author: Mr. Justice Wilkin

text:
    Edward C. Hegeler v. The First National Bank of Peru.

      Filed at Ottawa June 15, 1889.

    X. Fraud—as between creditors—a prior creditor omitting to disclose his claim or his security. The fuere failure of a creditor to disclose the fact that he has been secured by the debtor’s notes, with power of attorney to confess judgment, and the creditor failing to enter up judgment for several months after his debt is due, will not constitute a fraud against other persons who may afterwards give the debtor credit on the faith of his apparent solvency. Even if such preferred creditor had knowledge of his debtor’s insolvency, he would not be bound to disclose that fact, or the amount due from such debtor.
    2. But if the prior creditor, having knowledge of the insolvency of a person, loans him a large sum, taking notes, with a power of attorney for the confession of judgment thereon, as a security, and such creditor at the time agrees to conceal the fact of the loan and the security so given, and allow the debtor to retain the full control of his property, free from any record or known lien, and in pursuance of such agreement does conceal the facts in relation to such indebtedness for nearly a year, with the intention of allowing the debtor new and further credit elsewhere and to defraud other creditors, it seems that such prior creditor would be guilty of a fraud, for which he should be postponed to the rights of other creditors.
    3. In this case, a bank loaned an embarrassed or failing corporation a large sum of money, taking its notes due one day after date, secured by a power of attorney authorizing the confession of judgment on the notes at any time thereafter, and retained such notes for nearly a year after their maturity without disclosing to the public the fact of the loan or the existence of the bank’s security, during which time the corporation, on the faith of its solvency and property in its use and control, was enabled to, and did, obtain other considerable loans. The bank never agreed to conceal its claim, and there was no evidence tending to prove any acts or declarations of the bank calculated to induce others thereafter to give the company credit: Held, that a bill by a subsequent creditor of the company to set aside the judgment in favor of the bank, and a sale thereunder, and postpone its rights until the complainant’s debt was first satisfied, was properly dismissed.
    4. Appeal—what questions to be considered—as to matters waived in the Appellate Court. The practice of waiving points in the Appellate Court, even when they properly arise on the errors assigned, and then presenting them to this court on appeal, can not be recognized. The failure of the Appellate Court to reverse for error to which its attention has not been called, and upon which it did not pass, can not be urged for error in this court.
    Appeal from the Appellate Court for the Second District;— heard in that court on appeal from the Circuit Court of La Salle county; the Hon. Dobbance Dibell, Judge, presiding.
    On the 24th of December, 1881, the De Steiger Glass Company made its promissory note to the appellee, for $5200,. due ten days after date, with eight per cent interest. Also, on January 10, 1882, its other promissory note, for $35,000, due one day after date, and then executed and delivered its two powers of attorney, and attached the same to said notes, authorizing judgments to be confessed thereon at any time thereafter. On the 22d day of December, 1882, appellee, in pursuance of such powers of attorney, caused a separate judgment to be entered by confession on each of said notes, in its favor, and against-said glass company, one for the sum of $5325, and the other for $35,050. On these judgments executions were regularly issued, and levied on certain real estate situate in the city of LaSalle. On September 21, 1882, appellant loaned the said glass company $10,000, and November 20 following, $4500, for each of which sums he took its promissory note, with powers of attorney to confess judgments thereon, and on January 1, 1883, caused judgment to be duly entered in his favor for the sum of $14,500 and costs. Judgments were also rendered about that time against said company, in various amounts, in favor of several different persons, some by confession, and others on process regularly issued.
    Appellant having obtained execution on his judgment, and caused the same to be levied on the real estate upon which appellee had previously levied, filed this bill, on the 14th day of April, 1883, to set aside and vacate each of said jddgments in favor of appellee, alleging them to be fraudulent and void as against himself and other creditors of said glass company, and praying that the executions, levies and sales made hi pursuance thereof be set aside, and that all the property of said company, including that so levied upon by appellee, be distributed among all of its creditors pro rata. Although the bill was filed prior to the sale under appellee’s executions, the sale was not restrained, but proceeded regularly, without interruption, and the time of redemption having expired prior to the hearing upon this bill, appellee had received sheriff’s deeds for a part of said real estate, and was entitled to deeds for all of it. Pending the bill, a receiver had been appointed by the circuit court of La Salle county, with directions to take charge and control of all the property of said glass company, including that so sold on appellee’s executions. On the hearing, the bill was dismissed, and the receiver ordered to surrender possession of said premises to appellee. After the cause had been submitted, the court below permitted appellee to make a substantial amendment to its answer. On appeal to the Appellate Court for the Second District, the decree of the circuit court was affirmed, and appellant now brings the record to this court.
    Messrs. Brewer & Strawn, for the appellant:
    The bank took the judgment notes upon which the judgments were entered, and held and concealed the same under circumstances that made its conduct operate as a fraud upon subsequent creditors of the glass company.
    A deed not at first fraudulent may become so by being concealed or not pursued, if creditors are thereby induced to give credit to the grantee. Hildreth v. Sands, 2 Johns. Ch. 48; Perine v. Dunn, 3 id. 508; Kerr on Fraud and Mistake, 42, 43; Belcher v. Belcher, 10 Yerg, 121; Kennedy v. Kennedy, 2 Ala. 571; Gale v. Gale, 19 Barb. 249; Scrivener v. Scrivener, 7 B. Mon. 374; Gill v. Griffith, 2 Md. Ch. 270; Hilliard v. Cagle, 46 Miss. 309; Blennerhassett v. Sherman, 105 U. S. 100.

      The court erred in permitting the appellee to file an amendment to its answer after the case had been taken under advisement, and also in divesting the receiver of any further control of the property of the glass company.
    Mr. G. S. Eldbidge, for the appellee:
    None of the authorities cited by appellant sustain the position contended for. They are all cases of mortgages, deeds or other conveyances, in which it was ■ held that they were inoperative as liens from the date of their execution, as to creditors who had acquired subsequent liens without notice of the alleged secret liens, and when the acts of the holders of the secret liens had been such as to amount, as against other creditors, to a disavowal of any liens upon, or ownership of, or interest in, the property involved.
    No law requires bank or other notes to be recorded or made public, and the bank never concealed the existence of the indebtedness to it. Field v. Ridgely, 116 Ill. 424.
    Hegeler made his loan to the glass company upon the stipulation that he should have the first lien by a mortgage on the property of that company, when the exigency should occur for its execution. The inquiry is suggested, that as Hegeler gave no publicity to this stipulation, did he create a secret lien in his own favor, and thereby aid in giving a fictitious appearance of wealth to the De Steiger Glass Company, and did he thereby commit a legal fraud ? It is not here insisted that he did, but according to the theory of appellant’s counsel, if their views are correct, it would most certainly appear that he had. If their theory be the correct one, then certainly he has no status, in equity, to assail the validity of the bank judgments.
   Mr. Justice Wilkin

delivered the opinion of the Court :

The sole ground upon which a reversal was asked in the Appellate Court was stated by counsel for appellant in the following language:

“The theory upon which complainant seeks a reversal of the decree below will appear from the following extracts from his bill of complaint, viz.: ‘That although the notes upon which ■said judgments were confessed in favor of the Peru bank were dated anterior to the time when the indebtedness for which ■said judgments were confessed was contracted, still said notes were kept by said bank in its custody and concealed from the knowledge of complainant, and the judgments thereon were ■confessed after said glass company became indebted to complainant; that it is inequitable and unjust for said bank to ■assert a lien upon said premises, under said judgments, as •against complainant. Tour orator would further represent, that although said judgments in favor of the First National Bank of Peru were not entered up until December 22, 1882, yet said notes both became due in January, 1882, and were each accompanied by power of attorney to confess judgment at any time; that prior to January 10, 1882, the date of the execution of each of said powers of attorney, the De Steiger Glass Company was unable to meet its obligations, and was insolvent, which was then and prior thereto known by said First National Bank of Peru; that said bank had cause for so ■believing; that just prior thereto said glass company offered to mortgage its property to said bank, but said bank refused, because it would injure the credit of the glass company and prevent it from obtaining elsewhere further credits and loans; that thereupon said bank took from said glass company said notes, and powers of attorney attached thereto, and agreed to ■conceal the same, and to allow said glass company to retain the full control of the property, free from any recorded or known lien; that in pursuance of such agreement said First National Bank of Peru, with the intention of allowing said glass company to obtain new and future credit elsewhere, and to defraud its creditors, did keep concealed in its possession for over eleven months, and until December 22, 1882, said judgment notes, when it entered judgments thereon and took out executions and made levies as aforesaid, with the express, purpose of defeating the just claims of your orator and other creditors of said glass company incurred during the period of said concealment, and concealed the amount of indebtedness, from the glass company to it until December 22, 1882; that-your orator advanced $10,000 September 21,1882, and $4500 November 20,1882, on the false and fraudulent statements of the De Steiger Glass Company as to its financial condition,, and upon the delusive and fictitious credit given it by said First National Bank of Peru in allowing it to retain all its property apparently free from incumbrance, and that had your orator-known or suspected the existence of said judgment notes he-would have given no credits or loans whatever to said glass-company ; that such concealment enabled the glass company,, under the semblance of being the owner of a large amount of unincumbered real estate and personal property, to deceive and mislead your orator and other persons to give it credit that-would otherwise have been withheld, by reason of which said glass company did contract the aforesaid debts to your orator, now remaining wholly unpaid; wherefore your orator avers it-is inequitable and unjust for said First National Bank of Peru to be allowed to enforce its said pretended liens to the injury of your orator, and until your orator has been paid in full his-aforesaid judgment.’ ”

The briefs and arguments filed in the Appellate Court are-re-filed here as the principal arguments in this court.

