author: Mr. Justice Scott

text:
    The Presbyterian Theological Seminary of the Northwest v. The People ex rel. W. T. Johnson, Collector.

      Filed at Ottawa November 10, 1881

      —Rehearing denied March Term, 1882.

      Taxation—what property of institutions of learning is exempt. Land belonging to an institution of learning upon which the buildings or “institutions” are not located, and which is not shown to be “used exclusively” for the interests of the corporation, is subject to taxation, and is not exempt, under the present legislation.
    Appeal from the County Court of Cook county; the Hon. Mason B. Loomis, Judge, presiding.
    ■ Mr. Wm. C. Gotjdy, for the appellant, contended that the five acres which is taxed was real estate on which an institution of learning is located, within the meaning of the statute, and consequently, exempt from taxation. The division of it from the other land does not change its character. ' The exemption is of all the property of an institution of learning, and not merely of. the real estate on which the institution is located.
    It is clear that if the clause, viz: “including the real estate on which the institutions are located, ” was not in the statute, all the property, real and personal, of this appellant, “not leased or otherwise used with a view to profit, ” would, beyond any question, be exempt from taxation, for the word “property, ” in tax exemptions, includes everything capable of ownership. Primmv. Belleville, 59 Ill. 142; Home for Friendless v. Rouse, 8 Wall. 430; Washington University v. Rouse, 8 id. 438; Atwater v. Woodbridge, 6 Conn. 223.
    Where a law is plain and unambiguous, whether' it be expressed in general or limited terms, the legislature should be intended to mean what they have plainly expressed, and consequently no room is left for construction. Arrington v. Smith, 28 Wis. 43; Tynan v. Walker, 35 Cal. 634; Warfield v. Fox, 53 Pa. St. 382; Encking v. Simmons, 28 Wis. 272.
    Applying the principles of these cited cases to the case at bar, it is evident that there is no express limitation to limit the general ’words here used, and a limitation can not be implied. The fact that by sub-section 2 of the exemption section of the Revenue act, church property only is exempt when actually used for public worship, is no argument against this appellant’s view.
    Mr. Consider H. Willett, for the appellee:
    The claim of appellant that “all property, ” meaning all real estate of any theological seminary, no matter where located in the State, is exempt from taxation, has no support in the language of the statute creating the exemption.
    Let us examine this exemption, “all property described in this section, to the extent herein limited.” First, “all lands donated by the United States for school purposes not sold or leased.” The exemption rests upon “all lands donated by the United States for school purposes ” until sold or leased, at which time or event the exemption is destroyed. “All public school houses. ” “All property of institutions of learning * * * not leased by such institutions or otherwise used with a view to profit. ” “Including the real estate on which the institutions are located, ” means that all real estate shall be taxed except that upon which the institution is located. Exemption is the exception, and taxation is the rule. First Methodist Episcopal Church v. Chicago, 26 Ill. 482; People v. Western Seamen’s Friend Society, 87 id. 246; Washington College v. Com. of Shawnee County, 8 Kan. 344.
    Where exemptions are claimed they must be clear and unequivocal, and all doubts are to be solved in favor of the State and against the exemption. The intention of the State to bind itself by an exemption must be clear, as all presumptions are against it: Cooley on Taxation, 54.
    In Academy of Fine Arts v. Philadelphia, 22 Pa. St. 496, it was held that an exemption of universities, colleges, academies and school houses did not extend to an academy of fine arts, “as none can claim an exemption unless the exemption be so clearly expressed in the statute as to admit of no other construction. ”
    In Crawford v. Burrell, 53 Pa. St. 219, it is said: “Taxation is an act of sovereignty, to be performed, so far as it conveniently can, with justice and equity to all. Exemptions, no matter how meritorious, are of grace, and must be strictly construed. ”
    An exemption from all taxation in the charters of churches and schools will not exempt them from assessments for local improvements. Cooley on Taxation, 147.
   Mr. Justice Scott

delivered the opinion of the Court:

This was an application by the county collector of Cook county for judgment against lands and lots for unpaid taxes for the year 1880, and prior years. Among other lands against which judgment was sought was a tract of land, consisting of five acres, belonging to the Presbyterian Theological Seminary of the Northwest. That institution is a corporation existing under the laws of the State of Illinois, and the object, as set forth in the preamble to the act creating the corporation, is to establish an institution for the education of young men for the Christian ministry.

Evidence introduced shows the corporation acquired the tract of land assessed, by deed dated May 1, 1863. The school buildings are situated on another tract of land owned by the corporation, which consists of twenty acres. The deed for the tract assessed contains, among other provisions, one that the buildings of the seminary should be erected on the large tract of land conveyed to it, and should be maintained for the purposes of the institution during a period of twenty-five years, and also a provision that unless the corporation observed the conditions written in the deed, the land should revert to the donors. The two tracts were obtained from different grantors by deeds bearing the same date, and are now separated by Fullerton avenue,—a street, although the width is not stated, may be understood to be of the usual width. Concerning the facts of the case there is no disagreement.

Section 3, art. 9, of the constitution, provides that property, both real and personal, used “exclusively” for certain charitable purposes enumerated, may be exempted from taxation. Accordingly the General Assembly has enacted, that among property that shall be exempt from taxation is “all property of institutions of learning, including the real estate on which the institutions are located, not leased by such institutions, or otherwise used with a view to profit. ” It is under this clause of the statute the objecting corporation seeks exemption from taxation. The act of the General Assembly cited must be read in connection with the section of the constitution on the same subject. It must, therefore, be understood the legislature only intended to exempt such property of institutions of learning as “may be used exclusively” for the objects and purposes of such institutions. The buildings or “institutions ” of the corporation are not located on the tract of land assessed. As we have seen, the buildings are situated on a much larger tract, separated from it by a street of the usual width. Nor can it be said the tract assessed is “used exclusively” for the benefit of the seminary. It is fenced all around, but according to this record it does not appear to be used for any purpose. It is not even leased, so as to make it a source of income to the institution.

It is to be observed the real estate belonging to institutions of learning that shall be exempt from taxation is limited by the express .terms of the statute to that upon which the “institutions are located, ” and it is not within the province of the courts, by construction, to declare that other property shall be exempt. The General Assembly could rightfully exempt only such property as “may be used exclusively” for the purposes of institutions of learning. It is not to be understood the act of the General Assembly on this subject is broader in its scope than the constitution itself.

As the “institutions” of the corporation defending are not •located on the tract of land assessed, and as it does not appear, from anything in the record, it is “used exclusively” for the interests of an “institution of learning, ” it is subject to taxation as other property of the citizen, or that of a private corporation.

The judgment will be affirmed.

Judgment affirmed.

Mr. Chief Justice Craig, Mr. Justice Dickey, and Mr. Justice Sheldon, dissent.


source: Caselaw Access Project

author: Mr. Justice Scholfield

license: Public Domain

text:
    The Chicago and Iowa Railroad Company et al. v. Isaac M. Mallory et al.

      Filed at Ottawa November 10, 1881

      —Rehearing denied March Term, 1882.

    1. Municipal bonds—burden of proof is on party ashing ihéir issue. In a suit by a railroad company to enforce the issuing of bonds by a municipality for its use, the burden of proof is upon the railroad company to show affirmatively that the issue of the bonds was authorized by a vote of the people, had pursuant to a law providing therefor, prior to the adoption of the present constitution, and the law under which the election is held must be substantially complied with, or the election will confer no authority.
    2. Same—of the validity of the election. Where a law for an election to determine whether a subscription, etc., shall be made by a town to aid a railroad corporation, provides that “ such election shall be held and conducted, and returns thereof made, as is provided by the Township Organization law in towns organized under said law,” an election held on the question, as in the case of an ordinary town meeting, presided over by one moderator only, with only one clerk, is void, and will confer no authority to issue the bonds of the town. Such a provision requires the election to be held by three judges and two clerks, as in general elections. The words “town meeting, ” and the word “election,” as used in'the Township Organization law, are not convertible terms.
    3. Town meetings—distinguished from an election. The words “town meeting" have a definite and well settled meaning in the Township law, and are always used to describe the annual town meetings of the electors of the town for the purpose of electing town officers, and transacting such other business as the electors are authorized to transact, or special meetings of the electors for such purposes called pursuant to law. Such meetings are clearly distinguishable from “elections,” when there is no other business transacted but to elect officers.
    Appeal from the Appellate Court for the Second District;— heard in that court on appeal from the Circuit Court of Stephenson county; the Hon. William Brown, Judge, presiding.
    Bill was filed in the circuit court of Ogle county, by Isaac M„ Mallory, Daniel Shockley, and Samuel L. Bailey, tax-payers of the town of Flagg, 'in Ogle county, against the Chicago and Iowa Railroad Company, and certain officers of said town of Flagg, to enjoin the issuing to the Chicago and Iowa Railroad Company of $50,000 of the bonds of the town, payable ten years after date, and bearing interest at the rate of ten per cent per annum, etc., as a donation to the railroad company. By an amendment made subsequent to the filing of the bill, the Chicago and Northwestern Railway Company, as a tax-payer of the town, was made a co-complainant, and W. H. Holcomb, receiver of the Chicago and Iowa Railroad Company, was made defendant.
    Answer having been filed by the Chicago and Iowa Railroad Company, that company and its receiver filed its cross-bill, praying that the bonds sought to be enjoined be issued. Answers and replications were filed, properly presenting issues on the allegations of the original and cross-bills..
    On the hearing, the cross-bill was dismissed, and the prayer of the original bill granted. An appeal was prosecuted from that decree to the Appellate Court for the Second District, where, on hearing, the decree of the circuit court was affirmed,, and from that judgment this appeal is prosecuted.
    Mr. Geo. W. Cothran, and Mr. Geo. W. Kretzinger, for the appellants,
    insisted that the charter of the railroad company controlled in all matters concerning the election, and that all its provisions in that regard had been complied with.
    Mr. B. C. Cook, for the appellee the town of Flagg:
    1. The burden of proof to show that the donation was authorized by a vote of the people of the town of Flagg, under existing laws before the adoption of the constitution, rests wholly on appellants. Wright v. Bishop, 88 Ill. 303; Middleport v. Ætna Life Ins. Co. 82 id. 568; Jackson County v. Brush et al. 77 id. 65; Springfield and Illinois Southeastern Ry. Co. v. Coldspring Township, 72 id. 603; Schall et al. v. Bowman et al. 62 id. 321; People v. Jackson County, 92 id. 450.

