author: Mr. Chief Justice Diceey Mr. Justice Mulkey,

text:
    Albert Paul Smith et al. v. Franklin Dennison, Receiver, etc.

      Filed at Ottawa June 20, 1881

      Rehearing denied September Term, 1881—

      A second petition for rehearing dismissed March Term, 1882.

    1. Evidence—credibility, when contradictory statements are shown. Although contradictory statements by a witness as to immaterial matters may tend to cast suspicion upon his testimony, they will not authorize its entire rejection, when he is corroborated by another witness, and not contradicted * by any other evidence in the case.
    2. Assignment for the benefit of creditors--what constitutes— rights under a transfer as between partners. Where one partner transfers and delivers to another all the assets of the firm, to collect the debts due the firm and pay and discharge its liabilities, giving such managing partner all the powers possessed by both, for the purpose of settling the partnership affair's and a division of the proceeds after payment of the debts, this is not an assignment for the benefit of creditors of the firm, but one for the benefit of the parties, and will not prevent the partner taking the assignment from securing one creditor to the prejudice of others.
    3. CoizdatebaiiS—may be given to secure more than one debt. Where a firm has given collaterals as security for a loan, and procures a further loan upon additional collaterals, the firm may, in. obtaining such new loan, contract with the person advancing the money that he may hold the securities as collateral to both debts, or his entire claim.
    4. Pabtneb—his power to pledge collaterals for money. Where one partner entrusted with the winding up of the business of the firm was authorized, by agreement, to trade any part of the assets, and to do all and everything for settling its affairs that might be deemed expedient, it was held, that such partner was authorized, on borrowing money to pay a liability of the firm, to pledge notes of the firm as collaterals to secure not only the new indebtedness so created, but also a prior indebtedness of the firm to the same creditor.
    Writ of Error to the Appellate Court for the First District ;—heard in that court on writ of error to the Superior Court of Cook county; the Hon. S. M. Moore, Judge, presiding.
    Frisbie and Eappleye were partners, doing business as such, in Chicago. John Seely Wallace was the father-in-law of Eappleye. The firm borrowed money from Wallace, and having made some payments had a settlement with Wallace, and on the 28th of December, 1875, found the balance due Wallace was $7662.44, and on that day gave him the note of the firm for that amount, payable in ninety days, with ten per cent interest until paid, and at the same time deposited with him other notes of other persons as collaterals to secure the payment of the note to Wallace.
    On the 18th of April, 1876, this firm stopped business, and an agreement was executed between Frisbie and Eappleye that Eappleye should wind up the business, collect the assets, and from the proceeds pay the firm debts, if the assets were sufficient; that in payment of the debts, when any assets can, in the judgment of Rappleye, he better disposed of without first being converted into money, or can be traded to secure that end, he shall pursue that course; and finally agreed that all the assets and property should be turned over to Rappleye, and declared that the same were thereby transferred, indorsed and assigned to him, “as trustee, for the purposes mentioned, ” that is to say, “realizing the most out of the same, and paying the debts; ” and Frisbie authorized Rappleye “to do all and every the matters and things that may be necessary or expedient in settling the affairs of the firm; ” and that after the payment of all of the debts the balance of the money or assets on hand should be divided equally between the parties. Frisbie was to give his advice and assistance in the settlement of the affairs, and neither of them should charge or receive any compensation for his services.
    On the 20th of April, 1876, the firm having not long before collected money as agents of an eastern insurance company, and improperly applied the same to their own use, Rappleye borrowed from Wallace $4539.16 for the purpose of discharging that liability of the firm to the insurance company, and gave to Wallace a promissory note, signed “Frisbie & Rappleye, ” for that amount, payable on demand, with interest at the rate of ten per cent per annum until paid, and deposited with him notes of other persons, payable to the firm, as col-laterals to secure the payment of the same. Afterwards Frisbie was informed that Wallace held these, and made no objection thereto. In the language of the witness, “he neither assented nor dissented. ”
    At the August term, 1876, of the circuit court, Frisbie filed a bill in chancery against Rappleye & Wallace, charging that Rappleye was collecting of the assets of the late firm moneys, and using the same in his own private business, and not applying the same to the payment of firm debts, and charging that Rappleye induced him to make the agreement of April 18, 1876, by representing to him that Wallace would, in such case, “at once come to his aid with such pecuniary assistance as would enable him, with said assets, to pay off the debts and wind up the business;” and charging that Rappleye, in bad faith, had turned over to Wallace a large amount of notes belonging to the assets of the firm, as collateral and additional security to Wallace upon an old debt, which was already fully secured by other collaterals sufficient in value to pay the old debt, .and that the old debt was without consideration; that Wallace had not assisted Rappleye in paying off the debts, as Rappleye said he would; that the indebtedness of the late firm to Wallace has not increased except by the interest, and that said securities were placed in Wallace’s hands to deprive him and the creditors of the late firm of the same, and for the personal benefit of Rappleye, and ¿heating Frisbie out of the same, and that Rappleye had no authority to make such use of the assets; that the securities so held by Wallace are excessive, and that Rappleye was insolvent, and asking that that agreement be set aside, and the affairs of the firm settled by having a receiver appointed, and that Wallace be required to surrender the collaterals, and praying for a temporary injunction. That suit was afterwards dismissed by the complainant therein.
    This suit was instituted in January, 1877, and is a bill in chancery, brought against John Seely Wallace, by Dennison, stating that judgments had been rendered against Rappleye & Frisbie, one in favor of one Sutor, and one in favor of one Eldred, and that upon cieditors’ bills filed by these judgment creditors, complainant had been appointed by the court receiver of the assets of said judgment debtors, and charging that before and at the time of filing this bill Wallace had in his possession and custody securities belonging to Frisbie & Rappleye, which he claims to hold as collateral security upon certain indebtedness of Frisbie & Rappleye upon -certain notes; that such pretended indebtedness is merely colorable, and no consideration ever existed for the same, and claiming that complainant is entitled to the custody of such collaterals, and asking an account of the same may be taken, and if it should appear that Wallace has any lien upon the same, that the amount thereof may be ascertained, -that complainant may redeem. Wallace answered the bill, setting out the two principal notes above mentioned, and a list of the collaterals deposited with him at the giving of the first note, and also a list of the collaterals deposited with him at the giving of the second note, and stating, at the time of loaning the money for which the last note was given it was a part of the agreement (and the inducement on which he acted) that he should retain “all of said collaterals, and proceeds thereof, until the amount of all his indebtedness, represented by the two principal notes, should be fully paid. ” To this answer was filed a replication, and the case was heard on the pleadings and proofs.
    Pending the suit, all the collaterals remaining in the hands of Wallace, and not collected, were by consent placed in the hands of complainant, as receiver, for collection, without prejudice to the ultimate rights of either party.
    The Superior Court, on final hearing, found the equities in favor of complainant, and held that Wallace was not entitled to apply any of the' proceeds of the collaterals deposited at the making of the last note upon the indebtedness evidenced by the first note, and held that he should account to complainant for all proceeds of such collaterals in excess of the amount due upon the last note, instead of applying the same towards the payment of the first note. After the death of Wallace the case was taken to the Appellate Court by his legal representatives, and there the decree of the Superior Court was affirmed. To reverse that judgment of the Appellate Court this writ of error is brought.

