author: Mr. Justice Scholfield

text:
    Robert M. Douglas et al. v. The Union Mutual Life Ins. Co. and Adele Cutts Williams et al. v. The University of Chicago.

      Filed at Ottawa January 25, 1889.

    1. Contract—construction—supplemental agreement. Where a written agreement is changed, in some respects, by a further agreement, which recites that all the other conditions and provisions in the first shall remain, in all respects, as therein stated, except as chaifged and amencled by the last agreement, the two agreements must be read as if what is changed by the last were stricken out of the first, and the matter of the last agreement were substituted.
    2. Same—contract to convey land—restrictions therein obviated by the character of the deed—merger of the preliminary contract in the deed. One who gives his obligation to convey land as a site for an educational institution when certain conditions shall be performed, the title to be inalienable, and to forever remain in the institution, may waive the performance of the conditions precedent, and convey the land in fee simple absolute, free of any and all restrictions, so that the grantee can sell or incumber the same.
    3. The owner of land gave his obligation to one in trust, whereby he agreed, upon certain conditions, to execute and deliver to the board of trustees of a proposed university, or their successors in office, a good and sufficient deed of conveyance of a tract of land described, “for the sole and exclusive use of the university, inalienable for any other use or purpose forever.” The board of trustees never performed the conditions prescribed in the contract, and were never entitled to a deed for the land, but the maker of the agreement to convey, of his own accord made a warranty deed of the tract, free of any restriction on the power of alienation: Held, that the title thereby passed to the grantee, and that the university might mortgage the same, and the title would pass on foreclosure and sale, free from any rights of the grantor’s heirs and widow.
    Í. In such case, the grantee has no right to insist that the deed be read as being qualified by the previous agreement, because not having performed its conditions, no rights could be properly claimed under it, and the deed being a voluntary grant, contained its own limitations, and therefore the grantee, in accepting it, accepted it as it was.
    5. It is a general rule, that a written agreement for the execution of a deed is merged in the deed, when made and delivered. So a covenant to convey a parcel of land for a designated purpose, making the premises not subject to alienation or incumbrance, is satisfied by a deed in fee, without any restrictions on the power of alienation.
    6. Chancery—forfeiture—breach of condition subsequent. A court of equity will not lend its aid to enforce a forfeiture because of a breach of a condition subsequent,—not even upon the special ground of removing a cloud on title.
    7. Corporation — charter limiting power of alienation•—construed. A clause in a charter of a university, that “no gifts, grants or devises made to the university for a particular purpose shall be applied to any other purpose,” has reference only to donations in aid of the accomplishment of a special object, as distinguished from aid to the university generally. It does not prohibit the alienation of land conveyed to it by a general deed expressing no specific purposes of the grant.
    Appeal from the Superior Court of Cook county; the Hon. Egbert Jamieson, Judge, presiding.
    The following instrument was executed by the parties thereto at the date therein stated:
    “This agreement, made this second day of. April, in the year of our Lord one thousand eight hundred and fifty-six, between Stephen A. Douglas, of the county of Cook and State of Illinois, of the first part, and John C. Burroughs, of the city of Chicago, of the second part:
    “ Witnesseth, that the said party of the first part, in consideration of the covenants and agreements hereinafter contained, and of the sum of one dollar in hand paid by the party of the second part, the receipt of which is hereby acknowledged, agrees and binds himself, his heirs, executors, administrators and assigns, to donate and grant unto the said party of the second part, all that certain piece or parcel of land situate, lying and being near the southern boundary of the present city of Chicago, Illinois, and being a part of the south half of the north-east quarter of section thirty-four (34), of township thirty-nine (39), of range fourteen (14), east, and bounded as follows: On the east by street or avenue known as ‘Cottage Grove avenue,’ on the north and south by two parallel lines, commencing on Cottage Grove avenue at points immediately opposite two parks, described on map made by J. E. Boyd in July, 1855, as Groveland Park and Woodland Park, at a distance of fifty feet, respectively, from the north line of Grove-land Park and from the south line of Woodland Park, running west to a north and south line, at such distance from the center of Cottage Grove avenue as that within the four lines thus described there shall be embraced ten acres of ground, inclusive of a space thirty-three feet in width on each of the four sides of said plat, to be set apart, along with an equal quantity of the adjacent ground, for the purpose of a sixty-six feet street on all sides of said tract.
    “The condition of this agreement is such, that if the said John C. Burroughs, party of the second part, shall fail, within a reasonable time, to procure the organization of a board of trustees of a university, according to the statutes of the State of Illinois, to consist of the following persons, viz.: Stephen A. Douglas, Hiram A. Tucker, William B. Ogden, John H. Iiinzie, Charles Walker, E. D. Taylor, Samuel Hoard, James H. Woodworth, Levi I. Boone, Walter S. Gurnee, Mason Bray-man, Rev. Mr. Clarkson and John C. Burroughs, residents of the city of Chicago; and James Dunlap, of Jacksonville, Illinois ; Elijah Gove, of Quincy, Illinois; Charles H. Roe, of Belvidere, Illinois; Henry G. Weston, of Peoria, Illinois; Simon G. Miner, of Canton, Illinois; and N. W. Miner, of Springfield, Illinois, and such other persons as they may appoint, to which trustees this agreement shall be assigned, and which board of trustees shall procure the plans for a building such as shall be mutually agreed upon by them and the party of the first part aforesaid, all differences to be referred to the decision of Thomas U. Walters, architect of the National Capitol at Washington, D. C.,—said building to be erected on the premises hereinbefore described, and to cost not less than $100,000, to be expended as follows: $25,000 within one year from the first day of May next, (provided the foundation shall be completed within the present year,) and the further sum of $25,000 within two years from the first day of May next, and the further sum of' $50,000 within or prior to the expiration of the year one thousand eight hundred and sixty,—then, in case of the failure of the said party of the second part to perform the conditions above named, or any part of them, this agreement shall be null and void, otherwise it shall remain in full force and virtue; and then, on the completion of the building, as aforesaid, the said party of the first part agrees, for himself, his heirs, administrators, executors and assigns, that he will execute and deliver to the board of trustees aforesaid, or their successors in office, for the purposes of the university herein-before mentioned, a good and sufficient deed of conveyance, assuring to said board of trustees, or their successors in office, the fee simple of the premises above described, free from incumbrance. And the said party of the first part further agrees to give to the party of the second part immediate possession of the before mentioned premises.
    “In witness whereof, the said parties of the above agreement hereunto set their hands and seals, the day and year above written.
    g. A. Douglas, (Seal.)
    J. C. Bubboughs. (Seal.)
    “Signed in the presence of Nicholas Vedder and Charles D. Selden.”
    The instrument was acknowledged at Washington, D. C., before Charles D. Selden, commissioner for Illinois.
    A majority of the persons named in this instrument, on the 6th of July, 1856, effected a temporary organization as a board of trustees of the university, and accepted the grant. Contributions to the university were made by various parties, but by November 10,1856, it was ascertained that the stipulations in the agreement in regard to the laying of the foundation of the building and making the first expenditures thereon, could not be complied with, and thereupon, on that day, the following instrument was executed:
    “I, Stephen A. Douglas, party of the first part to the foregoing agreement, do hereby extend the time for laying the foundation of the university until the first day of May, and for expending the first sum of twenty-five thousand dollars ($>25,000) until the first day of October, 1857, all the other conditions remaining, in all respects, as stated in said agreement. This extension of time is granted on the condition and with the understanding that the title of said land shall forever remain in said university, for the purposes expressed in said agreement, and that no part of the same shall ever be sold or alienated or used for any other purpose whatever.
    “Chicago, November 10, 1856.