      2. The law under which it is claimed that an election was held, did not provide for submitting the question at a town meeting; but at a regular election. Secs. 56 and 68, Township law; People v. Town of Laenna, 67 Ill. 65; People v. Town of Santa Anna, 68 id. 28; Lippincott v. Town of Pana, 92 id. 24.
    3. No bonds, such as are claimed, were ever voted by the town. The voters of the town had the right to prescribe the conditions upon which the donation should be made and the bonds issued. People v. Cass County, 77 El. 440; Jackson County v. Brush et al. 77 id. 63; People v. Glann et al. 70 id. 234; People v. Dutcher, 56 id. 145; People v. Chapman, 66 id. 138; Ramsey v. Hoeger, 76 id. 444.
    4. The burden of proof is upon the party alleging the validity of the election, to show affirmatively that the vote was legal. Supervisors of Jackson County v. Brush, 77 Ill. 59; Town, etc. v. Ins. Co. 82 id. 562; People v. Board of Supervisors, 92 id. 450, and authorities cited on the first point.
    5. The Township law referred to in the charter, provides that all elections held under it, except certain specified ones, of which this election was not one, shall be holden in the manner provided by the general Election law of the State. This is precisely equivalent to a direct provision in the char-1 ter that the election shall be holden in the manner provided in the general Election law, and brings the case directly within the cases of Lippincott v. Town of Pana, 92 Ill. 24, and People v. Town of Santa Anna, 68 id. 28.
    6. Under the Township law no returns are required to be made of the votes for the election of town officers. It only requires a canvass of the votes. Sec. 67, Township law.
   Mr. Justice Scholfield

delivered the opinion of the Court:

Agreeing, as we do, with the view entertained of this case by the lower courts, it will be necessary to notice but a single question.

The burden is upon the railroad company asking the enforcement of the issuing of the bonds, to show, affirmatively, that the bonds are authorized to be issued by a vote of the people, had pursuant to a law providing therefor, prior to the adoption of the present constitution, (Wright v. Bishop, 88 Ill. 303, Middleport v. Ætna Life Ins. Co. 82 id. 568, People v. Jackson County, 92 id. 453,) and the law under which the election is held must be substantially complied with, or the election will confer no authority; and so it has been ruled, an election held' and conducted as a special town meeting, under a law requiring the election to be held and conducted, and returns thereof to be made as in general elections, will be a nullity, and confer no power to issue bonds of the town. Lippincott v. Town of Pana et al. 92 Ill. 24; People ex rel. v. Town of Santa Anna, 67 id. 57; People ex rel. v. Town of Laenna, id. 65.

What is here claimed to have been an election authorizing the issuing of the bonds, was but a special town meeting, presided over by a "moderator, and without the judges or clerks required in general elections. The question is, whether this is such an election as is authorized by the charter of the Chicago and Iowa Railroad Company, under the authority of which it is claimed to have been held.

The twelfth section of the charter of that company, (vol. 2, p. 163, Private Laws of 1869,) in providing for the holding of an election to determine whether subscriptions, donations, etc., shall be made by the town, employs this language: ’ “And such election shall be held and conducted, and returns thereof made, as is provided by the Township Organization law, in towns organized under said law.’’ Now, it will be noted, the election is not to be held and conducted and returns thereof made, as the law requires in case of township elections, or of the election of township officers. If this had been the requirement, there would have been no room whatever for controversy, and it would seem of significance that tin's idea is not expressed. Had it been intended, why not have so said ? But the language is general, and requires the election to be held and returns thereof made as is “provided by the Township Organization law. ” A particular kind of election is not designated as furnishing the guide, but a particular law. What, then, is “provided by the Township Organization law” on that subject? It provides for town meetings, in which township officers are to be elected, and to be presided over by a moderator, who, in addition to discharging the duties of presiding officer over the town meeting, “shall have the same power, and be subjected to the same penalties, as other judges of election. ” Rev. Stat. 1874, chap. 139, title “Township Organization,” secs. 1, 2, 3, 4, 7, 8, 9, 10, art. 6, and secs. 1, 2 and 3, art. 7. It is also provided by statute that “each town shall constitute an election precinct, but the county board may divide any town into as many election districts as the convenience of the people may require, * * * and may, from time to time, designate the places at which elections shall be held. All general and special elections shall be held at the places so designated. ” Rev. Stat. 1874, chap. 46, title “Elections,” sec. 31. And sec. 6, art. 6, of the Township Organization law, swpra, provides that “the supervisor, assessor and collector of the town shall be ex officio judges of all elections in their town, except as otherwise provided by law.” There is no reason, of which we have any conception, why this section can be held to be not embraced by the language of the charter quoted swpra, namely: “provided by the Township Organization law.” It is provided by, for it is a part of, the Township Organization law. It enacts a general rule, and whether any election is embraced by it, depends upon whether the law under which it is held provides for other or different judges, and no other or different judges being provided for by the railroad charter, those designated must act.

But counsel insist this election must, in -all respects, be conducted as a town meeting, and, therefore, must have had a moderator only. The force of this is not perceived. It might have been very appropriate to have so enacted, but the General Assembly was at liberty to enact as it pleased, and if it chose, as a safeguard to the tax-payers, to interpose an election with' the restraints and guarantees thrown around general elections, instead of a town meeting, no one has a right to complain. The question is not one of propriety, but one of construction,—what was enacted ? The words “town meeting” have a definite and well settled meaning in the Township law, and are uniformly used- to describe the annual meetings of the electors of the town for the purpose of electing township officers, and transacting such business as the electors are by law authorized to transact, or special meetings of the electors for such purposes, called pursuant to law. The statute speaks of elections being held at or in such meetings, but never describes them by the word “election.” Thus, in sec. 1, art. 6: “The annual town meeting, in the respective towns, for the election of town officers, and the transaction of the business of the town, shall be held, ” etc. In sec. 3, art. 6 : “Each town, for the purpose of town meetings, constitutes an election precinct. ” Secs. 2 and 5, art. 6, speak of the notices to be given for the holding of town meetings, and of the mode of changing the places for holding town meetings, the latter providing that that question may be included in the notices of such meeting, and “the electors may vote for and against, ” etc. Sec. 7, art. 6, provides how special town meetings may be called, and secs. 8 and 9 of the same article provide for notice of special town meetings, and what it shall contain, and sec. 10 provides that the “electors at a special town meeting, when convened, shall have power, among other things, to fill vacancies in the offices of the town. ” See. 1, art. 7, provides that “at the annual town meeting in each town there shall be elected, by ballot, ” certain town officers. Sec. 2 of the same article provides how regular and special town meetings may be called to order, and a moderator thereof elected, and this officer is uniformly styled and spoken of as “moderator of the town meeting. ” In sec. 5 of the same article the town clerk is made clerk of the town meeting, and in sec. 10 of the same article, the canvass of the votes being made, “the result shall be publicly read by the clerk to the meeting. ”

On the other hand, we know of no instance in which the word “election” alone, unaccompanied by any qualifying words pointing out its connection with a town meeting, is used to describe what is in reality a town meeting. The General Assembly must be presumed, in the enactment of the charter of the Chicago and Iowa Eailroad Company, to have been mindful of this use of these terms, and to have employed language in the same sense; yet the words “town meeting” do not occur in that charter. The petition to be presented to the town clerk is not for a “town meeting, ” but for “an election to be held, ” etc. The notices to be posted are not, as in the cases of special town meetings, to be of “special town meetings,” but of “an election to be held by the legal voters, ” and whenever mention is made of taking the vote of the electors, it is called an “election. ” It can not be said the words “town meeting, ” as used in the Township law, and the word “election, ” are convertible terms. There may, it is true, at a town meeting be nothing but an election, but there may be more. The theory of such a meeting is, that the corporate body of the town is present for the purpose of transacting, and competent to transact, all the corporate business of the town not specially delegated to certain individual officers, and, but for the statute requiring officers to be selected by ballot, this would manifestly all be done in open meeting, by resolution, or whatever other method would be agreed upon to ascertain the will of the majority. ■

Again, by section 8, art. 7, of the Township Organization law, supra, “no registration of voters shall be required for the purposes of a town meeting. ” The meeting is held with open doors. All the electors so desiring are present, and each elector has an opportunity for detecting and exposing and prohibiting the participation of those not lawfully entitled to take part in the proceedings. But in case of general elections this is not so. The judges of those elections are authorized to allow not more than two' legal voters, as challengers, of each party, in: the room where the election is held. The elector, as a rule, casts his ballot and goes away. In a great measure the responsibility of detecting imposition and fraud is left with the judges of elections; but to enable them to protect the purity of the ballót-box, certain restrictions are imposed upon those seeking to exercise the elective franchise, among which is that.of .registration. And a circumstance, as we think strongly confirmatory of the view that it was intended an election, and not a town meeting, was to be held under the charter, is, that -the charter, in its 13th section, expressly provides “the qualification of the electors at said election shall be determined by the registration next preceding said election. ” It is impossible the Begistry law can be complied with at a town meeting. It requires (see. 7, chap. 46, p. 470, Bev. Stat. 1874,) one of the registry lists to be delivered to the judges or inspectors, and one to be filed in the office of the town clerk, etc., and then provides that “it shall be the duty of said judges or inspectors so receiving such list carefully to preserve the said list for their use on election day, and to designate two of their number, at the opening of the polls, to check the name of every voter voting in such district whose name is on the register. ” And section 9 of the same act makes provision for the depositing and keeping of .these lists after the election. The only difference between this and any other election, as respects the registry, is, obviously, here the judges use the old registry lists, while in the others they use lists specially prepared for the occasion. In all other respects the duties of the officers are the same.

