author: Per Curiam.

text:
    In re Estate of Gus G. Eliopulos, Deceased. Andrew Kotsires and Peter Stamates, Executors of Last Will and Testament of Gus G. Eliopulos, Deceased, Appellants, v. Basilo Eliopulos et al., Appellees.
    Gen. No. 9,993.

      Opinion filed April 18, 1946.
    Released for publication May 6, 1946.
    Smith & Hynds, of Morris and D. Parry, of Chicago, for appellants; William I. Hynds, of Morris, of counsel.
    Thomas B. Dunn, of Morris, for appellees.
   Per Curiam.

Gus G. Eliopulos died testate on March 7, 1940 and on June 29, 1940 letters testamentary were issued to appellants as executors of his will. The testator bequeathed to his sister, Basilo Alemis, $2,000, to his sister Stamata Eliopulos, $2,000, to his brother Athanasios Eliopulos, $2,000, to his brother William Eliopulos, $500 and the rest and residue of his property, real and personal to his nephews, the appellants herein.

Appellees on March 11,1941 instituted a suit to contest this will which resulted on June 5, 1942 in a verdict and judgment sustaining the will. During the pendency of the will contest, appellees were sued in Cook county, and appellants executors were made parties thereto as garnishees. That action terminated in a $750 judgment for the plaintiff, on February 8, 1943 and that judgment was paid by the executors. On July 31, 1943 the executors filed their final report in the county court of Grundy county and on August 21, 1943 deposited to the credit of each appellee with the county treasurer of that county the sum of $1,750.

The final report showed that the executors had received $12 cash and $250 from the sale of an automobile of the testator or a total of $262- and had paid out for funeral expenses, inheritance tax and other claims and costs of administration $4,851.80. In addition to this amount the report disclosed that the executors had paid the garnishment judgment of $750; the special bequest of $500 to the conservator of the estate of Wm. Eliopulos and had deposited with the county treasurer for the benefit of each appellee the sum of $1,750 as stated. The report disclosed that the executors had each advanced $5,544.90 with which these judgments, claims and legacies were paid and each waived reimbursement of that amount and released the estate from any claim on account of advancing such sums inasmuch as they were the residuary legatees and devisees. To this final report appellees filed objections claiming interest on their respective legacies from March 30, 1941.

Upon the hearing it was stipulated that the income from the decedent’s real estate from March 7, 1940 to -August 15, 1943, received by appellants as residuary devisees and legatees, was $10,709.86, out of which they paid operating expenses of $4,166.87; that at the time of the testator’s death, and ever since, so far as it is knoyra, appellees were and are residents of Greece and that since April 1941 when the German army occupied Greece, the forwarding of money from the United States to Greece has been prohibited by order of the President of the United States.

The county court awarded interest at 5 per cent to each legatee, interest being allowed at 5 per cent on $2,000 from March 30, 1941, to February 1, 1943 and interest at 5 per cent on $1,750 from February 1, 1943 to August 21, 1943. The reduction from $2,000 to $1,750 being occasioned by the payment by the executors of the judgment against the legatees in the garnishment proceeding as above indicated.

The executors appealed from the order of the county court to the circuit court, where the matter was again heard upon a stipulation of fact. A like judgment was entered by the circuit court and the executor’s appeal. Appellants urge that the delay with respect to the payment of these legacies was occasioned wholly and entirely by acts of the legatees, and therefore they should not be entitled to interest during such period of delay. Appellees’ position is that the only way interest upon their legacies can be defeated is to defeat the legacies and that the trial court correctly applied the rule in effect in this State.

The common-law rule is that interest is payable on a general pecuniary legacy from the time when the same is due and payable until the time when payment is made. The terms of this will do not fix a time when these legacies are to be paid and in the absence of any time being so fixed the legacy is considered due and payable one year after the testator’s death, when not otherwise controlled by statutory enactment. Such rule is well established in this State. (State Bank of Chicago v. Gross, 344 Ill. 512; Fenton v. Hall, 235 Ill. 552; Fraser v. Fraser, 149 Ill. App. 186; Dreyfuss v. Freud, 189 Ill. App. 417.)

It is not so much that there has been improper delay in payment by the executors but rather that the testator intends the legatees, as part of the legacy, to have the value of the use of the money, which has influenced the courts to adopt the rule giving interest on legacies. It has thus become a rule of construction that an unconditional gift of a general pecuniary legacy is a gift of both principal and interest, and that the interest is not given as a penalty for the executor’s negligence or delay, but as an incident and accretion to the legacy itself. The residuary legatee is postponed until specific legacies are paid, and the loss which he suffers is no more than the testator expressly provided for by preferring the general pecuniary legatees to the residuary legatees. (State Bank of Chicago v. Gross, 344 Ill. 512, 515, and cases cited.)

Not all jurisdictions have adopted the common-law rule regarding payment of interest on general pecuniary legacies and the various jurisdictions which do observe the rule are not in accord in its application. Some apply the rule in a fixed and arbitrary manner, holding that the rule is not affected by the condition of the estate, and that such legacy will bear interest after a year from the death of the testator even though there be delays occasioned by litigation and although the delay is catised from a suit by the legatee to contest the will. (Woerner — Law of Administration (3rd Ed.) vol. 3, sec. 459, p. 1578. Here will be found cited cases reported in the National Reporter System, which together with the Digest thereto, .afford a ready reference to the jurisdictions observing the rule as well as those which do not observe it. Reference may also be had to Woerner, sec. 454, p. 1551, and to that portion of vol. 3 devoted to Interest on Legacy, beginning with sec. 458, on p. 1570.) Other jurisdiction observing the rule apply the same under equitable principles, holding that where the payment of the legacy has been delayed beyond the one-year period and payment rendered impossible by some act of the legatee, he is not entitled to interest thereon during such period of delay. Courts so holding reason that a will contest is not to be deemed to have been in the mind of the testator when he made his will and that the testator must have anticipated his estate would be administered within the usual statutory period, and that when distribution is so made within such period, in the usual course, the legatee is only entitled to receive the amount of the bequest.

Appellants insist that the common-law rule was abrogated in this State by section 114 of the Administration Act of 1872 (Ill. Rev. Stat. 1874, ch. 3, par. 113, replaced by sec. 308 of the Probate Act of 1939, Ill. Rev. Stat. 1945, ch. 3, par. 462 [Jones Ill. Stats. Ann. 110.559]), and rely upon In re Estate of Schofield, 99 Ill. 513, and Pillsbury v. Early, 252 Ill. App. 620. .These statutory provisions relate only to personal liability of administrators and executors to pay interest at 10 per cent per annum, for delay in distribution, on funds in their hands or control, after the expiration of á period of 2% years, by the statute of 1872, and 2 years by the Act of 1939, from the issuance of their letters, an entirely different subject matter than that of the common-law rule, which deals with interest payable from the residuary estate as a part of the legacy itself. Another outstanding difference is that under the statute such a delay is excusable for good cause shown, but the common-law rule embraces no such element. In each of the two cases mentioned, relied upon by appellants, the recovery sought was from the executor or administrator personally, and neither of them tends to show that the common-law rule was abrogated by the statute invoked. Whatever may be the rule in other jurisdictions all of the authorities treat the common-law rule as still in effect in this State.

Appellants further urge that the suit by appellees to contest the will amounted to a refusal on their part to accept the legacies; that under such circumstances, no distribution could be made and that no order of court could have been obtained for a final distribution of the estate when the same was thus in litigation.

As above stated, the various jurisdictions that have adopted the common-law rule cannot be brought into accord on its application. One group holds interest payable regardless of the fact the delay was caused by the legatee. The other group holds that the question should be determined upon equitable principles, and that if the delay was caused by act of the legatee, interest should not be paid for the period of such delay, to the injury of a residuary legatee who was innocent of any fault. It would appear from the language used in State Bank of Chicago v. Gross, 344 Ill. 512, that this State has adopted the rule holding interest payable on a general pecuniary legacy from the time when the same is due and payable until the time payment is made, although the delay is caused by suit of the legatee to contest the will.

While the Gross case involved a trust fund which had earned income from the time of the testator’s death, and the will contained an express provision that the income should be paid to the legatee “commencing at my death,” the opinion holds that in the absence of any time fixed by the will for payment, a legacy is considered as due and payable one year after the testator’s death, "and draws interest from that time, and that there was no reason for the attempt by the executor to distinguish between income and interest.

The contention of appellants that because" the testator left only $262 in personal property it would be necessary to sell some or all of the real estate in order to pay the legacies, and that the testator therefore did not intend the legacies should be paid until the real estate was sold, is not a defense to the right of appellees to recover interest on their legacies. There is nothing in the record which tends to show that the testator contemplated that the real estate would not be sold within one year after his death. Furthermore, the Gross case holds that the usual excuse that assets out of which the legacy must be paid could not be collected until long after the testator’s death, has always failed. This doctrine applies to any other delay in payment, such as the garnishment proceeding or the will contest, or because the net income from the real estate was not sufficient to pay the claims and the legacies.

The claim of appellants that appellees are not entitled to interest because they never applied to the court for a sale of the real estate, is likewise without merit. In the first place, such an application was the province of appellants, and not of appellees, and in the second place, the Gross case holds that a lack of demand by a legatee is not an excuse nor is it an excuse that some of these legatees are nonresidents and not in a position to receive their legacies.

While the value of the real estate which the testator owned, is now shown, the income therefrom does appear and the fact that appellants advanced sufficient to pay all claims and the legacies, saving the real estate to themselves as residuary legatees, demonstrates that the value is far in excess of the amount advanced by the executors so that the interest on the legacies will come, not from the executors as such, as is claimed by them, but will come from the residuary estate.