    g. A. Douglas.”
    This was accepted by Burroughs.
    On the 20th of January, 1857, a special act of the General Assembly, incorporating the Chicago University, was approved by the Governor. The trustees named in the temporary organization and in the agreement were made trustees in this act. By the act, usual and ample powers for the objects of the corporation were conferred. So far as their consideration may be material, they will be set out in the opinion.
    On the 21st of May, 1857, the board of trustees named in the charter, met, and effected an organization, making Douglas chairman, and accepted the charter. At this meeting it was also “Resolved, that in accepting the grant of the Hon. S. A. Douglas, the trustees record their high appreciation of his munificence, and their cordial interest in carrying out the noble object which it contemplates.” At the same time, “plans for a college building presented by Boyington & Wheelock,” were adopted, and the executive committee was directed to place the center of the main building in the center of the grounds donated hy Douglas, etc.
    On the 27th of May, 1857, Burroughs formally assigned the agreement between Douglas and himself, to the Chicago University, and on the 4th day of July of that year the corner stone of the university building was laid with imposing ceremonies, the building being located in the center of the ground donated by Douglas. On the 8th of September, 1857, Douglas, in consequence of charges made by his political enemies, to the effect that his donation was for the purpose of speculation, proposed to the trustees of the university, that he would, in lieu of the lands donated, refund all the moneys expended thereon, including the cost of laying the corner stone, and in addition pay $50,000 toward establishing the university, upon the plan which had been adopted, on any other site which the board of trustees might select,—the $50,000 to be expended in endowing a school of law in the university; but the board of trustees declined to accept the proposition.
    Work upon the building progressed slowly. At a meeting of the board of trustees held on the 14th of July, 1858, a report from the executive committee was received, explaining why work on the university buildings had thus far been suspended, and strongly urging that measures be now taken to so complete the proposed building as would afford accommodations for opening the university in the fall; and the trustees then adopted the recommendations of the executive committee, and instructed the committee to contract with builders for the erection of the south “wing” and corridor, on the best terms practicable.
    Before work on the building had greatly advanced, on the 13th of August, 1858, Douglas and his wife, Adele, (who is the Adele Cutts Williams in the present suit,) executed a deed to the university, which, however, was not acknowledged until the 30th of that month, and recorded on the 13th of the next month, as follows:
    “This indenture, made this 13th day of August, in the year of our Lord one thousand eight hundred and fifty-eight, between Stephen A. Douglas, of the city of Chicago and State of Illinois, and Adele Douglas, his wife, parties of the first part, and the Board of Trustees of the ‘University of'Chicago,’ party of the second part:

      “Witness, that said party of the first part, for and in consideration of the sum of one dollar to' him in hand paid by said party of the second part, the receipt whereof is hereby acknowledged, hath granted, bargained and sold, and by these presents doth grant, bargain and sell, unto the said party of the second part, and their successors and assigns, all the following described lot, piece or parcel of land, situated in the county of Cook and State of Illinois, to-wit:
    “That part of the south half of the north-east quarter of section thirty-four (34), in township thirty-nine (39), north, of range fourteen (14), bounded and described as follows: Beginning at a point in the center of Cottage Grove avenue fifty (50) feet due south of the south line of lots in Oakenwald subdivision lying next north of Groveland Park, running thence west parallel with said south line of lots, and fifty (50) feet from said line if extended a distance of six hundred and twenty-seven (627) feet; thence due south a distance of six hundred and fifteen (615) feet; thence east on a line parallel to and fifty (50) feet north of the north line of the lots in said Oakenwald subdivision lying next south of Woodland Park, a distance of seven hundred and ninety (790) feet, to the center of Cottage Grove avenue; thence northwesterly on the center line of said avenue, six hundred and thirty-six (636) feet, to the place of beginning, containing ten (10) acres. A strip of land thirty-three (33) feet wide around the entire tract of land above conveyed, to constitute and form the one-half of a street to be hereafter laid out around said tract, sixty-six feet in width, the other half of said street so to be opened to be dedicated for that purpose by said party of the first part.
    “Together with all and singular the hereditaments and appurtenances thereunto belonging or in anywise appertaining, and the reversion and reversions, remainder and remainders, rents, issues and profits thereof, and all the estate, right, title, interest, claim and demand whatsoever, of the said party of the first part, either in law or equity, of, in and to the above bargained premises, with the hereditaments and appurtenances ; to have and to hold the said premises above bargained and described, with the appurtenances, unto the said party of the second part, their successors and assigns, forever.
    “And the said Stephen A. Douglas, party of the first part, for himself and his heirs, executors and administrators, doth covenant, grant, bargain and agree, to and with the said party of the second part, their successors and assigns, that at the time of the ensealing and delivery of these presents he is well seized of the premises above conveyed, as of a good, sure, perfect, absolute and indefeasible estate of inheritance in the law, in fee simple, and hath good right, full power and lawful authority to grant, bargain, sell and convey the same in manner and form aforesaid, and that the same are free and clear from all former and other grants, bargains, sales, liens, taxes, assessments and incumbrances, of what kind or nature soever, and the above bargained premises in the quiet and peaceable possession of the said party of the second part, their successors and assigns, against all and every person lawfully claiming or to claim the whole or.any part thereof, the said party of the first part shall and will warrant and forever defend.
    “In witness whereof, the said parties of the first part hereunto set their hands and seals, the day and year first above
    written-
    S. A. Douglas, (Seal.)
    Adele Douglas. (Seal.)”
    It was acknowledged in proper form, before a justice of the peace of Cook county.
    The record of the board of trustees shows a meeting on the 7th of September, 1858, and that at such meeting Dr. L. D. Boone made a statement with regard to arrangements made by the executive committee for issuing bonds for a loan, based upon the deed of ground by Douglas to the university, and a resolution was then adopted, “that the university grounds, and the buildings to be located thereon, be mortgaged, or conveyed by deed of trust, ” as therein provided, “as security for a loan or loans of money, not exceeding the sum of $25,000,” etc., and the president or vice-president, and secretary, were authorized to execute the mortgage. A committee was appointed to negotiate sale of the bonds, and the following other resolution was adopted:
    “Resolved, That in order to place the security of our loan beyohd question, the members of the board and other friends of the university be requested to guarantee the payment of the bonds and coupons above authorized, and that the financial agent of the university be directed to place in the hands of William Jones, Esq., $30,000 of its bills receivable, to indemnify said guarantors against loss upon said guaranty.”
    The board then adjourned until the next day, and at its meeting on the next day the following additional resolutions were adopted:

      “Resolved, That the thanks of this board be presented to Hon. S. A. Douglas for his liberality in waiving the terms of the original contract for the conveyance of the university grounds, and giving us a deed of the lands donated by him for the university.

      “Resolved, That the executive committee of the board be authorized to execute a bond to Judge Douglas, as shall be satisfactory to him and approved by the said executive committee, for the faithful carrying out of the university enterprise according to the spirit of the original contract.”
    In pursuance of this authority, twenty-five bonds, for the sum of $1000 each, dated September 1, 1858, payable in five years from date, were issued, and their payment was secured by deed of1 trust on the ground conveyed by Douglas to the university, to Mark Skinner, trustee. This deed, and the record of it, were destroyed by the great fire in Chicago, in October, 1871, but the proof is clear that it was executed by Douglas, as president of the board of trustees of the university. The bonds seem to have been sold upon the market, and a portion of them were purchased by the Union Mutual Life Insurance Company. Soon after their issue, and by the 1st of April, 1861, that company had become the owner and holder of the entire issue. An extension of time for the payment of the bonds was agreed upon between the university and the insurance company, and in September, 1861, a new trust deed was executed by those then representing the university, to Levi D. Boone, as trustee, to secure the payment. Thereafter, additional loans were obtained by the university from, the insurance company, from time to time, and 'secured by trust deeds upon the same property, to the same trustee. The university failed to pay either principal or interest, and finally, on the 8th of February, 1876, it obtained a'further loan of §13,143.84, which, added to principal and interest then due on prior loans, made $150,000 the university owed the insurance company, and, to secure this, the university then executed its deed of trust on the same property included in the prior deeds of trust, to Levi D. Boone, as trustee. All of the loans were obtained for the purposes of finishing the buildings or paying other expenses properly incurred by the university, and the consent of the requisite number of trustees, as required by the charter, was given prior to obtaining the several loans. Default having been made in payment of the $150,000 and accruing interest, a decree of foreclosure of the deed of trust was rendered by the Circuit Court of the United States for the Northern District of Illinois. The property was sold pursuant to the decree, and bought by the insurance company. There being no redemption, the master conveyed the property to that company, by deed.
    On the 8th of May, 1885, Stephen A. Douglas and Bobert M. Douglas, heirs-at-law of Stephen A. Douglas, deceased, filed their bill in chancery, in the Superior Court of Cook county, against the University of Chicago, setting up, among other things, the facts heretofore recited, and thereupon claiming that the grant by Douglas to the university was upon the eondition subsequent that the property should be forever held by the university for the purposes of the university; that such condition was broken by the making of the trust deed of February 8,1876, and praying that the premises might be decreed forfeited to them by reason of that breach of condition.
    On the 30th of April, 1886, the present bill was filed by Robert M. Douglas, one of the heirs-at-law of Stephen A. Douglas, deceased, and by Adele Cutts Williams, his widow. The same facts, in substance, are alleged in this bill as in that filed by Stephen A. and Robert M. Douglas, supra. Stephen A. Douglas and the Union Mutual Life Insurance Company are made defendants. Stephen A. Douglas filed answer and cross-bill, and answer and cross-bill were also filed by the insurance company. The answers to the original bill put in issue its material allegations, and answers were filed to the cross-bills, putting in issue their material allegations. By agreement of parties, the bill by Stephen A. and Robert M. Douglas, against the university, was consolidated with the bill in the present case. The court decreed that the original bills and the cross-bill of Stephen A. Douglas be dismissed, and that the prayer in the cross-bill of the insurance company be granted. Errors are assigned upon the several rulings of the court involved in the decree.
    Mr. W. P. Black, and Mr. Henry Decker, for the appellants,
    Messrs. Swett, Grosscup & Wean, and Mr. J. L. High, for the appellees.
   Mr. Justice Scholfield

delivered the opinion of the Court:

