffs are treating such decree as being subject to further examination as to justness and conscience; that plaintiffs are refusing to follow decretal paragraph K, which provides for the payment of plaintiffs’ costs and expenses, solicitors’ fees and the fees of the First National Bank of Chicago out of the corpus, and are claiming that these three fees should be paid out of income. Defendants argue that they are entitled to have the decree re-examined for 'justness and conscience before any relief thereunder, such as is being sought by the plaintiffs, can be granted, and that if the plaintiffs, whose decree it is, can open it up for justness and equity, defendants should certainly have the same privilege. • We have read the cases cited by defendants in support of their position. In Lancaster v. Snow, 184 Ill. 534, the court said:

“ Since the opinion was filed in Wadhams v. Gay, 73 Ill. 415, the rule has been in this state that where an original bill is filed asking for a decree to carry a former decree into execution, the court may look into the original case and see if the former decree is equitable and just, and if it is not, may refuse to enter a decree or enforce and carry it out.”

We are of the opinion that the decree of February 14, 1940 was equitable and just, and that it is enforceable. In fact, that decree, except as to the payment of attorneys’ fees, expenses and masters’ fees, has been carried but. Having decided that the fees allowed by the chancellor are reasonable, that the decree is' just and that the fees should be paid, we turn now to a consideration of the proposition as to whether plaintiffs are entitled to be reimbursed out of the trust estate for their costs and expenses of suit, including attorneys’fees.

Paragraph 7 of the trust instrument vests in the trustees full power and authority to take all steps and proceedings at law or in equity or otherwise to protect the trust estate, and to enforce all rights of action arising out of or in connection with any of the securities, constituting a part of such estate. Paragraph 9 contains the usual provision that the trustees in the discharge of their duties may employ attorneys and counsel. Paragraph 8 provides that the trustees shall at all times during the continuance of the trust, “collect all the income, interest and dividends of the trust estate and after deducting therefrom all taxes, assessments, legal charges and expenses paid out or incurred in connection with the care and management of the trust property and the exercise of the powers hereby conferred, pay over the balance thereof to the persons and at the time and in the manner hereinbefore specified. The trustees are hereby given and they shall have a lien upon the trust estate for all such taxes, assessments, legal charges and expenses.” From this provision it will be noted that the trustees are empowered to employ attorneys and to take all necessary steps and proceedings to protect the trust estate. Paragraph 8 expressly provides that all legal charges and expenses in connection with the care and management of the trust property and the exercise of the powers conferred, shall he deducted from the income of the trust, the balance thereof to be paid over to the persons specified. Our view is that the trust instrument contemplates that the expenses and fees incurred by plaintiffs should be chargeable against the income of the trust.

The well established principle of law is that in the absence of provisions to the contrary in the trust instrument, ordinary expenses of administration of a trust are chargeable to income and extraordinary expenses to principal, and it is usually held that the expenses of a trustee who has been required to lay money out in the protection of a trust estate, including attorneys’ fees, will be charged to the principal of the trust rather than to income. The rule is also well established that where a beneficiary brings a suit against the trustee which is groundless, the solicitors’ fees and expenses of the trustee in defending the charge are to be paid out of the share of the complainant in the trust estate and not charged against the estate generally, nor against a general fund by which co-beneficiaries would have to contribute. (Patterson v. Northern Trust Co., 286 Ill. 564.) The rule is succinctly stated in Mandell v. Green, 108 Mass. 277, as follows: “The case falls within the rule by which courts of equity impose the costs of necessary litigation upon the party who has caused it. ” We have held that under the express provision of the trust instrument attorneys’ fees and expenses are property payable out of income. We are also satisfied that even though there were no such provisions in the trust agreement the costs, expenses and attorneys’ fees should be charged against income because of the wrongful conduct of Dr. Boomer. The statement of facts relating to this conduct will he found in the previous opinion of this court (308 Ill. App. 170).