The judgment order appealed from is in accord with the authorities and must be affirmed.

Judgment affirmed.


source: Caselaw Access Project

author: Justice Wheat.

license: Public Domain

text:
    Finis E. Downing, Complainant, v. William B. Finn et al., Defendants. William B. Finn, Cross Complainant Appellee, v. Centennial National Bank, Cross Defendant Appellant. Centennial National Bank, Appellant, v. William B. Finn, Appellee.
    Gen. No. 9,476.
    opinion filed February 28, 1946;
    rehearing denied May 7, 1946;
    released for publication May 8, 1946.
    William T. Gordley and Barber & Barber, for appellant;
    Putting & Putting, for appellee.
   Opinion by

Justice Wheat.

Not to be published in full.


text:
    Millie E. Stombaugh et al., Appellees, v. Henry M. Morey et al., Appellants.
    Gen. No. 9,488.

      opinion filed February 28, 1946;
    rehearing denied May 7, 1946;
    released for publication May 8, 1946.
    James G. Allen, for appellants;
    Weilepp & Wilson, for appellees.
   Opinion by

Justice Wheat.

Not to be published in full.


author: Justice Bristow.

text:
    Theodore Orban and Albie Orban, Appellees, v. Clarence Michal and John O. Stoll, Defendants. John O. Stoll, Appellant.
    Gen. No. 10,032.
    opinion filed March 8, 1946;
    rehearing denied May 7, 1946;
    released for publication May 9, 1946.
    Gardner, Carton & Douglas and Runyard & Behanna, for appellant; Erwin W. Roemer and James A. Velde, of counsel;
    Snyder & Clarke, for appellees; Gerald C. Snyder, of counsel.
   Opinion by

Justice Bristow.

Not to be published in full.


text:
    Chicago Title and Trust Company as Trustee Under Trust No. W 19162, Plaintiff, v. A. L. Walker, Appellee and Carl Vendley, Appellant, Defendants.
    Gen. No. 10,052.
    opinion filed March 8, 1946;
    rehearing denied May 7, 1946;
    released for publication May 9, 1946.
    Perry & Elliott, for appellant;
    Hadley & Leren, for appellee; Charles W. Hadley, of counsel.
   Opinion by

Justice Bristow.

Not to be published in full.


author: Justice Dove.

text:
    Guy Rigdon, Appellee, v. Hattie Wagner Crosby, Appellant.
    Gen. No. 10,047.

      opinion filed April 18, 1946;
    released for publication May 6, 1946.
    John P. Haley and Charles M. Robson, for appellant;
    Pence B. Orr, for appellee.
   Opinion by

Justice Dove.

Not to be published in full.


text:
    O. A. Brock, Appellant, v. Guy Derry, Appellee.
    Gen. No. 10,063.
    opinion filed April 18, 1946;
    released for publication May 6, 1946.
    Morgan, Pendarvis & Morgan, for appellant;
    Galbraith & Baymiller, for appellee.
   Opinion by

Justice Dove.

Not to be published in full.


text:
    In re Estate of Mary Peters, Deceased et al., Appellees, v. Esther A. Peters, Executor of Last Will and Testament of Mary Peters, Deceased, Defendant. James H. Peters, Appellant.
    Gen. No. 10,067.

      opinion filed April 18, 1946;
    released for publication May 6, 1946.
    Oakleaf & Churchill, for appellant; Cyrus Churchill, of counsel;
    J. J. Ludens, for appellees.
   Opinion by

Justice Dove.

Not to be published in full.


text:
    People of City of Ottawa, Appellants, v. City of Ottawa, Appellee.
    Gen. No. 10,072.
    opinion filed April 18, 1946;
    released for publication May 6, 1946.
    Linwood Connellee and George V. B. Weeks, for appellants;
    George S. Wiley, former acting City Attorney and George H. Wiley, City Attorney, for appellee.
   Opinion by

Justice Dove.

Not to be published in full.


author: Mr. Presiding Justice Friend

text:
    Stanley Mruk, Appellant, v. Chicago Title and Trust Co., Appellee.
    Gen. No. 43,285.
    Opinion filed April 11, 1946.
    Rehearing denied May 15, 1946.
    Released for publication May 16, 1946.
    Markman, Donovan & Sullivan, of Chicago, for appellant; Charles E. Loy, of Chicago, of counsel.
    Nathan Schwartz, of Chicago, for appellee; Norman H. Arons, of Chicago, of counsel.
   Mr. Presiding Justice Friend

delivered the opinion of the court.

In this proceeding the plaintiff, owner of four bonds which he had delivered to the defendant, Chicago Title & Trust Co., as depositary for the committee for the protection of bondholders of property under foreclosure, and for which bonds he had received a certificate of deposit which was subsequently stolen from him and to which his signature had been forged in an assignment thereof, sought relief against defendant because it refused to deliver to him certain shares of stock in a corporation which had been organized to take over the property in exchange for bonds issued to the rightful owners of certificates or the lawful transferees thereof. After extended pleadings, embracing some 42 pages of the abstract of record, the court entered an order striking plaintiff’s fourth amended replication, and he having elected to stand thereby, a decree was entered dismissing his complaint for want of equity, from which he has taken an appeal.

The facts admitted by the pleadings disclose that Chicago Title & Trust Co., by instrument in writing-dated January 27, 1931, became the depositary for a bondholders ’ committee of certain first mortgage gold bonds on improved property known as “The Gables.” Plaintiff being the owner of four of these bonds, each of the par value of $500, surrendered and delivered them to defendant and received therefor certificate of deposit No. 32 in the usual form issued to bondholders who had delivered or surrendered their bonds to the depositary. Thereafter, some time prior to July 20, 1938, certificate of deposit No. 32 was stolen from plaintiff, his name was forged thereto, and the certificate was sold to one Julius Reingold without plaintiff’s knowledge or consent for the nominal sum of $200. Reingold signed the certificate as a witness to the- alleged signature of plaintiff and the indorsement was guaranteed by Fred E. Busbey & Company and the Northern Trust Company. Thereafter the certificate was presented to defendant who issued a new certificate to Reingold. About July 20, 1938, when plaintiff learned of the theft of said certificate, he called at the office of defendant, where certificate No. 32 bearing the forged signature thereon was exhibited to him. He then advised defendant that the signature was a forgery and that the certificate had been stolen from him. Thereafter, defendant requested him to call at its office in Chicago and in the presence of certain of its officers, agents and several handwriting experts who had been engaged by defendant, plaintiff wrote his name a number of times to enable the experts to compare his handwriting with the signature on the certificate. After examination, they were of the opinion that the signature on said certificate was not in his handwriting.

It further appears that pursuant to a plan of reorganization by the protective committee, a corporation was organized known as 8001 Edgewater Road Building Corporation which took over the property upon which the bonds had been issued and delivered stock of the corporation to defendant to be turned over to the rightful owners of certificates or to the lawful transferees thereof. Under the aforesaid plan the rightful owner of certificate No. 32 became entitled to 2206 shares of the new corporation. Plaintiff made numerous demands and requests upon defendant to turn over and deliver said stock to him or his attorney, all of which were refused. Defendant held said stock without delivering it to anyone until May 1941, when 2206 shares were turned over to Julius Reingold who had presented the stolen certificate No. 32 upon which plaintiff’s name had been forged. Defendant’s attorney has in his possession a certain alleged bill of sale dated January 22, 1937 bearing plaintiff’s signature. It is witnessed by his daughter-in-law, Marie Mruk, one of the persons who sold the certificate to Reingold. Plaintiff cannot read, write or understand English and was induced to sign the alleged bill of sale by his daughter-in-law and his son, Mike Mruk, who represented to plaintiff that his signature on the instrument would enable him to obtain an old age pension. At the time he signed it he did not know it was a bill of sale. His signature thereto was obtained long after the certificate had been sold to Reingold and after Reingold had turned it over to defendant and had obtained a duplicate certificate. The alleged bill of sale was not presented to Reingold at the time the certificate was delivered to him and was never delivered to the defendant. As a matter of fact defendant did not rely upon it but relied solely on the indorsement upon the certificate and the guarantee of the indorsement. The certificate of deposit on its face provides that “The interest represented by this Certificate is transferable, subject to the terms and conditions of said Deposit Agreement, only on the books of said Depositary by the holder hereof in person or by attorney upon surrender of this Certificate properly endorsed.”

Defendant takes the position and the chancellor was evidently of the opinion that the rights of the parties are governed solely by the terms of the deposit agreement and that plaintiff is precluded thereby, despite the forgery of his signature, because he failed or refused to comply with-section 5 of article I of the deposit agreement which provides that “In case of loss, theft or destruction of any certificate, the applicant for a new certificate shall furnish indemnity satisfactory to the Depositary and to the Committee.” Defendant’s counsel argue that neither the amended complaint nor any other pleadings allege the performance of this condition precedent and therefore plaintiff cannot obtain the relief sought. The pleadings indicate that Reingold offered and gave security whereas plaintiff did not, although he had ample time after notifying defendant of the forgery within which to do so. We think it is a sufficient answer to this contention that the provision for indemnity is not applicable to plaintiff because the certificate of stock, although stolen, was not lost or destroyed but was in defendant’s hands. That provision, as we construe it, is applicable to situations where the owner of the certificate is unable to produce it, but claims that it has been lost, stolen or destroyed, that he is still the rightful owner thereof and that no indorsement or transfer has been made. The indemnity is for the protection of the transfer agent, trustee or corporation in the event the instrument should eventually be produced in the hands of a bona fide owner. The provisions of the deposit agreement do not apply where the certificate is actually in the possession of the party authorized to make the transfer, as in the instant case.

