author: Mr. Justice Scholfield

text:
    William S. Goembel et al. v. Samuel J. Arnett et al.

      Filed at Ottawa May 14, 1881

      Rehearing denied September Term, 1881.

    1. Sale—when title passes, as between parties. Where the vendor of a stock of merchandise puts the purchaser into possession of the same, and then works a month thereafter with the purchaser under what is assumed to be a part of a previous contract, and the vendor allows the purchaser to go on selling the goods, this will be evidence that the contract of sale was completed.
    2. Partnership—sale by one partner to another—promise to pay debts by purchaser creates no lien. The promise of one partner to the other, upon a purchase of the entire stock of goods, etc., of the firm, to pay the partnership debts, will not create any lien on the goods sold. It creates only a personal obligation on the part of the purchaser, and will not of itself prevent the latter from subsequently selling the goods for the payment of Ms individual debt.
    3. Cbeditob’s bill—to set aside sale as fraudulent. A bill to set aside a sale of a stock of goods on the ground of a fraudulent preference in the sale, can not be maintained where no judgment at law has been obtained by the complainant.
    4. Fbatjdulent conveyance—preference to one creditor. An insolvent debtor has the right to prefer one creditor to others, by making him a sale of all his stock of goods in payment of the debt, or in part payment.
    Appeal from the Appellate Court for the Second District;— heard in that court on appeal from the Circuit Court of Henry county; the Hon. John J. Glenn, Judge, presiding.
    William S. Goembel and Jacob Goembel filed their bill in chancery in the office of the clerk of the circuit court of Henry county, against Samuel J. Arnett, Jacob Arnett and Wesley C. Graham, alleging therein, in substance, that in September, 1875, William S. Goembel, Samuel J. Arnett and John Eapp formed an equal partnership, for the purpose of merchandising in Geneseo; that such firm did business until November, 1876, when Eapp retired from the firm; that thereafter Arnett and Goembel continued the business, and having assumed the debts of the old firm, they paid or substituted their own liability for all of them, except $700 due Jacob Goembel, and $300 due another person; that they continued the business until July, 1878, when differences having intervened, it was agreed between them that Arnett should have the entire stock in trade, all the accounts, etc., and in consideration thereof that he should pay all the debts of the firm, including the debts still unpaid of the firm of Arnett, Goembel & Eapp, pay Goembel $2000, employ Goembel to work for him for a month in settling accounts, and that he should secure the payment of the purchase money and indemnify Goembel, by proper instruments in writing, to be signed by Jacob Arnett as surety; that Goembel worked a month, as agreed, and during that time frequently urged Arnett to perfect the agreement by executing the writings, but he postponed the matter from day to day, at one time pretending he was negotiating the sale of an interest in the firm to Wesley C. Graham, who would bring in money enough to pay the $2000, and at other times suggesting the absence of Jacob Arnett from town, as reason for delay.
    It is further alleged, that at this time the firm was possessed of sufficient assets to pay its debts, having on hand about $10,000 worth of goods, besides outstanding notes and accounts; that the firm owed several notes, on which Jacob Goembel and Jacob Arnett, 'the fathers of its members, were joint sureties, namely: one of $1000, to David Suther; one of $1000, to John W. McClelland f one of $600," to First National Bank of Geneseo; one of $500, to Patrick O’Day; also a note to Carson, Pirie, Scott & Co., on which Jacob Arnett was sole surety, amounting to $800, and one of $400 to same firm, on which Jacob Goembel was sole surety; and that the firm also owed Jacob Goembel $2700, including the $700 of the old firm of Bapp, Goembel & Arnett.
    And it is further alleged, that Samuel and Jacob Arnett entered into a combination to defraud the complainants, and, although Jacob Arnett well knew Samuel Arnett had assumed to pay the debts of the firm, on the 4th of September, 1878, he received a bill of sale from Samuel Arnett of all the -partnership stock and assets, for which the only consideration was that Jacob Arnett was surety as aforesaid, and was also surety for Samuel Arnett on divers private debts, and Samuel Arnett owed him some amount unknown to the complainants ; that this arrangement being made, Samuel Arnett, on September 6, 1878, informed William S. Goembel that he could pay him nothing and could do nothing toward securing him from the debts of the firm; that Samuel Arnett is, personally, insolvent; that Jacob Arnett cooperated with him for the purpose of obtaining a fraudulent preference, in order to obtain all the assets and leave Jacob Goembel to pay half the debts for which they were joint sureties, and mainly to defraud the creditors of the firm, especially Jacob Goembel; that since the sale, Jacob Arnett and Jacob Goembel have each paid one-half of the debts for which they were joint sureties, but Jacob Arnett refuses to give Jacob Goembel any benefit of the assets of the firm received by him; that Samuel Arnett remained in the apparent possession of the store; that the sale to him by William" S. Goembel was incomplete, because of his failure to furnish the stipulated security; that the sale to Jacob Goembel was a fraud, and he has acquired no rights as against William S. Goembel; and that, to further the fraud, there has been some transfer of goods to defendant Wesley C. Graham, but without consideration.
    The prayer is for production of books and papers, appointment of a receiver, and an accounting of firm indebtedness; that the assets of the firm may be applied to the payment of- all the firm debts, and if any surplus shall remain, it may be applied to the payment of the $2000 to William S. Goembel.
    Samuel and Jacob Arnett filed their joint and several answers to the bill, admitting the formation .of the partnership by Arnett, Goembel & Rapp, but denying that the partners furnished equal portions of the stock, and they allege that Samuel Arnett furnished more than either of the other parties. They admit that firm was dissolved and the firm of Arnett & Goembel formed; that the latter assumed the liabilities of the old firm; that the new firm continued to do business until. July 8, 1878, when William S. Goembel retired, and sold all his interest to Samuel Arnett for- $2000, and that Samuel Arnett assumed all the liabilities of the firm. They deny that Samuel Arnett agreed to give Jacob Arnett as surety, either for $2000 or for indemnity to Goembel against the partnership debts; and they allege that the sale was unconditional, and completed by the delivery of the stock, and that- thereafter Samuel Arnett remained sole owner of the goods. They deny that Jacob Arnett had any knowledge of the terms of the sale to Samuel, until he heard the complainants’ bill read, and allege that within a week after the sale he knew of the fact that a sale had been made and of the delivery of the goods, and that Samuel was in possession. They deny that Jacob ever heard that the sale was conditional, and allege that, in fact, he believes it to have been absolute and complete. They allege that on the 4th of September, 1878, Samuel Arnett sold to Jacob Arnett all the property he had in his store, including that purchased of William S. Goembel, for $8272; that the sale did not include notes and accounts; that such sum was more than the value of the property sold; that it was paid by the release of about $1200 due from Samuel to Jacob Arnett before the formation of the firm, a part was sums loaned by Jacob to Samuel after the formation of the firm, and the residue was sums which Jacob assumed to pay, on which he was sole surety for Samuel, and sums that he might have to pay by reason of being joint surety with others for Samuel; that at that time he had loaned to or was joint surety for Samuel to the amount of $9000, of which -he has paid over $5700, including $1644.50 paid by him as his half on paper-on which he was joint surety with Jacob Goembel; that the sale to Jacob was made in good faith; that at the time of the sale Jacob was informed by Samuel that the amount due creditors of the firm was small, and the notes and accounts which Samuel reserved would be sufficient to pay it all;, that Jacob desired to purchase these notes for his own fuller indemnity, hut Samuel refused to sell them, and reserved them to pay the firm indebtedness; that Jacob did not think that Samuel owed William S. Goembel, or that the firm owed Jacob Goembel anything, except what might be due him for being surety for the firm debts; that Jacob did not purchase in order to procure a fraudulent preference, and did not know that any creditors of the firm would suffer by the purchase; that he did not suspect, nor have reason to suspect, the assumption of the firm debts by Samuel, nor that he had not fully paid the purchase price, until the filing of the bill..
    The answer further alleges, that Jacob is informed and believes that all that Samuel owed him for, or for which he was surety, went to the benefit of the firm of Eapp, Goembel & Arnett, or that of Arnett & Goembel; that he has not conveyed any of- the property so purchased to Wesley C. Graham, but is still owner of it, and has not put any of his property out of his hands; that Samuel Arnett has applied all he received of Jacob Arnett, and fill that Jacob Arnett was security for, except $1200, to the benefit of the two firms; that he did not agree to give William S. Goembel any security, but some three weeks after the sale said Goembel asked for such security, when Samuel told him he would see about it, but did not ask Jacob to become surety, and they deny that Samuel remained in the apparent possession of the store, and they deny all combination, etc.
    Wesley C. Graham answered, disclaiming any interest in the subject of litigation.
    The cause was heard on bill, answers and evidence, and the court found the equity for the defendants, and decreed that the bill be dismissed. From that decree an appeal was prosecuted by the complainants to the Appellate Court for the Second District, and on hearing that court' decreed that the decree of the circuit court be affirmed. This appeal is from that decree.
    Mr. Geo. W. Shaw, for the appellants:
    The sale was not complete. Notwithstanding the delivery of possession, there remained something to be done to make the contract binding,—the giving of security for the payment of $2000, and to indemnify against partnership debts. 1 Lindley on Part. 677.
    The utmost fairness and good faith is required where one partner is seeking to get rid of another, or to buy him out. Ibid. 595.
    As between Samuel Arnett and Sidney Goembel, the latter had the right to resume possession of his interest in the partnership goods, or to insist, as he now insists, that they be applied in payment of the partnership debts. Deven v. Fowler, 2 Paige, (N. Y. Ch.) 400; Renfrew v. Pierce, 68 Ill. 125.
    Even if it were admitted that Samuel owed Jacob to the extent claimed, the sale is not good against the creditors of the firm.
    The indebtedness wás personal. The firm, up to the sale by. Sidney to Samuel, owed Jacob Arnett nothing,—on the contrary, he was its debtor to the extent of about $200. The claim that a large amount of the money which was the consideration of the indebtedness from Samuel to Jacob went to the use of the-firm, is unsustained, save by the worthless testimony of Samuel. Sidney knew nothing of such application. Even if it had been so applied, it would not have made the claims of Jacob partnership indebtedness. Watt v. Kirby, 15 Ill. 201; Lill v. Egan, 89 id. 609.
    If Jacob Arnett knew the terms of the sale from Sidney to Samuel, or had notice sufficient to put him on inquiry, he could not receive the partnership goods from Samuel in payment of his individual debt. Rainey v. Nance, 54 Ill. 36.
    Independently of the grounds above stated, Jacob Goembel, and the other creditors of the firm, have a right to demand the application of the partnership stock to the payment of their debts.
    Mr. Chables Dunham, for the appellees:
    If the bill were true in all its statements of fact, it could not be maintained.