It must be admitted, that if the averment that appellee “agreed to conceal the same, and to allow said glass company to• retain the full control of the property free from any record or known lien, and that in pursuance of such agreement it did conceal,” etc.,, was stricken out of the bill, it would be demurrable, for want, of equity appearing on its face. (Field et al. v. Ridgely et al. 116 Ill. 424.) There is not a particle of evidence in the record to support that averment, nor is it relied upon, in the argument, as being essential to complainant’s cause. On the contrary, the argument proceeds throughout upon the proposition that the bank took its notes and held them under circumstances that made its conduct operate as a fraud upon others. There is no pretense that there was any agreement to conceal its claim against the glass company, much less that any such agreement was made for the purpose of enabling the company to obtain credit from others. No evidence can be found in the record proving, or tending to prove, acts or declarations on the part of appellee calculated to induce appellant to give credit to the glass company. There is nothing in the bill, and certainly nothing in the evidence, to show that at the time appellee took its notes, and refused to take mortgage security, it did not honestly believe, that, notwithstanding the insolvency of the glass company, it would, if its credit could be maintained, successfully recover from its embarrassment, continue business, and pay all its debts.

The authorities cited in the brief of appellant lay down correct rules and principles of law, but in our view of this case they are wholly inapplicable. We think the bill was properly dismissed.

In the additional brief and argument filed in this court, it is insisted that the circuit court erred in ordering the property in controversy to be turned over to appellee, and in granting it leave to amend its answer after the cause had been submitted. Neither of these points was presented to the Appellate Court for decision. The first is not even raised by the assignment of errors. We do not think the order was erroneous. The leave to amend the answer was clearly within the discretionary power of the chancellor.

We find no error in this record, and the judgment of the Appellate Court will be affirmed'.

Judgment affirmed.


source: Caselaw Access Project

author: Mr. Chief Justice Shope

license: Public Domain

text:
    Frank C. Hageman et al. v. Frederick C. Hageman et al.

      Filed at Ottawa June 15, 1889.

    1. Wills&emdash;quantity of estate devised&emdash;whether a fee. A testator devised his lands to his four sons, and the will then provided that the said sons “shall neither of them sell or mortgage any of the lots, * * * but the same shall go to their heirs after themHeld, that the sons of the testator took the fee in the estate so devised.
    2. Same&emdash;the rule in Shelly’s ease&emdash;as applicable to a devise. The rule in Shelly’s case is a rule of property in this State, and its application to the particular case depends, not upon the quantity of estate intended to be given to the ancestor, but upon the estate devised to the heir. When the devise is to heirs generally, the rule applies, and is held to conclusively express the intention of the testator, and will necessarily govern and control in determining the estate devised.
    3. Same&emdash;“heirs"&emdash;as a word of purchase. Neither the express declaration, first, that the ancestor shall have only an estate for life, and no longer; nor, second, that he shall have only an estate for life in the premises, and that after his decease it shall go to the heirs of his body, and in default of such heirs vest in the person next in remainder, and that the ancestor shall have no power to defeat the intention of the testator; nor, third, that the ancestor shall be tenant for his life, and no longer, and that it shall not be in his power to sell, dispose or make way with any part of the premises, will change the word “heirs" into a word of purchase.
    Appeal from the Circuit Court of Cook county; the Hon. Frank Baker, Judge, presiding.
    Mr. Charles D. Clark, for the appellants:
    It is evident, from the language of the will, that it was the intention of the testator to tie up the property in controversy during the lives of the first takers,&emdash;that is, that the said four sons should have a life estate only, and their respective children become the owners in fee upon the expiration of the life interests of their parents. The testator is particularly careful to insert a provision that the devisees should not sell or mortgage the premises devised, but that the same should go to their heirs after them. The intention of the testator is here clearly expressed, and unless the doctrine of the rule in Shelly’s case defeats such .intention, the decree must be reversed.
    This court has repeatedly held, that where the intention of the testator was clearly expressed, such intention must prevail, notwithstanding the rule in Shelly’s case. Belslay v. Engel, 107 Ill. 182; Butler v. Huestis, 68 id. 594; Bowers v. Porter, 4 Pick. 198.
    Such construction of a will should be adopted, if it consistently may be, as will uphold the intention of the testator. Lunt v. Lunt, 108 Ill. 307; Osborn v. Bank, 116 id. 130; Fussey v. White, 113 id. 637.
    Messrs. E. H. & N. E. Gary, for the appellees:
    The four sons took the title to the lots in fee, and the rule in Shelly’s case applies. 4 Kent’s Com. 215; Washburn on Eeal Prop. (5th ed.) 652; Warner v. Sprigg, 62 Md. 14; Ryan v. Allen, 120 Ill. 648; Murfitt v. Jessop, 94 id. 158; Leiter v. Sheppard, 85 id. 242; Brownfield v. Wilson, 78 id. 468; Baker v. Scott, 62 id. 86; Pool v. Blakie, 53 id. 495; Rawson v. Rawson, 52 id. 62; Brislain v. Wilson, 63 id. 173.
   Mr. Chief Justice Shope

delivered the opinion of the Court:

This was a bill filed in the circuit court of Cook county, by Frederick C., George W., Franklin J. and Louis B. Hageman, against the minor children of each, respectively, for partition of certain lots in what is known as McGrath’s addition to Chicago, and praying a construction of the last will and testament of Frederick C. Hageman, deceased, father of the complainants. It is alleged, that by said will the property sought to be partitioned was devised to the complainants in fee. A guardian ad litem was appointed for the defendants, who answered, admitting the making of said will, the death of the testator, and the admission of the will to probate, but denying that the complainants were the owners of the real estate devised, in fee, and averring, that by the terms of the will the defendants, children of complainants, became owners of the title in fee to the lands in controversy, subject only to a life estate in complainants, and the further possibility of letting in such other children of complainants as might thereafter be born, etc. Upon the hearing, the court construed the will as vesting the fee simple title in the complainants, and ordering partition thereof accordingly.

The third clause of the will of Frederick C. Hageman, deceased, and which is the only portion of the will involved in this controversy, is as follows:

“I give and devise unto my sons, Frederick G. Hageman, George W. Hageman, Franklin J. Hageman and Louis B. Hageman, lots 10, 11, 13, li and 15, as subdivided by plat ‘A,’ in block 1, in McGrath’s addition to Chicago, Illinois; but the said Frederick G. Hageman, George W. Hageman, Franklin J. Hageman and Louis B. Hageman shall neither of them sell or mortgage any of the lots last above mentioned, but the same shall go to their heirs after them,—that is to say, the lots which they take,—which shall be determined by lot or agreement between themselves.”

The question presented is, whether, under this language of the will, the complainants, sons of the testator, took an estate for life, in the lots devised, or took the estate in fee. It is contended that the language of the testator, that they “shall neither of them sell or mortgage any of the lots” devised, “but the same shall go to their heirs after them,” operates as a limitation upon the devise to the sons, so that they took a life estate only, and their children in esse became the owners in fee, subject to such life estate and the possibility of letting in other children of the said sons of the testator thereafter born, and answering the same description. The language employed in the first part of this clause of the will is sufficiently comprehensive to create an estate in fee in the sons. It is to be •observed, that in the words following there is nothing which designates any particular person, or class of persons, as remainder-men. The devise is to the sons, and to their heirs after them. It is urged., however, that it was manifestly the intention of the testator to deprive his sons of the power of alienation, and to vest in them an estate for their lives, only, and that the intention of the testator, as thus evinced, must control, and that the rule in Shelly’s case having the effect of defeating the intention of the testator, as thus shown, can not be applied.

It is said by Kent, (4 Com. p. 233,) in commenting upon "the decision in Perrin v. Blake, 4 Burr. 2579: “The result of that famous controversy tended to confirm, by the weight of judicial authority at Westminster Hall, the irresistible pre•eminence of the rule, so that even the testator’s manifest intent •could not control the legal operation of the word ‘heirs,’ when standing for the ordinary line of succession as a word of limitation, and render it a word of purchase. If the term ‘heirs,’ as used in the instrument, comprehended the whole class of Beirs, and they became entitled, on the death of the ancestor, to the estate, in the same manner and to the same extent, and with the same descendible qualities, as if the grant or devise had been simply to A and his heirs, then the word ‘heirs’ is a word of limitation, and the intention will not control the legal effect of the word.” This doctrine has received repeated recognition by this and other courts where the rule in Shelly’s -case is in force, so that we do not deem a review of the authorities necessary. See Baker v. Scott, 62 Ill. 88; Wicker v. Ray, 118 id. 472; Ryan v. Allen, 120 id. 648; Van Olinder v. Carpenter, 127 id. 42. In the case last cited, the authorities are collated and reviewed.