Belying further on the deposit agreement, defendant next urges that the depositary may recognize a transfer of the certificate other than by an indorsement of the certificate itself, and that the bill of sale was sufficient warrant for ultimately delivering the shares of stock to Reingold. This contention utterly disregards the fact that the certificate of sale was not relied upon by Chicago Title & Trust Co. in transferring the certificate of deposit or issuing the stock to Reingold. After plaintiff had furnished conclusive proof of the forgery, there was no legal justification for delivering the certificate of stock to Reingold in total disregard of its duty and in violation of plaintiff’s rights, simply because he failed or refused to furnish indemnity under a provision of the deposit agreement which had no application to the facts. Under ordinary circumstances it would be possible to transfer the interest represented by a certificate of deposit by .separate instrument, as defendant contends, but in the case at bar the bill of sale did not accompany the certificate and was not relied upon as a means of conveying title thereto. The real fraud in this proceeding is chargeable to Reingold. All the circumstances indicate that he knew, or at least should have known had he used reasonable diligence, that the certificate which he purchased was stolen and that the signature thereon was not in plaintiff’s handwriting. He bought the certificate for 10 per cent of the face value of the bonds. The usual means of transferring title to a certificate is by indorsement. If Reingold doubted the validity of the indorsement, having obtained the certificate from someone other than plaintiff, he could have easily ascertained whether plaintiff’s signature was genuine. The fact that he required and accepted a bill" of sale as a means of transferring title, long after the certificate was transferred to him, as alleged in plaintiff’s replication and admitted by defendant’s motion to strike, makes the presumption of fraud even more conclusive.

The remaining contention made by defendant is that plaintiff failed to join the 8001 Edgewater Road Building Corporation or Reingold as parties defendant, but brought suit only against the Chicago Title & Trust Co. for cancellation of the forged signature, with a prayer that defendant be ordered and directed to deliver to him 2206 shares of the building corporation stock, and that plaintiff have such other and further relief as the court should see fit to grant. It is urged that defendant did not and cannot issue the stock of the building corporation but is merely the distributor thereof, after such shares have been executed and delivered to it by the building corporation; that defendant cannot, nor has it the power to, compel the issuance of any further shares; and therefore, say its counsel, “it follows that no order or decree requiring the defendant to issue the stock could be complied with.” Burke v. Mierenfeld, 300 Ill. 188, and Prideaux v. Miller, 215 Ill. App. 429, are cited in support of this contention. These cases hold that where specific performance is impossible the court will not assume jurisdiction for the purpose of granting relief as to damages. In both these cases the basis of the claim to equity jurisdiction was for specific performance. In the case at bar, which is predicated upon fraud, we-think the right of plaintiff to relief and equity under the facts admitted by the pleadings is clear, and if the Chicago Title & Trust Co. cannot compel the issuance of any further shares of stock it can and should be held liable in damages for wrongfully delivering the stock to Reingold who was not the rightful owner of the certificate and whose rights were predicated entirely upon a forged instrument of which defendant had full knowledge before the shares were delivered. Defendant concedes it to be the established rule of law that forgery can confer no power nor transfer any right. Telegraph Co. v. Davenport, 97 U. S. 369; Chicago Edison Co. v. Fay, 164 Ill. 323. Therefore, in the light of the foregoing conclusions the order of the circuit court is reversed and the cause remanded with directions that a decree be entered in favor of plaintiff in accordance with the views herein expressed.

Order reversed and cause remanded with directions.

Scanlan and Sullivan, JJ., concur.


text:
    Hester S. Meyer, Appellant, v. Arthur Meyer, Appellee. Arthur Meyer, Appellee, v. Hester S. Meyer, Appellant.
    Gen. No. 43,303.

      Opinion filed April 11, 1946.
    Released for publication May 16, 1946.
    Teed & Johnson, of Chicago, for appellant; Hugh E. Johnson, of Chicago, of counsel.
    Cantwell & Cantwell, of Chicago, for appellee; Robert E. Cantwell, Jr. and Yager Cantwell, both of Chicago, of counsel.
   Opinion on Petition for Rehearing.

Mr. Presiding Justice Friend

delivered the opinion of the court.

A petition for rehearing having been granted in this cause, we have carefully re-examined the record and the authorities cited which pertain to the jurisdictional question raised by the pleadings, and especially the propriety of the order of reversal directed in our original opinion.

It appears from the record that on December 28, 1942 the plaintiff, Hester S. Meyer, filed a complaint in the circuit court against her husband, Arthur Meyer, for a divorce on the ground of desertion, seeking the care and custody of their two minor children. Three days thereafter defendant filed a formal answer admitting substantially all the allegations of the complaint except the charge that he had deserted her and the assertion that plaintiff had at all times conducted herself toward him in a manner becoming a good, true and affectionate wife. Simultaneously he also filed a counterclaim alleging that he had always conducted himself toward plaintiff as a dutiful and affectionate husband, that his wife had wilfully deserted him without any reasonable cause or provocation on November 1, 1941, and he asked that a decree for divorce be entered in his favor and that he be awarded the care and custody of the minor children. Plaintiff’s answer of January 5, 1943 to defendant’s counterclaim denied his allegations with respect to her desertion and asked that the counterclaim be dismissed for want of equity. A stipulation was then entered into by counsel for the respective parties that the matter be set for immediate hearing, and the cause proceeded to trial at noon on January 11, 1943, some 14 days after the complaint was filed. Mrs. Meyer was represented by counsel but was not present at the hearing, being then confined as a patient at the North Shore Health Resort, in Winnetka, Illinois. Defendant testified that his wife had deserted him on November 1, 1941 without cause, and two other witnesses stated in corroboration of his testimony that the parties had been living separate and apart since that date, and that in their opinion Mr. Meyer was a fit and proper person to have the care and custody of the children. Following the defendant’s examination by his counsel, Judge Lynch interrogated Mr. Meyer as follows: “Q. What happened on November 1st, 1941, that might be the cause of her leaving? A. Nothing particularly that I can think of to cause her to leave. Q. Were you present at the time she packed? A. Well, she has gone on several occasions. When she left this time, I wasn’t there. Q. Did she leave a note or anything? A. No, she did not. Q. When was the next time, you saw her? A. I don’t recall, Judge. Q. You do not know why she left? A. No, I do not. Q. Did she say to you that she was dissatisfied with married life? A. She has said that a number of times. Q. Do you know any reason why she was dissatisfied? A. No, I do not. Q. When did she go to the sanitarium ? A. She went there in October, 1942,1 believe. Q. What is the reason she is in the sanitarium? A. I can’t tell you that, Judge. Q. You have not lived with her since November 1st, 1941? A. No, sir.” At the conclusion of the hearing the court indicated that the decree would be granted on defendant’s counterclaim, awarding custody of the children to defendant, and after the testimony was written up and submitted to the chancellor, a decree for divorce was entered on January 18, 1943.

Subsequently, on May 11, 1944, plaintiff filed a petition in the circuit court, alleging that at the time of the entry of the decree she was in ill health and had no definite plans for the immediate future, but she had since recovered her health, was permanently located in Orange, New Jersey, employed by the Beard School in that city, and had space and accommodations for the two minor children, and accordingly sought a modification of the decree granting her the privilege of having the children with her for at least half of the summer vacation and for other periods during the year. Defendant answered her petition, denying her right to a modification of the decree because of her habits, state of health and temperament, and averring that the best interests of the children would not be served by dividing their custody. Shortly thereafter plaintiff filed the petition upon which this proceeding is predicated, collaterally attacking the decree on the ground that the circuit court lacked jurisdiction of the subject matter, thus rendering the decree void,, and asking that it be expunged of record. Defendant filed an answer, denying the allegations touching upon the question of jurisdiction, and averring that plaintiff was a resident of Cook county when the complaint was filed by her counsel. Hearing on the petition and the answer thereto was set before the chancellor, but at the outset -he indicated that he was primarily interested in plaintiff’s “state of mind,”, as he characterized it, and “whether she was capable of understanding the proceeding that she was in.” The chancellor had indicated his desire to have Messrs. Davis and Gorham present, and they were present in court, but after interrogating plaintiff as to her memory of events that occurred before the complaint was filed in the divorce proceeding, to ascertain whether any fraud had been practiced upon her, the chancellor indicated that it would not be necessary for counsel to testify, and at the conclusion of plaintiff’s evidence granted defendant’s motion to dismiss Mrs. Meyer’s petition for want of equity.

The only question presented is whether plaintiff made out a prima facie case on the proposition that the decree of divorce was null and void for want of jurisdiction, her position being that neither of the parties was a resident of Cook county at the time the divorce proceeding was instituted, as required by statute (Ill. Rev. Stat. 1941, Divorce, ch. 40, par. 6 [Jones Ill. Stats. Ann. 109.173]). The salient facts essential to a consideration of this question may be summarized as follows: The parties were married in Chicago, Illinois, on December 27, 1923 and resided in this city for about 10 years, but in 1933 they purchased a home at 428 Fulton street, Geneva, Kane county, Illinois, and resided there continuously until their final separation. Two children were born of the marriage, Sheldon, now 19 years of age, and Priscilla, aged 15. In September 1942 both children were sent away to school, Sheldon to an academy at Lawrenceville, New Jersey, and Priscilla to the Beard School for Girls at Orange, New Jersey, and both continued in these respective schools until the close of the academic year in June 1944.