      Jacob Goembel is a simple creditor of the firm of Arnett & Goembel. He never had any lien upon the assets of the firm, either in law or equity. What common or joint right have the appellants ? The simple creditors of a partnership have no lien on the partnership assets any more than the simple creditors of an individual have upon his property.
    A creditor has no right to attack the good faith of a sale by his debtor until he has judgment and execution, and then only for the purpose of enabling him to collect his judgment. What standing, then, has Jacob Goembel in a bill filed for such a purpose as this ? There is no claim in the bill that the assets were conveyed to Samuel J. Arnett in trust for the benefit of the creditors of the firm.
    It is true that each partner has a lien upon the partnership assets as against the other partner or partners, to the. extent and for the purpose of having the assets applied to the partnership purposes. But this is the sole right of the partner, which he may alone work out, and the creditors, in some cases, get the consequent benefit.
    I have been unable to find a case or any principle that will allow a simple creditor—one having no judgment—to maintain such a bill as this.
    The following authorities seem to me to determine that this bill will not lie in behalf of these appellants: Stone v. Manning, 2 Scam. 530; Bigelow v. Andress, 31 Ill. 322; McConnel v. Dickson, 43 id. 99.
    If Samuel J. Arnett bought the goods of Wm. S. Goembel for the very purpose of turning them over to his father in payment of his debts to him, and if he were guilty of ever so great a fraud in order to purchase of Goembel, yet Jacob Goembel would take a good title, even if he knew the object in0 purchasing was to sell to him, if he did not know of the fraud used to effect the purchase, and even if he did know of the promise, of Samuel J. Arnett to pay the firm debts. Story on Partnership, secs. 360, 361; Story’s Eq. Jur. sec. 672; Reeves v. Ayres, 38 Ill. 418; Ladd v. Griswold, 4 Gilm. 36; Hopgood v. Cornwell, 48 Ill. 64.
   Mr. Justice Scholfield

delivered the opinion of the Court:

The only point in dispute in regard to the question of the fact of a sale by William S. Goembel to Samuel Arnett, is whether the terms of the contract were to be reduced to writing, and Samuel was to give his father, Jacob, as surety for the payment of the $2000 to Goembel, and that Samuel would pay the firm debts. William S. Goembel asserts that this was the contract, and Samuel Arnett denies it. It is not controverted that Goembel went out of the store, and left Arnett in possession as sole owner, and that Goembel thereafter worked a month for Arnett, under what was assumed to have been the previous contract. This strongly corroborates Arnett. Why was Arnett allowed to go on selling the goods, and why was Goembel working for him as clerk, if the contract was not completed?

We can not say, under all the evidence, that the circuit court erred in finding the title to the goods passed by the contract to Samuel Arnett. That contract did not create or reserve a lien for the creditors, generally, of the firm.' The promise of Samuel Arnett to pay the debts of the firm created only a personal obligation, and not a lien, and it did not, of itself, prevent his subsequently selling the stock of goods for the payment of his individual debts. Hopgood et al. v. Cornwell et al. 48 Ill. 64; Ladd v. Griswold, 4 Gilm. 25.

It is not and could not with any plausibility be claimed that any express trust in favor of partnership creditors existed in respect of the goods.

Treating the bill as a bill to set aside a sale on the ground of a fraudulent preference, it clearly can not be maintained, for no judgment at law has been obtained by either William S. or Jacob Goembel. Stone v. Manning, 2 Scam. 530; Bigelow v. Andress, 31 Ill. 322; McConnel v. Dickson, 43 id. 99. On this ground alone, therefore, the decree below should he affirmed.

We may, however, not improperly, add, that we would not feel inclined to disturb the .decree below if the case turned upon the sufficiency of the evidence to establish a fraudulent preference. The consideration was unquestionably sufficient to sustain the transfer. We entertain no doubt that Samuel, in good faith, owed Jacob more than the value of the goods transferred. He had a right to prefer "him to others, and it was the exercise of this right of preference that was manifestly alluded to in the loose remarks proved by witnesses of the intention to “beat” or “get ahead” of others, and not the doing of any act deemed fraudulent in law. We think the fair preponderance of the evidence fails to show that Samuel remained in possession of or retained a secret interest in the goods after the sale to Jacob.

No useful purpose will be subserved by discussing the evidence on this point at large, and we therefore forbear further comment.

The decree below is affirmed.

Decree affirmed.


source: Caselaw Access Project

author: Mr. Justice Mulkey

license: Public Domain

text:
    Elizabeth Long et al. v. Bridget Fox et al.

      Filed at Ottawa, May 14, 1881

      Rehearing denied September Term, 1881.

    1. Chanceby pbactice—waiver of demurrer by neglect to have it called up. It is the duty of a defendant, if he relies on a demurrer to a supplemental bill in chancery, to call up the same, and have it passed upon before a hearing and final decree; and if he does not call up the same in proper time, he will be deemed to have waived the demurrer, by allowing the cause to be heard without a decision upon it, The rendering a decree in such a case is in effect overruling the demurrer.

      2. Same—hearing without issues of fact. "Where a defendant allows a cause in chancery to come to a hearing as though the issues were properly made up, and a final decree entered, without calling the attention of the court to the fact that a demurrer to a supplemental bill remains undecided, he will be estopped on appeal or error from showing the issues were not made up.
    3. Tbxjst-—when trustee liable personally. A person who obtains a deed for real estate from an insane person wrongfully and by improper means, will in equity be treated as his trustee, and as such will be required to account to him or his legal representatives for any breach of the trust, and a personal decree may be rendered against the trustee for the value of the property converted by him to his use.
    4. So, where husband and wife, by imposition and improper means, procure a conveyance of valuable real estate to be made to the latter by a brother at the time incapable of malting a contract, and make an incumbrance on the same to a creditor who has no notice of the fraud or facts of the case, on bill to set aside such deed the grantee may be required to pay off and discharge the incumbrance.
    5. Chanceby—•reversing on facts. Unless this court is able to say that the finding of the circuit court in a chancery suit is clearly wrong, it will not reverse the decree on the ground the evidence does not justify it, although it might be better satisfied if the finding had been the other way.
    Writ of Error to the Circuit Court of Cook county; the Hon. M. F. Ttjley, Judge, presiding.
    Mr. Bobert Hervey, and Mr. A. D. Carter, for the plain- ' tiffs in error:
    The plaintiffs in error claim that the decree in this case should he reversed—
    First—Because not only does the evidence of defendants in error fail to show that Egan was mentally incompetent to make this deed, or that he was improperly influenced, but, on the contrary, it clearly establishes his competency.
    Second—Because of errors in the proceedings in matters of law.
    Under the first point we claim that the burden of proof was on defendants in error to show Egan’s mental incompetency to make the deed. Roe v. Taylor, 45 Ill. 490.
    Again, we say that mere mental weakness will not authorize a court of equity to set aside a deed, if such weakness does not amount to inability to comprehend the contract, and is unaccompanied by evidence of imposition or undue influence. Miller v. Craig, 36 Ill. 109; Scanlan v. Cobb, 85 id. 296; Baldwin v. Dunton et al. 40 id. 188; Clearwater et al. v. Kinder et al. 43 id. 272; Lindsey, Jr. v. Lindsey, 50 id. 79; Williams V. Dunn, 93 id. 511.
    We further claim that the court erred in entering a final decree without disposing of the Longs demurrer to the supplemental bill. Nothing was done by them to waive this right.
    Further, plaintiffs in error claim that the court erred in decreeing that plaintiff in error Elizabeth Long should pay, out of her own means, the amount due the mortgage company, and discharge its trust deed from the whole of said premises, since the court had no right, at the most, to command her to discharge the trust deed from the whole of said premises, but only from the interest of defendants in error therein.
    Messrs. Waite & Clarke for Margaret Carroll, Mr. P. McHugh for Julia Byrne et al., and Mr. B. W. Clifford for Bridget Fox:
    From the evidence in this case it is clear that Egan was insane at the date of the making of the deed, and if this is so, whether such insanity resulted from drink or any other cause, the deed is voidable. Menkins v. Lightner, 18 Ill. 284; Scanlan v. Cobb, 85 id. 299; Van Horn v. Keenan, 28 id. 445.
    Such a deed so made will be set aside at the instance of the party, or of his conservator, or his representatives, or his heirs. Menkins v. Lightner, 18 Ill. 284.
    The condition at the time of execution is the point to be considered, and evidence of previous and subsequent insanity is admissible to show condition at this time. Anderson v. Cranmer, 11 W. Va. 562; Jarett v. Jarett, id. 584.
    The case of Van Horn v. Keenan, 28 Ill. 445, goes almost to the full extent of the English doctrine, and sets aside a deed under less strong circumstances of control over the donor than the case at bar.
    The fact that a man could ordinarily write, but was in such condition that he had to make his mark, is a strong circumstance to show his mental incapacity to make the deed or understand its legal effect, and neither in England nor this country would a will be admitted when a party could write, but did not write his name. Delafield v. Parish, 25 N. Y. 59.