Mr. Preston, in his work on Estates, (Vol. 1, pp. 281-283,) speaking of the legal effect, under the rule in Shelly’s case, of the word “heirs” where it is used as designating persons who would take in succession, says: “In wills, the rule applies generally, and without exception, to the several limitations, as. often as the gift to the heirs is without any expression of qualification,” and that “neither the express declaration,—first, that the ancestor shall have an estate for his life, and no longer; nor, secondly, that he shall have only an estate for life in the premises, and that after his decease it shall go to-the heirs of his body, and in default of such heirs vest in the person next in remainder, and that the ancestor shall have no power to defeat the intention of the testator; nor, thirdly, that the ancestor shall be tenant for his life, and no longer, and that it shall not be in his power to sell, dispose or make way with any part of the premises, * * * will change the-word ‘heirs’ into a word of purchase.”

The rule in Shelly’s case is a rule of property in this State, (Baker v. Scott, supra, and Ryan v. Allen, supra,) and its application to the particular case depends, not upon the quantity of estate intended to be given to the ancestor, but upon the estate devised to the heir. When the devise is to heirs generally, the rule applies, and is held to conclusively express the intention of the testator, and will necessarily govern and control in determining the estate devised, notwithstanding the expression of an intention on the part of the testator that the-ancestor shall take a less estate than the fee. The devise, here, must therefore be treated as if it were to the sons of the testator and their heirs, without qualification, in which event it is clear the sons would take the fee in the estate devised. See Van Olinder v. Carpenter, supra.

The decree of the circuit court, being in conformity with the views here expressed, must be affirmed.

Decree affirmed.


author: Mr. Justice Magruder

text:
    The People ex rel. John Weber et al. v. The City of Spring Valley et al.

      Filed at Ottawa June 15, 1889.
    1. Quo warranto&emdash;parties&emdash;in proceeding against a corporation as such&emdash;or against persons who unlawfully assume to he a corporation. Where an existing corporation abuses any of its franchises, or usurps franchiseswhich do not belong to it, the information should be against the corporation as such. But when a body of men or a number of in- dividuals unlawfully assume to be a corporation, the information should be against them as individuals, and not by their assumed corporate name. This rule applies to municipal as well as private corporations. 2.
    If the information charges a city with exercising a franchise not authorized by its charter, it is proper to make the city a party defend- ant by its corporate name; but if it calls in question the corporate ex- istence of the city or the legality of its organization, the information must be brought against the officials or individuals assuming to exer- cise the corporate powers. 3.

      Sams&emdash;proceeding against a corporation hy name admits its corpo- rate existence. The effect of filing an information against a corporation by its corporate name, to procure a forfeiture of its charter or to com- pel it to disclose by what authority it exercises its corporate franchise, is to admit the existence of the corporation. When, therefore, the in- formation is filed against the respondent in its corporate name, and process is issued and served accordingly, and the respondent appears and pleads in the same corporate character, its corporate existence can not afterward be controverted. 4.
    Same&emdash;replication inconsistent with the information is a departure. Where an information is filed against a city by its corporate name, rep- lications to pleas, denying the fact of incorporation or setting up facts impeaching the validity of its organization, are obnoxious to demurrer, as being inconsistent with the information, and as a departure there- from. 5.
    Same&emdash;amendment of information&emdash;as mahing it inconsistent with itself. On an information in the nature of a quo warranto, against a city, by its corporate name, for the purpose of calling in question the legality of its incorporation, the relators asked leave to amend the in- formation by inserting after the name of the city the words, “never having been lawfully and legally incorporated under the laws of the State,” which the court refused to allow: Held, no error, as the pro- 129 posed amendment would have rendered the information inconsistent with itself, in admitting the corporate existence of the city and at the same time denying such existence.
    6. Pleading—carrying demurrer bach—to what pleading. The general rule is, that a court will not, in carrying a demurrer back, sustain it to a pleading of the adverse party, to which a demurrer has already been overruled.
    7. Same—declaration not supporting judgment. But if the declaration is so defective as not to support the judgment, that may be availed of on error, or, in the case of an information in the nature of a quo warranto, the trial court may dismiss the information, even after a demurrer thereto has been overruled and the defendant has pleaded over.
    8. Appeals—whether a franchise isinvolved—former decisions. Where the right to hold a municipal office depends upon the legality of the incorporation of the municipality, under an act of the legislature, a franchise is involved in a quo warranto proceeding to test such right. The cases of People v. Holts, 92 Ill. 426, and Graham v. People, 104 id. 321, in so far as they hold a contrary view, are overruled.
    Writ of Error to the Circuit Court of Bureau county; the Hon. Charles Blanchard, Judge, presiding.
    Messrs. Brewer & Strawn, and Messrs. Eckels & Kyle, for the plaintiffs in error:
    A demurrer can not be carried back and sustained to a pleading to which a demurrer has been overruled. Stearns v. Cope, 109 Ill. 340; Culver v. Bank, 64 id. 528; Walker v. Welch, 14 id. 277; Express Co. v. Pinckney, 29 id. 392.
    Again, we insist the information was good and sufficient. The practice, in quo waoranto proceedings, does not require the People to show anything by the information, or to present the facts upon which the relators rely. The information calls upon the defendants to show by what warrant they exercise iheir franchises, and they must exhibit good authority for so doing, or the People will be entitled to judgment. The object of the information is to call into question defendants’ title to the franchises claimed, and then the entire onus is on the defendants, and they must show, by their pleas, that they have a valid title to the franchises. Clark v. People ex rel. 15 Ill. 213; People ex rel. v. Ridgely, 21 id. 65.
    We think the court below erred in sustaining the demurrer to the replications. The proper practice seems to be to charge usurpation, generally, in the information, and upon the defendants setting forth the acts of incorporation, and justifying under them, to reply, setting forth the causes of forfeiture, facts which avoid the plea, or traverse its allegations. People ex rel. v. Improvement Co. 103 Ill. 491; People ex rel. v. Bank of Niagara, 6 Cow. 196; People v. Railroad Co. 12 Mich. 389 ; People v. Richardson, 4 Cow. 97, note; Commonwealth v. Bank, 28 Pa. St. 383; Angell & Ames on Corp. secs. 734, 756, 760.

      Quo warranto is the proper remedy where it is sought to exercise the privileges and powers of any municipal corporation without authority of law. High on Ex. Legal Bern. 500, sec. 684; State v. Bradford, 82 Vt. 50.
    A bad reply is good enough to a bad plea, and will be held good on demurrer. Ashley v. Foreman, 85 Ind. 55; Frost v. Hammett, 11 Pick. 70.
    Even if the replications were all bad, but the plea to which they were filed was substantially faulty also, the court should have carried the demurrer back and sustained it to the plea. Insurance Co. v. Stanton, 57 Ill. 354; Tipton v. Carrigan, 10 Bradw. 318; Townsend v. Jemison, 7 How. 706; 2 Wils. 150.
    Mr. G-. S. Eldredge, for the defendants in error:
    The city, if it had a legal existence, had the right to exercise municipal control over the territory in its limits, and the trial court is bound to take judicial notice of the existence and boundaries of cities. Rev. Stat. chap. 27, sec. 6; Brush v. Lemma, 77 Ill. 497; Potwin v. Johnson, 108 id. 70; Chicago v. People, 80 id. 496.
    The information, being against the city, admitted its corporate existence, and the replications seeking to assail such existence are inconsistent with the information, and are a departure. Chesshire v. People, 116 Ill. 492; People v. Draper, 15 N. Y. 532; People v. Carpenter, 24 id. 36; People v. Board of Education, 101 id. 308; Graham v. People, 104 id. 322.
    Where the information charges that there never was a corporate existence, the proceedings must be against the persons assuming to act as a corporation. Chicago v. People, 80 Ill. 496; People v. Railroad Co. 15 Wend. 113; People v. Supervisors, 41 Mich. 652; State v. Gas Co. 18 Ohio St. 262; Granville v. Alexandrian Society, 11 id. 8.
    We are aware of no case in this country in which a, body, such as a corporation, has been ousted of the franchise to be a corporation, on the ground that it never had a corporate existence. State v. Gas Co. 18 Ohio St. 262; People v. Bartlett, 6 Wend. 424; State v. Coffee, 59 Mo. 59; Stultz v. State, 65 Ind. 403; 48 Vt. 266.
    So, then, it must be certainly regarded as conclusively settled, upon principle and authority, that an information filed against a corporation admits, necessarily, the existence of the corporation.
   Mr. Justice Magruder

delivered the opinion of the Court:

This was an information in the nature of a quo warpanto, filed, by leave, in the Circuit Court of Bureau County, on April 23, 1886, against the City of Spring Valley, and Charles J. Devlin as Mayor of said city. The information charged, that the city of Spring Valley was then using, and for three months past, had used, without any warrant, charter or grant, the following liberties, privileges and franchises, to-wit: that of exercising the municipal powers of every kind and nature conferred by “An act to provide for the incorporation of cities and villages,” over certain specified territory in the township of Hall in Bureau County, and over all persons found or residing within the limits of said territory; and that Devlin then was, and, during the same time, had been exercising the powers, rights, franchises and duties conferred by said act upon mayors of cities, claiming to be, without any warrant or authority of law, Mayor of said city of Spring Valley; all which privileges, franchises and duties said city and said Devlin had usurped and still usurped to the damage and prejudice of the People and against the peace and dignity of the same. The information contains a prayer that the defendants answer by what warrant they respectively claim to have, use and enjoy and exercise the said privileges, liberties, franchises and duties.