      Messrs. Small- & Moore, for the plaintiffs in error:
    1. Where a promissory note, to which other notes are deposited as collateral security, contains a provision authorizing the payee to sell the collateral notes at his discretion, and apply the proceeds to the payment of the principal note, but is silent as to the disposition to be made of the surplus of such collaterals after the principal note is paid, the application of such surplus, with the maker’s consent, to the payment of another indebtedness owing by the maker to the payee, will be upheld against other creditors of the maker, if no fraud is shown. In such a case, if a contest, arises as to the application of the surplus of collateral notes, the proceeds thereof, the creditor having the superior equity will prevail, or “where the equities are equal, the first in time is the first in right.” Adams’ Equity, 148; Bispham’s Equity, 50.
    2. The equitable title to a promissory note may, and often does, pass by mere delivery. Garvin v. Wiswell, 83 Ill. 215.
    3. In the absence of a provision in the principal promissory note requiring the surplus of collateral notes to be returned to the maker of the principal note, after it is paid, the law would presume such a duty to be cast upon the payee; but such a presumption may be rebutted by parol evidénce of an agreement, contemporaneous with the principal note, that such surplus of collaterals should be applied to the extinguishment of another indebtedness owing by the maker to the payee. All presumptions may be rebutted by parol testimony. Davenport v. Mason, 15 Mass. 89; Barker v. Prentiss, 6 id. 433; 1 Greenleaf on Evidence, sec. 484 a; 2 Parsons on Contracts, p. 553; 3 id. p. 280; Jeffrey v. Walton, 1 Starkie, 267; Story’s Eq. Jur. secs. 1202, 1531.
    4. A receiver, appointed in supplementary proceeding's, to enforce the claims of certain judgment creditors for certain fixed sums against the estate of an insolvent debtor, is limited in his recovery to an amount sufficient to cover such claims, and interest, together with the costs of the proceeding. Bostwick, Receiver, v. Menck, 40 N. Y. 383.
    The receiver’s right of action in such cases is “precisely such as the creditors themselves might have maintained, and no more.” High on Deceivers, sec. 455.
    Mr. J. L. High, for the defendant in error:
    1. The dissolution of the partnership terminated the power of both partners, and Dappleye had no authority thereafter beyond that specified in the article» of dissolution. By those articles he was made a trustee for all the creditors, without priority, and no power or authority was conferred upon him to secure one creditor to the prejudice of the others. He could not use the firm name in giving new obligations, and had no authority to pledge the firm assets. Story on Partnership, sec. 322; 3 Kent’s Commentaries, 63, and notes; Hicks v. Russell, 72 Ill. 230.
    2. The existence of a former debt due to Wallace did not authorize him to apply thereon the securities received for the subsequent debt. The mere existence of another debt does not authorize the pledgee to detain the pledge as security for that debt, unless such was the intention of the parties. Story on Bailments, sec. 304; 2 Kent’s Commentaries,,584.; Baldwin v. Bradley, 69 Ill. 32; Jarvis v. Rogers, 15 Mass. 389.
   Mr. Chief Justice Diceey