It is said this provision in section 13 was unnecessary, and therefore meaningless, because it was already provided in the Township law that there need be no registry. Its necessity was a question for the General Assembly. It is very clear in its language, and by no fair rule of construction can it be held to be identical in meaning with the Township law on that subject. The distinction is between using an old registry list and using none at all. The Township law requires no list; the charter requires a list, but it is the old one.

We think the court below niled correctly. Its decree will, therefore, be affirmed.

Decree affirmed.


text:
    Cuthbert W. Laing, Admr. v. A. H. Burley.

      Filed at Ottawa November 10, 1881

      Rehearing denied March Term, 1882.

    National banks—who is a “shareholder” that is made liable for debts of bank. While it may be true that a bank organized under the National Banking law may not be bound to admit a purchaser of shares of stock in the association to all the rights and liabilities of the prior holder, unless the transfer is made on the books of the bank in the manner prescribed by the by-laws or articles of association, yet where it does issue certificates of shares to a subsequent purchaser in lieu of the certificates of the prior owner, without observing its by-laws, so far as creditors of the bank are concerned a party taking and holding such shares of stock will be subject to the liabilities imposed by section 5151 of the National Banking law.
    Appeal from the Appellate Court for the 'First District;— heard in that court on appeal from the Circuit Court of Cook county; the Hon. Elliott Anthony, Judge, presiding.

      Messrs. Wallace & Mason, for the appellant:
    Title to stock is determined by the transfer books of the company. Angell & Ames on Corp. sec. 113; Long Island R. R. Co. 19 Wend. 37; Ex parte Holmes, 5 Cow. 426.
    Title may be without certificate. Angell & Ames on Corp. sec. 113; Agricultural Bank v. Burr, 24 Maine, 256; Chester Glass Mfg. Co. v. Dewey, 16 Mass. 94.
    No person can acquire title to stock without transfer according to the rules of the bank. Angell & Ames on Corp. sec. 569; Union Bank of Georgetown v. Laird, 2 Wheat. 390.
    Where sale is required to be registered, the registry operates not merely to perfect a conveyance previously begun, but is itself the originating act in the change of title, and must be by assignment, either in person or by attorney, on the books of the bank. A simple credit of the amount of the shares on the treasurer’s book to the successive holders, is not sufficient. Angell & Ames on Corp. sec. 576; Marlboro Mfg. Co. v. Smith, 2 Conn. 579.
    After a person once becomes a stockholder, he can only throw off the liabilities incident to that relation by transferring the stock in accordance with the statute. Addenly v. Storm, 6 Hill, 624.
    Transfer must be shown on the books of the bank. First National Bank of Mendota v. Smith et al. 65 Ill. 44.
    Any mode or form of conveyance sufficient in law to transfer the title to any other property is sufficient to transfer stock, in the absence of regulation by statute or by-law, otherwise when so regulated. The People ex rel. Pickering v. Devin et al. 17 Ill. 84.
    Títere is no statute in this State requiring transfer of stock on the books of the corporation.
    Messrs. Monroe & Ball, for the appellee:
    The liability of the shareholder in a National banking association is fixed by sec. 5151 of the Banking act. See. 5234 provides the manner in which that liability is to be enforced, namely, through the receiver of the bank.
    The holder of the legal title is liable primarily for all the burdens placed upon the stock. Wheelock v. Kost, 77 Ill. 296.
   Mr. Justice Scott

delivered the opinion of the Court:

Claimant is the receiver of the Cook County National Bank, and as such filed a claim in the probate court of Cook county against the estate of Clara Irene Day Laing, deceased.

Section 5151, title 62, chap. 1, Bev. Stat. U. S. 1874, declares: “The shareholders of every national banking association shall be held individually responsible, equally and ratably, and not one for another, for all contracts, debts and engagements of such association to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares.” .It is under this section of the National Banking act the liability is said to arise for the par value of the stock alleged to have been held and owned by the intestate in the “Cook County National Bank, ” at the time of her death. No question is made as to the liability of the estate if it shall be ascertained the intestate was a “shareholder” in the bank, in the sense that term is used in the section of the Banking act cited.

Originally, Isaac C. Day was the owner of 100 shares of the stock of the banking association, of the par value of $10,000, evidenced by two certificates issued to him. Subsequently these certificates were returned to the bank, with a blank indorsement thereon, by persons representing themselves to he the heirs of the estate of Isaac C. Day, deceased, among whom was the intestate, Clara Irene Day, and to whom was issued a new certificate for a part of the same stock that had been owned by Isaac C. Day, viz: for thirty-three shares, of the par value of $100 each. Other certificates were issued to the other persons representing'themselves to be heirs, to the full amount of the remainder of the stock that had been owned by Isaac 0. Day. The ledger and the stubs of the stock certificate book kept by the bank showed the issuing of the several certificates, the number of shares of stock embraced in each, the date, and to whom issued.

There is and can be no question made the intestate held a certificate for thirty-three shares of stock in the banking association, of the par value of $100 each, at the time of her death. On notice to the administrator, he produced on the trial a certificate for that amount of shares of stock, that had been issued to her. The fact such certificate'was held by her would imply an acceptance, and coming as it did from her administrator, it is not unreasonable to believe it had' previously been in her possession. Holding the stock of the banking association in her own name, as the intestate did, no reason is perceived why she was not a “shareholder, ” within the meaning of the statute, and subject to the liabilities imposed upon “shareholders” by section 5151 of the National Banking act. The only argument made against such liability is, the stock formerly owned and held by Isaac C. Day was never transferred to the intestate “on the books of the association, ” as provided stock may be transferred in section 5139 of the same title and chapter of the Banking act, cited supra, and it is said until such transfer was so made on the “books of the association, ” the intestate did not “succeed to all the rights and liabilities of the prior holder of such shares. ” The Banking law will not bear this construction. It may be the association would not be bound to admit a purchaser of shares of stock “to all the rights and liabilities of the prior holder of such shares, ” unless the transfer to him was made on the books of the association in such manner as may have been prescribed in the by-laws or articles of association. But however that may be, when the association does issue certificates of shares of stock to a subsequent purchaser, in iieu of the certificate of the prior owner, without observing its by-laws in regard to transferring stock on its books, certainly, so far as creditors of the association are concerned, a party holding such shares of stock will be subject to the liabilities imposed by section 5151 of the National Banking law. It will be noted the liability is imposed upon the “shareholder,” and it is a matter of no consequence such shares may not have been transferred to such shareholder on the books of the association in exact conformity with its by-laws. It is sufficient, if the ownership of the shares is in fact in the person holding the certificate, to constitute him a “shareholder” in the association, and subject him to the liabilities imposed by the Banking law, under which such association may have been organized. A case in this court analogous in principle with the one at bar, is Wheelock v. Kost et al. 77 Ill. 296.

The judgment of the Appellate Court will be affirmed.

Judgment affirmed.


author: Mr. Justice Diokey

text:
    The Fifth National Bank v. The Village of Hyde Park.

      Filed at Ottawa September 26, 1881

      Rehearing denied March Term, 1882.