The defendants demurred to the information. Their demurrers were overruled, and they failed to stand by them, but filed pleas to the information. In their pleas, they attempted to set up the various steps taken for the organization of the city, as required by section 5 of said act, beginning with the filing of the petition with the clerk of the county court on January 8, 1886, and ending with the calling of an election to vote upon the question of incorporation, the canvassing of the vote, the declaration of the result showing a majority in favor of organization, the certificate thereof of the county judge, and the recording of the result upon the records of the county court, etc. The pleas also set up the proceedings for the election of city officers, showing the election of Devlin as mayor on February 23, 1886, and that he was duly qualified, etc.

The People filed seven replications to the pleas, the first denying the incorporation, the second, third and fourth, denying that the petition was subscribed by 50 legal voters, that there was a resident population of 1000 inhabitants, and that the territory described was contiguous territory. The fifth, sixth and seventh replications charge, that the organization of the city of Spring Valley was fraudulent; that Devlin controlled the Spring Valley Coal Company; that the miners, who were employed by the company, constituted nearly all the population of the territory and were under the control of Devlin; that he fraudulently procured the petition to be signed and the organization to be voted for by his mining employees; that he was owner of most of the ground platted into lots, blocks, streets and alleys; that the territory described in the information comprises all the territory in the limits of said pretended city; that before January 22, 1886, there was no organized city in said territory and no such municipality as the city of Spring Valley; that underlying said lands were strata of coal; that the company had sunk shafts upon some of said lands and erected buildings and other improvements; that Devlin fraudulently omitted these portions of his lands from said petition, so that it might escape taxation for city purposes; that such lands were suited for municipal purposes; that, without the knowledge of relators or notice to them, he included their lands in said petition, so as to make them bear the burdens of the municipal taxes, and thereby improve his own property; that the lands of relators were only adapted for agricultural purposes, and were farming lands, and pasturage and wooded lands; that the same were fraudulently inserted in said petition; that the remainder of said territory, except that occupied by the employees of said coal company was sparsely settled, there being only about one family to each 150 acres; that said company and Devlin, its general manager, put into execution a fraudulent scheme to defraud the owners of lands adjoining those of the company by compelling such owners to contribute by taxation to the improvement of the company’s lands that were platted, and by relieving those not platted from taxation, and, for that purpose, fraudulently caused the petition to be presented to the county court, and falsely and fraudulently represented that it was signed by 50 legal voters, and that said territory was occupied by 1000 inhabitants, and that the same was contiguous, etc.

The defendants demurred to these replications. The Court sustained the demurrers. On August 22,1887, the defendants moved for judgment on the demurrers to the replications. September 14,1888, the Court sustained the motion, and dismissed the information.

The demurrers to the replications were properly sustained. The first replication was a general denial of the legal incorporation of the city. The second, third and fourth were specific denials of particular facts necessary to constitute such legal incorporation. The fifth, sixth and seventh charged, that the incorporation was illegal and void by reason of the fraudulent means put forth to secure it. In substance, therefore, all the replications attacked the existence of the city of Spring Valley as a corporation. But this was a departure from the information, or, if not a technical departure in pleading, it amounted to a contradiction of the information by the replications, because the information, by making the City of Spring Valley a> party defendant, thereby admitted its existence as a corporation.

When an existing corporation abuses any of its franchises, or usurps franchises which do not belong to it, the information should be against the corporation as such. But when a body of men, or a number of individuals, unlawfully assume to be a corporation, the information should be against them as individuals, and not by their corporate name. Dillon in his work on Municipal Corporations (vol. 2, 3d ed., sec. 895) says: “It is held, in England, that if the information be for usurping a franchise by a corporation, it should be against the corporation; but, if for usurping the franchise to be a corporation, it should be against the particular persons guilty of the usurpation.” (People v. Richardson, 4 Cowen, 97; People v. R. and S. R. R. Co. 15 Wend. 113; People v. Supenisors, 41 Mich. 647; State, etc. v. Cin. Gas Light and Coke Co. 18 Ohio St. 262).

The weight of authority in this country “may now be regarded as sustaining the proposition, that the effect of filing an information against a corporation by its corporate name to procure a forfeiture of its charter, or to compel it to disclose by what authority it exercises its corporate franchise, is to admit the existence of the corporation. When, therefore, the information is filed against the respondent in its corporate name, and process is issued and served accordingly, and the respondent appears and pleads in the same corporate character, its corporate existence cannot afterwards be controverted.” (High on Ex. Leg. Rem. 2d ed. sec. 661; State v. Commercial Bank of Manchester, 33 Miss. 474; People v. R. & S. R. R. Co. supra; State v. Cin. Gas L. & C. Co. supra).

If, in the present case, the information had charged the city of Spring Valley with exercising a franchise not authorized by its charter, it would have been proper to make the city a party defendant by its corporate name. But as the information calls in question the corporate existence of the city, it should have been brought against the officials or individuals assuming to exercise the corporate powers.

Some of the authorities seem to draw a distinction between private corporations and municipal corporations, and to hold that an information may be brought against a municipal corporation by its corporate name, even where its corporate existence is challenged, the proceeding in such case being against the city as a corporation de facto, and not as a corporation de jure. (State v. Bradford, 32 Vt. 50; People v. City of Riverside, 66 Cal. 288). We do not think, however, that an exception to the general rule can be held to exist in this state in the case of municipal corporations.

In the City of Chicago v. The People, 80 Ill. 496, the proceeding was an information in the nature of quo warranto against the city of Chicago, requiring it to show by what authority it exercised the franchises conferred by the city incorporation act of 1872, the charges being that the question of minority representation was not submitted at the election to determine the question of incorporation, and that such election was invalid for fraud and other irregularities. The right to bring the information against the city of Chicago eo nomine was not discussed. On the contrary it is there said: “It has not been necessary to consider whether this proceeding will lie against a municipal corporation as a body.” It must be remembered also, that, in that case, the question was, whether the city of Chicago had organized under the incorporation Act of 1872 by legally adopting that act as its charter. The City of Chicago existed under another charter prior to the election upon the question of becoming incorporated under the act of 1872. If that election had been against incorporation, the city still existed under its old charter. Therefore, the party defendant to the quo warranto proceeding was a city already existing, and not one deriving its sole existence from the election under discussion in that case. Here, however, the City of Spring Valley had no corporate being prior to its incorporation, or attempted incorporation, under the act of 1872. When it was made defendant to the information, its existence as a corporation under that act was admitted.

In Chesshire v. The People, 116 Ill. 193, the information was against certain persons assuming to act as directors of a school district. The defendants demurred to the information, and, upon the demurrer being overruled, they elected to stand by the demurrer. One of the objections to the information was that the school district was not made a party. It was there held that, as the information proceeded upon the hypothesis, that there was no corporation in law, by the name of “school district No. 9,” it would have been impossible to make the corporation a party, and that the persons assuming to act as directors of the district were “the only parties that need be before the court to test the validity of the organization of the district.”

Moreover, the statute of this State in relation to quo warranto, (Starr & Cur. Stat. chap. 112, page 1871), provides that the information may be filed where “any association or number of persons shall act within this State as a corporation without being legally incorporated. ” This language implies, that, where the legal existence of the corporation itself is questioned, the proper defendants to the information are the persons who assume to act as a corporation. The subsequent clauses indicate, that the corporation itself is a proper defendant, when-it “does or omits any act, which amounts .to a surrender or forfeiture of its rights and privileges as a corporation, or exercises powers not conferred by law.”

It is claimed, however, that, by dismissing the information, the trial court carried the demurrers to the replications back to the information, and that this was erroneous because the defendants had demurred to the information, and their demurrers had been overruled. • Unquestionably the general rule is, that the court will not, in carrying the demurrer back, sustain it to a pleading of the adverse party to which a demurrer thereto has already been overruled. (Culver v. Third, National Bank of Chicago, 64 Ill. 528). But if the declaration is so defective as not to support the judgment, that may be availed, of on error, even after a demurrer thereto has been overruled, and the defendant has pleaded over. (Kipp v. Lichtenstein, 79 Ill. 358; Smalley v. Edey, 19 id. 207.)