delivered the opinion of the Court :

Two questions are presented for decision in this case: First, the question of fact, whether the collaterals deposited at the making of the note of April 20, 1876, were pledged as collaterals in Wallace’s hands to secure not only that note, but also to secure the payment of the .preexisting debt upon the note of December 28, 1875; and second, whether Eappleye had lawful authority to make such pledge, if it were in fact made.

After a most careful consideration of. the evidence on the subject, we are brought to the conclusion that the pledge was in fact made to secure both of these notes. Wallace and Eappleye both swear positively that this is the truth, and no witness contradicts them in this respect. Not only so, but there is such inherent evidence of the truth of this testimony arising out of the circumstances of the ease, as to give great strength to-it. Eappleye and his partner were not in -harmony. The affairs of the firm had just been turned over to Eappleye for management. The money of the insurance company had been wrongfully applied to the payment of a debt of the firm, in the expectation that the demand of the insurance company could be met by money expected from another source. Eappleye, in his solicitude to get rid of a partner not in harmony with him, had (as Frisbie claims) represented to him that if he alone had the management, Wallace (his father-in-law) would furnish the ready money necessary to carry the debts of the firm until their resources could be made available. He may have hoped that this would be.so. When applied to for a further loan, however, Wallace was found to be very cautious, and probably somewhat suspicious as to the discretion and capacity for success of his son-in-law. He was not disposed to lend any more money in that direction, but was at length induced to do so by the consideration that the collaterals offered were more than sufficient for the present loan, and he would thereby strengthen his security upon his first note. The conversations and discussions on this subject, sworn to in detail by both Wallace and by Eappleye, are so natural and probable, and so fully in harmony with the ordinary course of affairs with men of like relative conditions under similar circumstanees, as to render it very improbable that they could have been invented in all their details.