    It is in proof that Egan was unable to control the calls of nature before and after, and at the time of making the deed. Such inability has ever been regarded as- a distinguishing evidence of the loss of mental power. Delafield v. Parish, 25 N. Y. 44.
    This deed was presumed to be drawn by the Longs, and in law is deemed their act, because done, by their procurement, through an attorney whom they engaged and paid. This in itself casts suspicion on the making of the deed, and unless the donees can remove this suspicion, the court will not decide in favor of the instrument. Delafield v. Parish, 25 N. Y. 36; Crespell v. Dubors, 4 Barb. 398; Park v. Olatt, 2 Phillip, 323.
    By neglecting to call up their demurrer, by taking proof on the reference, by excepting to the master’s report, and going on to the hearing on the master’s report, the Longs waived then’ demurrer. Hungate v. Reynolds, 72 Ill. 426; Jameson v. Conway, 5 Gilm. 230; Skinner v. Dayton, 5 Johns. Ch. 191; Executors of Bather v. Van Cortland, 2 id. 242; Reed v. Kemp, 16 Ill. 445.
    The parties have treated the cause as at issue, and it was so heard and decided by the court below, and under such circumstances it is too late to urge such objections in this court. Jameson v. Conway, 5 Gilm. 230; Corbus v. Teed, 69 Ill. 209; Armstrongs. Mack, 17 id. 166; Beesleys. Hamilton, 50 id. 88; Strohm v. Hayes, 70 id. 43; Rowans. Kirkpatricet al. 14 id. 1; Webb v. Insurance Co. 5 Gilm. 225.

      The Longs were at liberty to file a new answer, but the complainants were not obliged to require them to do so. Miller v. Whittaker, 33 Ill. 386. They can not complain of their own omission. The court will not consider an error that has done the party no harm. Forman v. Stickney, 77 Ill. 578; Rowen v. Kirkpatrick, 14 id. 1.
    Under the answer .originally in—to the original bill—all the rights of the plaintiffs in error were protected, and all matters of defence to the so-called supplemental matter added could be availed of, and the party could as fully introduce- evidence as under any new answer. Forman v. Stickney, 77 Ill. 578.
    The demurrer was not well taken, and hence the party is not injured.
   Mr. Justice Mulkey

delivered the opinion of the Court:

This was a bill in chancery, originally filed by Thomas Brennan, as conservator of Patrick Egan, against Elizabeth Long, and her husband, Francis Long, to set aside a deed made by Patrick Egan, bearing date November 23, 1875, conveying to Elizabeth Long, his sister, certain real estate in the city of Chicago, for the consideration, as recited in the deed, of one dollar and the love and affection which the grantor bore to the grantee. The property conveyed consists of a lot upon which there is a three-story brick and stone building, and its value is variously estimated at from $20,000 to $50,000.

The bill charges that Egan, before and at the time of the conveyance, was insane, and that its execution was obtained through the fraud and undue influence practiced upon and exercised over him by the grantee and her husband. Egan was found to be insane by the county court of Cook county in April, 1876, and Thomas Brennan, the original complainant,. was appointed his conservator, on the 12th of the following month. Pending the suit, to-wit, on the 11th of September, 1876, Egan died intestate, without children or descendants of children, and defendants in error, his only heirs at law, with the exception of his sister, Elizabeth Long, by order of court were made complainants to the bill.

Prior to the filing of the bill, to-wit, on the first of April, 1876, Elizabeth and Francis Long, for the purpose of securing a loan of $8000 made to them by the Scottish American Mortgage Company, conveyed the premises in question by a deed of trust to Henry I. Sheldon. By an amendment to the bill, Sheldon and the mortgage company were subsequently made parties to the bill. Answers were filed by all the defendants, denying the equities of the bill. Upon the hearing quite a number of witnesses were examined orally before the court, the most of the testimony being directed to the question of Egan’s sanity at the time of the execution of the deed. The court, by its decree, filed December 12,1877, found that Egan at the time of the conveyance was of unsound mind; that the deed was obtained by imposition, and that defendants, Elizabeth and Francis, took no interest in the premises under it, and declared the same null and void. On the other hand, the court found that Sheldon and the Scottish American Mortgage Company were bona fide purchasers without notice, and declared that the setting aside of Egan’s deed should be ineffectual as to them, and that the indebtedness secured by the trust deed should remain a valid charge upon the premises until paid, and the cause was referred to the master to take an account of the rents and profits of the premises, taxes, etc., during the time they were in the possession of plaintiffs in error.

"While the proceedings were in this condition, and pending the order to take the account, the complainants assuming that the original bill was so imperfectly drawn as not to warrant the court in granting relief to the full extent of their rights, applied for and obtained leave to file a supplemental bill, which, after reciting at length the charges in the original bill, and all the proceedings under it, proceeds to charge as follows: That Elizabeth Long’s interest in the premises in question, as one of the heirs at law of Egan, is not adequate to the amount of the loan made by Elizabeth Long from the mortgage company, and such interest does not exceed in value $4000 in the premises in question, and by the act of incumbering the same by Elizabeth Long, a fraud has been committed on complainants, and that if the mortgage company is decreed to be a bona fide purchaser without notice, and to hold the entire interest in the estate so conveyed to said Sheldon by said deed of trust, the estate of complainants will be held burdened with the amount of said loan, and that if said mortgage company should be so held it should be compelled to take the said money, with the interest thereon, and release the said trust deed and the estate of complainants from lien thereof, and that said Elizabeth Long should be decreed to pay said $6500, and relieve the estate of complainants from the burden thereof.

This was the only new matter contained in the supplemental bill, and it is clear that it does not materially change the scope or purposes of the original bill.

Demurrers to the supplemental bill were respectively filed by Elizabeth and Francis Long, and by Sheldon and the mortgage company. The court overruled the demurrer filed by the latter, but from inadvertence or some other cause never formally passed upon that of the former, and this is one of the errors relied on for a reversal.

This demurrer was filed in December, 1877, and the final order in the cause was not entered until the 19th of February, 1880. During all this time plaintiffs in error permitted this demurrer to lie quietly and undisturbed among the files, without making any effort whatever to bring it to a hearing. It was their duty, if they relied upon the demurrer, to have called it up and had it passed on by the court, and not having done so after such an extraordinary delay, they must be deemed to have waived it. The rendition of the decree on the supplemental bill was in effect overruling the demurrer, and if plaintiffs in error desired to answer, they should at least have made application to do so at the time of the rendition of the decree. Before that time they had the right to do so without leave; but not having done so, and sitting quietly by and allowing the decree to go, without asking an extension of time to answer, or even calling the attention of the court to the fact that there was a demurrer on file not passed upon, or in any other manner attempting to raise the question in the court below, we hold that it is now too late to raise it here for the first time. The hearing proceeded, and the case was treated by both parties as though the issues were properly made up, and they can not now be heard to say they were not made up. Jameson v. Comoay, 5 Gilm. 230; Corbus v. Teed, 69 Ill. 209; Strohm v. Hayes, 70 id. 43; Rowan v. Kirkpatrick et al. 14 id. 1; Miller v. Whittaker, 33 id. 386.

By the supplemental decree, Elizabeth Long is required to. pay the mortgage company the amount due under the trust deed, and the same is made a specific lien upon the interest she inherited from Egan in • the premises, and this is also assigned for error. We do not regard the objection as well taken. Having obtained the deed from Egan in violation of law and in fraud of his rights, she in equity is to be treated as his trustee, and as such must account to him or his legal representatives for any breach of the trust. Assuming the facts to be true as found by the court, they present a clear ease of a constructive trust, and no rule of law is better settled than that where a trustee wrongfully converts to his own use the trust property, or any part of it, the cestui que trust is entitled in equity to a personal decree for the value of the property so converted.

The vital questions presented by this record are questions of fact, namely: Was Egan of sound mind at the time of the execution of the deed? Did Mrs. Long procure its execution by fair and legitimate means, or did she obtain it by taking advantage of the loss of his mind, and the unfortunate circumstances which surrounded him ? Upon these questions a vast amount of evidence was taken, and the greater portion of the argument of counsel is devoted to them. Upon an examination of the evidence, we find it is conflicting and not to be reconciled. The questions are of that character about which honest witnesses might well differ, and the probative force of their testimony would depend largely upon their means and capacity of acquiring an intimate knowledge of the subject of inquiry. To attempt a discussion of the unusually large amount of testimony directed to these questions, can not reasonably be expected of us. Suffice it to say, that upon as careful an examination as we have been able to give it, we are unable to say the finding of the court below, whose opportunities for arriving at the real truth were far better than ours, is clearly wrong, and unless we were able to do this, according to the well settled rule of this court we would not be justified in reversing the decree on the ground the evidence did not sustain it, although we might be better satisfied if the finding had been the other way. Coari v. Olsen, 91 Ill. 273; Toledo, Wabash and Western Railway Co. v. Moore, 77 id. 217; Wiggins Ferry Co. v. Higgins, 72 id. 517; Bishop v. Busse et al. 69 id. 403.