It appears from plaintiff’s evidence that she was addicted to the excessive use of alcohol, and from the middle of October 1941 until January 11,1943 she was a patient in various sanitariums. She was treated at the Martha Washington Hospital, 2318 West Irving Park boulevard, Chicago, part of October, all of November and until December 24, 1941. She then spent the Christmas holidays at the home of the parties in Geneva, and from December 28, 1941 until October 26, 1942 she was a patient in the Milwaukee sanitarium at Wauwatosa, Wisconsin. A day or two after leaving the Milwaukee sanitarium she entered the North Shore Health Resort at Winnetka, in Cook county, Illinois, where she remained as a patient until January 11, 1943, the day on which the original divorce proceeding was heard in the circuit court. On each occasion when she entered a sanitarium she was driven there by the defendant in his car, and he obligated himself for the expense to be incurred and paid the bills in large part with plaintiff’s money.

Mrs. Meyer was the beneficiary of a trust fund settled on her by her cousin, Edwin Gould, about 1924, and until about 1942 the income from the trust averaged $1,000 a year. Shortly after the respective births of the children, trusts were established for them by Mr. Gould, the income for each trust varying from $500 to $800 per year. The income from all three trusts was paid to plaintiff and applied by her to the maintenance and upkeep of the children and the home. In the 12-year period from 1931 to 1942 inclusive, this income exceeded $24,000. In 1933 Gould gave plaintiff $5,000 to be used on account of the purchase of the Geneva home for $11,000. Defendant, who handled the details of the purchase, made a down payment of only $4,000 and gave a mortgage for the $7,000 balance. The other $1,000 was used to purchase rugs, draperies and other furnishings.

In September 1934 plaintiff received a legacy from her uncle, Edward Sheldon, in the net .amount of $9,941.67. That money was used and applied on the home expense. Plaintiff’s contribution to the home expense for the 12-year period consisted of trust income, gifts and legacy aggregating about $40,000, or an average of nearly $300 per month.

In' 1938 the first mortage on the Geneva home in the sum of $7,500 was taken over by the Chase National Bank of New York as trustee and became a part of the corpus of the trust held for plaintiff’s benefit. From then until the end of 1942 the interest was paid by defendant semiannually, then paid by the trustee to the plaintiff and turned over by her to the defendant. In December 1942 a mortgage for an unspecified amount was made on the Geneva property.

At the times the plaintiff was a patient at the various sanitariums defendant was in touch with her constantly and visited her frequently. During that time she would go home for a few days at intervals such as Thanksgiving 1941, Christmas 1941, and September 1942, when the children were preparing to go to school. On one occasion in the summer of 1942 defendant called for plaintiff at Wauwatosa and took her to Milwaukee, where, they had dinner, attended the theater, registered at the Schroeder Hotel as husband and wife, and defendant then returned her to the sanitarium about noon the following day. Plaintiff testified that on some of the occasions when she returned to the Geneva home and during their visit at the Schroeder Hotel in Milwaukee she cohabited with her husband. Defendant admits that she was at home on the occasions mentioned and that they spent the night at the Schroeder Hotel, but denies that they lived as husband and wife on any of those occasions. There was also another visit at the Schroeder Hotel on a -summer afternoon in 1942, when the parties registered as husband and wife and, as plaintiff testified, cohabited together as such. It was during this visit in Milwaukee that defendant told plaintiff he wanted a divorce, and thereafter he became insistent upon obtaining her consent thereto. Mrs. Meyer was at that time a patient in the Milwaukee sanitarium, and she testified that defendant told her that she should come to Cook county, Illinois, so that proceedings for divorce could be instituted here. The record discloses that defendant is a lawyer admitted to practice in Illinois and in good standing, but not presently engaged in the practice of law. Although he employed counsel it appears that throughout the events hereinbefore related, he negotiated directly with plaintiff. He saw her frequently and evidently discussed their property rights with her. Plaintiff testified that about December 1942 Mr. Sidney S. Gorham, who had previously drawn a will for her and was a friend of long-standing of both Mr. and Mrs. Meyer, informed her that he needed the assistance of a divorce expert, and shortly thereafter he called in Mr. Benjamin B. Davis, who met with plaintiff and her attorney, Mr. Gorham, and the draft of an agreement was handed to her and read by the additional counsel, Mr. Davis. The agreement was subsequently signed by plaintiff at a time and under circumstances not disclosed of record, and she was furnished with a copy thereof. By the terms of the agreement defendant took over plaintiff’s half interest in the Geneva home for $1,800, payable $50 per month, and he gave her notes therefor with interest after maturity. No security was provided. The mortgages at the time exceeded the original mortgage and therefore the only equity in the home was the original down payment of $4,000. Although the. agreement makes no provision for the support and maintenance of plaintiff, five or six paragraphs thereof are devoted to barring the parties from respective claims against each other’s property. One of the paragraphs relates to the custody of the children. The contract provides that the attorneys ’ fees were a direct obligation of defendant to plaintiff’s counsel, and if such fees were paid, as they presumably were, plaintiff had nothing’ to do with the transaction and never received any of the money with which to pay her counsel.

Although plaintiff identified her signature to the original complaint, she testified on the hearing of her petition that her mind was not clear at the time, that she was confused, and that she had no definite recollection of when or where it was signed, although she assumed it was signed while she was a patient at the North Shore Health Resort at Winnetka. The original complaint is unverified; it does not contain the usual prayer for alimony, child support, attorneys’ fees, costs and adjustment of property rights. In the original case the answer and counterclaim of defendant were signed by him and hi's counsel, plaintiff’s answer to the counterclaim was signed for her by her counsel. The decree does not bear the approval of either party to the suit, nor does it find that plaintiff was a resident of Cook county at the time the suit was filed; it merely recites that plaintiff “is now an actual resident of the County of Cook.”

Paragraph 6, chapter 40, Illinois Revised Statutes 1941, provides that “The proceedings shall be had in the county where the plaintiff resides . . . . ” The proof shows that at the time of the commencement of the suit and during its progress, both parties actually resided in Geneva, Kane county, Illinois. They had no other home. Plaintiff testified that when she returned to her home in Geneva from Wauwatosa she resumed drinking and “Mr. Meyer became very angry and he told me that he was going to take me to the North Shore Health Resort and I said, ‘Oh, no, I am not going to any more sanitariums’ and Mr. Meyer took off his coat and rolled up his sleeves and went out in the garage and brought back a long rope and he .said ‘I’ll tie you up and drag you there but you are going. ’ I ran out of the room downstairs, upstairs to the bath room and locked the door, and cut both my wrists. . . . Mr. Meyer pounded on the door and tried to open it and my mother finally persuaded me "to open it and they brought me downstairs and I said I would rather die than go. My mother said ‘I can’t leave you here with him,’ she said, ‘You have got to go.’ I was bleeding and my wrists were bound up so she said, ‘I cannot take the responsibility. I don’t know what he will do’ and so they took me there [North Shore Health Resort].” Plaintiff’s mother, her twin sister and her husband accompanied her to the sanitarium, and when she was admitted she was placed in the psychiatric section of that institution.' Nor can it be fairly contended that she wag content to remain there because she frequently expressed a desire to go back to her home in Geneva. The most that can be said of her residence in Winnetka is that she stayed in the sanitarium for the purpose of being cured of alcoholism. Her residence there was neither voluntary, bona fide nor with the animus manendi contemplated by the statute, and therefore defendant’s contention “that two months’ presence [in the North Shore Health Resort] coupled with a definite purpose in staying for an indefinite period of time constitutes residence,” is not in harmony with the facts of record nor the requirements of the statute and the authorities construing it. In support of his contention that plaintiff was- a resident of Cook county within the meaning of ch. 40, par. 6, defendant cites only one case, Way v. Way, 64 Ill. 406. Even a cursory reading of that decision does not support defendant’s contention. Plaintiff also relies on it, and with good reason, because the court in construing the identical section of the statute here under consideration specifically held that all suits for divorce must be commenced in the county where the complainant resides, and characterized the language of the statute as follows: “The words are simple and expressive, and the meaning would seem to be obvious. The bill shall be filed in the county in which the complainant resides. The language is imperative, and excludes the right to commence proceedings in any other county than the one in which the residence of the complainant is fixed. Residence is made a prerequisite to the existence of the right to file the bill.”

The authorities in this State are in accord that in order to establish a new residence, a person must abandon a former one and take up a new residence with an animus manendi. Something more than a mere existence in the county is required (Way v. Way, supra); and where an actual bona fide residence is lacking, the court cannot acquire jurisdiction of the subject matter, and the proceedings are void. It was so held in the recent case of Dean v. Dean, 381 Ill. 514, wherein the court held that “The statute is specific in directing that the proceedings shall be had in the county where the plaintiff resides. It makes the residence of the plaintiff in the county where the suit is to be filed a prerequisite to the existence of the right to file a complaint [citing Way v. Way, supra, Horix v. Horix, 256 Ill. App. 436, In re Estate of Goldberg, 288 Ill. App. 203].”

The law is also well settled that jurisdiction of the subject matter cannot be conferred by the parties, and therefore the question of jurisdiction can be raised at any time by direct or collateral attack. In Wood v. First Nat. Bank of Woodlawn, 383 Ill. 515, the court pertinently held that “If there is a total want of jurisdiction in a court, either as to the subject matter or as to the parties, its proceedings are an absolute nullity and no rights are created by them, and they may be pronounced void when collaterally attacked.” Likewise, in Werner v. Illinois Cent. R. Co., 379 Ill. 559, the court held that “Jurisdiction could not he conferred by consent of the parties and was not waived by defendant’s appearance and participation -in the trial. It is a question that may be raised at any time, even on appeal”; and in Toman v. Park Castles Apt. Bldg. Corp., 375 Ill. 293, the court said: “It is a familiar rule that when a court has no jurisdiction of the subject matter, it cannot be conferred by consent, and when lack of jurisdiction appears the court should decline to proceed further in the cause. . . . Whether the question of jurisdiction was raised in the lower court is immaterial. There can he no waiver of jurisdiction of the subject matter where the trial court lacked jurisdiction to enter the order appealed from. [Citing authority.] A party is not estopped by failing to raise the question in the trial court. ’ ’ In Hawkins v. Hawkins, 350 Ill. 227, the court again held that “The question of jurisdiction of the subject matter has not been raised, but where such jurisdiction does not exist, it cannot be conferred by consent or acquiescence.” It would be idle in this proceeding to argue that Mrs. Meyer had any intention of establishing a residence in Cook county within the contemplation of the statute, any more than it could, be urged that she intended to become a resident of the State of Wisconsin while confined in the sanitarium at Wauwatosa for nine or ten months prior to her admission to the North Shore Health Resort.