Defendants state that costs are not recoverable at common law. Costs were not recoverable at common law and they can be recovered only in cases where there is statutory authority therefor. Wintersteen v. National Cooperage & Woodenware Co., 361 Ill. 95, 108. Any party claiming a judgment for his costs must bring himself within the operation of some statutory provision and courts have no power to tax costs against anyone on merely equitable grounds. (Patterson v. Northern Trust Co., 286 Ill. 564.) However, in the instant case the only amounts in dispute taxed as costs against the defendants are the masters’ fees. The other amounts were directed to be paid out of the income of the trust.

We are convinced that the attorneys’ fees and expenses should be paid out of the income. At this stage we are confronted with paragraph K of the decree of February 14, 1940, which provided that the court retained jurisdiction “for the purpose of entering a subsequent order or decree touching the allowance and payment out of the corpus of the said trust of plaintiffs’ costs and expenses of suit and solicitors’ fees and of the reasonable fees of The First National Bank of Chicago as custodian.” Defendants urge that if Dr. Boomer had elected to abide by the decree when entered, the costs, including fees and expenses, would then and there have been fixed and paid, and that they could not have been paid at that time except out of the corpus as provided in paragraph K because there was no income on hand at that time, Dr. Boomer not having been deprived of the income prior to the entry of the decree. Had Dr. Boomer decided, before perfecting his appeal, that he would abide by the decree, the matter of the payment of fees and expenses would' have to be settled by the chancellor, unless the parties came to an agreement and then the agreement would require the chancellor’s approval. Plaintiffs maintain that there was no judicial determination by the decree of February 14, 1940 that the attorneys’ fees, costs and expenses be paid out of the corpus of the trust. They assert that paragraph K was nothing more than a reservation of jurisdiction by the court for the purpose of entering a decree dealing with such matters at a later date, and that the words “out of the corpus of the said trust” should be regarded as mere surplusage. The record shows that the question as to whether the fees and expenses should be paid out of the corpus or income was not discussed or argued before the chancellor when the decree was entered, or at any time prior thereto. Our view is that paragraph K reserved the entire matter of the determination of the fees and expenses, and that the court in the supplemental decree entered on November 20, 1942 was right in directing that the plaintiffs’ attorneys’ fees and expenses bre paid out of the income rather than out of the corpus of the” estate. Under the circumstances presented by the record, it would be wholly inequitable and unjust that the destitute' and crippled children of Chicago should bear the expense of recovering and preserving this fund created for their benefit, and that Dr. Boomer, who denied the very existence of the trust, and who in some fashion acquired possession of the securities, claimed them as his own and resisted all efforts to recover them until he was compelled by the decree to deliver them, should escape payment thereof.

For the reasons stated, the decree of the superior court of Cook county is affirmed.

Decree affirmed.

Kiley, J., concurs.

Hebel, P. J., took no part.


text:
    American Sanitary Rag Company, Appellant, v. United States Hoffman Machinery Corporation, Appellee.
    Gen. No. 42,656.

      Opinion filed November 17, 1943.
    Rehearing denied December 27, 1943.
    Chapman, Silverberg & Anixter, of Chicago, for appellant.
    Walter A. Myer, of Chicago, for appellee; Julius L. Kabaker, of Chicago, of counsel.
   Mr. Justice Burke

delivered the opinion of the court.