It seems to be supposed by counsel for the receiver that certain circumstantial evidence in the case rebuts the conclusion that Bappleye had agreed with Wallace that he might retain these notes as collateral to the old debt as well as to the new, and for this purpose the fact is supposed to be established that in the chancery suit of Frisbie, both Wallace and Bappleye made oath that these collaterals were held by Wallace for the new debt only, and for no other debt, and that in a prosecution against Frisbie, instituted afterwards, Bappleye so testified. It may be conceded that Bappleye did so swear, but he now swears that his former statements were not correct on this question. This identical question now presented was not a material question in issue in either of those cases. The substantial allegations on which the chancery suit was based were, that the assignment of these collaterals was made without consideration, and that the first debt was fictitious and fraudulent, and not real, and if real, was already well secured, and hence the pledge for the old debt was unwarranted. The material allegation of the answer in that case was, that the pledge was made to secure the new debt, of which Frisbie had made no mention. The material question was not whether the pledge extended over the old debt, but was whether it rested upon a real, valid, subsisting debt. It was material to show the new debt, and the pledge therefor. This being shown, it was not material in that case whether the pledge covered the old debt or not. Bappleye’s affidavit and his testimony, therefore, were not as to matter material to the issues in the proceedings in question. These circumstances, therefore, are not sufficient to authorize the rejection entirely of the testimony of Bappleye in this case. Contradictory statements by a witness as to immaterial matters do tend to cast suspicion upon the testimony of a witness, but do not authorize its entire rejection, where he is corroborated by another witness, and not contradicted by any evidence in the case.

As to the claim that Wallace made any statement in his affidavit at variance with his present testimony, it is not sustained. The only evidence on this" question is that of Mr. Cooper, who drew the affidavit of Wallace, referred to. He says as to Wallace’s affidavit, that it was about the same as that of Rappleye. This was the recollection of Mr. Cooper as to the contents of an affidavit drawn by him in another suit, near three years before he gave his testimony. An examination of Rappleye’s affidavit, referred to by the witness, shows that it contains nothing directly on the question as to whether Wallace had an agreement from Rappleye to hold these securities as collateral to the first note. There is one expression which contains that idea by implication. There is nothing in this record indicating that Mr. Wallace was not a man of unquestioned standing in the community as a man of wealth, caution and integrity. He was not interrogated at all as to this affidavit. We are satisfied his testimony in this case is true.

The next question relates to the power of Rappleye to pledge these collaterals to secure the first debt. Counsel for the receiver seems to construe the contract of April 18, 1876, between Frisbie and Rappleye, as an assignment of the assets of the firm for the benefit of creditors, and hence insists that Rappleye became “a trustee for all the creditors, without priority, ” and that he therefore had no power or authority to secure one creditor to the prejudice of others. In the absence of this agreement between these partners, it will not be denied that Frisbie and Rappleye, in winding up their affairs,’ could have made a valid contract with Wallace that if he would . make the second loan he might hold the securities as collateral to both debts, or to his entire claim. This contract differs from an ordinary assignment for the benefit of, creditors in its whole character.and structure. It was made for the benefit of the parties to it, and Rappleye was given the largest powers and discretion. The end to be accomplished for the benefit of the parties was, that the debts and liabilities should be extinguished out of the assets, without sacrifice of the assets, and. a surplus divided. To “secure that end” Rappleye was authorized “to trade any part of the assets, and to do all and every the matters and things that may he * * * expedient in settling the affairs of the ■firm.” It was plainly the design and effect of this contract to clothe Rappleye with powers to this end equal to the combined power of both Frisbie and Rappleye,—that he was to be in that regard in full the representative of the late firm. Frisbié plainly undérstood that Rappleye had power in some way to borrow money, for in his bill he said he was expected to get advances from Wallace, and his complaint was that this was not done; and he also understood that Rappleye had power to pledge assets to secure old debts, even without any new consideration. He was told by Wallace that he held this second parcel of securities. At that time he did not know of the new loan by Wallace, and yet he made no objection and did not then find any fault with the arrangement.