Defendant is practically forced to the position of conceding that the foregoing conclusions are sound because his principal argument is confined to the alternative proposition that “assuming that the divorce decree herein is null and void, equity will not permit the plaintiff to raise the question of jurisdiction” because “A. plaintiff has accepted benefits under the divorce decree herein [and] B. plaintiff by filing suit and by waiting a year and a half before attacking the divorce decree has authorized and ratified said decree.” The argument that Mrs. Meyer accepted the benefits of the decree and therefore cannot repudiate it is predicated upon the provisions of the contract between the parties which was introduced in evidence upon the hearing, whereby she “accepted $1800 in $50 installments since December 1st, 1942,” in consideration of her release of a one half-interest in the Geneva home, and the payment, as defendant contends, of some $300 fees to her counsel. Inasmuch as the equity in the Geneva home was paid for entirely by funds derived from Mrs. Meyer’s relatives and really belonged to her, it seems naive to characterize this settlement as an acceptance of benefits by her. We are not unmindful, of course, that a court of equity will not permit a party to enter into an agreement in regard to the terms of a decree of divorce and after having received the benefits to be derived therefrom, repudiate it (Boylan v. Boylan, 349 Ill. 471; Guelzo v. Guelzo, 292 Ill. App. 151; Kuebler v. Kuebler, 204 Ill. App. 256; and VanSickle v. Harmeyer, 172 Ill. App. 218), but these decisions deal with situations where the decree specifically conferred a benefit on the party seeking to repudiate it, and in every instance the court could have enforced the exercise of its power in the event of noncompliance. In this proceeding the $50 monthly payments and the provision for attorneys’ fees were covered by an agreement made before the decree was entered, of which the court had no knowledge, and presumably it could not have enforced the $50 monthly payments because there was nothing of record upon which an enforcing order could he predicated. As a result of this state of the record defendant could have refused to pay and plaintiff would have had -to resort to a suit at law without the usual equitable remedies afforded for the enforcement of the provisions of the decree.

In support of the remaining contention that plaintiff has authorized and ratified the decree because she waited 18 months before attacking it, defendant relies principally on Guggenheim v. Guggenheim, 189 Ill. App. 146. In that case Mrs. Guggenheim obtained the decree and under it received $150,000. Eight years later she sought to attack the decree upon the ground that fraud had been committed upon the court which granted it. In the interim the divorced spouse married an innocent party and a child was born of such marriage. The court held that plaintiff had knowledge of the fraud and actually participated therein and that under all the circumstances of the case the doctrines of clean hands, estoppel, laches and acceptance of benefits should be invoked against her, and on appeal the ruling of the chancellor was affirmed. We find nothing in this record comparable to the Guggenheim case. In this proceeding plaintiff’s only act was the signing of an unsworn complaint alleging that she was a resident of Cook county. She testified that while she was at the North Shore Health Resort Mr. Meyer told her that he was getting a divorce and that it could be procured in Cook county. “I said, ‘How can you get it in Cook County when I am not a resident of Cook County?’ He said, ‘Oh, that’s just a technicality, that can be arranged.’ I said, ‘Well, I don’t understand it and I never have understood it.’ ” After she signed the bill defendant procured the decree. Plaintiff was not even present at the hearing, and if any fraud was committed upon the court she took no part in it.

Other cases cited by defendant enunciate the general proposition that where one successfully invokes the jurisdiction of the court he is estopped from afterward questioning its jurisdiction. Stewart v. Stewart, 231 Ill. App. 159; Grimm v. Grimm, 302 Ill. 511. The record in this case rebuts the contention that plaintiff was the moving party in invoking the jurisdiction of the court. That she was a chronic alcoholic is fully admitted by both counsel and by plaintiff herself in her testimony upon the hearing of the petition; and the record shows that immediately preceding the filing of her suit she had spent over 12 months in sanitariums trying to cure her alcoholism. Her testimony indicates that while she was at the North Shore Health Resort she was mentally "disturbed, confused and incapable of making a decision as to whether a suit for divorce could properly be filed in Cook county; and when she demurred to the filing of the suit in this county because she was not a resident here, defendant persuaded her to file here on the assurance that it was “just a technicality, that can be arranged.” The plain inference from plaintiff’s evidence is that defendant planned to have the divorce proceeding brought in Cook county so as to avoid the publicity that would have attended such a proceeding in the smaller community of Kane county where they had long resided, and that he induced his wife to sign a complaint, prepared by him or his counsel, alleging residence in Cook county, in furtherance of that plan.

Riddlesbarger v. Riddlesbarger, 324 Ill. App. 176, is the subject of considerable comment and discussion by both counsel. The opinion in that case was written by Mr. Justice Scanlan and filed in November 1944. We, think it bears a striking resemblance to the case at bar in many of its salient aspects. Both husbands were lawyers but did not practice their profession, and there were minor children in both instances. In the Riddlesbarger case the parties were residents of Cook county and the divorce was obtained in Kane county. In this proceeding the counties are reversed. In both instances the wife’s action was dismissed on the husband’s motion at the close of plaintiff’s case. There were out-of-court agreements in both cases and in neither instance were they brought to the attention of the court or made a part of the decree. The wife’s lawyers were paid directly by the husband. There was no service of summons in either case. In the Riddlesbarger case the wife was permitted to sit in the court room where she could see but not hear what was going on. In this case Mrs. Meyer merely signed the complaint and was not even present in court when the hearing was had, and in fact she was not consulted or advised until later informed by the defendant that a decree had been granted.

Defendant seeks to distinguish the Riddlesbarger case on the ground that one day was the length of time upon which the requirement of residence was based and that the general testimony of the defendant, not only with respect to his residence but otherwise, was predicated upon perjured evidence. The authorities are in accord that the duration of residence is immaterial if the animus manendi is lacking. Way v. Way, 64 Ill. 406; Saul v. Saul, 122 F. (2d) 64. With respect to the perjured testimony it may be conceded that the degree of perjury in the Riddlesbarger case was more flagrant, but defendant in this proceeding also testified falsely and failed to make a full and truthful disclosure to the chancellor when interrogated by him. Desertion was a material issue and defendant charged that plaintiff had wilfully deserted him November 1, 1941. Upon hearing he testified that his wife left him at the Geneva home on that date. When questioned by the court he stated that nothing in particular happened to cause her to leave, that he was not present when she left, that he did not recall when he next saw her, that he did not know why she left, that she had said a number of times that she was dissatisfied with married life and that he knew no reason therefor, that he believed she went to the sanitarium in October 1942, when, as a matter of fact, she went there in October 1941, a month before the claimed desertion, and was taken there by defendant, and that he could not tell why she was .in the sanitarium. In defendant’s sworn answer filed in this proceeding he says that his wife entered the Martha Washington Home of Chicago in October 1941 and remained there all of that month and during November and December. When called as a witness he said that he took her there in the early part of October 1941 and that she remained there until about Christmas of that year. His sworn answer and testimony cannot be reconciled with the assertion that she deserted him November 1, 1941. His reply to Judge Lynch’s inquiry that he did not know why his wife was in the sanitarium was deliberate perjury. He was fully conversant with the reasons for her being there and all the circumstances that led to her confinement, and if the truth had been disclosed to the chancellor the decree would certainly not have been entered. With respect to the concealment from the chancellor that an agreement existed, the plain inference is that it was an inequitable agreement.

Upon oral argument of this cause counsel for defendant stated that the record showed that plaintiff was such a chronic alcoholic that it was absolutely necessary to place her in various sanitariums. We are satisfied that during the period in question her unfortunate habits had affected her mentally as, well as physically, and it was an easy matter for her lawyer husband to deceive the court, to her great injury.

In our original opinion we indicated that the chancellor should have granted plaintiff’s petition to .expunge the divorce decree, and because of his failure so to do we reversed the order entered and remanded the cause with directions “that an appropriate order be entered in harmony with the views herein expressed. ’ ’ Since defendant’s petition for rehearing was allowed, we have re-examined the record, and find that because of the chancellor’s primary concern with the mental condition of Mrs. Meyer, an orderly hearing of plaintiff’s petition challenging the jurisdiction of the court, and defendant’s answer thereto, was never had, but instead the inquiry was directed primarily to Mrs. Meyer’s mental condition and her ability to understand the nature of the proceeding.

We adhere to our conception of the law relating to the question of jurisdiction and plaintiff’s right to challenge it, as set forth in our original opinion and here repeated, but we think the parties were not afforded an opportunity to adduce the competent evidence available and to have the controversy determined upon the issues made up by the pleadings. Accordingly, the order of the circuit court is reversed and the cause is remanded for a new trial.

Order reversed and cause remanded for a new trial.

Scanlan and Sullivan, JJ., concur.


text:
    Everett Simpson, Appellant, v. Hazel Harrison, Appellee.
    Gen. No. 43,424.

      Opinion filed April 11, 1946.
    Released for publication May 16, 1946.
    Everett Simpson, pro se.