The American Sanitary Bag Company, a corporation, filed an amended complaint in two counts in the municipal court of Chicago against United States Hoffman Machinery Corporation. The action arose out of a written contract dated July 10, 1940, under the terms of which plaintiff purchased and defendant sold a rebuilt Troy 54" & 120" Nine Pocket Monel Washer for $2,100. The following clauses appear in the contract: “Machine to be free of mechanical defects for one year. . . . There shall be no liability for breach of warranty, express or implied,' on the part of the seller if any claim arises by reason of faulty operation of property by the buyer nor unless notice of breach of such warranty is mailed by registered letter to seller within five (5) days of such breach.” The first count set forth an election to rescind the contract because of breach of the warranty that the machinery was to be free from mechanical defects for one year and asked judgment in the amount of the purchase price of $2,100. The second count was for damages sustained by reason of the breach. On motion of defendant an order of court required plaintiff to elect as to its remedies and it elected to proceed on the first count, which claimed a rescission of the contract and asked for the return of the purchase price. The second count was thereupon stricken. Answering, defendant admitted the contract, the warranty that the machine was to he free from mechanical defects for one year, the payment of the sum of $2,100 as the purchase price; that it (defendant)'was advised of mechanical defects and that it received notice of rescission of the contract; denied that plaintiff had a claim; that plaintiff advised defendant that the machine did not comply with the warranty, or that plaintiff was damaged in the sum of $2,100. Defendant further answered that all of the mechanical defects were corrected and adjusted by it to the satisfaction of plaintiff; that such defects were caused by the improper use by the plaintiff of the machine; that the notice of rescission was received on April 2,1942 and was not delivered within a reasonable time after delivery. The case was tried before the court and a jury, resulting in a verdict finding the issues against defendant with damages of $2,100. A motion by defendant for a directed verdict was reserved. The court overruled defendant’s motion for a new trial, but granted defendants motion for a judgment notwithstanding the verdict, and plaintiff prosecutes this appeal.

Plaintiff’s theory is that the washer purchased by it was warranted to be free from mechanical defects for one year; that defects became apparent and defendant attempted to repair the machine; that plaintiff at the request of defendant retained the machine until such time as defendant refused to repair it; that the warranty was not one to repair but that the machine was to be free from defects; that plaintiff within a reasonable time rescinded the sale and requested the return of the purchase price. Defendant’s theory is that the notice of rescission, dated April 2, 1942, was given one year and nine months after the date of the contract and one year and seven months after delivery of the washer, which notification was not within a reasonable time as a matter of law; that the continuous use of the machine by plaintiff for approximately 16 months was an acceptance and waiver of the right to rescind; that the notice of rescission was an illegal demand coupled with a request for damages; that the payment of the purchase price of $2,100 by the plaintiff on January 4, 1941, four months after the use of the machine and after knowledge by it of any defects, was an acceptance of the machine and waived its right to rescind; and that the contract required plaintiff to give notice of breach of warranty by registered letter within five days after the breach, which was not done.

Plaintiff- conducted its business at 1001 North avenue, Chicago. Defendant’s Chicago office was located at 535 S. Franklin street. The" machine was to be used for washing dirty wiping rags. The rags are delivered to plaintiff’s place of business by rag dealers. Plaintiff sorts the rags and washes them. Plaintiff understood that it was purchasing a rebuilt washer. The machine was delivered and installed on or about September 10,1940. After the first few weeks the machine began to give plaintiff trouble because of defects such as broken gears and trunions and a leaky dump valve. Between September 21, 1940 and December 18, 1941 defendant made certain repairs. There was testimony by two of plaintiff’s agents that each time something went wrong with the machine, defendant’s agents told them they would take care of it and to be patient, and on various occasions requested them not to return the machine. Finally, in January 1942 defendant refused to fix the machine. On April 2, 1942 plaintiff wrote a letter to defendant, the concluding paragraph of which reads: ‘‘ Therefore, we now advise you that we do hereby rescind the said contract and demand that you forthwith return the purchase price of $2,100.00 plus the amount of $4,000.00 to cover damages sustained by reason of the breach of warranty. We are holding the equipment at our plant subject to your direction as to shipment to you or your pick-up.” There is testimony on behalf of plaintiff that the machine was properly greased and never overloaded, and on behalf of defendant that the machine was dry and overloaded.