In the present case the declaration is so defective, that it could not support the judgment. The judgment would be one-of ouster against the corporation for not having been legally organized. But the declaration admits that it was legally organized. The judgment would be inconsistent with and contradictory of the declaration. It would be based upon the non-existence of a corporation, whose existence the declaration admits.

In The State v. The Cin. Gas L. & C. Co. supra, the pleadings were substantially the same as in the present case; the information was against the Gas Company as a corporation; a replication of the State to one of the pleas of the company, in substance, denied the existence of the corporation; the company demurred to the replication and the demurrer was sustained. In that case, the court say: “It is claimed by counsel for defendant that this replication is a departure in pleading; that the information having been filed, and process, issued against the defendant by its corporate name, and not. against individuals as usurpers of the franchise to be a corporation, the fact that the defendant, has or once had a legal existence as a corporation is admitted, and cannot, therefore, be drawn in question by the state, in its subsequent pleadings in the case. * * * In this country, we think, the great weight of authority favors the ground taken by counsel for defendant. * * * "We are aware of no case in this country, in which a body, sued as a corporation, has been ousted of the franchise to be a corporation, on the ground that it never had a legal corporate existence.”

Inasmuch, therefore, as any judgment, which may have been entered in favor of the People under the pleadings in this record, could have been reversed on error, the court below committed no error in dismissing the information. The latter would not support the judgment, even if the pleas are defective for the reasons urged by counsel for the People. If the demurrers to the replications had been carried back to the pleas, and judgment had then been rendered against the defendants upon the information, the judgment would have been subject to reversal on error in this court.

After the demurrers to the replications had been sustained, and defendants had moved for judgment on those demurrers, the People moved to amend the information by inserting after the words, “the city of Spring Valley,” the words, “never having been lawfully and legally incorporated under the laws of the State of Illinois.” The trial Court overruled the motion to amend, and its action in this regard is complained of as error. The City of Spring Valley, as a corporation, would still have been a party defendant, notwithstanding the allegation that it was not legally incorporated. The information would have been inconsistent with itself in admitting the existence of the city, and at the same time denying such existence. Hence, the People suffered no injury from the refusal of leave to amend in the respect indicated.

Defendants in error have made a motion to dismiss the writ of error for want of jurisdiction in this Court. The motion was reserved when the cause was taken. The right to exercise the municipal powers and privileges, conferred by the legislature upon cities under the act for the incorporation of cities and villages, is a franchise of the highest character. Such right is directly involved in the issues made by the pleadings in this case. Therefore the writ of error has been properly sued out from this Court directly to the Circuit Court. The motion to dismiss is accordingly denied.

Upon more mature reflection, we are satisfied, that where the right to hold a municipal office depends upon the legality of the incorporation of the municipality under an act of the Legislature, a franchise is involved in a quo warranto proceeding to test such right. In so far as the cases of The People v. Holtz, 92 Ill. 426, and Graham v. The People, 104 id. 321, hold a contrary view, they are overruled.

The judgment of the Circuit Court is affirmed.

Judgment affirmed.


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    Joseph Davis, Cory & Co. v. The Chicago Dock Company.

      Filed at Ottawa June 15, 1889.

    1. Insolvent debtobs&emdash;general assignment&emdash;what will pass thereby. Under a general voluntary assignment of all tbe property of a firm and of the several partners, the interest of the firm or of an individual partner in real estate will pass to the assignee, though not included in the schedule of assets.
    2. Same&emdash;title of assignee&emdash;subject to prior equities. The assignee, under a voluntary assignment of insolvent debtors made for the benefit of creditors, takes no greater interest or better title than his assignor possessed. His title will be affected with every infirmity, and be subject to all the equities, that existed in respect thereof in the hands of the assignor.

      3. Same—powers and d/aties of the assignee—jurisdiction of the county court. The assignee of an insolvent debtor, having due regard to the administration of the estate and to the rights of creditors, may do whatever his assignor might have done in respect of the assigned property if no assignment had been made. The assignee must act under the supervision and control of the county court, and may, under its direction, do what is necessary for the most advantageous, final and complete settlement and distribution of the trust estate.
    4. The statute gives the county court the power to direct and control the assignee at every step in the progress of the settlement of the estate, and the assignee is required, at all times, to act in accordance with its mandate and under its supervision.
    5. The county court has jurisdiction and power, in the first instance, to determine what property has passed to the assignee, and the nature and extent of the interest acquired by him therein under the assignment. Indeed, it is by the statute required to do so.
    6. It does not follow that the county court is given jurisdiction in causes of a purely equitable nature, or that it may adjudicate in respect of property not in the possession or control of the assignee. If that court seeks to compel the assignee to reduce to possession property held adversely, its power will end with the enforcement of its order on the assignee to proceed in the forum having jurisdiction of the action requisite for that purpose.
    7. While the county court has jurisdiction to direct the assignee in all matters pertaining to the administration and settlement of the estate, and to settle all controverted questions relating to the property in possession of the assignee, nevertheless, if the assignee seeks to recover property, either at law or in equity, he must resort to the courts having jurisdiction of the appropriate remedy and competent to afford adequate relief.
    8. Where a large body of property has been sold en masse by a sheriff, on execution, for a grossly inadequate price, without any prior demand by the officer of the defendant for payment, so that a court of equity would set aside the sale on payment of the price for which the sale was made, and the holder of the sheriff’s deed makes a general assignment of all his property for the benefit of his creditors, the county court will have jurisdiction to find that the only interest acquired by the sale is the right to be reimbursed the amount bid at the sale, with interest, and direct the assignee, on payment of that sum, to quitclaim the property to the defendant in the execution.
    9. SaIie on execution—inadequacy of price—prior demand of payment—remedy in equity. Where a sheriff’s sale on execution is fairly and openly made, after due notice, and without any circumstance impeaching its fairness, inadequacy of price, however gross, is not, per se, sufficient evidence of fraud to avoid the sale.