Perceiving no substantial error in the decree, it will be affirmed

Decree affirmed.


author: Mr. Justice Sheldon

text:
    The Union Rolling Mill Company v. Thomas Gillen.

      Filed at Ottawa June 20, 1881

      Rehearing denied September Term, 1881.

    1. Instruction—as to cause of accident in suit for negligence. In a suit to recover for a personal injury claimed to have resulted from the negligence of the defendant railroad company, an instruction for the plaintiff, that if, while the plaintiff was crossing the track, the defendant ran its train upon the track, recklessly and negligently, without ringing a bell or blowing a whistle, or giving a warning of any kind, and ran a car upon and against the plaintiff’s wagon, thereby smashing the same and throwing plaintiff from his seat in the wagon, thereby causing to the plaintiff serious injury, then plaintiff is entitled to recover, especially in view of the conflicting character of the evidence, was held not. erroneous, as omitting the vital condition that the reckless running of the train, and failing to give the usual signals, must have been the cause of the accident. The word “thereby,” in the instruction, was intended to refer to all that preceded it, both as to the act of propulsion and the act of striking.
    2. New trial—obviated by a remittitur. There is no error in denying a motion for a new trial in an action ex delicto, where the plaintiff, by entering a remittitur, reduces the damages awarded by the jury to an amount the court considers reasonable.
    3. Same—newly discovered evidence. Although the newly discovered evidence shown for a new trial may have an important bearing on a second trial, yet a new trial will be denied where the requisite diligence has not been exercised to discover such evidence.
    Appeal from the Appellate Court for the First District;— heard in that court on appeal from the Circuit Court of Cook county.
    Messrs. Lawrence, Cabipbell & Lawrence, for the appellant.
    Messrs. Hynes, English & Dunne, for the appellee.
   Mr. Justice Sheldon

delivered the opinion of the Court:

The Union Rolling Mill Company is a corporation engaged in the manufacture of iron and steel, and having its furnaces and its mills for rolling the metal in the city of Chicago. It owns a couple of switch engines, for the purpose of delivering on or removing from its premises cars loaded with its material, upon certain spur or switch tracks, which are laid to connect its grounds with the tracks of the Chicago and Alton Railroad Company, which pass through this part of the city. November 21, 1878, Gillen was engaged in hauling stone to the mills of the Union Rolling Mill Company. Having delivered a load, and while passing over one of the switch tracks above mentioned, where it crosses Ashland avenue, a collision occurred between his wagon and a car load of coke which was being backed along said track by one of the engines of the rolling mill company. The wagon in which Gillen was riding was,crushed, and he received some injuries, to recover damages for which this suit was brought, and which resulted in his obtaining a verdict for $5000, and a final judgment for $3000, in the circuit court, a remittitur of $2000 having been entered by plaintiff, in accordance with a suggestion of the court. On appeal to the Appellate Court for the First District the judgment was affirmed, and the company appealed to this court.

As to the question of fact whether the verdict is supported by the evidence, that must be considered as settled by the judgment of the Appellate Court, and we can consider only the questions of law raised in the case, and not controverted questions of fact.

The giving of the second instruction for the plaintiff is assigned as error.

The instruction stated, that if Gillen was crossing the track while in the exercise of due care and diligence, and defendant ran its train upon the track “ recklessly and negligently, without ringing a bell or blowing a whistle, or warning of any kind, and that the defendant ran said car upon and against the plaintiff’s wagon, thereby smashing the same, and thereby throwing the plaintiff from his seat on the wagon, and thereby causing to the plaintiff serious injuries, then the plaintiff is entitled to recover. ” The objection taken to the instruction is, that it omits the vital condition that the running of the train “recklessly and negligently, without ringing a bell or blowing a whistle, or warning of any kind,” must have been the cause of the accident; that, admitting no warning was given, it does not necessarily follow that such omission or negligence was the cause of plaintiff’s injuries.

Appellee’s counsel insist that the word “thereby, ” in the instruction, was evidently intended to refer to all that precedes it, both the manner of propulsion and the act of striking, and that it could not have been otherwise understood by the jury. We are inclined to take this view of the instruction, especially in view of the evidence in the case.

Gillen, the plaintiff, testifies that, going north on Ashland avenue, when he started to cross this switch track, the locomotive was standing, with a ear attached, upon the track, about eight or ten feet west from where he crossed; that when he got to the track it was still standing, and just as he went to move across, walking his team slowly, the engineer put on steam and the engine ran against him, etc. Another witness corroborates this statement that the engine and car were standing still on this side track at the time, and both state the bell was not rung nor the whistle sounded. In opposition to this, Reagan, who was in charge of the locomotive, states that he ran up the main track on Ashland avenue until he got to the switch; that he ran north of that', when the switch was thrown over, and he reversed his engine and backed right up on this switch track; that after the switch was turned, and he commenced backing up, he made no stop whatever until he struck the wagon, and that the train did not stop until it got across the road, shoving the wagon on before the car some eight or ten feet. Donnelly, who was on the engine with him as fireman and switchman, confirms this statement, and both testify that the bell was rung during the time.

This is all the testimony in the record upon this point. There was a direct conflict of testimony between the two sets of witnesses. The jury must have accepted that on the part of the plaintiff, and rejected the other. They could not, we think, have been in any way misled by this instruction. If plaintiff was acting in the manner set out in the instruction, and the servants of the defendant were managing the engine as mentioned therein,—if the evidence given by plaintiff’s witnesses was accepted as being true, which it evidently must have been by the jury,—then the starting and running the engine without giving any warning must have caused the accident.

Complaint is made of the modification by the court of the fourth and fifth instructions asked for the defendant. We do not think there is any just ground of complaint upon this score.

It is insisted the court should have granted a new trial because the damages were excessive; that after finding them to be such, it was erroneous to allow the plaintiff to remit $2000 upon the verdict of $5000 rendered by the jury, and enter judgment for $3000, after such remittitwr. It is contended that while this may be proper in actions ex contractu, it is otherwise in actions ex delicto, and that in such latter actions it should- be taken that a jury which is unfair in assessing the damages is also unfair in deciding upon the issue.

The practice here adopted has been sanctioned by this' court in a number of cases, at least so far as to refuse to reverse judgments entered under like circumstances. McCausland v. Wonderly, 56 Ill. 410; Thomas v. Fischer, 71 id. 576; Illinois Central Railroad Co. v. Ebert, 74 id. 399. Although misgivings may have been expressed in some cases, as in the last, and Lœwenthal v. Streng, 90 Ill. 74, as to the propriety of the practice were it a new question, it is one not singular in this State.

In Sedgwick on Damages, 603, it is laid down: “ Where the jury have given such excessive damages that the court feel bound to set aside the verdict, they will, instead of simply ordering a new trial, give the plaintiff the option of reducing the verdict to the sum which the court considers reasonable, and on his remitting the excess will deny the motion for a new trial, and this in actions of tort as well as on contracts, ”->-in support of which quite a number of cases from different States are cited.

We must hold, in accordance with our former decisions on the subject, that there is no error in this last regard.

There were two motions for a new trial made and overruled, the first in usual course before judgment, and the second in connection with a motion to vacate the judgment after its entry, but before the expiration of the term; and the overruling of the motion to vacate the judgment, and this second motion for a new trial, is urged as ground for reversing the judgment. The last named motions were upon the ground of newly discovered evidence.

Upon the trial the plaintiff had testified to his bad physical condition, his lameness, pains, etc., and his physician testified that in his opinion his injuries were permanent, although it was conceded that if plaintiff was a rheumatic person, many of the pains which troubled him might proceed from that condition instead of from the accident; but plaintiff testified that he never had had rheumatism in his life, and never had been lame before the accident; that he had not been drinking anything that day, nor at any time. The newly discovered evidence was, that plaintiff had before suffered from rheumatism; that he had been treated for it for quite a time, and had experienced lameness from it; that his habits of life had been intemperate, and that he had a scar of a gunshot wound, one inch in length, on his person, near the hip. No doubt this was important evidence for the defence, as going to show that the present condition of plaintiff might be referable to a greater or less extent, not to the accident, but to his physical condition before the accident occurred, and might materially lessen the amount of damages on another trial. But the circuit court may have been of opinion that there had not been the exercise of the requisite diligence to discover this evidence before the trial, and on that ground have overruled the motion; and if such were the case, we are not prepared to say the court erred in that respect.

The judgment of the Appellate Court must be affirmed.

Judgment affirmed.

Mr. Justice Dickey did not participate in this decision.


author:
Mr. Justice Walker
      Mr. Justice Mulkey, Dickey and Scholfield, JJ.:

text:
    The City of Chicago v. Joseph Bartee.

      Filed at Ottawa May 14, 1881

      Rehearing denied September Term, 1881.