It is the law of this State that on a motion by a defendant for a judgment non obstante veredicto, the only question preserved for review is, does the evidence on the part of the plaintiff, if taken as true and most favorably considered for him, with all just inferences to be drawn therefrom, make out a prima facie case on the part of the plaintiff? The question of the weight of the evidence or the credibility of the witnesses cannot be considered. The burden of proving that the contract was rescinded was on the plaintiff. Plaintiff argues that whether or not the offer to return the machine and to rescind the contract was made in a reasonable time is a question of fact for the jury to be determined in the light of attending circumstances. Plaintiff asserts that it relied upon and was induced by the defendant to hold the machine by the representation of the defendant that the defects would be remedied. Defendant urges that all reasonable men can agree that notice of rescission given April 2, 1942, of the contract entered into in July 1940, was too late. The rule is that if a purchaser desires to rescind a contract of sale and return the article purchased, he must offer it back as soon as he discovers the breach, or after he has had reasonable time for examination, and he waives the right to rescind by continuing to use the article for a longer time than is reasonable for a trial, and must have recourse to his action for damages in a suit for breach of warranty, or as a defense to a suit for the contract price. Conner v. Borland-Grannis Co., 294 Ill. 58, 62. However, where the delay in giving notice of rescission, or in conveying the intent to the seller is caused or induced by the seller, this fact is to be considered by the jury in determining the reasonableness of such notice. Dorrance v. Dearborn Power Co., 233 Ill. 354, 361; Sandwich Mfg. Co. v. Kelly, 26 Ill. App. 394. We agree with plaintiff that the only real issue presented on the record is whether or not the question as to reasonableness of the time of the rescission in this case is one of law or of fact. There was evidence that constant defects occurred in the machine; that defendant attempted to remedy such defects; that the defendant induced plaintiff to believe that if plaintiff would retain the machine such defects would be corrected, and that after many attempts to correct the defects, defendant stated that it could do nothing more. There is evidence to support plaintiff’s position that reliance was placed upon the defendant each time an attempt was made to correct the defects. Finally, the machine was stored in plaintiff’s plant and defendant was notified. We are of the opinion that under the facts and circumstances of this case the dispute as to the reasonableness of the notice of rescission presented a question of fact for the jury.

Defendant, citing Claybourn Corp. v. Cuneo Press, 27 Fed. Supp. 231, contends that the notice of rescission was an illegal demand. In that case there was a conditional offer to return the presses. The letter of April 2, 1942 in the instant case rescinded the contract and told defendant that the machine was being held subject to its order. There was no condition attached to the statement of rescission. While in the letter plaintiff demanded damages of $4,000 in addition to the purchase price, the demand for this additional sum did not have the effect of weakening the notice of rescission. Defendant stresses the fact that the purchase price was paid four months after the use of the machine and after knowledge by plaintiff of the defects, and that this was an acceptance and waived plaintiff’s right to rescind. Such payment under these circumstances tended to support defendant’s contention. This testimony undoubtedly was given due consideration by the jury in deciding on the reasonableness of the notice of rescission. There is competent evidence that -at the time payment of the purchase price was made the machine was not satisfactory. It would be entirely consistent for the purchaser to pay for the machine relying on the good faith of the seller in carrying out its warranty. The contract between the parties states that “there shall be no liability for breach of warranty, express or implied, . . . unless notice of breach of such warranty is mailed by registered letter to the seller within five days of such breach.” We agree that the evidence shows that defendant waived this formal notice by registered mail. However, it did receive ample notice. Whether notice was waived became a question of fact for the jury. We are of the opinion that the record shows the verdict of the jury was in accordance with the justice of the case.

The judgment of the municipal court of Chicago is reversed and the cause remanded with directions to enter judgment in accordance with the verdict of the jury, with interest from the date such verdict was returned.

Reversed and remanded with directions.

Kiley, J., concurs.

Hebel, P. J., took no part.


author: Mr. Jtjstce Burke

text:
    Stanley Szewczyk, Appellee, v. Sophie Szewczyk, Appellant.
    Gen. No. 42,671.