The agreement between Douglas and Burroughs of the 10th of November, 1856, was intended by them as a change and amendment of their agreement of the 2d of April, 1856. Their agreement of the last named date was to remain in full force, except as changed and amended by their agreement of the first named date. They must therefore he read as if what is changed by the November agreement were stricken out of the April agreement, and the matters of the November agreement were substituted. So reading it, the latter clause of the agreement must stand as follows: “And then, on the completion of the building as aforesaid, the said party of the first part agrees, for himself, his heirs, administrators, executors and assigns, that he will execute and deliver to the board of trustees aforesaid, or their successors in office, a good and sufficient deed of conveyance, assuring to said board of trustees, or their successors in office, the title of the premises above described, free from incumbrance, for the sole and exclusive use of the university, inalienable for any other use or purpose, forever.” The agreement was not intended to be a conveyance, of itself, but simply the evidence of an obligation assumed by Douglas to convey in the future. It was wholly executory, and it is proved beyond all controversy that it was never complied with by the university. There never was a time when the university was entitled to demand, as of right, that Douglas execute any deed. But if there had been full performance of the agreement by the university, Douglas might, of his own voluntary munificence, do more than comply with his contract, and give the university an absolute instead of a qualified title. The university could not object, for it might as effectually then retain the property for a particular use as if compelled thereto by the terms of the deed, and no one but the university and Douglas had any interest in the question. It follows, then, that on the 30th of August, 1858, Douglas might make a deed restricted and qualified as by the November, 1856, contract; or he might if he chose to do so, make an absolute deed to the university. No one*had a right to object to either. He made an absolute deed. There was neither fraud, accident nor mistake affecting his action, and there is no pretense that he did not thoroughly comprehend the legal effect of what he did. In his deed he recites that he “has granted, bargained and sold, ” and does thereby “grant, bargain, sell and convey (the premises described) to the ‘board of trustees of the university of Chicago,’ and to their successors and assigns, * *' * together with all and singular the hereditaments and appurtenances thereunto belonging or in anywise appertaining, and the reversion and reversions, remainder and remainders, rents, issues and profits thereof, and all the estate, right, title, interest, claim and demand whatsoever of the said party of the first part, either in law or equity, of, in and to the above bargained premises, with the hereditaments and appurtenances, to have and to hold the said premises above bargained and described, with the appurtenances, unto the said party of the second part, their successors and assigns, forever.” Then follow covenants of seizin, of good right to convey, and against incumbrances, f “with the said party of the second part, their successors and assigns.” These are not mere idle words. They were deliberately used, and their legal effect is to convey as absolute and unqualified a title as it was possible for Douglas to convey to the university. This is the only conveyance made by Douglas to the university. The university could not have insisted it is to be read as being qualified by the previous agreement between Douglas and the university, because, not having performed its part of that agreement, the university could claim no rights under it; and the deed being a voluntary grant by Douglas, contained its own limitations, and therefore the university, in accepting it, accepted it as it was.

But for the purpose of argument let it be assumed that this deed was made because of the obligation of Douglas under the agreement between himself and Burroughs; is it not clear that the deed is a satisfaction of his liability under the agreement, and conclusive as to the absolute character of the title held by the university ? It can not be said here, as it was said in Morris v. Whitcher, 20 N. Y. 41, cited by counsel for appellants, that the covenant to convey the title designated in the agreement is collateral, and therefore not satisfied by the deed, for there is no other covenant in the agreement to which it is possible that it can be collateral. It is itself the principal' covenant. By it alone is it pretended that Douglas was at any time under obligation to convey the property to the university. It is impossible that the university can at the same time have an absolute and yet only a restricted or conditional title to this property, and therefore either the prior agreement must control and modify the subsequent deed, or the subsequent deed must satisfy and discharge the prior agreement. It is not questioned by us that Douglas might have made the language of the agreement describe the title conveyed by the deed, either by making an express reference to it for that purpose in the. deed, or by exacting from the university, before the rights of third parties had intervened, the execution and delivery of a deed to him declaring that the title conveyed by his deed was accepted and held by the university on the terms stated in the agreement. But he did not do so. Nor did he, as would have been most natural had he so intended, use any language in the deed limiting or qualifying the title conveyed. The general rule is, that a written agreement for the execution of a deed is merged in the deed. Moser v. Miller, 1 Watts, 156; Harris v. Barker, 3 Johns. 506; Houghtailing v. Lewis, 10 id. 296; Brooks v. Mallbie, 4 Stewart & Porter, 96.

There is nothing in the evidence in this record to make this case exceptional. Upon the contrary, the fact that immediately after the execution of the deed by Douglas the trustees put a loan of $25,000 on the market, and secured it by a deed of trust on the property it conveyed, which was executed by Douglas himself as president of the board of trustees, is conclusive that all parties then thought the character of the title of the university was fixed by the terms of the deed alone. It may be conceded that the evidence very clearly shows that it was desired by Douglas, and by the other members of the board of trustees, that this property should not pass from the university ; that the munificence of Douglas in making the grant was highly appreciated by the trustees, and that they were, in return, anxious that the university should become an honor to his memory. But this has no tendency to prove that language in a deed is not to be construed according to its well established meaning, or that a prior written agreement, not referred to in that deed or in any written instrument made contemporaneous with or subsequent to its execution, is to be held as qualifying and changing the title it conveys. The fair inference is, that Douglas trusted entirely to the trustees of the university to see that his wishes and expectations in this regard were not disappointed. And this does not rest in inference alone'. There is positive proof to that effect. Burroughs testified, among other things : “I conversed with Douglas concerning the conveyance. I told him I thought he had done a very wrong thing. I told him there was a contract between him and me, and this deed was in anticipation of that contract, and in violation, and my impression was it was fatal to the enterprise. A concern beginning to go in debt at that stage would be ruined. And Mr. Douglas said a good deal, trying to smooth me down, saying the better wray was to make no fuss about it, but let it go on; that he had confidence in the trustees; that it was a temporary expedient, and they could go on. So I was induced to keep quiet and let the thing go on.” And the resolution of the board of trustees authorizing the executive committee of the board to execute a bond to Douglas for the faithful “carrying out of the university enterprise according to the spirit of the original contract, ” is proof to the same effect. If the grant was on a condition subsequent, then no bond was needed, for the property could not be alienated. The resolution necessarily implies that the grant was absolute, and that Douglas, therefore, had no guaranty that the property would not be diverted from the purpose of the grant.

The eighth section of the charter of the university has been cited as prohibiting the alienation of this property. It provides that “no gifts, grants or devises made to the university for a particular purpose, shall be applied to any other purpose,” etc. But even under the contention of appellants this >vas not a grant to the university for a particular purpose. The contract of November, 1856, was only that the title should remain in the university “for the purpose expressed in said agreement.” There is no “particular purpose expressed in said agreement.” The section, obviously, has reference only to donations to the university to aid in the accomplishment of a special object, as distinguished from aid to the university generally,—as, for instance, to endow a professorship in a particular branch of literature or science, purchase a library or designated scientific instruments, etc. But if the evidence here showed a grant upon a condition subsequent, the present bills could not be maintained, for no rule is better settled than that a court of equity will not lend its aid to enforce a forfeiture because of a breach of a condition subsequent in a deed. 2 Story’s Eq. Jur. sec. 1319; 4 Kent’s Com. (8th ed.) 134, *130; Freeman’s notes to Cross v. Carson, 44 Am. Dec, 757. And it will make no difference in such case that the aid of equity is sought upon the special ground of removing a cloud on the title. Memphis Railroad Co. v. Neighbors, 51 Miss. 412.

If we are right in the preceding views, it is unnecessary to consider the capacity of the university to make a,mortgage, or whether the mortgage foreclosed was executed by the proper parties, for, in that event, those questions do not concern these appellants. If they have no standing to enforce a forfeiture on account of a breach of a condition subsequent, the decree below is right, since they make no showing that they are entitled to relief on any other ground.

The decree is affirmed.

Decree affirmed.

Mr. Justice Bailey took no part in this decision.


source: Caselaw Access Project

author: Mr. Justice Shops

license: Public Domain

text:
    James W. Sykes v. The People of the State of Illinois.

      Filed at Ottawa January 25, 1889.