In an ordinary assignment to a trustee for the benefit of creditors, the title to the assets is passed from the debtors, so that the same can not be reached by creditors except by virtue of their rights under the assignment. Here the title was placed in Rappleye, and in his hands these assets were as open to appropriation by creditors as if the assignment had not been made. Their rights were in no way affected by the transfer. The object and legal effect of this contract was that the prosecution of the business should cease, and that Rappleye should have vested in him all the powers which both the partners would otherwise have had in the management of the property, to the end that they should both be relieved from liability as debtors. This case does not involve the question of the personal liability of Frisbie upon the last note. The validity of the debt for which that note was given, and of the note as the note of Bappleye, may be, and no doubt is, involved. Bappleye had authority to apply the assets to pay the debt of the insurance company, or to pledge assets in its security to procure extension of time for the payment thereof; or, under the powers given in the agreement, he had power to borrow money to pay that debt, upon his own note, and pledge the assets in security, if the pledgee was given no power to sell the assets in violation of the limitations in the agreement. Treating, then, this new note merely as the note of Bappleye alone, it is a' debt of such character that the pledge of collaterals was in that regard valid.

The remaining question relates to Wallace’s right to a lien on the collaterals for the payment of the first note. Obviously Frisbie understood that he had by this contract clothed Bappleye with power to pledge assets to secure the payment of old debts. He was told by Wallace that he held this second parcel of securities. At that time he did not know of the new loan, and yet he made no objection thereto. Afterwards, when he got the notion that this first indebtedness was not real, he filed his bill charging that there was no foundation for this old indebtedness, that it was merely colorable, and that Bappleye had no lawful authority to pledge the col-laterals to secure a fictitious claim of indebtedness.

We are fully convinced that the pledge was made as claimed by Wallace, and that in equity Wallace’s estate should be fully paid from the proceeds of the collaterals in question, before the application thereof to any other debts of the late firm.

The judgment of the Appellate Court is therefore reversed, and the decree of the Superior Court of Cook County is also reversed, and the cause remanded to the Appellate Court, to be remanded thence to the Superior Court, with directions to enter there a decree in conformity to the views herein expressed.

T 7 7 Judgment reversed.

Mr. Justice Walker : I concur in the conclusion reached, but not in all that is said in the opinion.

Mr. Justice Mulkey,

dissenting:

Ordinarily, when I am unable to agree with the majority of.the court in the decision of a case, I am content to simply place myself upon the record as dissenting, and sometimes I do not even do that. But inasmuch as the conclusion reached in the present case seems to me to be not only destitute of any authority even tending to support it, but in direct conflict with well recognized principles founded upon an unbroken current of authority, I feel it due to myself, as a member of the court, to do something more than merely mark myself as dissenting.

With respect to the collaterals given with the note of the 28th of December, there is no ground for controversy. It is conceded that the note was given for money loaned by Wallace to Frisbie & Rappleye, in the usual course of business, and the makers had a perfect right to secure it in the manner they did. Indeed no question is made upon the argument with respect to Wallace’s right to the collaterals given with this note. The whole controversy is confined to the right to give the subsequent note, and the disposition sought to be made of the collaterals accompanying it. This note, it will be remembered, was executed by Rappleye in the name'of the firm, two days after the dissolution of the partnership between Frisbie and Rappleye, Wallace at the time having notice of such dissolution. It is conceded the note was given for loaned money, which was used by Rappleye in the payment of a partnership debt, yet defendant in error questions the power of Rappleye to execute it so as to bind the firm or the partnership effects. While the authorities are not altogether harmonious as to the power of partners after dissolution to bind one another by new engagements, yet the general doctrine, as shown by the decided weight of authority, unquestionably is, that notwithstanding the dissolution the partnership still exists, sub modo, for the purpose of collecting and paying the debts of the firm, and of doing such other acts in the regular course of business as are necessary to winding it up. The power of disposing of the partnership effects for these purposes exists practically to the same extent as it did before dissolution. Whatever is essential to the winding up of the business of the firm, as contradistinguished from what might be deemed politic, desirable or expedient, may be done, and nothing more. Parsons on Partnership, (2d ed.) 388, side page; Hicks v. Russell, 72 Ill. 230. As contracts of sale are essential to the disposition of the partnership property, whereby the necessary means may be raised for the payment of debts, they may be made as well after as before dissolution; and this power to sell, as a general rule, includes the power to mortgage or pledge the partnership property, yet this power may, and often is, modified or limited by agreement of the parties. Herman on Chattel Mortgages, sec. 118; 5 Wait’s Actions and Defences, 127.