    1. Tbtjst—when stranger to fund is chargeable as a trustee. To charge a stranger to a trust fund as a trustee, by reason of participation in a misapplication of the fund, upon the ground that the fund was used in paj'ment of a private debt of the original trustee, it is necessary to show not only that the party sought to be charged was aware that the fund was a trust fund, but also that he was at the time aware that the debt paid by it was in fact a private debt, or such a debt that payment thereof could not lawfully be made out of such fund.
    2. If a depositor pays his own debt to a banker by a check upon funds to his credit in a fiduciary capacity, the banker will be affected with knowledge of the unlawful character of the appropriation, and will be compelled to refund to the cestui que trust; but the debt paid must be such as that the officers of the bank are aware that the same is really and in truth the private debt of such depositor.
    3. A treasurer of a village borrowed money of a bank on his own note, secured by valuable collaterals, professing at the time to be borrowing the same for the village to pay off its warrants in anticipation of the collection of its taxes, and such money was placed to his account in bank as treasurer, and most of it applied in payment of village warrants, and after the receipt of the taxes he gave the bank a check upon the trust fund in payment of his note, and the bank in good faith, believing the debt to have been incurred for the village, accepted the payment and surrendered the note and collaterals: Held, that the payment could not be rescinded by the village, and the bank be held responsible for the money so paid it.
    Appeal from the Appellate Court for the First District;— heard in that court on appeal from the Circuit -Court of Cook county; the Hon. Murray F. Tuley, Judge, 'presiding.
    In April, 1873, A. D. Waldron became treasurer of the village of Hyde Park, and entered upon his duties as such. He continued to hold the office (being from time to time selected as his own successor) until May, 1878, when he was succeeded in that office by Geo. A. Follensbee. On May 20, 1873, he opened an account, in his individual name, with the Fifth National Bank of Chicago, in which account he deposited funds of the village coming to his hands as such treasurer, and so continued to do until the 11th day of June, 1877, paying dues of the village from time to time by checks on that bank, signed “A. D. Waldron, ” and charged against that account. On that date he closed that account, and opened a new account with the same bank in the name of “A. D. Waldron, Treasurer,” by transferring the amount at that time to his credit as “A. D. Waldron, ” to the new account. He continued the account under the head of “A. D. Waldron, Treasurer,” until May, 1878. At that time it was discovered that he was a defaulter to the village in the sum of $114,-032.62. Thereupon he was removed from office, and his successor was appointed, and the amount of the defalcation was afterwards reduced to the sum $76,636.13, by credits on account of property of Waldron turned over to the village on that account. Waldron, from that time to his death, appears to have been without property or assets, and wholly insolvent.
    This is a suit brought in January, 1879, by the village of Hyde Park, against Waldron and the Fifth National Bank. The bill charges that Waldron misapplied a large part of the village funds in his hands, and asks an account to fix the amount, and also that the bank received a large amount of the misapplied funds under such circumstances as to render it liable as trustee in that regard; that Waldron is insolvent, and prays that the bank be required to refund to the village the funds so received, to be applied in satisfaction of Waldron’s defalcation.
    Pending the suit, and before final hearing, Waldron died, and as to him and his estate the suit was abated. The bank answered, a replication was filed, and the cause was finally brought to a hearing on pleadings and proofs. The circuit court found that for no part of the moneys paid by Waldron to the bank by checks on his deposit account while the account was kept in the individual name of “A. D. Waldron, ” could the bank equitably be charged, hut that as to certain moneys of the village paid by Waldron to the bank by checks on his deposit account while the account was kept in the name of “A. D. Waldron, Treasurer,” in payment of certain loans made by Waldron, arid for which he had given his own promissory note, the bank was chargeable as trustee for the use of the village, and rendered a decree against the bank and in favor of the village for the sum of $57,959.95, and interest thereon from the coming in of the answer. From this decree the bank appealed to the Appellate Court, and there the decree was affirmed. From that judgment of the Appellate Court the bank appeals to this court.
    It appears from the record in this cause, that the predecessor of Waldron, as treasurer of the village of Hyde Park, kept the moneys of the village in his hands on deposit in bank, in a deposit account in his own name. When Waldron opened his first account with the Fifth National Bank, as stated above, it was known to the bank that he was the treasurer of Hyde Park, and that the first deposit in that account was the sum of $30,602, received by him as treasurer from his predecessor as funds of the village, and that a large part, if not all, of the moneys deposited while the account was kept in his own name, were in fact funds of the village. Waldron testifies that in. this account he did not deposit or mix with funds of the village any of his own private or personal moneys, and there is no proof in the record contradicting this statement. But no proof tends to show that the bank officers knew that all the moneys so deposited were funds of the village. While Waldron was treasurer, while the account was kept in the name of A. D. Waldron, several loans were made from the bank, avowedly for the use of-the village. Part of them were made by him in his individual name and on his personal credit, supported by personal securities and collaterals, and part of these loans were made in the name and upon the credit of the village, and one of them was made in the name of one Lawrence, and secured by Lawrence’s note, signed by Waldron as security, and supported by collaterals. Of- loans thus made was one on June 24, 1873, made upon a certificate given in the corporate name of the village, and signed by the president and treasurer thereof, for the sum of $35,000; another was made on July 27, 1874, in the name of the village, on a certificate. signed by appropriate officers thereof, for the sum of $35,000. Both these loans were duly authorized by appropriate resolutions passed by the board of trustees of the village. The funds so borrowed were, deposited to the credit of the account of A. D. Waldron.
    During 1875 and 1876 Waldron borrowed money from this bank on several different occasions, giving his own notes for the same, secured by collaterals, and the sums borrowed credited to his deposit account in the bank. Some of these notes were renewed from time to time, and they were all ultimately paid by checks drawn upon his account, kept, as above stated, in his individual name. These' loans, not including the renewal notes, with a like loan of $4000, made May 17, 1877, amounted in all to about $89,000.
    On the 11th of June, 1877, Waldron made another loan from this bank, of the sum of $52,000, and gave his own note, signed by Lawrence as security, for the sum of $45,000, and the note of Lawrence, signed by Waldron as security, for the sum of $7000, and both these notes were secured by collaterals then deposited by Waldron with the bank.
    The proceeds of all these loans were at once passed to the credit of A. D. Waldron, in which, up to that time, all the moneys of the village coming to his hands as treasurer had been deposited.
    As to each of these loans so made in the years 1875,1876, and 1877, embracing the last loan of June 11, 1877, Mr. Lombard, the cashier of the bank, testifies that Waldron stated, at the time of making each loan, that he “wanted the money for the use of Hyde Park, to pay warrants in anticipation of the collection of taxes.”
    On June 11, 1877, after the proceeds of this loan of $52,000 was passed to his credit on the books of the bank, Waldron applied to the cashier of the bank for a certificate of his balance in the bank, which was accordingly made out and presented to him, when Waldron said he wished a statement that the balance shown stood to his credit as treasurer. Thereupon the account was changed on the books of the hank, by closing the account as kept up to that time simply in the name of “A. D. Waldron, ” .and opening a new account in the name of “A. D. Waldron, Treasurer, ” and the credit balance in the first account was transferred to the new account as a credit balance. This was done by a check signed by Waldron, payable to. himself as treasurer, and indorsed to the bank by him as treasurer. This credit was to the amount of $53,247.82, and to the extent of $52,000 was composed of the money that day loaned to Waldron, upon his statement that "he wanted the money for the use of Hyde Park, to pay warrants in anticipation of the collection of taxes. A written statement was then given to “Waldron, Treasurer, ” that the balance to credit of his account was $53,247.82. He thereafter kept no account with this bank in the form of a private account. He afterwards made additional deposits to this new account, from time to time, until May, 1878. These deposits aggregated more than $300,000. No loans were made to him, as treasurer or otherwise, after the deposit account to this new form. At the time when the form of the account was changed, June 11, 1877, the bank held the Lawrence note of that date for $7000, and the Waldron note of that date for $45,000, and also a note of Waldron, given for the sum of $4000, of date of May 27, 1877, given for a loan made for the same avowed purposes and under like circumstances with the loan of June 11, 1877.
    These loans of May and June, 1877, were afterwards paid to the bank by Waldron, by means of checks drawn by him as treasurer, and charged to the deposit account kept by him in the name of “A. D. Waldron, Treasurer.” The last payment on that account was'made December 1, 1877, by a check for the sum of $50,688.88, given in payment of “balance of $52,000, loan and interest.” After the deposit of the moneys arising from this loan, and before the final payment on December 1, 1877, this deposit account had at one time been reduced, by checks drawn thereon, to the sum of $474.17", and was again replenished on the 30th of November, 1877, by a deposit of $97,826.31,—known to the bank officers to be. the money of the village,—consisting of two checks drawn by the county treasurer, payable to “A. D. Waldron, treasurer of Hyde Park, ” and indorsed to the bank by him, as treasurer.
    Mr. Lyman Trumbull, Mr. Charles Hitchcock, and Mr. Melville W. Fuller, for the appellant:
    The decree should be reversed and the bill dismissed, because the village can not keep the bonds pledged as col-laterals, and at the same time recover the money paid the bank to procure their surrender.
    He who seeks equity must do equity. The bank is now called upon to' make restitution of money alleged to have been wrongfully paid to it by the treasurer, but without any fraud or bad faith on the part of the bank. Upon this payment it gave up most important rights of property, which the village has since acquired.
    In order to hold a bank liable for paying out trust money there must be a misappropriation in fact, and participation in, or privity with, such breach of trust on the part of the bank.
    All the eases show that without pre-concert and knowledge of the breach of trust a bank can not be held liable. There must be proof, as Lord Cairns says in Gray v. Johnston, 3 Eng. & Irish Appeals, p. 11, that “the bankers are privy to the intent to make this misapplication of the trust funds.”
    The liability, in Bodenham v. Hoskyns, 13 Eng. L. & Eq. 222, (21 L. J. N. S. 864,) much relied on by appellee’s counsel, was declared to be founded on the actual knowledge of, and participation in, the misapplication.
    A cestui que trust can not stand by and permit the trustee to borrow money upon the representation that it is for the benefit of the cestui que trust, and then repudiate the action of the trustee in paying the loan. Still less can a cestui que trust recover back from a creditor money paid him to take up a loan, which the creditor made in the belief to the knowledge of the cestui que trust that it was for the benefit of, and assented to by, the latter.

      Messrs.' Beaming & Thompson, Mr. Chaeles H. "Wood, and Mr. B. D. Condee, for the appellee:
    1. A trust will be enforced not only against a rightful possessor of trust property as trustee, but against all persons coming into possession of such property with notice of the trust. In re Gross, 6 Law Rep. C. 632; Bodenham v. Hoskyns, 13 Eng. L. & E. 222; Morse on Banks and Banking, pp. 37, 45, (2d ed.); 2 Story’s Eq. Jur. sec. 1707, and note a; Perry on Trusts, sec. 840.
    2. If trust property be commingled by the trustee with his own property, it does not thereby, in. the view of equity, lose its character, but remains the property of the cestui que trust. Van Allen v. American National Bank, 52 N. Y. 1; Bodenham v. Hoskyns, 13 Eng. L. & E. 222; Same, 21 id. 645; Morse on Banks and Banking, (2d ed.) p. 49; Pennell v. Deffell, 4 De Gex, Mc. & G. 382.
    3. If a party dealing with a trustee has, at the time, reasonable grounds for believing that he intends to misapply trust property, or is in the very transaction applying it to his own private use, a court of chancery will hold the person so dealing responsible for any injury sustained by the cestui que trust. Fields. Schieffelin, 7 Johns. Ch. 150; Jandon v. National City Bank, 8 Blatch. 430; Pannell v. Hurley et al. 2 Collier, 244.
    4. A person fraudulently receiving or possessing himself of trust property, is converted by a court of chancery, into a trustee for parties beneficially interested in such property, and the same rights and remedies exist against him as against an express trustee fraudulently committing a breach of trust. Norton et al. v. Hixon, 25 Ill. 439; Bank of Greensboro v. Clapp, 76 N. C. 482; Jackson et al. v. Noms et al. 72 Ill. 367; Bridgeman v. Gill, 24 Beav. 302; Shaw v. Spencer, 100 Mass. 382.
    5. The appropriation or application of public funds in payment of private indebtedness is not within the scope of the powers conferred upon the corporate authorities of municipal corporations, and no consent can be presumed on the part of such authorities to an act ultra vires. Jackson ex rel. v. Norris et al. 72 Ill. 364; Bradley v. Ballard, 55 id. 413; Taylor v. People, 66 id. 326.
   Mr. Justice Diokey

delivered the opinion of the Court:

It is conceded that no one had the slightest suspicion that Waldron was a defaulter, until some time in 1878, and about the first of May of that year. There is nothing in the proofs tending to show that any of the officers of the bank had any suspicion that Waldron was, or had at any time been, applying the moneys of the village to the payment of any claim or demand which (as between him and the village) he was in duty bound to pay from his own personal funds.