    1. Municipal cobpobation—power to require milk dealer to take out license. Under the 41st subdivision of section 62 of the general Incorporation law of 1872, a city incorporated under that act has the power to pass an ordinance malting it unlawful for any person to sell, expose for sale, or deliver milk from any wagon, cart or other vehicle, within its limits, without first procuring a license, and to provide a punishment for its violation.
    2. Peddler—what constitutes. The term “peddler," in the 41st subdivision of section 62 of the general law of 1872 for the incorporation of cities and villages, is used in its general and unrestricted sense, and fully embraces persons engaged in going through a city, from house to house, and selling milk in small quantities to different persons, and this though they may have regular customers to whom they daily sell milk. ,

      Appeal from the Appellate Court for the First District";— heard in that court on appeal from the Criminal Court of Cook county; the Hon. John G. Rogers, Judge, presiding.
    Mr. Julius S. Gbinnell, for the appellant:
    The city has power , and authority, under its general police powers, to regulate the sale of milk, provide for its inspection, and prevent the sale of or dealing in impure, adulterated or unwholesome milk. Dillon on Mun. Corp. sec. 95; Harrison v. Mayor of Baltimore, 1 Gill, 276.
    The power to license as well as tax this class of business is specifically granted by the charter to the common council. See 41st subd. sec. 62 of gen. Incorp. act, 1872.
    Whether or not this ordinance is reasonable, is exclusively a question for the court. To arrive at a correct decision whether the by-law be reasonable or not, regard must be had to its object and necessity. Vandine, Petitioner, etc. 6 Pick. 187; Commonwealth v. Stoddard, 2 Cush. 562.
    Mr. W. B. Cunningham, for the appellee:
    Corporations have no powers but those expressly granted, or necessarily implied, by the act of incorporation, or those essential to the declared objects and purposes of the corporation,—not simply convenient, but indispensable. Dillon on Mun. Corp. (2d ed.) vol. 2, p. 173; Spaulding v. Lowell, 23 Pick. 71; Petersburg v. Metzger, 21 Ill. 205; Betts v. Menard, 11 id. 395; New London v. Brainard, 22 Conn. 551; Stetson v. Kempton, 13 Mass. 272; Hodge v. Buffalo, 2 Denio, 110; Williard v. Killingsworth, 8 Conn. 247.
    And courts adopt a strict construction, and powers must be clearly given. Minturn v. Larne, 23 How. 435; Thompson v. Lee Co. 3 Wall. 320; Clark v. Davenport, 14 Iowa, 495; Merriam v. Moody Exrs. 25 id. 163; Leonard v. City of Canton, 35 Miss. 189; Lafayette v. Cox, 5 Ind. 38.
    A corporation must show a grant, either in terms or by necessary implication; for all the. powers it attempts to exercise, and especially must this he done when it claims the right, by taxing or otherwise, to deprive individuals of their property without their consent. Mix v. Ross et al. 57 Ill. 135; Sharp v. Spier, 4 Hill, 76.
    And to this effect are adjudged cases, without exception. Ham, v. Miller, 20 Iowa, 450; McInery v. Reed, 23 id. 410; Blackwell on Tax Titles, (ed. of 1864,) ch. 31, p. 448; Bank v. Chillicothe, 7 Ohio, 31; Collins v. Hatch, 18 id. 523; Shear v. Hill, 4 Hill, (N. Y.) 329.
    The city council can not license milk dealers, because the charter does not enumerate them in the list of those that may be licensed. 2 Coke, 58; Hyman v. Bayne, 83 Ill. 264.
    The power to make “by-laws relative to hucksters, grocers and victualing shops, ” does not authorize the corporation to exact a license from persons carrying on such business. Nor does the general power “to pass prudential by-laws, not inconsistent with the laws of the State, ” confer the authority to demand a license. 1 Dillon on Mun. Corp. 396; Dunham v. Rochester, 5 Cow. (N. Y.) 462; Commonwealth v. Stoddard, 2 Cush. 562; Mays v. Cincinnati, 1 Ohio, 268.
    The license is not authorized by power given to license peddlers.
   Mr. Justice Walker

delivered the opinion of the Court:

Appellant brought an action against appellee to recover a penalty for violating an ordinance of the city. The ordinance claimed to have been violated is this:

“Sec. 2. It shall be unlawful for any person or persons, within the city of Chicago, to sell, expose for sale, or deliver milk from any wagon, cart or other vehicle, unless he or they shall first have obtained a license to carry on such business. The mayor is hereby authorized to issue a license for such purpose to any person applying to him in writing for the same. Such application shall specify the number of wagons or other vehicles intended to be employed in the sale or delivery of milk, and the applicant shall pay into the city treasury, as a license fee, the sum of $5 per annum for each and every such wagon or other vehicle. The number of vehicles authorized by any license to be so employed may be enlarged upon a further written application to the mayor, and the payment of the above named sum of $5 for every such additional vehicle.”

Another section of the ordinance imposed a penalty for a violation of the second section, and provided for its recovery.

The case was tried on an appeal to the Criminal Court of Cook county, 'on this agreed statement of facts: That the defendant was a milk dealer in the city of Chicago, and continued to follow his business in said city after April 1, 1880, prior to the issuing of summons for violation of said ordinance, without paying $5 for each wagon used by him in said business ; that he had no license after April 1, 1880, to follow his vocation of' milk dealer; that he had, during that time, after April 1, 1880, employed several wagons in delivering milk to his customers at their houses or places of business, in small quantities, in the regular course of such business of delivering milk from said wagons, and selling the ,same to regular customers and others; that the city of Chicago was incorporated under act of 1872,' for incorporation of cities and villages, etc., and which was adopted by the city May 3, 1875.

On these facts the Criminal Court found in favor of defendant, and against the city. An appeal was prosecuted to the Appellate Court, where, on a trial, the judgment was affirmed, and the case comes to this court by appeal on a certificate of that court, and a reversal is urged.

It is insisted in favor of affirmance, that the ordinance is void for want of power to adopt it. It is on the other hand claimed, that there is ample power to maintain it under either of two provisions of the charter: first, under the police powSr, as found in the 66th and 68th subdivisions of section 62 of the city charter; and, second, under the 41st subdivision of the same section, which confers power “to license, tax, regulate, suppress and prohibit hawkers, peddlers, pawn brokers, keepers of ordinaries, * * * and to revoke such license at pleasure. ”

In the view we take of the ease, we deem it unnecessary to determine whether the ordinance may be sustained under the police power conferred by the charter. We are of opinion that the power is conferred by the 41st subdivision of section 62. If appellee was a peddler, or engaged in the occupation of .a peddler, then the power was ample, and the ordinance must be sustained. The term “peddler,” is defined by high authority to be one who deals in small or petty things, and this coincides with the popular meaning of the word, and we must conclude, as required by the canons of interpretation, that such is the sense in which it is employed in the charter. The term “peddler” is used in the charter in its general and unrestricted sense, and fully embraces persons engaged in going through the city from house to house, and selling milk in small quantities to different persons; nor can it matter that appellee had regular customers to whom he daily sold his milk.

Being one of the kinds of peddlers embraced in the 41st subdivision of the 62d section, and it being within the undoubted power of the General Assembly to confer the power to license, the city had ample power to adopt the ordinance requiring appellee to obtain and pay for a license to ply his business, and failing to do so, he became liable to the penalty, and the Appellate Court erred in affirming the judgment of the Criminal Court. The judgment of the Appellate Court is reversed, and the cause remanded.

Judgment reversed.

Mr. Justice Mulkey,

dissenting:

I dissent in toto both to the reasoning and conclusion reached by a majority of the court in this case.

Appellee was prosecuted under an ordinance prohibiting the business of selling, exposing for sale, or delivery of milk from wagons or other vehicles without a license from the city for that purpose. It is conceded there is no power in the city charter to tax such a business, but the opinion of the court seems to proceed upon the theory that the acts admitted to have been done by appellee amount to peddling, and that inasmuch as the charter does authorize the city to prohibit, by ordinance, peddling without a license therefor, the defendant should be convicted for that offence. I confess I am unable to see the force of such reasoning.

There are two sufficient answers to the position thus assumed: First, it is manifest that the object of the city in adopting the ordinance in question was simply to impose a tax on milk dealers, and not to prohibit peddling. Second, the prosecution instituted against appellee was not founded upon the ordinance prohibiting peddling.

The ordinance under which this prosecution was commenced, does not contain either the term peddling or peddler, nor has it the slightest allusion to that subject. ít is directed solely against .the business of selling milk. It is clear that if the ordinance were valid, one might be convicted under it for a single transaction or sale, where there could be no pretence that the offender had been guilty of peddling. In such a case as that, the court, as all must admit, would be bound to hold the ordinance invalid, and there consequently could be no recovery, although the proofs brought the defendant within its express provisions. And it will hardly be seriously maintained by any one that an ordinance may be valid to-day and invalid to-morrow, dr that its validity or invalidity can in any sense be made to depend upon the proofs in a particular case; and yet such seems to be the effect of the present decision.

For the reasons stated, I am clearly of opinion that the Criminal Court properly held the defendant not liable under the ordinance, and consequently the Appellate Court committed no error in affirming its judgment.

Dickey and Scholfield, JJ.:

We concur with Mr. Justice Mulkey.


author: Mr. Justice Sheldon Mr. Justice Walker:

text:
    Timothy Moshier v. David Norton et al.

      Filed at Ottawa May 14, 1881

      Rehearing denied September Term, 1881.