In the application of the general rule that each partner, after dissolution, has the right, where the same has not been relinquished by special agreement, to enter into such contracts and engagements as are necessary to the closing up of the partnership business, it is generally held that á partner, after dissolution, has no implied power to give a note or other negotiable security in the firm name, even for a preexisting debt, and such is the doctrine of this court. .Parsons on Partnership, 391; Hicks v. Russell, 72 Ill. 230.

If such be the rule with respect to antecedent indebtedness, it must be conceded that it applies with greater force to ani indebtedness created after such dissolution. It is believed that no decision of any respectable court can be found holding that a partner, after dissolution, can, by virtue of any implied authority arising out of his relation to the dissolved. partnership or the partnership effects, go into the market, borrow money, and execute in the partnership name a note or other negotiable security therefor, so as to bind the other partners or the partnership effects, where the party advancing the money and taking the note or other security has notice of the dissolution of the partnership. Whether in such case, where the money thus procured has been applied in the discharge of a preexisting firm debt, the party lending it will in equity be subrogated to the rights of the creditor, as against the firm whose debt has been liquidated by the loan, is a question which does not arise upon this record, and about which it would be useless to express an opinion.

It follows, from what I have already said, that Rappleye had no authority either to borrow the money advanced by Wallace on the 20th of April, or to execute the note given therefor, and if the partnership was not bound thereby, it is difficult to see on what principle Wallace could hold the collaterals. The note in question, then, was in law simply the individual note of Rappleye, and Wallace, having actual notice of the dissolution of the partnership, is ■ conclusively presumed to have known that Rappleye, after such dissolution, had no implied power, by reason of existing relations to Frisbie, to execute a note or borrow money so as to bind the latter, and that under the circumstances Rappleye alone was bound. This being so, Wallace was not warranted in relying upon the firm for payment, except so far as he might be subrogated-to the rights of the insurance company, whose debt against the firm was liquidated with the money advanced by him to Rappleye; nor was he authorized to receive in pledge, the securities or collaterals given to him by Rappleye with that note. It was a misappropriation of the partnership effects, in which Wallace personally participated, with express notice of such facts as in law showed the transaction unwarranted.