It is insisted by counsel for the village of Hyde Park, that the several loans made of this bank by Waldron in his own name, and upon his own notes or the notes of other private persons, were mere private debts, and not debts for which the village was liable, and inasmuch as the bank officers knew that the payment of these loans was made from funds known by them to be the funds of the village, they insist that such payment was known to them to be a misappropriation of the trust funds. The learned judge of the circuit court took this view of the matter, in so far as concerns payments made after the account was kept in the name of “A. D. Waldron, Treasurer.” He held otherwise, however, so far as regards payments made out of the account kept in the name of “A. D. Waldron.” In Morse on Banks and Banking, 37, it is said, in general terms: “If a depositor seeks to pay Ms own debt to the banker by an appropriation of the funds to his credit in a. fiduciary capacity, then the banker is affected with knowledge of the unlawful character of the appropriation, and will be compelled to refund. ” It seems plain, however, that unless the debt to which the funds are thus applied ■ be such that the officers of the bank are aware that the same is really and in truth “his. own debt, ” knowledge of the unlawful character of the appropriation can not be imputed to the bank.

To charge a stranger to a trust fund as a trustee, by reason of participation in a misapplication of the fund, upon the ground that the fund was used in payment of a private debt of the original trustee, it is necessary to show not only that the party sought to be charged was aware that the fund was a trust fund, but also that he was aware that the debt to the payment of which it was applied, was, at the time of such application, in fact a private debt,—a debt of such character that the fund in question could not lawfully be applied in payment thereof.

In Keame et al. v. Robarts et al. 4 Maddox Ch. 357, it is well stated, as the result of the authorities at that time (1819), that “every person who acquires personal assets by a breach of trust * * * is responsible to those who are entitled to the fund, if he is a party to the breach of trust.” And again: “Generally speaking, he does become a party to the breach of trust by buying or receiving in pledge any part of the personal assets, not for money advanced at the time, but in satisfaction of his private debt, because this sale or pledge is prima facie inconsistent with the duty of an executor.” This implies that the debt in satisfaction of which the property is taken, is of such character that it is known to be a private debt, for it is elsewhere declared that the party so receiving the trust fund must, to become chargeable, have been guilty of “fraud, collusion, or gross negligence. ” In the same case the vice-chancellor says: “If a party dealing with an executor for the personal assets, pays his money to the executor so that it may be applied to the purposes of the will, he is not responsible for the executor’s misapplication of it; but if, in dealing with the executor, he does in truth pay his money for the private purposes of the executor, he is equally a party to the breach of trust whether he applies his money to the private debt of the executor, or to the private trade of the executor, and this because he knows that the object to which the money is applied is not an object to which it may be lawfully applied. ”

In Field v. Schiefelin, 7 Johns. Ch. 150, Chancellor Kent says, in substance, that to charge a third party with participation in the misapplication of trust funds by a trustee, the proof must “justify the conclusion of a breach of trust, in which the party to be charged knowingly partook. ” That was the case of a guardian, and Kent, after a review of all the then cases, says they all agree that a party dealing with an executor is safe if he is no party to his fraud, and has no knowledge or proof that he intended to misapply the proceeds, and was not in fact by the very transaction applying them to the extinguishment of his own private debt. This necessarily refers to a debt known to be his own debt, to which the fund could not be properly applied.

We have examined with care all the cases referred to by counsel for appellee, and many others, where a party receiving trust funds in payment of a private debt to himself has been held chargeable as a trustee, and we find no case among them where the party so charged was not aware, at the time of receiving such trust funds, that the debt to which it was applied was a debt to the payment of which the trustee could not lawfully apply the trust fund. The receipt of such money, under such circumstances, is a plain fraud.

Let us consider a moment the character of these debts, which in this case are called private debts. The debt for the loan of $52,000, made on June 11, 1877, may be taken as an example. Waldron called at the bank, saying he wished to borrow a given sum of money for the use of the village of which he was treasurer, to pay warrants in anticipation of the collection of taxes. The money was, upon that statement, lent to him upon his own personal note, secured by collaterals. There was no fraud in believing this statement to be true, nor is there any proof that it was not true. The money thus lent was placed to his credit as treasurer, and paid out by him on checks drawn by him as treasurer, a large portion of which is proven to have been paid upon proper warrants upon the treasury, and no part of which is shown to have been paid out for other purposes. The bank assumed, and had a right to assume, that this money was intended to be applied to the proper payment of valid warrants, in anticipation of the collection of taxes, and on the 1st of December, 1877, one day after a large amount of money had come into the treasury from the collection of taxes by the county treasurer, when Waldron proposed to use so much of that fund in paying off the unpaid balance of that loan, the officers of the bank were authorized to assume, and in good faith did assume, that the money was by such payment being applied in refunding money paid out on such warrants on the treasury from the proceeds of the original loan. If this were true in fact, it was not a misapplication of the trust fund, but was a proper and just application of the fund. Had Waldron had'abundant means of his own, and had he, when there was no money in the treasury, paid with his own money warrants properly drawn upon the treasury to the amount of $50,000, he would have thereby in equity become entitled (by subrogation to the rights of the holders of such warrants) to apply to his own use so much of the public moneys afterwards coming to his hands as needed to refund to him the amounts so advanced.

It follows that, under the circumstances, at the time when the officers of this bank received payment of this loan, they were not aware that, as between the village of Hyde Park and Waldron, he had not lawfully and equitably the right to apply the public funds to the payment of this debt. They must be assumed to have known the law in relation to the transaction, but the law does not impute to them omniscience as to the facts. Taking the facts as these officers believed they were, and as they had good cause to believe, the payment would not have been a misappropriation of the funds. They are not chargeable with fraud, collusion, or gross negligence.

The case In re Gross, 6 L. B. 632, C. App., is cited as against this position, but it is not in point. There, as here, the funds were known to be trust funds. There, as here, the funds may be said to have-arisen from moneys advanced" by the bank upon the personal credit of the officer and trustee, but at the time when it was proposed by the bank to apply the trust fund to the private account of the officer, it was known that the officer was in default, and had the officer been present and offered to so apply the trust fund, called the “police fund, ” the bank could not at that time have accepted the same without being knowingly a party to the misapplication. The court said: “If a banker receives from a customer holding a trust account, a check drawn on that account, he is not in general bound to inquire whether that check is properly drawn. Here the customer has drawn no check, and the bankers seek to set off the balance of his private account against his credit on what they knew to be a trust account. ” It was very properly held that the set-off could not be allowed. The court would otherwise have permitted the bank to make a known misapplication of a trust fund.

So, in Bodenham v. Hoskyns, 13 E. L. & E. 222, Parks was the agent of Bodenham, and kept the moneys of his principal in the bank of Hoskyns, in a deposit account headed “Botherwas account, ” and at the same time kept his own moneys in the same bank in a deposit account in his own name. After Parks was known to the banker to be insolvent, and when his private account was largely overdrawn, the bank, with the consent of Parks, transferred all the moneys standing to his credit on the “Botherwas account” to his credit on his private account, which still left that account over-drawn. The bank was very properly held to be a party to that breach of trust. The officers of the bank knew, at the time of the appropriation of the trust funds, that they were the funds of another entrusted to the care of their debtor, and that the debt to which they were applied was a strictly private debt, to which the trust funds could not properly be applied. The court says: “They were aware of the circumstances, which made it a fraud in Parks to make the transfer, * * * and they concur in the transaction. ” In the case at bar the officers had no knowledge or suspicion of the circumstances which made it a fraud in Waldron to pay these notes from the village funds.

In Jandon v. City Bank et al. 8 Blatch. 430, the trustee borrowed money from the bank for his oion use, and pledged certificates of stock issued to him, as trustee for complainant, by name; and it was ruled that the bank held them for the complainant, the court saying: “The transaction of the loan indicated * * * that he was borrowing money for his private use. ” In the case at bar the transaction of the loan did not indicate that he was borrowing the money for his own use. He professed to be borrowing for the use of Hyde Park, to pay warrants in anticipation of the collection of taxes.

It does not seem necessary to review other cases in detail. The teaching of all the authorities is consonant with the proposition that to charge a stranger as a party to the misappropriation of a trust fund, such stranger must knowingly partake in the breach of trust,—that he must know or have proof of facts which in law characterise the transaction as a breach ok trust.

It is no doubt true that where a stranger receives moneys of a trust fund from the trustee as a gift, or without a valuable consideration, though in ignorance of the character of the moneys received, he may be held as a trustee; but where such stranger to the trust has in good faith paid a valuable consideration, or has materially changed his condition, so that he can not be restored to his original advantages, that doctrine does not apply. In the case at bar the money was in good faith received by the bank from a man in good credit, and with assets in his hands of his own to the value of over $30,000, and his note and valuable collaterals were surrendered to him. It is now proposed, after that man has become insolvent, and has been stripped by complainant of all his assets, and has died, to rescind the payment to the bank, without restoring that for which it was paid. This, it seems to us, would be grossly unjust.

The judgment of the Appellate Court is therefore reversed, that the Appellate Court may reverse the decree and remand the cause to the circuit court, for proceedings not incompatible with the views of the law herein expressed.

Judgment reversed.

Scott and Sheldon, JJ., dissenting.


author: Mr. Justice Sheldon

text:
    City of Peoria v. Jacob Darst et al.

      Filed at Ottawa January 18, 1882

      Rehearing denied March Term, 1882.