    1. Mortgage—accounting by mortgagee in possession. Ordinarily a mortgagee in possession is only required to account for the actual receipts, less such sums as he may have paid for the taxes and necessary repairs; but he will be answerable for any gross neglect or willful default resulting in loss to the mortgagor.
    . 2. Where the mortgagee in possession resided twenty-five miles from the mortgaged premises, and occupied them through a tenant, it was held, that general evidence of the rental value, what amount of crops was raised by others on other lands, and opinions of what ought to have been raised or what was raised, which was greatly variant, was not sufficient to show that it was from willful default or gross negligence of the mortgagee that the receipts from his tenant were not greater.
    3. Same—mode of stating account between mortgagor and mortgagee in ' possession. In stating an account between a mortgagor and the mortgagee in possession, any surplus of receipts in any year above all the interest then due, and disbursements, should be applied in reduction of the principal, irrespective of the fact whether there was or was not interest in arrear at the time the mortgagee took possession.
    4. Same—mortgagee in possession suffering sale for taxes, not allowed amou/nt of redemption. If the mortgagee in possession suffers the lands to be sold for taxes, he will not be allowed the amount paid by him to redeem, but only the amount of the taxes, with interest. /

      5. Res ad judicata—matters decided on prior appeal. On a second appeal to this court, the propriety of the decision of this court as to a point in the case on the first appeal, is not open for review. Its reconsideration can he had only by a rehearing.
    Appeal from the Appellate Court for the Second District;— heard in that court on appeal from the Circuit Court of Stark county; the Hon. David McCullough, Judge, presiding.
    This was a bill in chancery, filed September 6, 1866, by Timothy Moshier, against David Norton and others, to foreclose a mortgage of certain lands in Henry county, executed by the latter to the former on November 4, 1857, to secure the payment of a promissory note of the same date made by Norton to Moshier, for $6000, payable two years after January 1, 1858, with interest payable annually, at the rate of 10 per cent per annum. Norton had given a prior mortgage on the premises for $1000, at the same rate of interest, to one Miles, which the latter foreclosed by scire facias, and on August 4, 1866, Moshier redeemed therefrom by payment of the sum of $2782.50, and in his bill sought to recover likewise this redemption money, with 10 per cent interest thereoñ. In March, 1862, complainant took possession of the mortgaged premises, and has remained in possession ever since. The defendants answered, setting up usury in the $6000 mortgage, and that complainant had received his pay for the moneys due him from the rents and profits of the property.
    The circuit court found there to be usury in the note and mortgage, and on August 4,1875, entered a decree for $30.48 in favor of complainant. From this decree aji appeal was taken to this court, which reversed the decree of the circuit court, finding that the note and mortgage were free from usury, and also allowing 10 per cent interest upon the redemption money paid to redeem- from the Miles mortgage, the circuit court having allowed but 6 per cent. (Moshier v. Norton et al. 83 Ill. 519.)

      After the cause was remanded to the circuit court of Henry county, the venue was changed to the circuit court of Stark county. The answer was amended, setting up more specifically the defence of usury, and some further testimony was taken. The latter court, at the March term, 1878, referred .the cause to the master, with directions to report upon certain specified points, among which were, the reasonable rental value of the land, the value of the crops raised when the complainant had occupied the land, and when he had rented it what had been received, and the value of the landlord’s share of the crops raised. The master made report, to which exceptions were taken by the complainant, and overruled, and at the March term, 1880, the cause coming on to be heard, the court found the note and mortgage to be free from usury, and after other findings, “the court further finds that complainant leased the said land to one Elmore, during 1862; that in 1863 he put said premises into the possession of his son, with the intention of giving him the rents and profits; that in 1864 complainant farmed the same himself, under the supervision of hired help, and that from 1865 to 1879, inclusive, complainant leased the same to one Osgood for a share of the products; but the court finds it impossible, for want of proper accounts and the insufficiency of the evidence, to ascertain the actual products of said land from year to year, or the value thereof to be charged to the complainant, in an accounting between the complainant and defendants. The court further finds, that in addition to the rents specified in the master’s report, complainant has received from the crops of 1878 the sum of $983.15, and from the crops of 1879 the sum of $1409.40, and no more; but the court can not, from the evidence, find the amount of the actual products of said land, or the value thereof, for these years; wherefore it is considered by the court that said complainant ought to account for the reasonable rental value of said lands from the first day of March, 1862, to the first day of March, 1880. The court finds that there are in said mortgaged premises 489 acres of tillable land, and that the reasonable rental value thereof, in cash or grain rent, taken one year with another, is, for the years 1862 and 1863, $1 per acre; for the years 1864 to 1867, inclusive, $3 per acre, and for the years 1868 to 1879, inclusive, $3.50 per acre.”
    There was a further reference to the master to state the account on this basis. The master reported, that in accordance with the rule prescribed by the court for making the computation, the rents of the premises had overpaid the complainant his whole claims against Norton, principal, interest and taxes, the sum of $2111.62, which the master-reported was due from the complainant. The court, after overruling complainant’s exceptions to the report, approved the same, found that complainant had received of rents $2111.62 more than his mortgage debt and all disbursements, and dismissed the bill. On appeal to the Appellate Court for the Second District the decree was affirmed, and complainant appeals again to this court.
    Messrs. Mtlt.er, & Frost, and Mr. Miles A. Fuller, for the appellant:
    The court erred in making annual rests, and applying the rents to the reduction of the principal annually, when the law is, that if rent be in arrear at the time the mortgagee takes possession, annual rests should not be made until the whole mortgage debt is paid. Story’s Eq. Jur. sec. 1016 a; Finch v. Brown, 3 Beav. 70; Sheppard v. Elliott, 4 Mad. 254; Wilson v. Cluer, 3 Beav. 136; Gordon v. Lewis et al. 2 Sum. 147; Bennett v. Cook, 2 Hun, (N. Y.) 526; Green v. Westcott, 13 Wis. 606. See, also, Bac. Ab. Title Mort. (sub title F,) vol. 7, 170.
    Story, in the section cited, says: “The court erred in charging the complainant with the rental value of the mortgaged premises, instead of the sums actually received by him. ”

      Mr. C. C. Wilson, for the appellees:
    It is not the law that. annual rests should not be made until the entire mortgage debt is paid, even though the interest be in arrear at the time of the entry, but the rule in this country is, that whenever the rents exceed all the interest then due, annual rests should be made, and the excess applied to reduce the principal, the receipt of rents being like any other payment on the mortgage debt. Jones on Mort. secs. 1139, 1140; Van Vronker v. Eastman, 7 Metc. 157; Green v. Westcott, 13 Wis. 678.
    In this State it is the settled rule that a mortgagee in possession is liable to account for the rents actually received, or which might have been received by reasonable care and diligence. McConnel v. Holbook, 11 Ill. 61; Roberts v. Fleming, 53 id. 196; Harper et al. v. Ely, 70 id. 581; Mansfield v. Alwood, 84 id. 497.
    If the mortgagee has kept no proper accounts- of the rents and profits received by him, he is chargeable with what he might have received, and must be presumed to have received by the use of ordinary care. Jones on Mort. sec. 1124; Dexter v. Arnold, 2 Sum. 108; Van Buren v. Olmstead, 5 Paige, 9.
    Also, in the same section, the author says: “If the mortgagee be unable to render an account, he is chargeable with a fair occupying rent, ” and cites Montgomery v. Chadwick, 7 Iowa, 114; Gordon v. Lewis, 2 Sum. 150; Clark v. Smith, 1 Saxt. 121.
    A mortgagee is bound to keep proper accounts of the rents and profits received by him, and to have them ready to produce when called for; for to this extent, at least, of being required to keep and present a proper and honest account, he is the trustee of the mortgagor, and to hold him, to be less would open the door to frauds of the grossest kind. Jones on Mort. sec. 1115; 2 Washburne on Real Prop. 116, (3d ed.); Griffin et al. v. The Marine Co. of Chicago et al. 52 Ill. 142.

      A mortgagee in possession is not entitled to compensation for taking care of and renting the estate, even where there is such an agreement between himself and the mortgagor. Jones on Mort. sec. 1132; Moore v. Cable, 1 Johns. Ch. 385; French v. Baron, 2 Atk. 120.
    The reason given for this rule is, that it would tend directly to facilitate usury and oppression. Jones on Mort. sec. 1132; Scott v. Brest, 2 T. R. 238.
   Mr. Justice Sheldon

delivered the opinion of the Court:

The court below erred in decreeing that complainant should account for the reasonable rental value of the lands. This was a departure from the rule prescribed by this court when the cause was here before. We then said, “that ordinarily a mortgagee in possession is only required to account for the actual receipts, less such sums as he' may have paid out for taxes and necessary repairs, unless where the evidence shows by reasonable diligence more could have been realized. Of course, he would be answerable for any gross neglect which might result in loss to the mortgagor whose premises he holds. Any more stringent rule than this, it seems to us, would be unjust and unreasonable. ” 83 Ill. 524.

This is in accordance with the well settled general rule upon the subject. Chancellor Kent thus states it: “If the mortgagee obtains possession of the mortgaged premises before foreclosure, he will be accountable for the actual receipts of the net rents and profits, and nothing more, unless they were reduced or lost by his willful default or gross negligence. By taking possession, he imposes upon himself the duty of a provident owner, and he is bound to recover what such an owner would, with reasonable diligence, have received. ” 4 Com. 185. To the same effect 1 Hilliard on Mort. 448-9.

The subject is very fully discussed in 3 Powell on Mort. 949, 1154, where it is said: “A mortgagee will not be obliged to account according to the value of the lands, viz: he will not he hound by any proof that the land was worth so much, unless it can likewise be ■ proved that he actually made that sum of it, or might have done had he not been guilty of fraud or willful default, as, if he turned out a sufficient tenant that held it at so much rent, or refused to accept a sufficient tenant that would have given so much for it; for it is the laches of the mortgagor that he lets the land lapse into the hands of the mortgagee by the non-payment of the money, and when it doth, he i§ only a bailiff of what he doth actually receive, but is not bound to the trouble and pains of making the most of what is another’s.”