    1. Fraudulent warehouse receipts—statutes—title of act relating to penalty. Section 25 of “An act to regulate public warehouses, and the warehousing and inspection of grain,” and to give effect to article 13 of the constitution of this State in the imposition of a penalty or punishment, is not void merely because the particular matter of that section is not embraced in the title of the act. The section is germane to the purposes of the act as stated in its title.
    2. Same—sections 124 and 125 of the Criminal Code—whether repealing section 25 of the Warehouse act. Section 25 of the act regulating public warehouses, which denounces the punishment of warehousemen for the issue of fraudulent warehouse receipts, is not repealed by sections 124 and 125 of the Criminal Code. They are not so repugnant as to work a repeal by implication.
    3. Section 25 of the Warehouse act is directed against the issue of fraudulent receipts by public warehouses and warehousemen, and because of the public capacity in which they act, while sections 124 and 125 of the Criminal Code are directed against every person who shall “fraudulently make or utter any receipt or other written evidence of the delivery or deposit of any grain,” etc., upon any wharf or place of storage, or in any warehouse, mill, store or other building, and includes places of storage which are not public warehouses. In the first case, the offense consists solely in issuing the receipts, from which a fraudulent result may occur to another; while in the last, it is made to consist in the making or uttering of the receipt for a fraudulent purpose or with a fraudulent intent.
    4. Same—what will constitute a false and fraudulent receipt—character of the intent. If a public warehouseman issues warehouse receipts for a particular kind of grain or seed, and pledges the same as collateral security for a loan, when, in fact, he has no such grain or seed in store, and no such grain or seed has been deposited by the person to whom the receipts are issued, such receipts will be false and fraudulent, and the warehouseman issuing the same will be liable to indictment and punishment, even though he may have had a large quantity of the specified grain or seed at his place of business as a dealer in the article, but which is disconnected with his warehouse.

      5. Warehouse receipts being assignable by indorsement, so as to transfer the property they represent, the issue of a false receipt for grain not in store, although issued to a phrty having knowledge of its being false, is a violation of the statute. By the issue of such receipt the holder is furnished with the means of perpetrating a fraud on the public. The intent with which such receipt is issued is immaterial. The intent necessary to constitute this offense relates alone to the intent to issue the receipt knowing it to be false.
    6. Where a public warehouseman issues to another, as collateral security for a loan, warehouse receipts of grain, knowing that the grain therein purporting to be represented is not, in fact, in store, as therein designated and described, the crime created by section 25 of the Ware-h ouse act is committed; and it will be immaterial whether the defendant intended a fraud on the person to whom issued, or other persons.' And the fact that the person to whom the receipts were issued may have known there was no grain in store called for by the receipt, or may have consented to the removal of the grain, if deposited, without surrendering or canceling the receipts therefor, will not exonerate the warehouseman from criminal liability.
    7. Same—evidence—as affecting degree of punishment. The punishment of a public warehouseman for the issuing of false or fraudulent receipts of grain being fixed at not less than one nor more than ten years’ confinement in the penitentiary, the circumstances under which the act was done, and the motives actuating the defendant, may be shown in mitigation of his punishment. Such evidence may be controlled by instructions, as in other cases where evidence is competent and admissible for a particular purpose.
    8. Chargutg the jury—limiting to the actual matters on trial. Where a defendant is tried only on part of the counts of an indictment, the better practice in instructing the jury is to direct their attention to the charge in the counts under which the trial is had. But when the attention of the jury is directed only to the facts constituting the offense as charged in the counts to which the prosecution is limited, there will • be no prejudicial error in omitting to particularize the counts, of which defendant can complain.
    Writ of Error to the Criminal Court of Cook county; the Hon. Oliver H. Horton, Judge, presiding.
    The plaintiff in error was indicted under the 25th section of the Warehouse act. (Starr & Curtis, chap. 114, p. 1975.) The evidence for the People tended to prove that for two or three years prior to October, 1886, the defendant was carrying on business in Chicago, Illinois, as a warehouseman of a public warehouse of class “C.” About the last of February, 1885, he opened an account with the Merchants’ Loan and Trust Company, a corporation doing a banking business. About the time of opening his account, Sykes applied to the officers of the company for accommodations in the way of loans, and an arrangement was made, by which the bank was to advance him money, from time to time, upon his notes, which were to be secured by warehouse receipts, issued by him to the bank, upon and for timothy seed belonging to Sykes, in store in his warehouse, and that he would, keep the same insured for the benefit of the bank. Early in March, 1885, a loan was made of $7000, which was evidenced by his note, with which was deposited, as collateral security, two warehouse receipts, which are set out in the record, dated March 14, 1885, and numbered, respectively, 20,035 and .20,036. The receipt 20,035 is as follows:

      “Warehouse receipt No. 2035, J. W. Sykes é Co.’s Public Warehouse of Class ‘C,’ for the storage of Grass Seeds,

      98 and 100 Michigan Ave.

    “Chicago, Ill., March 14, 1885.

    Received from Merchants’ Loan and Trust Co., in apparent good order, into our store as above, eleven hundred bags of timothy seed, marked thus: 600 bags ‘An,’ and 500 bags ‘Ap,’ deliverable to the order hereon of Merchants’ Loan and Trust Co., surrender of this receipt and payment of storage, loss or damage by the elements, heat, leakage, shrinkage, ratage, fire, etc., at owner’s risk. Storage paid for six months.
    “Rates of storage, two cents per bag for first month, and two cents per bag each following month or fraction thereof.
    J. W. Sykes & Co.”'
    The other receipts vary from this only in date, the amount of produce stored, and the marks and designations of the property.