    1. Construction of deeds and wills—intention must control. It is a rule in construing deeds or wills, that the intention of the grantor or testator, as manifested by the words of the writings, in connection with the surrounding circumstances, must be carried into effect, if no rule of law will thereby be violated, or sound public policy be disturbed. In ascertaining such intention one clause or part is not to be viewed but in connection with all the other parts.
    2. Same—character of estate created by deed—as to inheritance from grantee. A father of two illegitimate children conveyed real estate to their mother for her life, with remainder in fee to such children, or the survivor of them, who might survive their mother or leave issue, and in the habend/am clause of the deed provided that ,if such children should -survive their mother, and die without making any disposition of the property, by will or otherwise, and without issue, then it should go to the city of Peoria, etc.: Held, that the intent was, that in case of the survivorship of the children they should take and enjoy the property devised to their use personally, and have the full benefit of it, even to the extent of selling or devising it in fee; but in case of their death without issue, or disposition of it by them, no such estate had vested in them as could pass by descent to any one.
    3. Bemaindeb—vested and contingent—defined. A contingent remainder is one, the vesting or taking effect of which in interest is, by the terms of its creation, made to depend upon some contingency which may never happen; while a vested remainder is one that takes effect immediately upon the making of the instrument creating it, though its enjoyment is postponed until the termination of the prior estate.
    4. Same—a deed construed—whether a vested or contingent remainder. Where the father of two illegitimate children conveyed real estate to their mother for the term of her natural life, with remainder to his two children in fee simple; as joint tenants,.—that is to say, the mother to have a life estate in the property, and at her death the fee simple to vest in the children, or in the survivor of them, with this further clause immediately following: “If, however, both of them should die before the termination of the C. estate,” (that being the life estate of the mother,) “and to leave no child or children, then at the death of the said G. the title is to vest in the city of Peoria for the benefit of orphan children, ” etc., it was held, the grant to the children was not of a vested remainder, but that they took a contingent right only, depending upon the event of both or one of them surviving the mother dr having issue, and they both having died in the lifetime of the mother, leaving no issue, that the title, on the death of the mother, vested in the city of Peoria.
    5. Estate—application of the rule as to limiting a remainder in fee after a prior one. Where two limitations over in fee to one and to another, are concurrent contingent remainders, limited alternately on the same event to take effect, not the one subsequent to the other in succession, but the one as a substitute for the other, this will not be the limitation of a fee after a fee, and is permissible.
    6. Where both limitations are to take effect, the latter can do so only as an executory devise, for a remainder originally contingent, but afterwards vested by the happening of the contingency, is essentially the same as if it had been vested at its origin; but where both are limited alternately on the same event, by the happening of which one is to vest in exclusion of the other, then both are contingent remainders, and if such event never happens, the second remainder will take effect.

      Appeal from the Circuit Court of Peoria county; the Hon. John Burns, Judge, presiding.
    This was a proceeding, by petition of .Jacob Darst, for the partition of certain real estate in the city of Peoria. The property originally belonged to George Morton, through whom all the parties to the record claim, and the controversy in the case turns upon the construction to be given to a deed executed by him of the premises in 1852. The deed is as follows:
    “This deed, made and entered into this 12th day of August, in the year of our Lord 1852, by and between George Morton, of the city of St. Louis, county of St. Louis, and State of Missouri, party of the first part, Mary M. Clark, of the city of Peoria and State of Illinois, party of the second part, George Douglass Morton and Mary Helen Morton, both of the city of Peoria and State of Illinois, parties of the third part:
    “Witnesseth, that the said party of the first part, for and in consideration of the sum of $3000 to him in hand paid by the said party of the second part, the receipt of which is hereby acknowledged, has granted, bargained and sold, conveyed and confirmed, unto the said party of the second part, the following lots of ground in block numbered 85, of the city of Peoria, being lots numbered 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11 and 12, being the whole of said block 85, situated in Morton, Voris & Laiweille’s addition to the town of Peoria. To have and to hold, unto the said Mary M. Clark, for and during her natural life, remainder to George Douglass Morton and Mary Helen Morton in fee simple, as joint tenants,— that is, the said Mary M. Clark to have a life estate in said property, and at her death the fee simple title to the property to vest in George D. and Mary Helen Morton, or in the survivor of them. If, however, both of them should die before the termination of Mary M. Clark’s estate, and to leave no child or children, then, at the death of said Mary M. Clark, the title is to vest in the said city of Peoria for the benefit of orphan children, to be used for said purpose as the authorities of said city may think most expedient. If the said George D. Morton and Mary Helen Morton, or either of them, should survive the said Mary M. Clark, and should die without making any disposition of the property, by will or otherwise, it is in that event to go to the said city of Peoria for the benefit of orphan children, as aforesaid. The said George D. Morton was born in the city of St. Louis on the 18th day of July, 1850, and the said Mary Helen Morton was born in the city of St. Louis on the — day of-, 1852. And the said party of the first part hereby covenants that his heirs, executors and administrators will warrant and defend the title to the said premises, and every part thereof, to them, the said parties of the third part, and to their heirs and assigns forever, against the lawful claim or claims of all and every person or persons whomsoever claiming or to claim the same, or any part thereof.
    “In witness whereof the said party of the first part has hereunto set. his hand and seal the day and year first herein written.
    “Signed in presence of Lawrence T. Poland.
    Geoege Moeton. [Seal.] ”
    At the time of the making of the deed Mary M. Clark was a widow with four children, Frank Clark, Benjamin Clark, George Douglass Morton, and Mary Helen Morton. The two latter were the" illegitimate children of George Morton, the grantor in the deed, and both died in 1855 or 1856, the said Mary Helen first, and George Douglass a few hours later on the same day, leaving surviving them, as their only heirs, their mother, Mary M. Clark, and their half-brothers, Benjamin and Frank Clark. On August 23, 1858, Mary M. Clark conveyed to the city of Peoria all her title and interest in the premises, and soon thereafter the city entered into possession of the same, and made valuable improvements, and have continued to use and occupy them up to the time of the commencement of this suit. On October 3, 1861, Frank Clark conveyed to the petitioner, Jacob Darst, all his title and interest in the premises. Mary M. Clark is now dead, having died some time in 1865.
    Upon this state of facts the circuit court found that Darst and Benjamin Clark were respectively owners in fee of one-fourth of the premises, and that the city of Peoria was the owner of one-half, and decreed accordingly. The city appealed.
    Messrs. Cooper & Tennery, for the appellant „•
    The rules of construction require that all the language of the grant shall be considered, and effect given to it, unless so repugnant or meaningless that it can not be done. Cooper v. Cooper, 76 Ill. 60; Brownfield v. Wilson, 78 id. 467.
    In construing deeds or wills the intention of the grantor or testator, as manifested by the words of the writing, in connection with surrounding circumstances, must be carried into effect. Pool v. Blakie, 53 Ill. 495.
    As to the distinction between vested and contingent remainders, the following authorities were cited: 2 Blackstone’s Com. 168, 170; 2 Washburn on Beal Prop. 224, 228, 240.
    The office of the habendum in a deed is not to grant any estate in the first instance, but merely to limit or define the extent or certainty of an estate previously granted. Frink v. Darst, 14 Ill. 304; Cooper v. Cooper, 76 id. 57.
    The grant is to the mother for life, and at her death to the two children, or the survivor of them, and in ease both of them shall die childless before their mother, then at the death of the mother the title to vest in the city of Peoria, etc. And not only so, but if the two children, or either of them, should survive the mother, and should die without making any disposition of the property, by will or otherwise, it should go to the city of Peoria. This clearly expressed intent should be carried out by the courts.

      The terms employed to designate those who are next to take after them exclude the idea of inheritance. These terms are “child or children,” which are words of purchase, in contradistinction to the term “heir,” which is held to be a word of limitation. Baker v. Scott, 62 Ill. 86; Beacroft v. Strawn, 67 id. 28; Butler v. Huestis, 68 id. 594.
    But admitting that an estate in fee did in the first instance vest in the two children as grantees in the deed, we insist such estate was'not absolute in its character, but subject to be afterwards divested upon a contingency, which in fact has occurred. Illinois Land and Loan Co. v. Bonner, 75 Ill. 315.
    Mr. H. W. Wells, for the appellee:
    The deed conveyed a remainder in fee, which vested upon its delivery. An estate in remainder vests at the earliest possible moment. For example: “I give and devise to A, etc., for life, and upon his death, to B.” The remainder vests at once. Doe v. Considine, 6 Wall. 474; Manderson v. Lukins, 23 Pa. St. 31; Williams on Real Prop. 242; 4 Kent’s Com. 203; 1 Cruise’s Digest, 237.
    A conveyance to A foi life, remainder in fee to B. Here B takes a remainder which vests upon the delivery of the deed to A. Ide v. Ide, 5 Mass. 500; Burbank v. Whitney, 24 Pick. 146; Wimple v. Fonda, 2 Johns. 288; Hall v. Tuffs, 28 Pick. 455.
    A vested remainder is where a present interest passes to a definite person in esse, to be enjoyed in futuro. Preston on Estates, 70; 2 Washburn on Real Prop. (4th ed.) p. 542.
    No degree of uncertainty as to the remainder-man ever enjoying the possession of the estate can defeat it, provided he has the present absolute right to the estate the instant the prior estate is determined. 2 Washburn on Real Prop. (4th ed.) p. 547; Pierce v. Savage, 45 Me. 90.; Coxall v. Sherrard, 5 Wall. 269; Brown et al. v. Laurence et al. 3 Cush. 390.

      A remainder is never contingent where it can be construed to be vested. 2 Washburn on Real Prop. (4th ed.) p. 542; Manderson v. Lukins, 23 Pa. St. 31; Leslie v. Marshall, 31 Barb. 566; Blanchard v. Brooks, 12 Pick. 47; Coxall v. Sherrard, 5 Wall. 289.
    If the deed passed a vested remainder in fee simple, it was not competent for the grantor to divest that estate, nor to change the law of descent by any subsequent clause in the deed. Riggin v. Love, 72 Ill. 553; Siegwald v. Siegwald, 37 id. 437; Proprietors Church & Co. v. Grant, 3 Gray, 142; McLean v. McDonald, 2 Barb. 535.
    No remainder can be limited after a fee. Blanchard v. Brooks, 12 Pick. 46; Bouvier’s Inst. 249, 288.
    The rules governing the construction of wills and deeds are entirely different. A will is presumed to be made in extremity, and without the aid of counsel, (Bouvier’s Inst. vol. 2, p. 293, Cruise’s Digest, vol. 3, p. 444,) while a deed is presumed to be made upon the advice and with the assistance of counsel. 4 Kent’s Com. 264, 501; Siegwald v. Siegwald, 37 Ill. 430; Butler v. Huestis, 68 id. 594; Brownfield v. Wilson, 78 id. 467.
   Mr. Justice Sheldon

delivered the opinion of the Court:

The city of Peoria claims the exclusive title to the land in question, under the deed of George Morton. There can be no doubt as to the intention of the maker of that deed. It was as clear as can be expressed by language, that on the contingency which has here happened,—the death of Mary Helen Morton and George Douglass Morton, childless, in the lifetime of Mary M. Clark,—the property, on the death of the latter, should go to the city of Peoria for the benefit of orphan children. The express words of the deed are, that if both the said Mary Helen and George Douglass should die before the termination of Mary M.. Clark’s life estate, and leave no child or children, then, at the death of said Mary M. Clark, the title should vest in the city of Peoria for the benefit of orphan children. The said Mary Helen and George Douglass both did die childless, in the lifetime of Mary M: Clark. Why, then, at her death should not the title vest in the city of Peoria, as the deed intended and expressly declared it should?