. There is another view of this ease, however, equally unfavorable to plaintiffs in error. At the time of the dissolution the partnership was insolvent, and Frisbie had an unquestioned right to provide for an equal division of the assets of the concern among the creditors, according to their respective demands. As a partner he had a lien in equity upon these assets, as well for his own indemnity against personal liability for the debts of the firm, as for his proportion of any surplus that might be coming to him after payment of the debts. Having these rights, by the articles of dissolution he “transferred” and “assigned” to Rappleye, “as trustee, ” his entire interest in the partnership effects “in trust,” to “collect the assets of the firm, and from the proceeds thereof pay the. firm debts in full, ” provided the assets were sufficient for such purpose. It will be observed that this instrument contains apt and appropriate words of conveyance and transfer, and by it Rappleye clearly acquired the exclusive legal title to all the partnership property, subject to the trusts upon which the transfer was made. Upon the execution and delivery of this instrument an express trust was thereby created, not only in favor of Frisbie himself, but also in favor of all the creditors of the firm. By virtue of it ea.ch creditor became entitled to share in the proceeds of the partnership estate in proportion to the-amount due him, and it was not in the power of the trustee to hypothecate to one having notice of the trust, a portion of the assets, to secure the claim of one creditor so as to give him a preference over the others. Wallace himself states that he knew of the dissolution at the time of the giving of the last note and. the transfer of the collaterals accompanying it, and the evidence satisfactorily shows that he was made acquainted with the terms of the dissolution. Indeed, there is no claim on the part of either Rappleye or Wallace that the latter did not fully understand the terms upon which the partnership was dissolved, and by which Rappleye was given exclusive control of its affairs for the benefit of the creditors, as already shown. Assuming, then, that these collaterals were given, as is claimed by Wallace and Rappleye, to secure the first as well as the last note, it is manifest that in so far as they were given to secure the first note, it was in effect giving Wallace a preference over other creditors, which was a violation of the trust, in which Wallace personally participated, and from which he is not permitted to derive any advantage. There is nothing in the instrument to warrant the attempted preference. By its terms all the creditors are put upon terms of perfect equality, and it was the duty of the trustee to so execute the trust as to effectuate the clearly expressed intention of the parties in that respect. The partnership effects having been conveyed in trust to Rappleye in the manner and for the purposes we have seen, it was not necessary for a creditor of the firm to first go ¡into a court of law to establish his claim, and could not by doing so thereby obtain an advantage over other creditors who did not see proper to take that course. The assignment in question brings the case directly within one of the exceptions to the general rule that a party must first exhaust' his remedy at law before going into a court of equity.-2 Perry on Trusts, sec. 594; Steere et al. v. Hoagland et al. 39 Ill. 264; Hill on Trustees, 518, side page.

The members of a partnership, either before or after dissolution, may, where no statutory provisions intervene, like other persons who sustain no such relation to each other, make a partial or total assignment of the partnership effects in such manner as to give a preference to one or more of their creditors. This right of partners to prefer creditors in disposing of their property, rests upon the ground that their -ownership and power of disposition are as unlimited and absolute as that of persons sustaining no such relation to each other. (2 Leading Cases in Equity, 395, and authorities there cited; Reeves v. Ayers, 38 Ill. 418.) It has been supposed that the creditors of a partnership, particularly, after dissolution, have something in the nature of an equitable lien upon the partnership effects; but such is not the case. (2 Leading Cases in Equity, 396.) But where the partnership has been dissolved by the death of one of the partners, the survivor will in equity be regarded as a trustee of the partnership property, for the benefit of the partnership creditors as well as the legal representatives of the deceased partner, and in such case the former have an equity, arising out of the lien of the partners upon the partnership effects, as above mentioned, by which they are entitled to payment of their claims before any part of the partnership assets can be applied to the payment of the individual creditors of the partners. And in such cases the assets being insufficient to pay the full amount of the claims of the partnership creditors, they are to be paid pro rata. Reeves et al. v. Ayers, supra; 2 Leading Cases in Equity, 396; Parsons on Partnership, 441, et seq.; Hapgood v. Cornwell, 48 Ill. 64; Ladd v. Griswold et al. 4 Gilm. 25.

The Superior Court, in disposing of this case, doubtless proceeded upon the theory that Bappleye had authority to make the loan and hypothecate the collaterals for the payment of both notes, but found, as a matter of fact, they were pledged for the payment of the last note only, and admitting the law to be as is assumed upon that theory, the decree was clearly right. Upon that theory, the whole-case turned upon a pure question of fact, which the court found adversely to plaintiffs in error, and upon a careful consideration of the evidence it is difficult for me to conceive how they could have reached any other conclusion. It is true that in this suit, near three years after the alleged hypothecation, Wallace and Bappleye both swear positively that the collaterals in question were given to secure both notes; but it is equally true that they both swore just as positively, in another proceeding only a few months after the transaction occurred, when the circumstances must have been fresh in their minds, that they were given to secure the second note only. Besides, Mr. Young, who was present when it is claimed that there was a verbal understanding between them that the collaterals were to apply to both notes, swears that he heard nothing of the kind pass between them, and that it was not till months afterwards he heard Rappleye say there was some kind of an understanding to that effect, but that he, Rappleye, could not tell whether it was in writing^ or otherwise give any distinct or satisfactory account concerning it. Moreover, the instrument of hypothecation which was executed at the time, shows upon its face that these collaterals apply exclusively to the last note, and that no reference whatever is made to the first note. In view of these facts I am at a loss to see how the Superior Court could have come to any other conclusion than that which it did, upon that question.