      Opinion filed November 17, 1943.
    Mitchell Kilanowski, of Chicago, for appellant.
    Thos. A. McCaffrey, of Chicago, for appellee.
   Mr. Jtjstce Burke

delivered the opinion of the court.

On November 17,1942 Stanley Szewczyk filed a complaint for divorce in the circuit court of Cook county against Sophie Szewczyk, alleging that on July 21,1934 they were married; that there was no issue of the marriage; and that defendant was guilty of extreme and repeated cruelty. On November 25, 1942 defendant filed a petition stating that plaintiff departed the abode of the parties, leaving her with John, the 11-year-old boy of plaintiff, by a former marriage. She prayed for a reasonable sum for the support and maintenance of John and for her solicitor’s fees. Plaintiff answered the petition and asked that the court enter an order “placing the said child in suitable Catholic boarding-school, the expenses of which this plaintiff is willing to bear,” which he stated would be for the best interest of the child. Defendant answered the complaint for divorce, denying the allegations of cruelty and asserting- that on November 12, 1942, by a judgment of the municipal court of Chicago, plaintiff was found guilty of assault and battery upon her. In her answer defendant also stated that plaintiff’s son John “was raised and nurtured by said defendant and that plaintiff abandoned the child on the 12th day of November 1942.” On January 8, 1943 plaintiff filed a petition representing that John was his (plaintiff’s) child by a previous marriage and that “the said child has been in the care, custody and control of the defendant Sophie Szewezyk”; that on December 2, 1942 plaintiff visited the home of the defendant for the purpose of taking custody of his child, but that defendant refused to allow him to take the child; that he believes it to be for the best interest of John that he be placed in a suitable Catholic boarding school; and prayed for an order directing defendant to deliver the custody of John to him. Defendant answered the petition, stating that she married plaintiff on July 21, 1934, at which time John was two and one-half years of age; that she raised, educated and cared for John as his own mother; that on November 12,1942 plaintiff quit and abandoned their home and left her without any means of support other than her own earnings; that plaintiff contributed only $5 toward the support and maintenance of John; that during the time that the parties lived together plaintiff pursued a course of cruel and inhuman treatment toward this defendant and the minor child; that plaintiff is not a member of any Catholic church, nor has he a household wherein he could properly care for the said John; that the said John fears the said Stanley Szewezyk in that bodily harm may come to him; and that it is the wish and desire and request of the said John that he remain with the defendant. In her answer the defendant stated further that since the time that plaintiff left their home John improved “in his disposition and in his studies at school,” and that to grant the custody of John to plaintiff would be detrimental to his (John’s) welfare. She prayed that a full and complete hearing be granted upon the petition and answer, that the care, custody and maintenance of John be awarded to her and that she be allowed reasonable attorney’s fees. On January 22, 1943 tbe court, having read the petition and answer and having considered the arguments of counsel, entered an order directing that defendant give the custody of John Szewczyk, the son of plaintiff, to the plaintiff on or before February 15, 1943, and denied the petition of defendant for attorney’s fees.

The report of proceedings shows that in the hearing there was a discussion as to the law. The attorney for defendant then stated that he wished to make proof of the allegations in the answer to the petition. The court declined to allow defendant to offer any proof in support of her answer to the petition. The divorce case has not been disposed of according to the record in this court.