“The law, ” says Mr. Powell, in his notes to Wood’s Conveyancing, as quoted in 3 Washburn on Eeal Prop. 621, marginal, “is curious, and almost subtilizes to devise reasons and means to make assurances and deeds inure according to the just intent of parties, and to avoid wrong and injury which, by abiding by rigid rules, may be wrought out of innocent acts.”

This court said, in Pool v. Blakie, 53 Ill. 502: “It is a rule in construing deeds or wills, that the intention of the grantor or testator, as manifested by the words of the writings, in connection with surrounding circumstances, must be carried into 'effect. ” It is certainly so when, as afterward said in that ease, no rule of law will be violated, or sound public policy disturbed.

As the reason why the intention of the grantor here should not be allowed to prevail, and must be defeated, appellee’s counsel asserts that the deed conveys an absolute remainder in fee simple to George Douglass and Mary Helen Morton, which vested in them upon the instant of the delivery of the deed in 1852, and that the subsequent limitation to the city of Peoria was an attempt to limit a fee upon a fee, and was inoperative and void by the rule of the ancient common law, which did not permit any limitation of an estate over after the grant of a previous fee. But is it not an unwarrantable assumption that there is here a limitation, in the first place, of a remainder in fee to the children, absolutely and unconditionally ? Some ground for it may be found if we read the first branch of the habendum, clause of the deed by itself, disconnected from what follows. But such a mode of construing an instrument is not admissible. One part is not to be viewed by itself, but in connection with other parts, and the meaning of a deed is what it is found to be from taking and considering all of its parts together, and not from what any single clause by itself may show. And of especial force is this rule here, where the first branch of this habendum clause has immediately following it the words, “if, however. ” These are qualifying words,—words of condition,—denoting that what precedes is not the precise grant, and that what follows must be read to see what the exact grant is. The first clause says, at the death of the mother the fee simple title to the property is to vest in the children, or the survivor of them. “If, however," immediately following in the next clause, “both of them should die before the termination of Mary M. Clark’s estate, and to leave no child or children, then, at the death of said Mary M. Clark, the title is to vest in the city of Peoria for the benefit of orphan children. ”

Connected together, then, as these first and second branches of the habendum clause are by the qualifying conditional words above, the first alone does not show what estate is granted to the children, but both must be taken together as showing it; and reading both clauses together, we find that it is not a fixed right of future enjoyment after the death of the mother which is granted to the children, but a contingent one only, dependent upon the event of both or one of them surviving the mother, or having issue. In case of such surviving or having issue, then the fee simple title, at the death of the mother, is to vest in the children, or the survivor; but in the contrary event, the title is to vest in the city of Peoria. The two clauses being separated only by a punctuating point, and no regard being had to punctuation in construing a deed, they are really but one clause,—one entire expression how the property should go. It was an uncertain event whether or no the children, or either of them, would survive the mother or leave issue, and so whether the remainder to them would ever take effect. The estate thus limited comes within the ♦ proper definition of a contingent remainder, as being “one whose vesting or taking effect in interest is, by the terms of its creation, made to depend upon some contingency which may never happen at all.” (2 Washburn on Beal Property, 519.) And even the first clause of the 'habendum names the death of Mary M. Clark as the time for the title to vest in George D. and Mary Helen Morton.

We find, then, upon construction of the two clauses which give the remainder, taken "together, and .not looking to the first one singly, that the limitation of estate over to George D. and Mary Helen Morton was not an immediate vested interest in remainder, which they took on the making of the deed, but that it was a contingent remainder, depending upon a contingency which might not, and in fact did not, happen, whether it ever should take effect.

We may here advert to the third branch of the habendum clause, (which perhaps might more properly have been done in another connection when speaking of the intention,— making provision in case the remainder shall take effect in favor of the children,) which provides, that if the children, or either of them, should survive the mother, and should die without making any disposition of the property, it should then go to the city of Peoria. This is a further manifestation of the purpose of the grantor to restrict the grant of the property, after the termination of the life estate in Mary M. Clark, to the use personally of these two children and the survivor of them, or any child of either, so that no estate should vest in George D. and Mary Helen Morton which could pass by descent to any one. They being the illegitimate children of the grantor by Mary M. Clark, he gives to her by the deed a life estate in the premisés in question, and intends that at her death these children, if they or either of them live to take and enjoy it, shall do so, and have the full benefit of it, even to the extent of selling or devising it in fee; but if they, or either of them, do not so live to take, and die without issue of their own, then his purpose, as to be derived from the deed, is, rather than that the property should pass by descent to the heirs-at-law of these children, of no kin to himself, that it should go to the city of Peoria for the benefit of orphan children; and so the deed by express appointment fixes the time when the remainder to the children shall vest, to be at the termination of the life estate. And the question, as before observed, is, whether the deed may not be so construed as to effectuate the intention of the grantor, or are we forced to adopt a construction which will thwart it.

The remainder to these children being a contingent remainder, the limitation of estate over to the city of Peoria does not come within the prohibition of the rule that no remainder can be limited after a remainder in fee. The two limitations of estate over to the children and to the city of Peoria are concurrent contingent remainders in fee, limited alternately on the same event to take effect,—not the one subsequent to the other, in succession, but as a substitute for the other. This is not a limitation of a fee after a fee, and is permissible.

Mr. Washburn, in his treatise on Real Property, says: “Notwithstanding a remainder limited after a remainder in fee would be void, as has been often repeated, yet two remainders may be so limited, though each a fee, as to be good, provided this is so done that only one is to take effect, the one being a substitute for and not subsequent to the other. The consequence is, that if the first takes effect and becomes vested, the other at once becomes void. Such limitation is said to be of afee with a double aspect. A case illustrative of this proposition is that of Duddington v. Kime, 1 Lord Raymond, 203, where the devise was to A for life, and if he had male issue, then to such issue and his heirs; but if A died without issue male, then to T. B. in fee. Here are two remainders contingentan their character, and both in fee, dependent upon the same particular estate, and to take effect, if at all, upon the determination of that estate, and only one of these can take effect. If A has issue, the remainder vests at once in such issue, and defeats the limitation to T. B. altogether. On the other hand, if A dies without issue, T. B.’s remainder at once vests in him, and takes effect as a substitute for the other,—neither is, by its terms, to wait until the other shall have once taken effect and afterwards been determined. ” 2 Washburn on Real Prop. 250, marg. The author cites several other authorities in support of the text, among them Dunwoodie v. Reed, 3 Serg. & R. 452. In that case the testator devised to his daughter, Jane Dunwoodie, during her natural life, and at her decease unto her male heir, John Dunwoodie, if alive'at her death, otherwise unto her next male heir, and it was held Jane Dunwoodie took an estate for life, with concurrent contingent remainders to John Dunwoodie, or such person as, in the event of his death in the lifetime of Jane Dunwoodie, should be her heir male. It was there said, by Tilghman, Ch. J.: “The will presents a contingency with a double aspect, to be determined immediately on the death of Jane Dunwoodie. At that moment an estate in fee was to vest in somebody,—in John Dunwoodie, if living; but if not, in the next heir male of Jane; but in whomsoever it vested, it was indefeasible. There was no limitation, therefore, of a fee after a fee, but a limitation of only one indefeasible estate in fee.” And, further, by Gibson, J.: “But two or more several contingent remainders in fee may be limited, the one to be substituted for the other, instead of being dependent and to take effect in succession. ” From all the cases the rule seems to be this: Where both limitations are to take effect, the latter can do so only as an executory devise, for a remainder originally contingent, but afterwards vested by the happening of the contingency, is essentially the same as if it had been vested at its origin; but where both are limited alternately on the same event, by the happening of which one is to vest in exclusion of the other, then both are contingent remainders.

Our conclusion is, that the limitation over to the city of Peoria was not void as being the limitation of a fee after a fee,—that the contingency upon which George D. and Mary Helen Morton were to take never happened, and so no interest ever vested in them, and hence that the city of Peoria took and now hold, under the deed, the whole title.

The decree of the circuit court will be reversed, and the cause remanded for further proceedings in conformity with this opinion.

Decree reversed.

Mr. Chief Justice Craig, and Mr. Justice Mulkey, dissent.


author: Mr. Justice Scott Mr. Justice Dickey :

text:
    J. Young Scammon v. The Germania Insurance Company.

      Filed at Ottawa November 10, 1881

      Rehearing denied March Term, 1882.

    1. Insurance—policy construed as to time offwrnishing proofs of loss. Where an insurance policy provides, that “in case of loss assured shall forthwith give notice of said loss, * * * and as soon after as possible render a particular account of such loss,” the words “forthwith," anti “as soon as possible," will be construed to mean within “a reasonable time,” “without unreasonable delay,” and are the equivalent of “due diligence."
    2. Same—delay to furnish proofs, when unreasonable. A policy of insurance required that notice of a loss should be given forthwith, and proofs of the particulars of the loss rendered as soon thereafter as possible, and payment was not to be made until sixty days after such proof. No attempt was made to furnish the company such proofs for more than nine months after a loss, and no excuse was shown for the delay:. Eeld, that the delay was unreasonable, and that no recovery could be had on the policy.