      The bank made no deposit of seed with Sykes at any time. In May, the note for which these two receipts were held as collateral, was paid, and the receipts returned to Sykes. May 29, Sykes withdrew some warehouse receipts which lie had given as collateral to another note to the bank for $7500, and deposited these two receipts in their stead. The note of Sykes for $7500 was renewed from time to time, as it matured, and these receipts remained with the bank as collateral to such renewal notes.
    On the 26th of August, Sykes borrowed from the bank $8000, gave his note therefor, and deposited as collateral security thereto his warehouse receipt No. 2048, dated that day, for 2200 bags of timothy seed, received from the Merchants’ Loan and Trust Company, marked thus: 1000 bags marked 32, 800 bags marked 33, and 400 bags marked 34. On December 31,1885, the $8000 note became due, and on that day Sykes made his note for $15,500, delivered it to the bank, and placed the three warehouse receipts before mentioned as collateral security to this note, the proceeds of which last note paid the two notes before mentioned. Subsequently, the note of $15,500 was renewed, Sykes again placing the three receipts as collateral to the renewal note. This last note has never been paid.
    On the 1st day of October, 1886, Sykes made an assignment for the benefit of his creditors. Neither at the time of issuing said three receipts, or either of them, did Sykes have any seed in his store in bags marked as stated in these receipts, or either of them.
    The evidence on behalf of the defendant tended to prove that Sykes’ main business for the thirty-nine months he was in business at 98 and 100 Michigan avenue, and next preceding his failure, was that of a seed merchant, and during that time his sales of seed amounted to $1,335,900; that his warehouse business was incidental to his business as a merchant, and mainly grew out of sales of seed made by him which the purchasers left on store with him, being one hundred and two lots, of the aggregate value of about $146,000, for which he gave them receipts, and they paid him a compensation, but that he did receive seed from others into store there, to the number of forty-four lots, of an aggregate value of about $38,000; that at the time of issuing the receipts 2035, 2036 and 2048, or at any time after, he did not have belonging to him, or any one, in his store,, any timothy seed in bags which were marked as stated in any of the three receipts; that the Merchants’ Loan and Trust Company did not, before or on the day of the date of any receipt, or after, or ever, deliver to him or into his store any timothy seed whatever, and that he never received any from it in storage.
    On the trial, the defendant sought to prove conversations between the officers of the bank and himself, in respect of opening said account with the bank, the accommodation Sykes would require, and the security to be given by Sykes, and that it was understood that Sykes should give his notes for the money he might borrow, to be secured by warehouse receipts upon his own property, which, however, was to remain and be subject to his own use in the conduct of his business,—that is, the timothy seed was not to be tied up thereby, but that he should have a right to sell the same, and that it was understood that such warehouse receipts were issued and accepted by the bank as mere formal and nominal security for said sums so advanced. Upon inquiry by the court, the prosecution avowed that they were proceeding on the counts in the indictment drawn under the Warehouse act. The court, thereupon, determining that the ninth, tenth, twelfth and thirteenth counts of the indictment were the counts under the Warehouse act, excluded from the jury all the evidence tending to show the intent with which the alleged warehouse receipts were issued by the defendant, holding, in effect, that evidence tending to show the want of fraudulent intent in their issue, was incompetent. Defendant also offered to show that at the dates, respectively, of said receipts, and at all times thereafter, and until October 31,1886, defendant had in his store, 98 and 100 Michigan avenue, more than 4500 bags of timothy seed, belonging to himself, and for which he had issued no warehouse receipts. Objection thereto was sustained by the court.
    The ninth count of the indictment is against the defendant as a warehouseman of a public warehouse of class “C,” and is for fraudulently issuing warehouse receipts for grain not in store or on hand at the date thereof. The tenth count is for fraudulently issuing warehouse receipts, by the defendant, as such warehouseman, for seed not actually in store. The twelfth count is for fraudulently issuing warehouse receipts, fraudulent in character, as to the quantity, etc., of grain in store; and the thirteenth count is for issuing warehouse receipts, etc., and afterwards willfully and fraudulently removing the produce therein described from such public warehouse, without the return, surrender and cancellation of such receipts, etc.
    The trial resulted in a verdict of guilty. Motions for new trial and in arrest of judgment were severally overruled, and sentence pronounced upon the verdict.
    Mr. J. A. Sleeper, for the plaintiff in error:
    Section 25 of the Warehouse act, and the offense therein named, are not within the subject expressed in the title of the act.
    Warehousing does not embrace a transaction whereby one party loans money to the other, and takes a pledge of property, having the effect of a lien or mortgage. Such transactions are regulated by the act in relation to mortgages. Then the loan by the bank to Sykes, and the securing its payment by Sykes by his note, and depositing his receipts as collateral security, were not the subject of a warehousing transaction. It was not the issuing of a warehouse receipt, within the purview of the title to the Warehouse act. State v. Bryant, 63 Md. 66; Morris v. Kidder, 34 Hun, 534; Yeni v. McNamee,
      45 N. Y. 614; Nelson v. Brown, 53 Iowa, 555; Sexton v. Graham, id. 181; Dean v. Driggs, 44 Hun, 480; Ferguson v. Nat. Bank, 14 Bush, 555; Fishback v. Van Dusen, 33 Minn. 111; Bank v. Hibbard, 48 Mich. 118.
    The section of the statute being highly penal, must be construed strictly. Reinecke v. People, 15 Bradw. 241; Jones v. People, 110 Ill. 590; Waddle v. Duncan, 63 id. 223; Edwards v. Hill, 11 id. 22; People v. Peacock, 98 id. 172; Perry County v. Jefferson County, 94 id. 214; Walker v. Springfield, id. 364; People v. Thatcher, 95 id. 109; Hamilton v. State, 102 id. 367.
    The rulings of the court that intent did not enter into the commission of the crime denounced by section 25 of the Warehouse act, were erroneous. Hurd’s Stat. chap. 38, sec. 280.
    The cases under the Dram-shop act, so called, notably Wright v. People, 101 Ill. 126, are not in point. No person has a right to sell liquor at all without a license. His license does not give him the right to sell to everybody. Selling liquor is an unlawful business, and a person can only justify himself so far as he has a license. He must see to it that he does not transcend his license. He must know, when a person asks for liquor, that he is licensed to sell to him. It -is just the same as if he should sell liquor without any license. Streeter v. People, 69 Ill. 595; McCutheon v. People, id. 601; Eells v. People, 4 Scam. 501; Chambers v. People, id. 351.
    If the parties agreed that the receipts should not be deemed a conveyance or pledge of Sykes’ property at all, there would not exist the intent to violate a public law. It must be that the parties could agree upon the character of the securities to be given for money loaned, and their agreement that receipts to be given were to represent nothing, and were not to take Sykes’ seed out of his stock and convert it into warehouse seed, would fix the transaction as not within the Warehouse act.
    The ruling of the court that the conversations between Sykes and Orson Smith, which constituted the agreement between Sykes and the company, under which he opened his account there, and borrowed money from time to time, were not competent evidence, was erroneous.
    Mr. George Hunt, Attorney General, Mr. Joel M. Longeneoker, State’s Attorney, and Mr. George N. Stone, for the People:
    It is insisted by the plaintiff in error, that as Sykes had issued a promissory note, and issued these receipts and deposited them with the bank as collateral security therefor, therefore he is not guilty under the Warehouse act, though the receipt be a fraudulent receipt, and issued in violation of the Warehouse act, and that the receipt is to be treated as a pledge, and not as a warehouse transaction.
    In answer to this position, we contend that the moment Sykes delivered these receipts to the bank they then became warehouse receipts, and were negotiable, as provided by the statute, and liable to pass into different hands,—not as a pledge, but as warehouse receipts; and, in fact, receipts were introduced in evidence in this case which had been transferred and negotiated for other seed stored in Sykes’ warehouse, showing, conclusively, that the plaintiff in error intended that they should be considered as warehouse receipts, and not as a pledge, or in the nature of a chattel mortgage given on his own property. Sykes had a right, as a public warehouseman, to issue the class of receipts that he did issue. That being true, then when he issued these receipts, purporting to be genuine warehouse receipts, we contend that he is certainly liable to prosecution under the Warehouse act; and for authority on this point we cite State v. Morse, 52 Iowa, 509.
    The section of the Warehouse act under which Sykes was convicted, was enacted to protect the community. It became necessary for the legislature to protect the community against fraudulent receipts, and for that reason the statute was passed to protect third persons who might purchase the receipt, or to whom it was issued. • State v. Stevenson, 52 Iowa, 701.

      It matters not in what capacity the bank held the receipts, so long as they show on their face that they are genuine warehouse receipts. Cochran v. Ripley, 13 Bush, 495.
    A warehouseman having property of his own stored, may part with his title to it by execution and delivery of an ordinary warehouse receipt. Bank v. Wellington, 48 Mich. 118; Cochran v. Ripley, 13 Bush, 465; Foster v. Chicago Dock Co. 48 Ill. 507; Sexton v. Graham, 53 Iowa, 181; Gibson v. Bank, 11 Ohio St. 311.
    It is urged, on the question of intent, that Sykes should have been permitted to state all the circumstances connected with his issuing of these receipts, and other matters going to show the intent on this point. We call attention to the warehouse section, in which it says, “any public warehouseman of any public warehouse, who shall, etc., * * * shall be deemed to have committed a crime,”—so that intent does not enter into the act of issuing the receipt for grain not in store, or for removing grain after having issued receipts therefor. It is itself a crime, according to the statute; and on this point we cite the following: State v. Morse, 52 Iowa, 509; Gardner v. People, 62 N. Y. 299; McCutcheon v. People, 69 Ill. 601; Halsted v. State, 12 Vroom, 552.
    Section 25 of the Warehouse act is germane to the primary object of the act, and is not in conflict with the constitution, declaring that no act passed shall embrace more than one subject, etc. O’Leary v. Cook County, 28 Ill. 534; Magner v. People, 97 id. 320; People v. Lœwenthal, 93 id. 191.
   Mr. Justice Shops

delivered the opinion of the Court:

Upon the trial of this cause, it was avowed by the People that the prosecution was upon the counts under the Warehouse act, which, the court determined, limited the charge to the ninth, tenth, twelfth and thirteenth counts of the indictment, and the trial proceeded under those counts.

It is contended that the court erred in giving the second and third instructions on behalf of the People, for the reason the jury were thereby told that if they believed, from the evidence, etc., certain things, “as charged in the indictment,” etc., they should find the defendant guilty, instead of limiting the jury to the consideration of the facts charged as constituting the offense in the particular counts under which the defendant was on trial. The better practice in such cases is to direct the attention of the jury to the charge in the counts upon which the prosecution rely. But there was here no prejudicial error. In each of the instructions complained of, the attention of the jury was directed only to the facts constituting the offense as. charged in the counts to which the prosecution was limited.

The statute before referred to, and upon which said counts were predicated, is the 25th section of the act of 1871, (Starr & Curtis, par. 180, page 1975,) which is as follows: “Any warehouseman of any public warehouse who shall be guilty of issuing any warehouse receipt for any property not actually in store at the time of issuing such receipt, or who shall be guilty of issuing any warehouse receipt in any respect fraudulent in its character, either as to its date, or the quantity, quality or inspected grade of such property, or who shall remove any property from store (except to preserve it from fire or other sudden danger) without the return and cancellation of any and all outstanding receipts that may have been issued to represent such property, shall, when convicted thereof, be deemed guilty of a crime, and shall suffer, in addition to any other penalties prescribed by this act, imprisonment in the penitentiary for not less than one and not more than ten years.”

It is urged that this section of the statute is void, because the provision imposing a penalty for issuing such warehouse receipts, etc., is not embraced in the title of the act. The act is entitled “An act to regulate public warehouses and the warehousing and inspection of grain, and to give effect to article 13 of the constitution of this State.” Section 6 of the article 'referred-to provides: “It shall be the duty of the General Assembly to pass all necessary laws to prevent the issue of false and fraudulent warehouse receipts, and to give full effect to this article of the constitution,” etc. It is, we think, manifest from the mere statement, that the section under consideration is germane to the purposes of the act as stated in its title, and not, therefore, obnoxious to the objection. People v. Lœwenthal, 93 Ill. 191; Magnet v. People, 97 id. 320.