    Earl J. Neal and B. G. Clanton, both of Chicago, for appellee; B. G. Clanton, of Chicago, of counsel.
   Mr. Presiding Justice Friend

delivered the opinion of the court.

Everett Simpson, an attorney, at the Chicago Bar who appears pro se, filed an amended complaint in the circuit court against Hazel Harrison, seeking specific performance of an oral agreement to convey to him an undivided one half interest in an improved parcel of real estate in Chicago. Defendant answered, denying the material allegations of the complaint. Upon defendant’s motion the cause was referred to a special commissioner “for the purpose of taking proofs and making findings of facts and recommendations of law.” Plaintiff’s motion to vacate the order of reference was denied. He did not attend the hearing conducted by the commissioner and refused to appear to give evidence. Defendant, a nonresident, appeared and evidence was adduced in her behalf. The commissioner then filed his report recommending that plaintiff’s complaint be dismissed, with prejudice. Objections interposed to the report challenging the power or authority of the special commissioner to act in the cause or to render a report were ordered to stand as exceptions. The chancellor approved the report of the commissioner, adjudged that plaintiff’s complaint be dismissed, with prejudice, for want of prosecution, and assessed the costs of the proceeding against him. Jurisdiction to fix the fees of the special commissioner and tax them as costs, was reserved, and thereafter fees in the sum of $125 were approved. Plaintiff prosecuted a direct appeal to the Supreme Court, apparently on the assumption that a freehold or the validity of a statute or a construction of the constitution was involved, within the contemplation of section 75 of the Civil Practice Act (Ill. Rev. Stat. 1945, ch. 110, par. 199 [Jones Ill. Stats. Ann. 104.075]); but the Supreme Court held, in Simpson v. Harrison, 389 Ill. 588, that in an action for specific performance of a contract to convey real estate, where the sole contention was whether .the chancellor had authority to refer the cause to a special commissioner because of the repeal of the statute authorizing-such a reference, the issue raised is one of practice and procedure and does not involve a question of a freehold so as to warrant a direct appeal to the Supreme Court, and accordingly transferred the cause here for determination.

The Chancery Act of 1872 (Cahill Ill. Rev. Stat. 1933, ch. 22, sec. 39, par. 39) provided that “The court may, upon default, or upon issue being joined, refer the cause to a master in chancery, or special commissioner, to take and report evidence, with or without his conclusions thereupon.” The only other applicable statutes in which we have been able to find any reference to a special commissioner as an assistant to the chancellor in an equity proceeding are (1) the Divorce Act (Ill. Rev. Stat. 1945, ch. 40), sec. 15 (par. 16) [Jones Ill. Stats. Ann. 109.183]) of which provides in part that “in every suit for a divorce the wife or the husband when it is just and equitable, shall be entitled to alimony during the pendency of the suit, provided that no order or decree for alimony shall be entered until the court or a Master in Chancery or Special Commissioner, to whom the court may refer the cause, shall have determined from evidence the condition in life of the parties and their circumstances” and sec. 13 (par. 14) of which makes a similar provision with respect to the custody of children; and (2) the Act concerning separate maintenance of husband or wife (Ill. Rev. Stat. 1945, ch. 68), sec. 1 (par. 22) [Jones Ill. Stats. Ann. 109.189]) of which provides that in separate maintenance proceedings “the court . . . may make such allowance of temporary alimony, attorney’s fees, and suit money as may appear just and equitable, as in cases of divorce, and the court may refer the cause to a Master in Chancery or Special Commissioner to take and report evidence with reference to the condition in life of the parties and their circumstances with or without the Master’s or Commissioner’s conclusions-thereupon.” Upon the enactment of the Civil Practice Act, sec. 39 of the Chancery Act was repealed, and in lieu thereof sec. 61 (par. 185 [ Jones Ill. Stats. Ann. 104.061]) of the Civil Practice Act was substituted. It provides that ‘ ‘ Subject to rules, the court may in any chancery action, or in any action at law in .which matters of account are in controversy, on default or upon issue joined, refer the cause to a master or referee to take testimony and report his conclusions thereon.” The provisions for references to special commissioners in the Divorce and Separate Maintenance statutes remain unchanged. The Masters in Chancery Act (Ill. Rev. Stat. 1945, ch. 90, sec. 5, par. 5 [Jones Ill. Stats. Ann. 106.26]) provides that “Whenever it shall happen that there is no master in chancery in any county, or when such master shall be of counsel or of kin to either party interested, or otherwise disqualified or unable to act in any suit or matter, the court may appoint a special master to perform the duties of the office in all things concerning such suit' or matter; and every special master in chancery so appointed, before entering on the duties of his appointment, shall give bond, with security to be approved by the court, and take and subscribe an oath of office in such suit or matter, which bond and oath shall be filed with the clerk of the court making the appointment and spread upon the records thereof; Provided, however, that said special master shall not be required to give said bond if no funds shall be paid to him in said cause.”

It thus appears that since the repeal of sec. 39 of the Chancery Act of 1872, the foregoing statutes on Divorce and Separate Maintenance are the only applicable ones which provide for a reference to a special commissioner, and we have been unable to find any statute enacted since 1874 which in any way employed that term, or to ascertain the origin of a “special commissioner” in this State as an aid to a court of chancery. It is therefore fair to assume that it was advisedly deleted from the statute, when the Civil Practice Act was drafted. Nevertheless, some of the chancery judges in Cook county have continued the practice, as was done in the case at bar, of referring matters to special commissioners, who are not required to give bond, subscribe to an oath of office, or report to the court, as masters in chancery are required to do under paragraphs 4, 10 and 11 of chapter 90, Ill. Rev. Stat. 1945 [Jones Ill. Stats. Ann. 106.25, 106.31, 106.32], It is plaintiff’s contention that the reference of this cause to a special commissioner was invalid; that an order of reference based upon a repealed statute renders void all proceedings had pursuant thereto; that in chancery actions statutory authority to order a reference is limited to a master in chancery or, when statutory reasons exist and statutory provisions regulating the appointment are complied with, to a special master in chancery as a substitute for a master; and that there is no longer any authority or justification in law for the reference of the cause to a special commissioner.

For more than 100 years Illinois statutes have made full and ample provision for the appointment of masters in chancery as assistants to the court in equity proceedings. An Act approved March 3, 1845 provided that the several circuit courts of this State should have power to appoint in each county a master in chancery, prescribed his term of office, provided that before entering on the duties of his appointment he should give bond with security to be approved by the court and subscribe to an oath of office, provided for his compensation and empowered him to administer oaths, to compel the attendance of witnesses, order the issuing of writs and injunctions, and perform other duties pertaining to the practice of courts of chancery. (Revised Statutes of the State of Illinois 1845, eh; XXI, sees. 48 et seq.)

With respect to referees, the earlier enactments, as well as the present statute (Ill. Rev. Stat. 1945, ch. 117 [Jones Ill. Stats. Ann. 107.305 et seq.]), prescribe the procedure to be followed in common law causes referred to them, provide that witnesses may be required to attend and testify before such referees in the same manner as' is or may be provided by law in cases before masters in chancery, provide for their expenses and compensation, and empower them to administer oaths to witnesses who shall appear before them.

Chapter 101, Ill. Rev. Stat. 1945, provides (sec. 1, par. 1 [Jones Ill. Stats. Ann. 107.299]) “That all courts now established, or that may hereafter be established, and each judge, justice, "master in chancery, and clerk thereof, and all justices of the peace, police magistrates and notaries public, shall have power to administer oaths and affirmations to witnesses and others, concerning anything commenced or to be commenced, or depending before them respectively.” So far as we have been able to ascertain, none of our statutes empower special commissioners to administer oaths to witnesses, nor are they required to take oath, give bond, report to the court annually as masters in chancery are required to do, nor is any procedure "indicated tending to define their responsibilities as assistants or officers of the court.

This being a question of first impression, no applicable decisions are cited by either counsel. Nichols in his Commentaries on the Illinois Civil Practice Act, vol. 3, sec. 2930, p. 296, states that “While the statute reads ‘master or referee,’ it seems that the words ‘or referee’ are included merely to cover the authorization for a reference in any action at law in which matters of account are in controversy, and that the reference must be to a master in chancery.” We are inclined to agree with this reasoning because all provisions in the statute for referees pertain to actions at law, and section 61 (par. 185) specifically provides that “the court may in any chancery action, or in any action at law in which matters of account are in controversy, .... refer the cause to a master or referee to take testimony and report his conclusions thereon,” (italics ours), thus indicating, as it seems to us, the differentiation between chancery matters which may be referred to masters, and actions of law where matters of account are in controversy which may be referred to referees.

Section 5 (par. 5), ch. 90, Ill. Rev. Stat. 1945 [Jones Ill. Stats. Ann. 106.26], was evidently enacted to provide for contingencies where the regular master was disqualified for .any of the reasons enumerated in the statute and not otherwise, and cannot be interpreted to mean that a special commissioner or an assistant to the court designated by any other term, may be substituted in lieu of a special master. Section 5 certainly has no application to the practice in the Circuit court of Cook county where the matter could have properly been referred to any one of twenty masters, with fixed terms of office and readily available to assist the chancellor. Under the plain provisions of sec. 61, if this proceeding was a proper one for reference to a master, the chancellor should have referred it to one of the twenty masters of the court and not to either a special master, referee or special commissioner.

The theory upon which this and other references to special commissioners are made is that the chancellor has inherent power to appoint or refer a cause to any qualified person, by whatever name he may be designated. In view bf the ample provision made for the appointment of masters as assistants to the court and the availability of so many masters in Cook county to whom a reference could be made, this argument is untenable, and the practice of appointing special commissioners without any authority in the statute to do so, is indefensible.