      10. But where property has been sold upon execution, or at judicial sale, at a grossly inadequate price, even slight circumstances indicating unfairness or fraud, either upon the part of the officer, the purchaser, or the party to the record benefited by the sale, "will furnish sufficient ground for equitable interposition. While gross inadequacy of price will not, of itself, be sufficient, yet, when coupled with other circumstances tending to prove fraud, it becomes controlling and conclusive evidence, and justifies equitable interference to prevent the consummation of an inequitable result.
    11. In an action of replevin, the plaintiff recovered judgment, by default, for one cent and costs, upon which an execution issued, and was returned wholly unsatisfied, the defendant being entirely solvent and able to pay. Plaintiff’s attorney sued out an alias execution, and directed its levy on property worth $350,000, and the sheriff to advertise and sell as soon as possible, which was done without any demand of payment from the defendant, or notice to him. The property was sold for $>7.25, and a deed was taken on the sale: Held, that the failure of the officer to demand payment before the levy and sale, together with the gross inadequacy of price, would justify a court of equity in setting the sale aside on equitable terms.
    Writ ok Error to the County Court of Cook county; the Hon. Richard Prendergast, Judge, presiding.
    The Chicago Dock Company is a corporation engaged in the dock and warehouse business in Chicago. The Lyman Manufacturing Companj’", managed by Sherman & Marsh, stored wire in the warehouse of the dock company, for which warehouse receipts were issued, but which were subsequently taken up and delivery orders issued instead. Sherman & Marsh demanded delivery of the wire to them without return of the delivery orders, alleging their loss. The dock company refused to make the delivery without the giving of an indemnifying bond by Sherman & Marsh, which they refused to give, and brought replevin for the wire. The wire was taken under the writ, and delivered to Sherman & Marsh, and the writ served upon the secretary of the dock company, its president not being found, etc. On the 21st day of September, 1881, default was entered against the Chicago Dock Company, and judgment rendered, finding property in the plaintiffs, Sherman & Marsh, and against the defendant, for one cent damages and costs. Execution issued thereon September 23, 1881, which on December 22,1881, was returned “no part satisfied.” Alias execution issued January 27, 1882, and came to the sheriff's hands the same day, with instructions by the attorney of said plaintiffs to levy the same upon all of the dock company’s interest in block 74, school section addition to the city of Chicago, “together with all the buildings and improvements thereon, and advertise the sale as early as possible.” On the same day the sheriff levied accordingly, and, after advertising the sale, on the 27th day of February, 1882, at ten o’clock A. M., sold the entire property to said attorney of the plaintiffs for $17.25, being for the amount of said judgment and costs, the items being:
    Judgment,..............$.01
    Costs in replevin suit,.......... 8.75
    Interest from September 21, 1881,...... .24
    Sheriff’s fees on execution,........ 4.25
    Costs of advertising,...........4.00
    Total.............$17.25
    Certificate of sale was issued to the attorney, and recorded. Subsequently the certificate was assigned to one of said plaintiffs, Eben J. Marsh, and January 5, 1883, a sheriff’s deed, in pursuance thereof, was made to said Marsh, and recorded the same day. The dock company purchased block 74, so sold, in 1863, and occupied it continuously, paying all taxes assessed thereon, since its purchase. The property levied upon and sold by the sheriff was then and is now worth at least $350,000, and was clear of incumbrance. The dock company, or any of its officers, had no actual notice of the rendition of the judgment in replevin, or of the issue or levy of the execution, or of the sale of or deed to the premises by the sheriff, until in October, 1887, when, upon having the abstract of title to their property brought down, the sheriff’s deed was discovered of record. It is alleged, and is uncontradicted, that at all times since the date of said judgment the-company has- been abundantly able to satisfy the same, and which it alleges it would have done on being notified thereof, and that Sherman & Marsh knew that fact. The bill of exceptions shows that ill-feeling existed, on the part of Marsh, toward the president of the dock company, and that said alias-execution was taken out because thereof.
    Subsequently to the making and recording of said deed, Sherman & Marsh made an assignment for the benefit of their creditors, under the Voluntary Assignment act, under which Noble B. Judah was appointed assignee, and qualified. The property in controversy was not scheduled by the debtors as assets. On the 28th day of October, 1887, the Chicago Dock Company presented its petition in the county court of Cook county, setting up substantially the foregoing facts, and asking that it be permitted to pay the assignee, for the use of the estate, the amount of the said judgment and costs, with interest, and that the assignee be directed to quitclaim to the petitioner, etc. The county court, upon hearing of the matters alleged, entered an order nisi, granting the prayer of the petition, unless cause be shown to the contrary within ten days from the entry of that order, and directing notice to be served on creditors, which was done. The plaintiffs in error alone appeared and filed objections to the order, and also filed a cross-petition for a rule on the assignee to reduce the real estate in controversy to possession, and to convert the same into money, for the benefit of the estate, etc. The county court, upon further hearing upon the petition and cross-petition, entered its order dismissing the latter, and ordered the assignee, upon payment to him of $100, to make, execute and deliver to the Chicago Dock Conqpany his quitclaim deed to the property mentioned, and that he receive said sum of $100 in full satisfaction of said judgment and costs, and his attorney’s fees, and all other claims against said company-in respect of said property. It appears that the assets in the hands of the assignee are insufficient to pay the creditors of the estate in full. This writ of error is prosecuted by Joseph Davis, Cory & Co., cross-petitioners and creditors of the insolvent firm, to the county court of Cook county, to reverse said order.
    Messrs. Eliel & Rosenthal, for the plaintiffs in error:
    As to the-jurisdietion of the county court over assigned estates, see Hanchett v. Waterbury, 115 Ill. 220, and Freydendall v. Baldwin. 103 id. 325.
    If, at. the time of making the assignment, the title to the property did not belong to Marsh the assumption of jurisdiction by the county court was unauthorized; but if it belonged to him, the county court had dominion over it, but had no right to divest the assignee of his title, or to direct any disposition of it except for the benefit of the creditors.
    An assignee succeeds only to such rights as his assignor had. Burrill on Assignments, (5th ed.) 621; O’Hara v. Jones, 46 Ill. 288; Chase v. Chapin, 130 Mass. 128 ; Hathaway v. Bank, 131 id. 14.
    One of the principal objects of a voluntary assignment of property for the benefit of creditors, and one of the most important duties of the assignee in the execution- of the trust, is the sale of the property assigned, in order to convert it into money for the purpose of distribution among creditors; and every assignee is bound to bring the estate to a sale under every possible advantage to the cestuis que trust Burrill on Assignments, 648, 649; Paige v. Olcott, 28 Vt. 465; Geisse v. Beall, 3 Wis. 367; Downes v. Grazebrook, 3 Mer. 208; Maithies v. Edwards, 2 Coll. 480; Chesley v. Chesley, 49 Mo. 540.
    The failure of the sheriff to make demand of payment before levying did not invalidate the levy and sale, (Gardner v. Eberhart, 82 Ill. 316, Fergus v. Woodworth, 44 id. 378,) and the rescinding of the certificate of purchase was notice of the sale.

      Inadequacy of price is no ground for avoiding a sale. Ballance v. Loomiss, 22 Ill. 82; O’Callaghan v. O’Callaghan, 91 id. 228; Hamilton v. Quimby, 46 id. 96; 2 Pomeroy’s Eq. Jur. 926.
    To give a writ to the sheriff with instructions to make a levy and sale, is simply to deliver the writ to be executed, and tbis the creditor has the. right to do. McFarland v. Gwin, 31 How. 717; Weir v. Hale, 3 W. & S. 285.
    Messrs. Gregory, Booth & Harlan, for the defendant in error:
    The county court has equitable jurisdiction over assigned estates. Freydendall v. Baldwin, 103 Ill. 325; Hanchett v. Waterbury, 115 id. 228; Field v. Ridgely, 116 id. 432; Bank v. English, 21 Bradw. 317.
    Gross inadequacy of price is evidence of fraud, and ground for avoiding a sale. 2 Pomeroy’s Eq. Jur. sec. 927; Kerr on Eraud and Mistake, 186; Henderson v. Sublett, 21 Ala. 630; Langford v. Jackson, id. 650; Chapman v. Boetcher, 27 Hun, 606; Weber v. Weitling, 18 N. J. Eq. 441; Taul v. Wright, 45 Texas, 388; Comstock v. Purple, 49 Ill. 158; Berry v. Lovi, 107 id. 612; Duncan v. Sanders, 50 id. 475; Heberer v. Heberer, 67 id. 253 ; Hamilton v. Quirnby, 46 id. 90; Ballance v. Loomiss, 22 id. 82.
    As to the duty of the sheriff to postpone the sale in such cases, see Roseman v. Miller, 84 Ill. 297, and Ray’s Admr. v. Womble, 56 Ala. 32.
    No demand was made for payment, although they knew it would be paid instantly, upon demand. This court said, in Pitts v. Magie, 24 Ill. 614: “It is the first duty of an officer having an execution against a party, to apply to him personally for payment, wherever that is practicable; and the officer should be held responsible to the party aggrieved, for a neglect of this duty, wherever special damages result from it.” See, also, Rock v. Haas, 110 Ill. 529.
   Mr. Chief Justice Shope

delivered the opinion of the Court:

Two questions are presented by this record: First, had the county court, under the Voluntary Assignment act, jurisdiction to determine the interest of the assignee in the property in controversy, and to authorize and require him to receive payment for such interest, and execute an acquittance of the claim of the assignor upon receipt of the same; and second, do the facts here shown authorize the entry of that order by the county court, if it had such jurisdiction.

By the sheriff’s deed of June 5, 1883, Eben J. Marsh, one of the assignors, became clothed with the legal title to real estate of the value of at least $350,000; and although this property was not scheduled, either as the individual property of Marsh, or as assets of the firm of Sherman & Marsh, assignors in the deed of assignment subsequently made, yet the interest of Marsh and of the firm, if any, would and did, as being comprehended within the general terms of the assignment, vest in the assignee for the benefit of creditors. The assignee, however, took no greater interest or better title than his assignors possessed. In his hands the title was affected with every infirmity and subject to all the equities that existed in respect thereof in the hands of the grantor in the deed of assignment. It becomes necessary, therefore, to determine what interest Marsh took by virtue of the sheriff’s deed, and, logically, that determination would precede the discussion of the question of jurisdiction.

It is conceded that in making the sale and deed the sheriff proceeded in substantial compliance with the forms of law, and if there were no equitable considerations affecting the same, the title of the defendants in execution thereby became vested in Marsh. It is apparent, however, that there are strong equitable reasons why the sale, and deed thereunder, should not be allowed to stand. Beal estate of the value of $350,000 and over was levied upon and sold to satisfy a judgment of one cent and costs, which, with interest, and costs on execution, amounted, at the time of the sale, to the sum of $17.25—less than one twenty-thousandth part of the value of the property sold. In Comstock v. Purple, 49 Ill. 158, we said: “Admitting the lands sold for an inadequate price, the doctrine of this court is, that, of itself, is not sufficient,” (to avoid the sale,) .“unless it should he so grossly inadequate as to establish fraud.” It would seem that if a case could arise where gross inadequacy would establish fraud, this one would do so. Public policy, however, requires that judicial sales should be upheld, when fairly and regularly made. The better rule, and the one sustained by the weight of authority, is, that generally, in sales made under judicial process, gross inadequacy of price, unaccompanied by circumstances of irregularity, or that indicate unfairness in the conduct of the officer making the same, or the purchaser thereat, will not create the inference of fraud. Where the sale is fairly and openly made, after due notice, with a fair opportunity for real competition, and without any circumstance impeaching its fairness, inadequacy of price, however gross, is not, per se, sufficient evidence of fraud to avoid the sale. Hamilton v. Quimby, 46 Ill. 90.