It is next insisted that this section of the Warehouse act was repealed by the passage of sections 124 and 125 of the Criminal Code. The position is not well taken. The Warehouse act and the Criminal Code, severally containing the sections referred to, were parts of the general revision of 1874, and the presumption is, the legislature intended the revision should be a consistent body of laws, and each part thereof be capable of enforcement. The provisions of these sections are not repugnant, and there is, therefore, no repeal by implication. The section of the Warehouse act is directed against the issuance of warehouse receipts, etc., by warehousemen of public warehouses, as designated in and regulated by that act, and because of the public capacity in which they are acting, and that warehouse receipts for property stored in such public warehouses are, by the 24th section of the act, made transferable by indorsement, and thereby a valid transfer of the property represented by such receipt is made, the offense is made to consist simply in committing or doing the acts prohibited. On the other hand, the sections of the Criminal Code referred to are directed against every person who shall “fraudulently make or utter any receipt or other written evidence of the delivery or deposit of any grain” or other commodity upon any wharf or place of storage, or in any warehouse, mill, store or other building, and includes places of deposit or of storage not public warehouses, as designated in the Warehouse act. In the one case the offense consists solely in issuing the receipt, from which a fraudulent result may occur prejudicial to the public or those into whose hands the receipt may come; while in the other it is made to consist in the making or uttering of the receipt for a fraudulent purpose or with a fraudulent intent. It is apparent, we think, that the objects sought to be attained by these enactments are distinct, and that full effect could not be given to the legislative intent in respect of the acts of public warehousemen under the sections of the Criminal Code alone.

The principal point of contention, however, is, that the court erred in excluding from the jury, as it practically did, evidence tending to show the intent with which the several warehouse receipts were issued by the defendant, and ruling that it was immaterial whether such receipts Avere issued by the defendant'for a fraudulent purpose or with a fraudulent intent, or not. As Avill be observed, we have to some extent anticipated this contention. The defendant Aras a Avarehouseman of a public Avarehouse of class “C.” He so testifies, and the evidence clearly establishes that his Avarehouse fell within that class, as fixed by the second section of the Warehouse act. It can make no difference that the defendant was a dealer, also, in the commodities for the storing of which he kept such public warehouse. His transactions as warehouseman could not be affected thereby. The receipts issued by- the defendant to the bank, purport, on their face, to be issued by the defendant as warehouseman of a public Avarehouse of class “G,” and are issued in compliance with the requirements of the 24th section of the act. Therein is designated the brand or distinguishing marks of the property purporting to have been delivered for storage by the bank, as is provided shall be done in receipts for property stored in public warehouses of that class. It is obvious, therefore, without further discussion, that the defendant was a warehouseman of a public warehouse, and issued the warehouse receipts charged in the counts of the indictment before referred to, and subject to all the regulations prescribed by the Warehouse act for his conduct as such warehouseman. These several receipts were thus issued by him, when, in fact, as he himself testifies, the particular property designated and described in such receipts was not in store with him at the time of the issuance of such receipts, or at any other time. It is conceded that no timothy seed, in bags bearing the marks and brands stated on the face of the receipts to have been deposited for storage by the bank, was ever, at any time, on deposit or in store in the defendant’s warehouse, or under his control. The bank at no time made any deposit or stored any timothy seed therein. The receipts were, therefore, false in every particular relating to the property thereby represented to be in store. If, therefore, the court was correct in its ruling, the defendant was clearly punishable under the statute referred to.

To understand this contention clearly, some reference to the facts is necessary. The defendant applied to the Merchants’ Loan and Trust Company for financial accommodation. The proof tends to show that he indicated to the bank the sums required might aggregate $100,000, and proposed to issue warehouse receipts upon his own produce in store, as collateral security for advances made by the bank, and keep the property represented by such receipts insured for the benefit of the bank; and the proof also tends'to show that he procured insurance upon property purporting to be represented by such receipts. An account was opened, advances made by the bank, for which the note of the defendant was given, to which the warehouse receipts introduced in evidence, and others, were collateral, to a large amount, aggregating, at the time of the failure of the defendant, and remaining unpaid, over $90,000.

The evidence offered by the defendant, and practically excluded, tended to show that it was understood that the produce of the defendant represented in the receipts should not be tied up thereby,—that the warehouse receipts were intended and understood to be mere formal security for advances made by the bank. And it is contended, that as the officers of the bank knew no deposit had been made of grass seed, as shown on the face of the receipts, or otherwise, by the bank, it was competent for the defendant to prove the understanding with which the bank received such receipts, as tending to rebut the presumption of fraud or fraudulent intent on the' part of the defendant in issuing the same.

If the statute in question was intended for the protection of the person to whom the receipts issued, only, there would be much force in the position, for if the bank made no deposit, it could not be deceived by the statement in the receipts that it had stored the property therein described," and if the property of the defendant actually in store was not to be represented in such receipts, and this was so understood, no fraud could have been perpetrated upon the bank. This statute, ■ however, has a much broader scope, and is not designed alone for the protection of the person to whom the receipt is in the first instance issued; it is intended not only for his protection, but to protect the public at large, and all persons into whose hands the receipt may come in the course of business. By the provisions of the 24th section of the act, these receipts of public warehousemen are made transferable by indorsement of the party to whom they are issued, and thereby a valid transfer of the property represented in such receipts is made; and it is provided that such indorsement may be made either in blank or to the order of another. Such receipts, therefore, pass from hand to hand by indorsement of the person to whom issued. It can not be doubted that commercial transactions are greatly facilitated by this transfer of property, and the purpose of the act was to protect the holders of such public warehouse receipts from imposition and fraud. The receipts are required to be the true representative of property actually in store in the warehouse, and their issuance is prohibited under any other conditions or circumstances. If the bank, in this case, as it might, had put these warehouse receipts in circulation, an actual fraud would have been committed, and the evil intended to be prevented by the statute, consummated. By the issuance of the receipts to the hank it was furnished with the means of perpetrating a fraud, and this is one of the objects this statute sought to prevent. Any other construction would open the door to unlimited fraud, and render nugatory the protection attempted to be afforded to transactions through the public warehouses of the State by the statute.

It follows, that, as touching the question of the guilt or innocence of the defendant, the intent with which the receipts were issued by him was immaterial. The intent necessary to be found to constitute this offense, related alone to whether defendant intended to issue the receipt knowing it to be false. Thus far the common law doctrine, that every criminal offense consists of the joint operation of act and intent, enters into and must be considered as applying to statutory offenses. (Bishop on Stat. Crimes, 351-361.) If such receipts were issued by the defendant, he knowing that the property therein represented was not in fact in store as therein designated and described, the crime created by this section of the statute, as it relates to the issuance of such receipts, was committed. As before stated, it is immaterial whether the defendant intended a fraud upon the bank or other persons, if, in fact, his act, knowingly committed, was within the prohibition ,of the statute. This principle has found repeated recognition in this and other courts, in prosecutions for violations of the Dram-shop act and other acts. McCutcheon v. People, 69 Ill. 601, and cases cited; State v. Moore, 52 Iowa, 509; Gardner v. People, 62 N. Y. 399; Halstead v. State, 12 Vroom, 552.

The Supreme Court of Iowa, in State v. Stevenson, 52 Iowa, 701, held, upon the same principle, that when a warehouseman shipped grain out of his control, for which he had given a receipt, leaving the receipt outstanding, he was criminally liable under a similar statute, although the grain was so shipped with the knowledge of and without objection by the holder of the receipt. The court said: “It is evident, from this whole section, that it is for the protection of the community as well as the protection of the holder of the voucher. It is clear that Petrie, (such holder,) in this case, with the receipt in his possession, might perpetrate a fraud upon third parties, the grain not being stored with the defendant, as stated in the receipt. The defendant could not, innocently, under the statute, with such a receipt outstanding, ship the wheat beyond his control, even in the presence - of Petrie, and with his verbal assent. Such an act would furnish Petrie the means of perpetrating a fraud, which it is one of the objects of the statute to prevent.”

It is urged, with great persistency, that the transaction here was a mere attempt to create a lien upon the property of the defendant, in the nature of a mortgage or pledge thereof, and that therefore the act of defendant in making and delivering said receipt can not be deemed the issuance of a warehouse receipt, within the meaning of said act, and also, that the statute does not contemplate the issuing of warehouse receipts for the property of warehousemen, but only for property deposited or stored in such public warehouse by others. It is highly probable, if a holder of these receipts was seeking to recover possession of the property therein named, or enforce some right thereunder, as against the assignee of the defendant, or others having liens thereon, he having notice of the facts as here shown, would be bound by the transaction as it truly occurred between the warehouseman and the person to whom it issued, and the principle laid down in Fishback v. Van Dusen et al. 33 Minn. 111, cited by counsel for plaintiff in error, become applicable. No such question here arises. The warehouse receipts, as we have seen, as issued, purported to be for grain stored by the bank with the defendant, in his public warehouse, designated and marked as shown by the receipts, when in fact no such deposit had been made. Nor is it true, as the contention of counsel would indicate, that the receipts represented produce belonging to the maker thereof. Nor can it make any difference in the criminal responsibility of the defendant, under this statute, that such receipts might have been intended by the parties to operate as a pledge or mortgage of the defendant’s property, or that the officers of the bank knew, or might have known, that no such articles of property as therein described were in the custody of the defendant.