These conclusions lead to a consideration of the effect of the reference upon the decree entered in the case at bar. We think it rendered the entire proceeding void. A similar situation arose in the early case (1883) of State for use of Board of Education v. Brookover, 22 W. Va. 214, where by consent of the parties a cause was referred to a special commissioner, the order providing that after due notice of" the time and place, the commissioner should proceed to audit and state an account in the matters of difference between the parties. When the account was settled and a report thereof made by the commissioner, the statute under which the reference was made, had been repealed. Nevertheless, the report was approved by the trial court, but on appeal the judgment entered thereon was reversed and the proceeding annulled. In Palethorp v. Palethorp, 184 Pa. 585, 39 Atl. 489, the court appointed a master in chancery and directed that a certain equity cause should proceed before him to final judgment. About 10 months prior thereto the office of master in chancery had been discontinued by rule of court except in proceedings where decrees or interlocutory orders were to be executed or their execution supervised by an officer of the court. The master’s report was ultimately confirmed and a decree entered in accordance therewith. In reversing the decree of the chancellor the Supreme court of Pennsylvania held that “the equity rules have been utterly disregarded, and that there has been no trial had in this case. We can not consider a decree made under such circumstances as an adjudication upon any question to which it relates. The appointment of the master was'a simple nullity. The proceedings before him were coram non judice, and therefore a nullity. The decree resting on his report has absolutely nothing to support it, and it is therefore a nullity. There is no question before us except the question whether we can sanction or overlook the brushing away of the orders of this Court in this manner whenever it may suit the convenience or the whim of the parties to trample upon them. It may be said that, the defendants are in no position to raise this question now because of their appearance before and recognition of the master as an officer of the court, and that, as this case has been heard on the testimony, the result ought not now to be disturbed. But it has not been heard before any one having the right to hear it. Moreover, if we are to give to the mistakes of parties, or to their intentional disregard of our orders, the force and efficacy of regularity and law, what .will become of our rules of practice? They will be set aside at will, or without purpose, by mere inattention and carelessness. We have but one thing to do in this case, and that is by no means a pleasant one. We must treat this record as it actually is, as an incurable series of mistakes, and set aside all that has been done since the appointment of the master by him, or by the judge of the court below resting upon or in any manner relating to what the master has done. ” It should be noted that in the Palethorp case the parties had consented to the reference, had appeared before the master and participated in the hearing. In the recent case of Mitchell v. Illinois Cent. R. Co., 384 Ill. 258, plaintiff tendered a petition for leave to file a bill of review subsequent to the entry of the decree by the circuit court, contending that the special master before whom the cause was heard had failed to subscribe to the statutory oath. It appears that plaintiff had contested the cause before the special master and failed to raise any question with respect to the master’s oath until after rendition of an adverse decision by the chancellor. The court held that his “.active participation before the special master, without objection, constituted a waiver of the taking of the oath by the special master.” The implication of that decision is that if plaintiff had raised the point in apt time and refused to participate in the hearing, the court would have ordered a reversal. In the case at bar, however, plaintiff objected to the reference to a special commissioner, moved that the order of reference be vacated, refused to appear before the master or to testify at the hearing.

In view of the foregoing conclusions, we hold that for lack of any statutory authority to refer chancery matters to special commissioners, the decree from which this appeal is taken is void, and it is therefore reversed and the cause remanded with directions that the chancellor either hear and determine the controversy himself, or if he deems it a proper matter for a reference, refer it to one of the masters in chancery of the court.

Decree reversed and cause remanded with directions.

Scanlan and Sullivan, JJ., concur.


text:
    Victor Pelcak et al., Czechoslovak Society of America, Appellees, v. Jerry Bartos et al., Vaclav Cipra and Maurice B. Vick et al., Trading as M. B. Vick and Company, Appellants.
    Gen. No. 43,440.

      Opinion filed April 11, 1946.
    Released for publication May 16, 1946.
    G. A. Buresh and Julius H. Selinger, both of Chicago, for appellants.

      Lloyd M. Brown and John M. Byrne, both of Chicago, for appellee; Benjamin Weinberg, of Chicago, of counsel.
   Mr. Presiding Justice Friend

delivered the opinion of the court.

In this proceeding an individual member and an incorporated fraternal insurance society charged that a conspiracy existed between 18 members constituting an executive committee, and various bondhouses, whereby the purchase and sale of securities by the society resulted in private gains to the defendants. In the course of the proceedings all the defendants were dismissed except Vaclav Cipra, one of the directors, and M. B. Vick & Co., one of the bondhouses. The case was then referred to a master in chancery, who later was appointed special commissioner, for the purpose of ascertaining whether or not an accounting should be had. The special commissioner filed His report, finding that the individual plaintiff and the society are not entitled to an accounting, and he recommended the dismissal of the complaint. Objections to the commissioner’s report were overruled and permitted to stand as exceptions, and after the matter had been heard by the chancellor he sustained the exceptions to the report and entered a decree in favor of plaintiffs, from which defendants appeal.

The facts essential to a consideration of the issues involved disclose that the Czechoslovak Society of America (hereinafter referred to as the society) is a fraternal benefit society organized under the laws of the State of Illinois by merger of five separate organizations. It is a -nonprofit organization, maintained primarily for the mutual benefit and protection of its members and their beneficiaries and provides benefits in case of death, misfortune or disability from disease, accident or old age. The governing bodies of the society are the convention, the executive committee, grand lodges, lodges and committees. The convention is the highest legislative and governing body consisting of delegates elected from the membership who meet every four years with authority to amend the constitution and the charter, maintain order and discipline and promote justice among its members. The executive committee, consisting of 18 officers elected by the convention, is the chief administrative body when the convention is not in session and is accountable to the convention for the faithful execution of the resolutions of the convention, is charged with the duty of investing the funds of the society, and is required to hold monthly meetings and receive reports of the .officers and committees. The board of trustees is the custodian of the securities of the society. Its duty is to submit to the executive committee'at each meeting the total par value of all securities held on the date of the preceding meeting and a report of all securities redeemed, sold and acquired since the date of the last meeting, and to recommend to the executive committee a list of securities which it advises for purchase or sale.

During 1933 and 1934 Cipra was the dominant figure on the board of trustees. He was an experienced bond broker and was regarded with trust and confidence as an expert by the other members of the board who had no particular knowledge of securities and relied upon his recommendations and selections. During that time the" board and not the executive committee actually made the investments and after they were consummated the approval of the executive committee was secured. Cipra handled the transactions for the board and actually did the investing of the society’s funds, thereby assuming and performing the duties of a trustee in furtherance of the confidential relationship that existed. During the foregoing period Cipra received about $14,000, being a division of over $28,000 profits made by Vick & Co. in certain bond transactions which Cipra handled for the society through that company, and about $1,300 on bonds sold to the society, as well as additional commissions in considerable amounts from several other bondhouses. Although Cipra was known to be a bond dealer he nevertheless did not actually disclose to" and inform the society that he was receiving profits and commissions and dividing profits in the purchase and sale of securities on behalf of the society, and he did not at any time disclose to the society the actual amount of such commissions and profits which he received and retained. It appears from the evidence that at an executive committee meeting on July 5, 1935 and at the 1938 convention of the society, upon direct inquiry he refused to answer whether he had received such commissions and profits and stated that he would consult an attorney. These circumstances indicate that the society did not theretofore know that he intended to make or receive such commissions or profits before the respective transactions occurred. It was not until July 1934 that rumors and suspicions arose as to his transactions but no actual facts or proof was then divulged. Subsequently W. J. Muzik, who was secretary of the society during 1933 and 1934 and who had consistently complained about the purchase and sale of bonds through Cipra, moved that all purchases made during 1933 and 1934 be investigated. Muzik then wrote to the Insurance Department of Illinois and requested an investigation. The department later sent to each member of the executive committee a letter stating that in its opinion the society had paid excessive prices for some of the bonds. The matter was then again investigated by the society for several months and ultimately a complaint was lodged'with the state’s attorney of Cook county, and it was not until a few days before the opening of the quadrennial convention in August 1938, when the report of the state’s attorney of Cook county, Illinois, was obtained by W. J. Muzik, that partial proof was actually obtained.

Cipra contends that no complaint was ever made in the executive committee about the fact that he was receiving commissions on the purchase of bonds by the society; that he always admitted that he was getting something; that he was entitled to a commission or concession; that the society suffered no loss by reason of any bond purchases made during the two years in question; that it made a considerable profit on them; and that the sales were made pursuant to previously secured bids. However, under the established rule of law in this State a trustee and officer in Cipra’s position, investing the society’s funds, cannot lawfully make and retain secret commissions and profits in his dealings with the society’s funds. Dixmoor Golf Club, Inc. v. Evans, 325 Ill. 612; Farwell v. Pyle-National Elec. Headlight Co., 289 Ill. 157; Winger v. Chicago City Bank & Trust Co., 325 Ill. App. 459; and Goldberg v. Ball, 305 Ill. App. 273. The record does not support Cipra’s contention that the society did not pay more for the securities than it would have had to pay if the commissions had not been given to him and profits had not been made; it appears reasonably clear that the society overpaid for the securities an aggregate of approximately $20,000 in 1933 and again in 1934 or a total of more than $40,000. A few instances of the overpayments made will suffice to support this conclusion. It appears that on November 25, 1933 Vick & Co. sold to the society City of Hoquiam, Washington, Water Works Bonds, par value $20,000, at 98, for which the society paid Vick & Co. $19,853.15. These same bonds were purchased by Vick & Co. on November 20, 1933 at 80. Out of the profits, of this transaction Vick & Co. paid Cipra $1,900. In December 1933 Vick & Co. sold the society for $9,980.29 two blocks of $5,000 par value City of Hoquiam Water Bonds at 98, or an aggregate of $10,000 par value of bonds, which were purchased by Vick & Co. at 81, and out of the profits of this transaction Vick & Co. paid Cipra the sum of $1,150. It further appears that from July 12, 1933 to December 29, 1933 Vick & Co. secretly issued to Cipra 10 checks aggregating $6,745, representing his secret share of the profit from said transactions, and that from January 30, 1934 to December 29, 1934 Vick & Go. issued to Cipra 25 checks aggregating $7,254.43 as his secret share of the profits from said transactions during that period. The record discloses that when Vick & Co. received orders from Cipra for these bonds it had knowledge that he was chairman of the board of trustees of the society, and participated with him in these transactions.