Many eases are to be found in the books, which seem to apply the principles to sales upon process that are applicable to sales of private property. Kerr on Fraud and Mistake, (4th Am. ed.) 186. But an examination of the cases, it is believed, will show, that in nearly if not quite all, the application to vacate the sale was by motion in the court from which the process issued, or where there were irregularities affecting the process, or affecting the conduct of the officer in making the sale, or of the purchaser, or of the party to the record, which were regarded as sufficient to render it unconscionable that the purchaser should retain the undue advantage obtained by his purchase. See Henderson v. Sublett, 21 Ala. 630; Webber v. Weitling, 18 N. J. Eq. 441; Hodgson v. Farrell, 15 id. 88; Taul v. Wright, 45 Texas, 288; 2 Pomeroy’s Eq. 927. However this may be, the authorities are uniform that where property has been sold, upon execution or at judicial sale, at a grossly inadequate price, even slight circumstances indicating unfairness or fraud, either upon the part of the officer, the purchaser, or the party to the record benefited by the sale, will furnish sufficient ground for equitable interposition. The conscience of the chancellor, quickened by proof of circumstances indicating that an unfair advantage was sought or taken, will seize upon the gross inadequacy as additional and strong evidence of fraud, and, by decree, prevent the purchaser from reaping an unconscionable advantage. Thus, in Hamilton v. Quirnby, supra, it was said, that if the execution had been properly issued, and the officer had performed his duty by giving the defendant notice of the writ, and a sale had been made of a large amount of property for a very small sum of money, “the sale ought not to have been set aside for mere inadequacy of price; but even then, where there is such gross inadequacy, the court will seize upon anything indicating unfairness in the plaintiff, to afford relief.” See, also, Comstock v. Purple, supra; Kinney v. Knoebel, 51 Ill. 112; Berry v. Lovi, 107 id. 612; Howell v. Baker, 4 Johns. Ch. 122; Klœpping v. Stellmacher, 21 N. J. Eq. 328; American Wine Co. v. Scholer, 85 Mo. 496; Johnson v. Craul, 55 Texas, 571; Seaman v. Riggins, 1 Green’s Ch. 214; Bixby v. Mead, 18 Wend. 611; Roberts v. Roberts, 13 Gratt. 639; Bod v. Ellis, 11 Iowa, 97, and cases supra.

It will not be necessary to extend this opinion by quotation from the cases’. Upon examination it will be found that various incidents have been seized upon by the courts to grant relief where there has been a gross inadequacy of price; and the additional circumstances need not be sufficient, in themselves, to authorize the sale to be set aside, if they tend to show that an unfair advantage was taken, or that the sale was conducted in a manner prejudicial to the rights or interest of the parties interested, for while gross inadequacy of price will not, of itself, be sufficient, yet, when coupled with other circumstances tending to prove fraud, it becomes controlling and conclusive evidence, and justifies the interference by a court of equity to prevent the consummation of an inequitable result.

Tested by this rule, it is at once apparent that this sale and deed, upon proper bill filed for that purpose, would have been set aside. The dock company was bailee of the goods and chattels replevied, and it is evident that in their refusal to deliver the goods upon the request of Sherman & Marsh, without the return of the delivery receipts issued by them, they only sought to shield themselves from responsibility against a wrongful delivery of the goods. It is true they were served with process in the replevin suit, but, having no further interest in the goods replevied, paid no attention whatever to the result of that suit. It is shown that they had no actual notice of the rendition of the judgment or issue of execution thereon. The first execution, while it is apparent that the dock company had ample property in the county subject to levy, was returned by the sheriff not satisfied. No demand was made of the defendant for property upon which to levy, or notice given of the execution, although the defendant vras in the county, and its office within a few minutes’ walk from the sheriff’s office. An alias execution was issued on the 27th day of January, 1882, and came to the sheriff’s hands the same day, who was instructed by the attorneys for the plaintiffs therein to levy upon all the dock company’s interest in block 74, school section addition to the city of Chicago, together with all the buildings and improvements situated thereon, and to advertise and sell as early as possible. The sheriff levied accordingly the same day, and at ten o’clock A. M. of the 27th of February, 1882, sold the property en masse to the attorney of the plaintiffs for $17.25. It is true that a eertifi- ■ cate of purchase was recorded March 1, 1882, that the same was subsequently assigned to Marsh by said attorney, and upon the expiration of redemption a deed for the property was made to Marsh. It was the duty of the sheriff to notify the defendant in execution before making the levy, and apply to it for payment of his execution. (Pitts v. Magie, 24 Ill. 610; Rock v. Haas, 110 id. 529.) A defendant in execution has a right to pay and satisfy the same, and it is unfair and unjust to him that a levy should be made without an opportunity to make such payment, and thereby save incurring additional costs. It was said in the Pitts case: “It is the first duty of an officer having an execution against a party, to apply to him personally for payment, wherever that is practicable, and the officer should be held responsible to the party aggrieved, for a neglect of this duty, wherever special damages result from it.” It is averred and shown in this case, that the defendant in execution had ample property, and was able to, and would, upon demand or notice, have satisfied the execution. It is not necessary to hold, nor do we determine, that the failure of the officer to make the demand would be sufficient, of itself, in a case where the levy was upon real estáte, to avoid the sale. But in this case it is not shown or pretended that there was any necessity for levy upon this large amount of property, or that the-sale should be made in the shortest time possible, nor is any excuse given for not pursuing the ordinary course and making the demand before making the levy. While the officer failed to perform his duty in the respect indicated, under either execution, it appears that in making the levy and sale he acted under the direction of plaintiffs’ attorney. The attorney was careful to direct the levy upon the whole block, and upon all the buildings and improvements thereon, and to sell the same as early as possible. It is manifest that any division of the block would have satisfied the execution. Nor is there any reason why this vast amount of property should be advertised and sold for this insignificant sum, within thirty days from the date of the execution, without any actual notice to the defendant thereof, or demand for its payment. It seems clear that it was not the payment of the execution, alone, that was sought hy the plaintiffs’ attorney. Whether the animosity shown in the record to have existed on the part of the plaintiffs in execution against the president of the dock company, may furnish the clew to this proceeding, or whether it was to gain some unconscionable advantage by placing a cloud upon the title of the dock company, can make no difference. By the course pursued, if the sale was discovered, plaintiffs in execution would get their money, with costs. If, however, it remained undiscovered, a cloud would be created to the injury of the dock company, and possibly to the advantage of Marsh. It can not be doubted, that upon the state of facts here shown a court of equity would at once have declared the sale and deed void, and removed the same as a cloud on appellee’s title. At most it would have been found and declared that Sherman & Marsh, or Marsh, would have had no other interest, and acquired no other right, under said sale and deed, than to be reimbursed the amount of money bid at the sale.

The question remains to be considered, had the county court jurisdiction to determine whether the real estate in question passed to the assignee, under the assignment, and became assets in his hands, to be applied in satisfaction of the claims of creditors.

By the first section of the Voluntary Assignment act the effect of a voluntary assignment for the benefit of creditors is to vest in the assignee title to all the property of the debtors, whether scheduled or not, comprehended within the general terms of the assignment. By the 11th section of the act the assignee is empowered to dispose of the assigned estate, real and personal, to sue for and recover everything belonging or appertaining to said estate, “and, generally, to act and do whatever the said debtor or debtors (assignors) might have done in the premises.”' The duty of the assignee under this authority is, to collect and convert the estate assigned, into money, and to distribute the same pro rata among the creditors proving their claims in conformity with the statute. This is to be done under the supervision and direction of the county •court. The 7th section of the act provides, “that the assignee or assignees, in the execution of assignments, shall, at all times, be subject to the order and supervision of the county ■court, when in session, or judge of said court, when not in •session;” and the assignee may, by the court, be required “to proceed in the faithful execution of the duties required by this act, and to obey the order of such court or judge in relation to the complete and final settlement, distribution and paying •over of the proceeds derived from said trust, or any part thereof, until final settlement and distribution is made.”

It would seem clear that the assignee, having due and proper regard to the administration of the estate and to the rights of creditors, may do whatever the debtor or debtors might have done in respect of the assigned property, if no assignment had been made. It is, we think, also clear, that the assignee must act under the supervision, direction and control of the county court, and may do, under such direction, what is necessary for the most advantageous, and the final and complete, settlement and distribution of the trust estate. By the 14th section of the act, full authority and jurisdiction is “conferred upon the county courts, and the judges thereof, to execute and carry out the provisions of this act, ” and it is provided "that the court shall, at all times, be open for the transaction of business relating to assignments. The power to direct and control the assignee at every step in the progress of the settlement of the estate is thus clearly given to the county court, and the assignee is required at all times to act in accordance with its mandate and under its supervision. Freydendall v. Baldwin, 103 Ill. 325.