The instructions asked on behalf of the defendant, being based on the theory of counsel for plaintiff in error, that it was necessary for the People to show, and for the jury to find, that the receipts were issued by the defendant with a fraudulent intent, were properly refused.

We have seen that evidence tending to show that the defendant did not intend the perpetration of a fraudulent act, is not admissible in justification, or as exculpating the defendant from punishment for the alleged offense. Was it admissible for any purpose ? If so, it was competent to be considered by the jury for such purpose, and its exclusion was error. While the penalty is denounced against any warehouseman of a public warehouse committing the acts prohibited by the statute, and no excuse can be heard that a fraud was not intended, yet a wide discretion is left by the statute to the jury or court to determine what penalty shall be inflicted in the particular case. That the legislature did not deem all persons guilty of violating the provisions of said act as deserving of a like punishment, is manifested by the fact that the penalty inflicted may, in the discretion of the jury, be for any term not less than one nor more than ten years. The purpose and object of punishment in criminal cases is stated to be, to deter others from crime, and thus protect the community, as well as, when the life is not taken, to reform the offender. On the one hand, punishment will not be inflicted unless deserved, while on the other hand, it will not be imposed unless for conservation of the public good. (1 Bishop on Grim. Law, sec. 210.) And the punishment should always be commensurate with, but never in excess of, the purposes of the law as thus understood. The degree of punishment to be inflicted is, in the first instance, a matter for legislative control; but when the legislature has prescribed punishment in the alternative, or within certain defined limits, thereby vesting jurisdiction in the courts to determine which, or, within the limits fixed, what, penalty shall be inflicted in the particular case, the court is called upon to determine what punishment the turpitude of the offénse proved, on the one hand, and protection to society on the other, demand. It was not within the legislative contemplation that all persons convicted under this act should receive the same punishment. One may be sentenced for a term of one year, and another for ten years. One may have been guilty of a technical violation of the statute, involving no considerable degree of moral turpitude, and from which no considerable injury could be inflicted upon the public; the other may have committed the offense under the most flagrant circumstances, showing a willful and deliberate purpose to inflict injury. In such case, the jury must determine what, within the time prescribed by the legislature, is adequate punishment. This, manifestly, can be justly and properly done only by a consideration of the facts and circumstances attendant upon its perpetration, and which characterize- the purpose and motive in and effect of its commission. If the evidence is to be confined to the mere proof of the issuance of the false receipt by the public warehouseman, what is there upon which to determine what, within the limit, shall be his punishment ? Obviously, nothing, unless it be permissible to prove, in aggravation or mitigation of the punishment, the immediate attendant circumstances of its issue. This, we think, may be done. It was, we think, competent for the defendant to prove the circumstances under which the receipts were issued and delivered, as bearing upon the turpitude of the offense, and for the jury to consider the same in determining the measure of punishment to be inflicted. Such evidence must necessarily be controlled by instructions, as in other cases where evidence is competent and admissible for a particular purpose.

We are of opinion that the court erred in holding that the evidence tending to show the purpose and intent hy which the defendant was actuated in the commission of the offense, was improper to be considered hy the jury in mitigation of the penalties to he hy them imposed. Nor can we say, if it had been submitted, that the term fixed hy the jury for which the defendant should be confined in the penitentiary, would have been the same. Its exclusion for the purpose indicated, was, we think, prejudicial error.

For the error in this regard, the judgment of the Criminal Court is reversed, and the cause remanded for further proceedings.

Judgment reversed.


author: Mr. Justice Bailey

text:
    Hiram B. Scutt v. Daniel Robertson.

      Filed at Ottawa January 25, 1889.

    1. Partnership—assets of the firm—rights purchased by one partner—whether for himself, individually, or for the firm. A, the holder of certain patents for fence wire, formed a corporation, with others, to which he conveyed his patents, and afterward, as president of the company, by the consent and direction of the stockholders, assigned such patents to W., another corporation, taking back a license to himself, or to himself and associates, for the manufacture of 5000 tons of fence wire annually, upon certain conditions as to the associates, the license being"declared not transferable. A formed a co-partnership, composed of himself and B and 0, styled A & Co., all of whom were corporators in the first named corporation, and who succeeded to its machinery and other property. C sold his interest to A and B. Afterward A sold and transferred the firm property to A & Co., limited, and the right to manufacture 4000 tons of fence wire annually, for the price of $45,000. The firm consisting of A and B was dissolved. Thereafter, B filed a bill against A for an accounting: Held, that the right to make and sell 5000 tons of fence wire was a valuable property right, having a fixed market value, and that the license giving such right, though issued to A in Ms individual name, was, in equity, the property of the firm of A & Co., and a part of the assets of that firm.
    2. The license being equitably the property of the firm, the avails of so much of it as was actually sold and transferred by A, whether such sale took place before or after the dissolution of the firm, should be treated as partnership assets. And A should also be held to account, at its market value, for the 1000 tons per annum covered by the license, which he has retained and applied to Ms own use, or destroyed by voluntarily surrendering it to the licensor.
    3. Contract—waiver of condition—by whom. A license by a corporation to A to manufacture and sell 5000 tons of barbed fence wire annually, for a term of years, gave A the privilege of associating with him in the business not exceeding three partners, on condition they should subscribe to .the terms and conditions of the license, the doing of which was declared a condition precedent. The two partners associated with A subscribed a somewhat different obligation to the licensor, which that corporation retained, and the two associates of A declined to execute the obligation required by the licensor. Business was done with the licensees, and new contracts were made by and between the licensor and the licensees, extending the time of the license: Held, that the condition in the license that A’s associates should execute the obligations required, was for the benefit of the licensor alone, and could not. be taken advantage of by A, so as to deprive his associates of the benefits and profits derived under the license, and that the licensor, by its acts and conduct, waived strict performance of the condition.
    4. Same—contract, as distinguished from a mere license or privilege— whether revocable. A written license, by the holder of letters patent, for making barbed fence wire, to A and his associates, based upon a sufficient consideration, namely, an agreement on the part of the licensees, among other things, to make monthly payments of certain specified royalties upon all the barbed wire manufactured and sold, which, by its terms, was to remain in force for a stated time, subject only to the right of the licensor to revoke for certain defaults, and which was afterward, by an amendatory agreement, extended to a further time, is a contract, and not a mere license or privilege which the licensor might recall or revoke at pleasure, but vests a right to make and sell the wire named.
    5. Such a license is, in effect, an assignment, pro hac vice, to the licensees, of an interest in the patents, such assignment being revocable only for a breach of some of the stipulations in the contract by which the assignment was made. A provision in the license that it shall not be transferable, is solely for the benefit of the licensor, and it may be assigned when it appears that-the parties did not expect it to expire when the licensees should cease to act under it.

      Appeal from the Appellate Court for the Second District;— heard in that court on appeal from the Circuit Court of Will county; the Hon. Charles Blanchard, Judge, presiding.
    Messrs. Garnsey & Knox, and Messrs. Haley & O’Donnell, for the appellant.
    Mr. George S. House, and Mr. C. A. Hill, for the appellee.
   Mr. Justice Bailey

delivered the opinion of the Court:

This cause, comes here on appeal from a judgment of the Appellate Court, affirming in part and reversing in part, a decree of the Circuit Court. The opinion of the Appellate Court is reported in 26 Ill. App. 80. After a careful consideration of the case, we are disposed to concur in both the conclusions and reasoning of the Appellate Court, and it will therefore be unnecessary for us to do more than briefly state our views, chiefly by way of disposing of certain propositions which have been strenuously urged in this court.

The evidence, in our opinion, fully warrants the conclusion that the license issued to Scutt by the Washburn & Moen Manufacturing Company to manufacture and sell 2500 tons of barbed fence wire per annum under certain letters patent owned by said company, with the subsequent amendments thereto increasing the amount to 5000 tons per annum, was a valuable property right, having a fixed and ascertainable market value, and that though issued to Scutt in his individual name, it was in equity the property of the firm of H. B. Scutt & Co., and a part of the assets of that firm. Such being the case, the avails of so much of the license as was actually sold and transferred by Scutt, whether such sale took place before or after the dissolution of the firm, should be treated as partnership assets. Nor are we able to perceive any reason why Scutt should not be held to account, at its market value, for the 1000 tons per annum covered by the license, which he has either retained and applied to his own use, or destroyed by voluntarily surrendering it to the licensors.