But even if it be assumed, as Cipra contends, that there was no increase in cost, that the society did not overpay for these securities and that it suffered" no loss or injury, nevertheless, by reason of his fiduciary relationship and trust, he would still be accountable to the society for any secret personal profit made by him. In Dixmoor Golf Club, Inc. v. Evans, 325 Ill. 612, the court made the following pertinent observations with respect to a similar situation: ‘ ‘ The law is well settled that a trustee cannot without a breach of the trust deal with its subject matter in such a manner as to make a profit for his own benefit. It requires no very keen moral perception to recognize the obvious justice of this universal rule of law, of justice and of morality. The directors of a corporation are trustees of its business and property for the collective body of stockholders in respect to such business. They are subject to the general rule in regard to trusts and trustees, that they cannot, in their dealings with the business or property of the trust, use their relation to it for their own personal gain. It is their duty to administer the corporate affairs for the common benefit of all the stockholders and exercise their best care, skill and judgment in the management of the corporate business solely in the interest of the corporation. (Farwell v. Pyle-National Elec. Headlight Co., 289 Ill. 157.) The stockholders are entitled to the utmost fidelity of the directors to the interest of the stockholders. It is a breach of duty for the directors to place themselves in a position where their personal interests would prevent them from acting for the best interests of those they represent.” The same rule of law is expressed in Farwell v. Pyle-National Elec. Headlight Co., 289 Ill. 157; Winger v. Chicago City Bank & Trust Co., 325 Ill. App. 459; Goldberg v. Ball, 305 Ill. App. 273; and Continental Securities Co. v. Belmont, 206 N. Y. 7, 99 N. E. 138.

Cipra also relies on the fact that he was a licensed bond dealer and therefore entitled to make and keep the commissions on the society’s bond transactions because it was the policy of the society to benefit and assist its own members wherever possible. It is a sufficient answer to this contention that under the law Cipra cannot keep commissions thus earned under the facts of this case. In the leading case of White v. Sherman, 168 Ill. 589, the court stated the reason for the rule as follows: “The law does not allow a trustee to retain any personal gain, which he may obtain in such a manner as subjects him to the temptation of placing himself in a position which may be hostile to the interests of the estate, whether the estate is actually injured or not as a matter of fact. The fact, that he was receiving commissions, might have subjected him to a temptation to place a larger line of insurance than was necessary on the trust property. It is not essential, that the estate has suffered a loss from what he has done; it is sufficient that he has gained a profit. Whether the contract was beneficial or injurious to the estate is wholly immaterial. An agent is only entitled to commissions upon a faithful performance of all the duties of his agency. One of these duties is to render to his principal statements of all money received and profits made through his agency. (Fish v. Seeberger, 154 Ill. 30; Hoyt v. Shipherd, 70 id. 309; 27 Am. & Eng. Ency. of Law, 187, 194, 196; Perry on Trusts, sec. 209; Gillette v. Peppercorne, 3 Beav. 78; 2 Pomeroy’s Eq. Jur., sec..1075).” In Metcalf v. Metcalf, 286 Ill. App. 10, an officer of a bank and the bank handled securities for an elderly woman, advised her as to investments and sold and purchased securities for her, making certain commissions on the transaction. A judgment in excess of $5,000 against both the officer and the bank was affirmed and the court again enunciated the principle laid down in White v. Sherman and cited additional cases in support of its conclusion.

One of the principal contentions urged by defendants is that the resolution of the executive committee, after full investigation, and the resolution of the convention, the highest legislative and governing body of the society, after a full hearing, definitely closed the matter of Cipra’s transactions for all time, and that these resolutions were binding on the society and its members. It should be borne in mind however that the society in this proceeding is a fraternal benefit insurance corporation, different from a business corporation or other classes of insurance companies. It is organized not for profit pursuant to the Insurance Code of Illinois, is subject to examination, supervision and control of the Department of Insurance, is affected with a public interest, and unlike other corporations, the members of the society are the beneficial owners of its property and its assets. Knights Templars & Masons Life Indemnity Co. v. Vail, 206 Ill. 404; State v. The Praetorians (Tex.), 186 S. W. (2d) 973; and Winger v. Chicago City Bank & Trust Co., 325 Ill. App. 459. We find no cases in defendants’ brief involving a fraternal benefit organization supporting their contention. Moreover the constitution and by-laws of the society contain no statement whatsoever that the decision of the convention shall be final and conclusive and no such restriction is made as to the funds of the society. The provision that the “Convention shall be the highest legislative and governing body of the Society” does not expressly give such authority; and to regard the decision of the convention as final and conclusive would deprive the society of its inherent right to recover a large sum of money wrongfully paid to one of its members.

In connection with the foregoing contention it is also urged that the resolution of the convention in 1938 that the matter “be definitely closed for all time” constituted a ratification. The facts disclosed by the record do not support this rather naive assertion. It appears from the evidence that the resolution directed that in the best interest of the society Cipra be asked to resign, it found that the executive committee, with the exception of a few members, did not perform its duties to the best interest of the society, and it recommended that the convention take this into consideration when electing a new executive committee. An extended debate preceded the resolution of the convention, but it does not appear that there was a single word of approval of Cipra’s commissions or of his division of profits with Vick & Co. realized from overpayment on the bonds; on the contrary Cipra’s conduct in this respect was generally and bitterly condemned and the substance of the debate showed that the resolution was finally adopted to minimize any possible scandal and preserve harmony within the society. The resolution adopted was in fact a censure and condemnation of Cipra’s conduct and the fact that he was asked to resign would clearly indicate that his conduct was not ratified or condoned.

Moreover, since the taking'of secret profits by Cipra and Vick & Co. was illegal, neither the executive committee nor the convention had the power to ratify their acts and practices. In Loft, Inc. v. Guth, 23 Del. Ch. 138, 2 Atl. (2d) 225, it was held that the investment of corporate funds by the company’s president for his personal gain was fraudulent and could not be ratified by the directors, and in Continental Securities Co. v. Belmont, 206 N. E. 7, 99 N. E. 138, where directors had made a large personal profit through issuance of stock in a reorganization ratified by the stockholders, the transaction was held fraudulent and void and incapable of ratification.

In all the bond transactions which Cipra conducted with and through Vick & Co., the fact that he was a trustee of and for the society was well known to the bondhouse and it also knew that he was acting for and on behalf of the society in the purchase and sale of securities which were sold and delivered to the society. Under the established rule in this Sthte a third person who knowingly participates with a fiduciary in violation of his fiduciary duties is chargeable for secret profits made or. shared by it from such violations. Consequently Vick & Co. is chargeable for the amount of those secret profits. Kinney v. Lindgren, 373 Ill. 415; People v. Small, 319 Ill. 437; Metcalf v. Metcalf, 286 Ill. App. 10; Scott on Trusts, vol. 3, sec. 506, p. 2429.

The contention of the defendants that the decree does not fix the rights of the parties or declare the rule to be adopted in stating the account and that it erroneously requires Cipra and Vick & Co. to account for all profits in the transactions, is untenable, since the decree provides that defendants shall account for the secret and illegal profits made by Cipra alone and also. those made by him and Vick & Co. as participants in the purchase for and sale to the society of securities during 1933 and 1934, and orders the account to be stated upon the pleadings and all the testimony and exhibits in the report of the master and special commissioner, and such further evidence as may be presented by the parties. It goes without saying that defendants are not held accountable for any legitimate earnings but only for their' wrongful gains.

Additional defenses interposed are the Statute of Limitations and laches. The record discloses that the individual plaintiffs, the society and the members thereof did not know the actual and complete facts until August 1938, when the state’s attorney’s report was presented to the convention. Prior to that time there was only suspicion and rumor as to defendants’ conduct. Until the convention met in 1938 defendants refused to divulge any information. Fraudulent concealment stops the running of the Statute of Limitations until the cause of action is discovered. Winger v. Chicago City Bank & Trust Co., 325 Ill. App. 459. In Auer v. William Meyer Co., 322 Ill. App. 244, we held that where a cause of action arises from fraud the Statute of Limitations will not begin to run nor laches apply until the discovery of the fraud or from the time when the fraud could have been discovered by the exercise of reasonable diligence.

The decree in this case specifically finds that Cipra wiis a trustee of the society and while acting in such capacity made and retained for himself large secret and illegal profits through the purchase, sale and exchange of securities for and to the society and orders that he should account to the society for such secret profits. The record abundantly sustains these findings. The decree further finds that Vick & Co. had knowledge that Cipra was a trustee of the society, participated with him in the purchase, sale and exchange of securities for the society, from which it made large profits which it secretly divided with him, and the record sustains these findings. In view of these conclusions we are satisfied that the decree was in all respects correct and proper, and it is therefore affirmed.

Decree affirmed.

Scanlan and Sullivan, JJ., concur.