As to the rents for the years 1878-1879, the court ascertained in regard thereto, from testimony taken in open court, and found that the complainant had received from the crops of 1878 the sum of $983.15, and from the crops of 1879 the sum of $1409.40, and no more. Here are the actual receipts, and what is the reason why the well established rule of actual receipts should be discarded, and the complainant be charged the reasonable rental value of the lands, according to the conjectural estimate of various witnesses as to the probable rental value, their opinions . differing in amount from $1 and less per acre to $5 per acre? The reason given is, that “the court can not, from the evidence, find the amount of the actual products of said land, or the value thereof, for these years.” When we have the amount of the money received, what need for the number of bushels of all the grain raised ? All utility, that we can see, would be in the way of furnishing a test for the determining of whether the full amount of money had been received which ought to have been received. But because that test was not furnished, it is not to be assumed that if it had been it would have shown complainant did not get his one-third share of the crops; and even if it had shown that, it would not have shown that it was through any willful default or gross negligence of complainant that he failed to receive more than he did.

All the evidence in regard to the rents for these years was that of complainant himself, who. testified the above amounts to be returns from Hough & Bros., grain dealers at Galva, of the sales of his share of the crops, which had been delivered at that railroad station by the tenant, Osgood, as complainant’s rent, of one-third of the crops. The number of bushels of the grain sold was specified, but complainant said he did not know the number of acres or bushels of grain raised in either year; that Osgood divided the crops, and complainant did not know whether he got his share or not.

Complainant lived in another county, twenty-five miles distant from the premises, and he seems to have trusted to the honesty of his tenant to deliver, and of the receivers of the grain to send to him, his share of the crops. In the affairs of life, trust is, and must be, reposed in our fellow-men. There is nothing here going to impeach the correctness of the. amounts returned to complainant as the proceeds of his rent for these years, and we think they should be taken as prima facie correct, and be the amounts for which complainant should be charged. Defendant Horton lived at Galva, and if he was apprehensive of dishonesty in the tenant or grain buyer, and wished to know the amount of the whole number of bushels of grain raised on the place, in order to try to show such fact of dishonesty, it was as easy, for aught that appears, for him to ascertain the same as for complainant. Similar remarks may be made with reference to all the other years. Complainant renders an account of the amount of the actual receipts for each one of the years, but is not able to tell the number of bushels of grain raised in any year, and because of the insufficiency of the evidence to ascertain the amount of the actual products of the land from year to year, or the value thereof, complainant seems to have been charged with a supposed reasonable rental value, instead of with actual receipts.

The account of receipts rendered by complainant is corroborated by other testimony. The tenant who delivered the share of the crops testifies in the case, and there is no attempt to impeach, by him, the accuracy of the account, nor by any other witness, directly or specifically, but °all is general, as, the rental value; what amount of crops was raised by others on other land; opinions of what ought to have been raised or what was raised, and the evidence is greatly variant. This sort of evidence is insufficient to show, in this case, that it was from the willful default or gross negligence of complainant that the receipts were not greater than as returned,— not meaning, however, to say that there may not be a case where evidence of such general character might not be of avail in this respect. Complainant lived at a distance, as has been stated; he had the place constantly under rent at the customary rent of one-third of the crops,—except for two years, when he carried it on himself,—and to a tenant who, as the evidence shows, has managed the farm reasonably well; no rent has been lost, as appearing from any evidence. The grain was delivered by the tenant as complainant’s one-third share, and complainant accepted it as such, and that we conceive is all with which he should be charged. We think he might confide' in the honesty of a well known tenant of such long standing until something was brought home to him to excite suspicion to the contrary, and that it is not to be imputed as gross negligence, in that he did not assume the tenant to be a dishonest man, and keep watch over him as such, to see that he did actually measure out to complainant his full number of bushels of grain, and especially where there is no evidence that the amount received was short of the full amount of the landlord’s share. The presumption is in favor of honesty, and that presumption should be indulged in regard to the account rendered.

Further, the defendant Norton lived - at G-alva, only five miles from the land, and the-nearest railroad station where the grain was delivered. H@ was concerned in the matter, and should have taken interest'in it, and had opportunity to know how the farm was rented and managed, and what amount of rent was being received. If there was anything of wrong, or any cause of dissatisfaction in any respect, negligence is rather chargeable upon him in nothnaking communication thereof to complainant.

A similar circumstance is adverted to in Hughes v. Williams, 12 Ves. 493, cited in full on page 949 b, 3 Powell on Mortgages, as showing the duty which the mortgagor owes the mortgagee in this regard, where the question was, whether the mortgagee should be charged with the rents actually received, or" a greater rent, which it was claimed he ought to have obtained. Lord Erskine, in delivering judgment, said: “Another circumstance was, that the mortgagor, if he knew that the estate was underlet, ought to have given notice to the mortgagee, and to have afforded his advice and aid for the purpose of making the estate as productive as possible. * * * In this instance not only such notice was not given, but during the whole period of sixteen years, while the mortgagor was out of possession, he never stated that the estate was not managed as it might be. ”

These are observations which are pertinent to the present case.

Complainant takes exception to the mode of stating the account in making annual rests. The master reported that on January 1, 1870, the principal sum due from Norton to complainant was $8782.50; that the accrued interest thereon to that time was $8240.93; that the net rents up to that time were $8617.47. As the amount of rents at that time exceeded all interest due, said amount of the rents to that time was deducted from the whole amount of principal and interest at that time, leaving a balance due complainant of his principal sum, $8405.96, on January 1, 1870. Then to this sum was added the interest for one year, the taxes paid in 1870, and interest thereon to January 1, 1871, which made the sum of $9490.48, from which was deducted the rent of 1870 as found, $1711.50, leaving a balance due complainant of $7778.98, at that date. Then follow similar annual statements of balances on the first day of January in each year, up to and including January 1, 1880, the rents as found for each year exceeding the interest and taxes for the year.

Complainant concedes the mode adopted by the master in making annual rests was the proper one when no arrears of interest are due at the time the mortgagee enters into possession, but that where the interest of the mortgagee is in arrears, as in the present case, when the mortgagee takes possession, the court will not require annual rests to be made, even although the rents and profits may exceed the annual interest, nor until the principal of the mortgage debt is entirely paid off. There is authority for this position and distinction. It appears to be supported by Judge Story in his Eq. Jur. vol. 2, sec. 1016 a, and the English cases cited by him. But there are American decisions which lay down a different rule, as we regard, and agreeing with the one which was adopted in this case: Van Vronker v. Eastman, 7 Metc. 157; Green v. Westcott, 13 Wis. 606; 2 Jones on Mort. secs. 1139, 1140.

But it is said that these only lay down the general rule where there is no interest in arrear when the mortgagee takes possession. This distinction, adverted to by complainant’s counsel, is noticed by Mr. Jones in section 1140 of his work, as follows: “When there is interest in arrear at the time the mortgagee takes possession, annual rests are not generally required until the interest in arrear is paid off; and according to some authorities they are not, in such case, required until the whole mortgage debt has been paid off,”—thus indicating, as we understand, that in the author’s opinion the rule contended for by complainant is supported by the less weight of authority.

No satisfactory reason appears, to our minds, why, when there is a surplus of receipts in any year above all the interest then due, and disbursements, the balance remaining after discharging the interest should not be applied to reduce the principal; and this, irrespective of the fact whether there was, or was not, interest in arrear at the time the mortgagee took possession. We view the mode adopted by the master in making annual rests just and reasonable, and find no error therein.

A sale for taxes for one year after complainant took possession occurred, and complainant afterward redeemed from the tax sale. He was not allowed for the redemption money paid, but only for the amount of the tax. This is complained of. Complainant being in possession, and in receipt of the rents and profits, we think he should be allowed in account only the amount of the taxes with interest, and not the additional amount of the redemption money which was paid in order to redeem from a sale of the land for the taxes, which complainant had suffered to be made.

Appellees assign as a cross-error the finding of the court that there was no usury in the $6000 note and mortgage. Although, when the case was here before, we found the answer to be defective in setting up usury, we nevertheless fully considered the case upon the merits as to whether there was usury in the transaction, and found from the proofs that the note and mortgage were free from usury. Some additional evidence on the question was brought out on the last hearing, after the ease was remanded back from this court. No additional witnesses appear to have been examined upon this subject, save one, on the part of the complainant. We do not find the case, as now presented upon the proofs, to be substantially variant from what it was before upon this point, and we remain of our former opinion, and do not find any error in the ‘decree of the circuit court in this regard.

A further cross-error assigned, is in allowing ten per cent interest on the money paid to redeem from the foreclosure sale under the Miles mortgage. We decided, when the case was here before, that this interest should he allowed, and we do not regard the propriety of that decision as now open for review.

In Rising v. Carr, 70 Ill. 597, a case which was before us a second time, where, after the cause was remanded, some additional testimony had been taken, on the strength of which it was sought to have changed the former decision in the case, we said in answer thereto: “We regard it as simply an effort to induce this court to reconsider its former judgment. We have neither the power nor inclination to permit that to be done in this way. It could only be done on petition for rehearing, in the manner prescribed by the rules of this court. ”

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

Decree reversed.

Mr. Justice Walker:

I concur in the reversal, but not

in all that is said in the opinion.


author: Mr. Justice Walker

text:
    Andrew M. Beveridge v. The West Chicago Park Commissioners.