The evidence showing that Scutt, in obtaining the license, was not acting for himself alone but for himself and the persons who were to be associated with him in business under the firm name of H. B. Scutt & Co., is sufficiently stated and commented upon in the opinion of the Appellate Court. The proper conclusion is, that, in equity, as between the partners, the license must be treated precisely as though it had been issued to the firm. But it is urged that, as the license by its terms was not transferable, it was a mere personal privilege granted to Scutt and his co-partners to be operative so long as they might continue to act under it, but incapable of being converted into cash by sale. This we think does not fairly state the case.

What is called a license was in fact a contract containing various stipulations by the contracting parties, and based upon a sufficient consideration, viz., an agreement on the part of the licensees, among other things, to make monthly payments of certain specified royalties upon all the barbed wire manufactured and sold. By the original contract it was stipulated that the license should remain in force until December 1, 1885, subject only to the right on the part of the licensors to forfeit it in case of willful default by the licensees, on giving thirty days notice of their intention so to do. By the amendatory agreement of January 20,1881, the continuance of the license was extended to February 27, 1894. It is clear then that the license was not a mere privilege which the licensors could recall or revoke at pleasure, but a vested right to manufacture and sell barbed wire under the various patents owned by the licensors until such patents should expire. It was in effect an assignment, pro hac vice, to the licensees, of an interest in the patents, such assignment being revocable only for a breach of some of the stipulations in the contract by.which the assignment was made.

Nor does it seem to us to be material, so far as the present controversy is concerned, that the license hy its terms was not transferable. That was manifestly a provision inserted for the sole benefit of the licensors, so as to prevent a transfer of the license to parties who might not be acceptable to them, but, when viewed in the light of the surrounding circumstances, it does not show that it was within the contemplation of the parties at the time, that the license was to expire whenever the licensees ceased to act under it, or that it might not be transferred by the express consent of the licensors. The consideration for which it was granted, and the subsequent dealings of the parties with relation to it, both tend to show a tacit understanding between the licensors and the licensees that the former were to give their assent to and ratify any transfer made by the latter, if made to satisfactory parties and upon satisfactory terms. Scutt assumed the assignability of the license in his contract of April 22, 1882, in which he agreed to transfer and assign, in due form, said license, to the extent of authorizing his assignees to manufacture and sell 4000 tons of barbed wire per annum, and in his subsequent execution of such assignment, and also in his letter of July 1, 1882, to the licensors, apprising them of the assignment he had that day made, and requesting or authorizing them to cancel the license to the extent of 4000 tons and to issue a new license to his assignees for that amount, or to cancel the license altogether and issue a license for 4000 tons to his assignees and a new license for 1000 tons to him. The transferability of the license was also assumed and admitted by the licensors in their compliance, without hesitation or question, with Scutt’s request, by making out a new license for 4000 tons running to his assignees. The licensors are not now assuming and never have assumed that the license was not available to the licensees by way of sale when an acceptable purchaser was presented, nor have they interposed the slightest obstacle to a sale to such purchaser, but on the contra-ry, as we have just remarked, they seem to have instantly complied with Scutt’s request to execute such papers as would give practical effect to his contract of assignment.

But it is said that Ashley and Robertson, Scutt’s co-partners, cut themselves off from all benefit or interest in the license, after the termination of their partnership relation with Scutt, by their refusal to accede to certain terms proposed by the licensors. In order to properly understand the question here raised, it will be necessary to recur briefly to some of the terms of the license itself. That instrument was in the form of an agreement between the licensors of the one part and Scutt of the other part, and signed by both of said parties, and comprising twenty-six paragraphs, embodying a large number of conditions and provisions to be assented to and performed by the licensees. The second paragraph gave Scutt the privilege of associating with himself in the manufacture of barbed fence wire under said license, co-partners not exceeding three in number, and provided that such co-partners should each first subscribe to the terms and conditions of the license by a written obligation to that effect, to be deposited with the licensors. The third paragraph declared that the.license was granted upon the express conditions therein contained, to be performed and complied, with by Scutt and his associates, as conditions precedent to the continuance of the license. The tenth paragraph stipulated that Scutt and the persons comprising his firm thereby acknowledged the validity of the letters patent in said license mentioned and each of them, and agreed to act in good faith and use their best endeavors to maintain such patents and each of them, and not to set up any defense to the validity of such patents or any of them or deny in any way the validity thereof in any suit or suits which might be instituted against their firm or the individual members thereof or either of them, upon or under said license. By the twentieth paragraph it was agreed that each and every person who should be associated with Scutt under said license should, before being admitted to any of the rights and privileges of the same, agree in writing to accept and abide by all the covenants and conditions therein contained, as if they had originally been parties thereto, and deposit such writing with the licensors.

The license was dated December 18, 1878, and on the 31st day of the same month Ashley and Eobertson executed to said licensors their agreement, reciting the execution of the license and their association with Scutt in the manufacture of barbed wire, and agreeing as follows:

“Now, therefore, we, the said James Ashley and Daniel Eobertson, do each acknowledge that we have read the above mentioned contract or agreement between the Washburn & Moen Manufacturing Company and H. B. Scutt; that we are familiar with each and every detail of said agreement, and do hereby agree that we will be bound by said agreement during the time that we are members of the firm of H. B. Scutt & Co., the same as though we were original parties to the same, and promise and agree to execute each and every requirement in good faith, for the term that we may be associated with said H. B. Scutt in the business of manufacturing said barb wire.”

This agreement was transmitted by Ashley and Eobertson to the licensors, and it was by them retained, and by them produced at the hearing of this cause. But it does not seem to have been quite satisfactory, for they appear to have drawn up another paper for Ashley and Eobertson to sign, which by its terms bound them to acknowledge the validity of said patents so long as the license continued in force. This Ashley and Eobertson declined to execute, and it is claimed that such refusal limited their interest in the license to the period during which their partnership relation with Scutt continued.

It may be admitted that their agreement was not a full and literal compliance with the requirements of the license, and that the licensors might well have objected to their admission to the firm of H. B. Scutt & Co. or to their assuming any rights under the license. This, however, the licensors did not choose to do. Notwithstanding the refusal of Ashley and Bobertson to execute precisely such instrument as they desired, they retained the one they had executed and elected to treat the arrangement with them as fully consummated. The firm of H. B. Scutt & Co. commenced doing business about January 1, 1879, and embarked in the manufacture and sale of barbed fence wire under said license, rendering monthly statements to the licensors and paying them royalties, and continued so to do down to July 1, 1882, when the firm was finally dissolved and ceased doing business. Twice during that time, viz., January 20, 1881 and October 13, 1881, the license was amended and its scope enlarged by supplementary agreements. By these agreements the original agreement was re-affirmed with divers modifications and amendments, and the amendatory agreements were both signed by the firm of H. B. Scutt & Co. During all the time the firm was in existence the licensors made no objection that Ashley and Bobertson, or Bobertson alone after Ashley retired from the firm, had failed to comply with the conditions of the license so far as it related to the execution of the stipulated agreement acknowledging the validity of the letters patent. Possibly the licensors were of the opinion that the acceptance by the members of the firm of H. B. Scutt & Co. of the license with all its conditions and agreements as effectually bound them to a recognition of the validity of said patents as their express agreement to that effect would have done. Possibly they were of the opinion that the subsequent execution by the firm of the supplementary agreements bound the members of the firm to the terms and conditions of both the supplementary and original agreements as effectually as though they had been original parties thereto. But however this may be, it is difficult to see how the licensors, if they were parties to or in any way interested in the present controversy, could now object for any purpose that the terms of the license had not been fully complied with by the co-partners of Scutt. The admissions to be implied from their conduct would no doubt be conclusive against them. And it does not appear that they have ever been disposed to question Ashley’s or Robertson’s interest in the license. Their attitude at the dissolution of-the firm seems to have been that of entire willingness to consent to the transfer of the license to any unexceptionable assignee whom Scutt or the firm might designate.

It should be remembered, however, that the present controversy is between the members of the firm, and one in which the licensors have no interest whatever. Nor has Scutt .any interest in the question whether his co-partners executed the contract stipulated for in the license, or otherwise failed to meet the just requirements of the licensors. So long as the latter are in no way questioning the interest of Scutt’s co-partners, we are unable to see how he can assert a right which they have seen fit to waive. As between the parties to the present controversy, the case is narrowed down to these questions, 1, whether the license was a property right possessing any value as an asset, and, 2, whether it was a right belonging to the firm and therefore a partnership asset. The opinion of the Appellate Court resolves both these questions in favor of Robertson by arguments which are entirely satisfactory to us, and the judgment of that court will accordingly be affirmed.

Judgment affirmed.

Mr. Justice Baker, having passed upon this case in the Appellate Court, took no part in its consideration here.