      Appeal from the Appellate Court for the First District;— heard in that court on appeal from the Circuit Court of Cook county; the Hon. T. A. Moran, Judge, presiding.
    Mr. Francis H. Kales, for the appellant:
    The notice of loss in this case was served in apt time. Knickerbocker Ins. Co. v. McGinnis, 87 Ill. 70; Palmer v. Insurance Co. 44 Wis. 201; Sympson v. Henderson, 22 Eng. C. L. 313.
    The cases cited are express authority that the word “forthwith” is not to be taken literally, but is to be construed to mean within a reasonable time.
    The proofs of loss, in view of the provisions of the policy, v?ere made in good time. The words “as soon as possible,” mean within a reasonable time, under all the circumstances. See cases cited above, and Eastern R. R. Co. v. Relief, etc. Ins. Co. 105 Mass. 570.
    The peculiar insurance contract in this case, if strictly . construed, gave to the plaintiff a reasonable time, before the expiration of ten months after the loss, provided there was early and timely notice of the loss. Such contracts being unipartite or unilateral, and filled with conditions inserted by persons skilled in the learning of insurance law, are to be liberally construed for the insured, and strictly as to the insurance company. Insurance Co. v. Wilkinson, 13 Wall. 233; Aurora Ins. Co. v. Eddy, 49 Ill. 106; Wood on Insurance, 140, 141, and cases there cited; Bliss on Life Insurance, 656.
    The loss is not, by the terms of the policy, to be payable until the expiration of sixty days from the time of furnishing such proofs. The plaintiff is to have one year from the time of the loss within which to bring his suit,—to avail himself of which, and yet give the insurer sixty days before suit brought, the proofs under the policy must be furnished to the company within ten months from the time of the loss. This construction can stand, if the words “as soon after as possible,” or “forthwith,” are held to mean a reasonable time; and, perhaps, in this case, where the consequences of delay in furnishing proofs of loss are expressly stated, to-wit: that the loss shall not be payable until they are furnished, the construction here suggested would stand, even if these expressions were taken literally.
    Mr. Lawrence Proudfoot, for the appellee;
    All of the adjudicated cases, without a single exception, hold that strict compliance with the provisions of the policy in regard to the serving of notice and the proofs of loss is a condition precedent, and that no action can be maintained unless this condition has been performed. Edgley v. Farmers’ Fire Ins. Co. 43 Iowa, 587; Blossom v. Lycoming Fire Ins. Co. 64 N. Y. 162; Wood v. Worsley, 6 Term Rep. 710; Inman v. Western Fire Ins. Co. 12 Wend. 452.
    The word “forthwith” means without unnecessary delay. May on Insurance, sec. 462; Peoria Marine and Fire Ins. Co. v. Lewis et al. 18 Ill. 560; Cornell v. LeRoy, 9 Wend. 166; St. Louis Ins. Co. v. Kyle, 11 Mo. 289; Inman v. Western Fire Ins. Co. 12 Wend. 452; Knickerbocker Ins. Co. v. Gould, 80 Ill. 389; May on Insurance, sec. 464.
    That the delay in furnishing proof of the loss is fatal to a recovery, see Sherwood v. Agricultural Ins. Co. 10 Hun, (17 N. Y.) 593; Bell v. Lycoming Fire Ins. Co. 19 Hun, 239; Blossom v. Lycoming Fire Ins. Co. 64 N. Y. 162; Miller v. Hamilton Ins. Co. 17 id. 609; Inman v. Western Ins. Co. 12 Wend. 452; Kimball et al. v. Howard Ins. Co. 8 Gray, 33 ; Wheeler v. Field, 6 Metc. 295; Prescott Bank v. Coverly, 7 Gray, 221; Trask v. State Fire and Marine Ins. Co. 29 Pa. St. 198.
    The law is well settled, that though the company may know of the loss, it does not excuse the giving of notice and proofs of loss, and that the conditions must be strictly complied with, unless waived. Edwards v. Lycoming Fire Ins. Co. 75 Pa. St. 378; Patrick v. Farmers’ Ins. Co. 43 N. H. 621; Beatty v. Lycoming Fire Ins. Co. 66 Pa. 9.
   Mr. Justice Scott

delivered the opinion of the Court:

This action was brought on a policy of insurance issued by the Germania Fire Insurance Company to J. Young Scammon. The property covered by the policy was totally destroyed by fire on the 14th day of July, 1874. Notice of the loss was served on the local agent of the company on the 5th of August next thereafter, and by him transmitted to the office of the company, located in the city of New York. “Proofs of loss” were delivered to the local agent at Chicago on the 23d day of April, 1875, and the same were by him transmitted to the general agent of the company at New York. It is not proven the “proofs of loss” reached the principal office of the company before the 10th of May, 1875. Under the date of the 12th of May, 1875, the general agent acknowledged the receipt at his office of the “proofs of loss,” and notified the assured “they were furnished too late.” In case of loss, assured was obligated by a clause in the policy to “forthwith give notice of said loss to the companies, through their general agent in the city of New York, and as soon after as possible render a particular account of such loss. The defence in the court below was placed mainly on the ground there had been no compliance by the assured with this clause of the policy. As respects the “notice of loss, ” whether it was given in apt time or not need not be considered, as there is another objection insisted upon that is fatal to any recovery in the present case.

When “proofs of loss, ” which the assured was obligated to furnish, were delivered to the agent of the companies in New York, objection was promptly made, and the assured notified “they were furnished too late.” That raises the distinct question whether the proofs of loss in this case were furnished in time by assured to constitute a compliance with his insurance contract. The argument made is not inconsistent with the proposition there must be what is equivalent to a compliance with the provision of the policy requiring proofs of loss to be made, whatever that provision may mean, by furnishing proofs of loss to the company, before any action can be maintained on the policy; but the position is taken with a view to avoid the force of the provision, “proofs of loss” must be furnished as soon after the loss “as possible.” The clause of the policy requiring sworn proofs of loss is not introduced into the policy as a condition, or if there be an implied condition, the consequence of a non-observance is expressly stated, viz: the loss shall not be payable until such proofs are made, but not that the policy shall for that reason be forfeited, and hence it is insisted, as assured had one year from the time of loss within which to bring his action, to avail of which, and yet give the insurer' sixty days’ notice before suit is brought, proofs of loss, under the policy, may be furnished to the company within ten months of the time of the loss. The argument on this branch of the case has for its support much that is ingenious, but it admits of' an answer warranted by a reasonable construction of the policy. Whether that clause of the policy requiring sworn proofs of loss to be made as soon after the loss “as possible,” shall be regarded as a condition, the non-observance of which would work a forfeiture or not, it is a part of the insurance contract, and there must be - what is an equivalent with a compliance with it before any action can be maintained upon the policy. A declaration on a policy having such a clause must contain an averment of compliance with its provisions, and proof must be made as to the same on the trial. Accordingly, in one count of the declaration in this case of the loss sustained it is averred “plaintiff forthwith gave notice to defendant in writing, and as soon as possible thereafter, to-wit, on the same day, delivered to the defendant a partienlar account thereof; ” and in an amended count it is averred, when the loss occurred “plaintiff forthwith gave notice to the defendant in writing, * * * and delivered to said defendant a particular account thereof. ” Had these averments been omitted, obviously the declaration would have been bad on demurrer, unless it had been averred the performance of these acts had been waived by defendant.

What will be regarded as a compliance with the provisions of a policy containing the words, “in case of loss assured shall forthwith give notice of said loss, * * * and as soon after as possible render a particular account of such loss, ” is often a question involved in much difficulty. Bach particular case is determined by the attending circumstances which distinguish it from other cases. That which would be regarded as a compliance with such a provision in a policy under some circumstances, under others might not be so regarded. This fact accounts, in a large measure, for the contrariety of decisions on this question. In this State, at least, the meaning of the words “forthwith,” and “as soon after as possible, ” when employed in an insurance contract, as they are used in the policy declared on, has been definitely determined by previous decisions. They are understood to mean within “a reasonable time,” “without unreasonable delay,” and are the equivalent of “due diligence.” Hence this rule, deducible from adjudged eases, is, if the act to be done is required to be “forthwith, ” or “as soon as possible, ” or “immediately, ” proof it were done with “due diligence,” under the circumstances, and “without unreasonable delay, ” will be deemed sufficient proof it were done in apt time. Peoria M. and F. Ins. Co. v. Lewis, 18 Ill. 553; Knickerbocker Ins. Co. v. Gould, 80 id. 388; Same v. McGinnis, 87 id. 70.

Construing the evidence most favorably for plaintiff, even under the liberal doctrine of the cases cited, it can not be insisted, with any show of reason, the “proofs of loss” were furnished within any “reasonable time, ” or “without any unreasonable delay. ” If the delay suffered to intervene the loss and making proofs in this case would not bar the action on the policy under the circumstances proven, it would be difficult to conceive of a ease where delay in making “proofs of loss” would operate as a bar to the action. No attempt was made to furnish the company with proofs of loss until after the lapse of nine months from the time of loss, and no excuse is shown by the evidence that even tends to justify the delay. It is not claimed plaintiff was lulled to non-action by anything any officer or agent of the company did or said concerning “proofs of loss.” No waiver of the terms of the policy in this regard is insisted upon. Indeed, assured had no communication with any agent of the company on the subject, although the office of the local agent was near the office occupied by assured. Evidence appearing in this record, by stipulation, shows the proofs of loss were in fact made out within ten days after the loss occurred, and could have been served at any time, had assured elected to do so. The fact he was embarrassed by threatened proceedings in bankruptcy constitutes no valid excuse. No receiver had been appointed, and it was plainly the duty of assured to make proofs of the loss sustained. Where no circumstances are proven that justify the delay suffered to intervene, to hold that proofs of loss furnished nine months after the loss were furnished “as soon as possible, ” would be to extend the rule further than is warranted by the authorities.

The findings of the courts whence this cause comes were warranted both by the law and the evidence, and the judgment will be affirmed.

T . , Judgment affirmed.

Mr. Justice Dickey :

I can not concur in this decision.

The policy nowhere provides that a failure to make proofs as soon as possible shall defeat a recovery. The penalty for such neglect is found in the provisions that payment for the loss can not be demanded until sixty days after proof of loss.