One of the points urged by the plaintiff is that “the court had no jurisdiction of the child in question since the child was not the issue of the marriage between the parties and not part of the subject matter before the court.” We do not understand why plaintiff makes this point because he is the one who filed the petition asking the court to direct that defendant give the custody of the child to him (plaintiff). Pursuant to the petition of plaintiff, the court directed that the defendant give the custody of the child to plaintiff! If the court had no jurisdiction in the matter, plaintiff could have withdrawn his petition asking for custody of the child. The defendant concedes that the court has jurisdiction. Section 13 of the Divorce Act (sec. 14, ch. 40, Ill. Rev. Stat. 1941 [Jones Ill. Stats. Ann. 109.181]) provides that the court may on application of either party, make such order “concerning the custody and care of the minor children of the parties during the pendency of the suit as may be deemed expedient and for the benefit of the children, and may award the custody of the minor child or children of the marriage to either party as the interests of the child or children require.....” This section appears to contemplate that the court shall award the custody of the minor child or children of the marriage to either party. In the instant case John is not a child of the marriage. However, the circuit court is a court of general jurisdiction and has the right to decide on the custody of minor children on the filing of a petition for a writ of habeas corpus. Under the liberal provisions of the Civil Practice Act more than one action may be embraced in the same case. Here the parties induced the court to decide on the custody of the child. As the court had general jurisdiction of the subject matter and the parties induced the court to act, we will disregard the informality of the proceedings and consider the record as though plaintiff had filed a petition for a writ of habeas corpus.

We agree with the contention of plaintiff that the burden of proving unfitness was on the defendant and that unless such unfitness be established by clear evidence, fitness will be presumed. In Carmack v. Marshall, 211 Ill. 519, the Supreme Court said (523): “We regard the rights of the parent as superior to those of any other person, when that parent is a fit person to have the custody of children and is so circumstanced that he can provide the necessaries of life and administer to the requirements of such a charge. The mere fact that some other person may have more money or property in any form is not one that appeals to us. The divine injunction to multiply and replenish the species was not confined to the rich, nor was it intended that the poor should beget the children and the rich should rear them.”

In the Carmack case the court further states (527):

‘ ‘ The parent has the superior right to the child, but the superior right of the parent must yield to the best interest of the child. There is a recognition of both the rights, although the parent has the superior right, which is a true statement of an abstract proposition. He only has that superior right when it accords with the best interest of the child. All things being equal, as between the parent and strangers or other persons hearing a different relation to the child, the parent’s right is superior: . . . .”

Where a suit is instituted in a court of chancery relative to the person or property of an infant he is treated as the ward of the court and under its special protection. (Swiney v. Womack, 343 Ill. 278, 287.) There is no dispute as to the law applicable to this case. The presumption is that the father is a fit person to have the custody of the child and the burden of proving unfitness was on the defendant. The defendant sought to offer proof in support of her answer to the petition and she was not permitted to submit this proof. Her answer to the petition charged that plaintiff abandoned his child; that he contributed only $5 toward his support from November 12, 1942 until the date of the answer, January 14, 1943; that she had custody of the child from the time he was two and one-half years of age; that she eared for him as a mother; that plaintiff was cruel and inhuman in his treatment of the child; that plaintiff was not a member of any church, as he contended; that he had no household wherein to care for the child; that the child feared that bodily harm would come to him from his father; that it was the child’s wish and request that he remain with the defendant; that since plaintiff left their home the child improved in his disposition and his studies at school; and that to grant the custody of the child to the plaintiff would be detrimental to the welfare of the child. While the allegation that the plaintiff pursued a course of cruel and inhuman treatment toward the minor child is a general statement, there was no motion to strike the answer. As the child is treated as a ward of the court, it was the duty of the court to hear testimony in order to ascertain whether the father is a fit person to have the custody of the child. He has asked a court of chancery to aid him in securing custody of his child and should not object to meeting evidence purporting to show that he is unfit. Defendant, not being the mother of the child, has no right to his custody. In view of the offer by defendant of proof to show that the father was an unfit person to have custody of his child, the court erred in not receiving this proof. A court will not award the custody of a child to an unfit person. We do not wish to be understood as saying that the father in this instance is an unfit person. It would be necessary to make out a clear case of unfitness in order to deprive the father of the custody of his child. Nevertheless, we feel that in the interest of the child there should be a hearing to determine whether he is a fit person. The court is primarily concerned with the welfare of the child.

For the reasons stated the order of the circuit court of Cook county is reversed and the cause remanded for further proceedings not inconsistent with this opinion.

Reversed and remanded.

Kiley, J., concurs.

Hebel, P. J., took no part.