      Filed at Ottawa June 20, 1881

      Rehearing denied September Term, 1881.

    1. Bight of wat-—order condemning is a judgment. An order affirming an assessment of damages for property taken for the public use is a judgment, and a final determination of the disputed facts and law of the case. Until reversed, or otherwise impeached, it is conclusive on the parties as to the questions involved.
    2. Interest—on judgment condemning property. It being the duty of park commissioners to pay for lands condemned by them for a boulevard, within a reasonable time after confirmation of the proceedings and the title to the property is settled, they will be held liable to pay interest on the compensation awarded for the property condemned, after demand made by the owner and the establishment of his title to the property, although the land is vacant and unoccupied, and possession has not been taken.
    Writ of Error to the Appellate Court for the First District ;—heard in that court on error to the Circuit Court of Cook county; the Hon. Thomas A. Moran, Judge, presiding.
    Mr. James K. Edsall, and Mr. John B. Hawley, for the plaintiff in error:
    The award of compensation or damages by commissioners in condemnation proceedings, when approved by the court, is treated as a judgment, and is held to be “within the spirit, if not within the terms, of the statute which allows interest upon all judgments recovered.” Cook v. South Park Commissioners, 61 Ill. 115; Illinois and St. Louis Railroad Co. v. McClintock, 68 id. 296 ; City of Chicago v. Palmer, 93 id. 125.
    In the two cases last cited it appeared that the party making the condemnation had taken possession of the property condemned. Where, however, the owner remains in possession, and has the use of the property, such use and occupancy are deemed an equivalent for interest. South Park Commissioners v. Dunlevy, 91 Ill. 48.
    And where the location of the improvement may be rightfully abandoned by the party making the condemnation, and the owner has not' been disturbed in his possession, execution will not be awarded to collect the compensation allowed, nor in such cases will interest be allowed. But the park commissioners had no right to abandon'proceedings of this kind. St. Louis and Southeastern Ry. Co. v. Teters, 68 Ill. 144. It was the duty of the park commissioners, upon, such judgment of condemnation, at once to pay either to the owners of the land, or into court for them use, the amount of the award.' Section 13 of said act of February 27, 1869, provides as follows: “From the funds derived from said assessment (referring to the assessment of benefits), and from the other funds of the said board applicable to such purpose, the said board shall pay to the parties entitled thereto the amounts respectively due them.” Section 6 of the said act of April 19, 1869, gives to the park commissioners authority to borrow money to any amount necessary to pay said assessments.
    Mr. Geo. W. Smith, for the defendants in error:
    The rights of the parties were settled by the decree of July 25, 1870, and the subsequent acts of the commissioners do not afford a basis of claim to plaintiff in error.
    Interest is not recoverable, unless the land has actually been appropriated. South Park Commissioners v. Dunlevy, 91 Ill. 49; Cook v. South Park Commissioners, 61 id. 115; St. Louis and Southeastern Ry. Co. v. Teters, 68 id. 144; Chicago v. Barbian, 80 id. 482; Chicago v. Allcock, 86 id. 384; Chicago v. Palmer, 93 id. 125.
    The plaintiff had neither a legal nor equitable claim for interest. If the money had been paid into court, it could not have been withdrawn by the plaintiff. The title was in litigation until the latter part of 1875, and Elizabeth Beveridge had no interest in the land until 1876.
   Mr. Justice Walker

delivered the opinion of the Court:

Plaintiff in error, Andrew M. Beveridge, claimed to be the owner of the real estate out of which this controversy arises, and about the 25th of July, 1870, in a proceeding previously instituted by the Board of Park Commissioners of South Chicago to condemn this and other lands for a boulevard, and on that day, the circuit court of Cook county rendered a judgment approving and confirming the proceedings condemning the land. The judgment provides, that when the money assessed as damages shall he paid by the commissioners, or deposited in court, the title shall vest in the commissioners. The money was never deposited in court, nor was it ever paid to plaintiff in error until the 28th day of November, 1879, and then only the principal, without interest; but he reserved the right to sue for and collect interest, if entitled thereto. The judgment or order approving and confirming the condemnation has never been reversed, altered, or in any manner modified, but has remained in full force. The property was vacant, unimproved and unoccupied when it was condemned, and has so remained ever since. It is city property, and not farming lands. It appears that plaintiff in error never demanded the money until the 4th of January, 1876, nor did the park commissioners take possession or assume any" control over the property until they paid the principal sum assessed for damages. After the assessment of damages was confirmed by the court the property has never been assessed for taxation.

On these facts plaintiff in error claims that he is entitled to recover interest on the $9924.24 assessed as the damages his property sustained, from the time of the confirmation. Defendant in error resists the claim, and the circuit court, on a trial, rendered a judgment. in favor of defendant, and plaintiff prosecuted error from the Appellate Court. On a trial in that court the judgment of the circuit court was affirmed, and plaintiff brings the case to this court on error.

It has been held that the order affirming the assessment of damages is a judgment,—that it is a final determination of the disputed facts and law of the case. Until reversed or otherwise impeached it is conclusive on the parties as to the questions involved. Cook v. South Park Commissioners, 61 Ill. 115. It is true that an execution can not issue as on an ordinary judgment, but there are other means of having execution ; and where the condemnation has" been confirmed, and the land appropriated to the use of the public by tailing possession of the property condemned, it has been held that such a judgment will draw interest.

But it is urged that there is a broad and clear distinction between those cases and this, as the park commissioners did not enter into possession or exercise any control over the property before they paid the amount of damages assessed. On the other hand it is claimed, that as the judgment was final and conclusive, plaintiff in error was deprived of all beneficial use of his property, not being able to sell it and have the use of the money, nor being able to improve it so as to render it productive, he should have interest on the judgment,—that being deprived of its use, the park commissioners were virtually in possession, as it was the same to him in effect as if they had entered into possession when the judgment was rendered.

This case is different in its facts from the previous cases in this court, unless it be Cook v. South Park Commissioners, supra. ■ The land here is shown to have been unoccupied and unproductive, and appellant demanded payment of the damages,0 thus manifesting an intention not to hold the possession as an equivalent for interest. The demand was made more than five years after the judgment approving the condemnation and assessment of damages. The commissioners were under the legal duty to provide the means and pay the damages within a reasonable time, and failing to do so, they were guilty of a neglect of duty. They should have paid appellant the money before the demand was made, and failing to do so on demand, the commissioners became liable to pay interest. The demand operated as an offer to yield the possession of the property on payment of the money, and failure to pay put them in default. Here the rights of the parties were unalterably fixed. Plaintiff in error could not resume the ownership, nor could the commissioners abandon the property. The commissioners were bound to pay for the property, and the owner to receive the money and yield possession to the commissioners. They were both under this legal duty, irrevocably fixed by the judgment.

There can not be the slightest pretense that the commissioners have the power to oppress plaintiff in error by postponing payment indefinitely, and thus deprive him of all beneficial use of his property and of the money the law required them to pay to him within a reasonable time. If they may thus deprive him of his rights for nine years, why not for twenty-five years ? The law can never tolerate such oppression and wrong, and not afford some compensation for the infliction of the injury.

But it is said plaintiff in error could have resorted to mandamus to compel payment. This is an admission that the commissioners were neglecting a plain legal duty, as that "writ lies to enforce no other. Can plaintiff in error be answered by saying, we were acting in palpable violation of our duty, but we are not liable to make compensation for the wrong because you did not resort to legal proceedings to compel us to discharge a plain duty ? Surely that can be no answer to the claim of plaintiff in error.

But it is said that the case of South Park Com’rs v. Dunlevy, 91 Ill. 49, is like this, and that interest was there refused. In this there is a misapprehension of the facts. That case was a proceeding to condemn land for park purposes. Interest was- there claimed on the value of the land from the date of the filing of the petition. It was, of course, denied, because until the damages were assessed there was nothing to draw interest. Land "owned by Dunlevy not taken, condemned or appropriated for park purposes was incapable of bearing interest. He had been deprived of no right. The park commissioners had only asked that the property might be condemned and the damages ascertained. But here they had been ascertained, and a judgment of confirmation and a demand made for payment, years before suit was brought to recover interest. The two cases are unlike. This case is like the case of Cook v. Park Com’rs, supra.

In the case of Cook v. Park' Com’rs, supra, interest was allowed on the amount of damages after they were ascertained, and confirmed by the court. The cases of the Illinois and St. Louis Railroad Co. v. McClintock, 68 Ill. 296, City of Chicago v. Barbian, 80 id. 482, and City of Chicago v. Palmer, 93 id. 125, are cases where the judgment was not final and binding on the party seeking condemnation, as the corporate body had the legal right to abandon the proceeding and refuse to take the property. But in this class of cases the commissioners have no right to refuse to accept the property and pay the damages, either into court or to the owner. These last cases, therefore, have no controlling bearing on this case. But in this case the property was in litigation for several years after the judgment for damages, and until about a year previous to the demand, and until that litigation was determined the park commissioners could not certainly know to whom to pay the damages, and in such a case they should not be required to pay interest until the litigation was ended ; but when he made the demand after it was ended, they then knew he was entitled to receive the money, and they were put in default by the demand. We are therefore of opinion that plaintiff in error is entitled to recover interest on the amount recovered as damages, from the date the demand was made, to be computed as in other cases.

The circuit and Appellate courts erred in refusing to allow the recovery of such interest, and the judgment of the Appellate Court is reversed and the cause remanded.

Judgment reversed.