One of the duties imposed upon the assignee is to determine what property passed to him under the assignment, to reduce it to possession, and convert it into money, and it follows that in so doing he must, as in other matters, act under the control of the court and subject to its directions. If questions should arise whether particular property passed under the assignment, he must act under the direction of that court in respect thereof; and full power, as we have seen, is given by the statute to the court to execute and carry out the provisions of the act, and to compel the complete and final settlement of' the estate by the assignee. It necessarily follows that the-county court must, in the first instance, determine what property has passed to the assignee, and the nature and extent of the interest acquired by him therein under the assignment. So that if we are correct in our conclusion, it became the duty of the county court, in the exercise of its supervisory power and control over the assignee, to determine what interest, if any, the assignee took in the property in controversy, and we are of opinion it was authorized and required by the statute so to do. If the court had determined that the property was-assets belonging to the estate, it would have been its duty, by proper order, to have directed the sale of the property with or without reducing it to possession, as might have been found-best for the interest of the estate. It by no means follows from what is here said, or from the statute as we understand it, that the county court is given jurisdiction in causes of a. purely equitable nature, or that it may adjudicate in respect of property not in possession or control of the assignee. (Preston v. Spaulding, 120 Ill. 208.) If the county court had sought to compel the assignee to reduce the property to possession, its power would have ended with the enforcement of its order on the assignee to proceed in the forum having jurisdiction of the action necessary and requisite for that purpose, for while-the county court has jurisdiction to direct the assignee in all matters pertaining to the' administration and settlement of the estate, and to settle all controverted questions relating to property in possession of the assignee, and therefore under its administrative control, nevertheless, if the assignee seeks to recover property, either at law or in equity, he must resort to the courts having jurisdiction of the appropriate remedy, and competent to afford adequate relief.

It is manifest from the foregoing, that the county court, however it might be called into action, was clothed with authority to decide for the assignee the nature and extent of the interest in this property, if any, held by Marsh, and passing to him under the assignment; and it was competent for that court to adjudge, if the facts warranted, that the assignee had become seized of the entire estate; or of any less interest or estate, and direct that whatever that interest might be should be realized upon by the assignee. The court found, as it was justified in doing, that while the legal title had become vested in the assignor, in fact the only interest acquired, if any, was the right to be reimbursed the amount bid at the sale of the land on" execution, with legal interest thereon. Nor does this finding by the court involve the jurisdiction of a court of chancery,—as, upon bill filed by the dock company to set aside said sale and deed. The authority of the court arises from the express power given by the statute to that court to control the management and settlement of the estate, and direct the assignee in the execution of the trust. It is true that the court is required to look into the facts, and to find therefrom that the sale and deed of the sheriff were fraudulent, and that in a court of equity would be cancelled and set aside,—that is, to find that the assignor (Marsh) had no title in fact, and that none passed to the assignee, and that the only interest in the property that could be rightfully subjected to the payment of the debts of the estate was the judgment, interest and costs before mentioned. That this was all the interest Marsh had, was clearly and conclusively established. If the assignor had held a deed absolute to a tract of land, but which confessedly, by the contract of the parties, was intended to be a mortgage for the payment of money only, can it be doubted that the county court would have power, under this statute, to ascertain the amount actually due, and to anthorize the assignee to receive the same and execute a proper release ? The only distinction between that ease and this is, that in the one the equity arises out of the contract of the parties, while in the other it arises from the fraudulent act of the parties in procuring the deed. This power is essential to the proper administration of the estate. It was not contemplated that the county court must needs compel the assignee to proceed to expensive and fruitless litigation, and thereby exhaust the trust funds in his hands. The court having power so to do, and having determined that the real estate in question was not assets of the estate, properly dismissed the cross-petition of plaintiffs in error; and in the subsequent orders made, requiring the assignee to receive a sum of money far in excess of any claim the assignors had against the dock company, and to release and quitclaim his apparent interest acquired under the assignment, committed no error of which plaintiffs in error can complain.

From what has been said, it must be apparent that so far as the action of the county court was concerned, in determining the issues raised by the cross-petition, the direct question was, had the title to the block of land in controversy passed to the assignee. If it had become assets in his hands, the assignee should have been required to proceed in accordance with the prayer of the cross-petition. If it had not, he would be ordered by the court, — and properly so,— as he was, in effect, to desist from interfering therewith. When this was done the dismissal of the cross-petition properly followed.

We are of opinion that the order of the county court should be affirmed.

Order affirmed.


text:
    Seth Gage v. Hannah Wheeler.

      Filed at Ottawa June 15, 1889.

      1. Homestead—release—acknowledgment—requisites thereof. To make a valid release, waiver or conveyance of the homestead right as against the person entitled to the exemption or estate, the requirements of the statute, both as to the terms of the deed and the acknowledgment, must be complied with.
    2. The right of homestead can only be released by an acknowledgment, in the same manner as conveyances of real estate are required to be acknowledged.
    3. A mortgage or conveyance without acknowledgment may be valid to convey all other rights and interests of the grantors except the homestead right. Such right can be conveyed only by a contract acknowledged as required by the statute.
    4. A husband and wife executed a chattel mortgage upon a house upon leased ground, and which was occupied by them as a homestead. The mortgage was acknowledged by both before a justice of the peace, his certificate containing the clause, “including the release and waiver of the right of homestead,” but failed to show that the grantors personally appeared before the officer, or were personally known to him tobe the persons making the acknowledgments: Held, that the certificate was fatally defective, and that the mortgage did not pass the homestead right.
    5. Acknowledgments oe deeds—requisites. Acknowledgments to conveyances of real estate can only be made when the grantors are personally known to the officer taking such acknowledgment to be the real persons in whose name such acknowledgment is proposed to be made, or shall be proved to be such by a credible witness; and the fact of such personal knowledge or proof must be stated by such officer in the certificate of acknowledgment.
    Writ oe Error to the Appellate Court for the Second District ;—heard in that court on appeal from the Circuit Court of Kankakee county; the Hon. Owen T. Beeves, Judge, presiding.
    Mr. H. K. Wheeler, for the plaintiff in error,
   Mr. Justice Wilkin

delivered the opinion of the Court:

Defendant in error, Hannah Wheeler, and her husband, James Wheeler, executed, acknowledged and delivered two mortgages to plaintiff in error, on a building used as a millinery store and dwelling house in Momence. The house was on leased ground. The mortgages were in form chattel mortgages, but each contained a clause waiving the homestead right. They were each acknowledged before a justice of the peace, his certificate containing the clause, “including the release and waiver of the right of homestead,” but failing to show that the grantors personally appeared before him, or were personally known to him to be the persons making the acknowledgments. This cause originated in the circuit court of Kankakee county, on bill to foreclose these mortgages. James Wheeler died before the bill was filed.

The only question raised on the record is, whether or not the acknowledgments to the mortgages are sufficient to release the estate of homestead. The circuit court held they were, and decreed in favor of the complainant. The Appellate Court reversed that decree, and by writ of error to that court the record is brought here for review.

It has been repeatedly held by this court, under statutes prescribing the mode in which the homestead exemption or estate might be released, waived or conveyed, that to make such release, waiver or conveyance effectual, as against the person entitled to the exemption or estate, the requirements of the statute, both as to the terms of the deed and the acknowledgment, must have been complied with. Black v. Lusk, 69 Ill. 70; Kingman v. Higgins et al. 100 id. 319; McMahill et al. v. McMahill, 105 id. 596. See, also, cases cited in the opinion of the Appellate Court, by Smith, J.

It being admitted that the homestead right existed in the grantors at the time of the execution of the mortgages, it follows, that such right could only be released by an acknowledgment, “in the same manner as conveyances of real estate are required to be acknowledged.” (Rev. Stat. chap. 52, sec. 4.) But acknowledgments to conveyances of real estate can only be made when the grantor is personally known to the officer taking such acknowledgments to be the real person who, and in whose name, such acknowledgment is proposed to be made, nr shall be proved to be such by a credible witness, and the fact of such personal knowledge or proof must be stated by such officer in the certificate of acknowledgment, (Rev. Stat. ■chap. 30, sec. 24,) the form of which certificate is given in ■section 26 of the same chapter. Here the certificates failing to show that the grantors were personally known to the officer, or that they were proved to him by a credible witness, are fatally defective. (Tully v. Davis, 30 Ill. 103; Fell v. Young, 63 id. 106; Shephard v. Carriel, 19 id. 313.) The instruments are therefore of no greater force than if no attempt had been made to acknowledge them. They may be valid to convey all •other rights and interests of Hannah Wheeler in and to the property in question, without acknowledgment. Not so as to the homestead right. By the express provisions of the statute that can only be conveyed by a contract acknowledged. Until so acknowledged the contract has no binding force or effect. (Parrott v. Kumpf, 102 Ill. 426.) Other sections of the Conveyance act, cited by counsel for plaintiff in error, do not militate against this conclusion, hut are in harmony with it.

The judgment of the Appellate Court is right.

Judgment affirmed.