But the consideration which, in my judgment, is absolutely conclusive of this case, is the fact, already shown, that upon the dissolution of the partnership Frisbie conveyed the entire partnership effects to Rappleye in trust, for the benefit of the partnership creditors, and under such assignment Rappleye had no power to so dispose of the assets of the firm as to give orle creditor a preference over another, especially when such preferred creditor had notice of the assignment, as is shown to have been the case here. It is true, the mere retirement of one partner upon the dissolution of the firm, with the understanding that the other partner shall collect and pay all debts, and have the exclusive control and management of the partnership effects in winding up the business of the partnership, will not have that effect, for the reason such an agreement as that does not transfer the legal title in the partnership effects from one partner to the other, and hence no express trust is thereby created. But in the present case the legal title of Frisbie to the partnership effects passed to Rappleye, and the latter became thereby converted into a trustee, like any other assignee, for the benefit of creditors. That such is the legal effect of the assignment to Rappleye, is fully sustained ■ by a number of well-considered cases, and no authority has been produced, nor is it claimed that any such exists, even tending to sustain a contrary view. Sedam et al. v. Williams et al. 4 McLean, (Mich.) 51; Wilds et al. v. Chapman et al. 4 Edw. Ch. 669.

. It follows, therefore, that Eappleye had no power to hypothecate the collaterals in question to secure the first of said notes. To do so was a fraud upon the other creditors of the firm, in which Wallace knowingly participated. If any error at all was committed by the Superior Court, it was in favor of plaintiffs in error, and they therefore have no right to complain of it.

For the reasons stated, I am clearly of opinion the judgment of the Appellate Court should he affirmed.

Craig and Bcholfield, JJ.: We dissent from the opinion of the court, and concur in the foregoing opinion, of Mr. Justice Mulkey.

       At the time this opinion was delivered Mr. Justice Dickey was Chief Justice.


source: Caselaw Access Project

author: Mr. Justice Dickey

license: Public Domain

text:
    Caroline A. Jackson v. George A. Miner et al.

      Filed at Ottawa, September 26, 1881

      —Rehearing denied March Term, 1882.

    1. Fraudulent conveyance—gifts not valid as to then existing creditors. The purchase of property by a man, for a woman, in his own name, and its conveyance to her without any pecuniary consideration, and in view of illicit intercourse with her, past and expected, will not be sustained as against the claims of creditors for debts owing at the time of the grant, which he at that time was unable to pay.
    2. Same—as to subsequent creditors. Where property was bought for another as a gift, and the person to whom the gift was made put in possession of the same in 1870, and the conveyance made to her and recorded in December, 1871, at which times the party making the purchase and gift was solvent and in good credit, it was held, that the gift could not be set aside by creditors for debts accruing to them in 1873 and 1874.

      3. Compbomise—setting aside for fraud. A compromise by a debtor with his creditors, by which he paid fifty cents on the dollar of his indebtedness, and procured releases, will not be set aside, in the absence of proof of any false representations or fraud except his omission to inform his creditors that he had held the title to certain houses and lots, and had made a gift of them to another.
    4. Allegations and decbee—must correspond. On a creditor’s bill to set aside certain voluntary conveyances as having been made to hinder and defraud creditors, a prior compromise of the debtor with the creditor, by which fifty per cent of his indebtedness was taken in full discharge, can not be set aside, and the settlement opened for fraud, where no such case is made in the pleadings, or shown by the proof.
    5. Acknowledgments oe deeds—impeaching the certificate. The testimony of a widow that she never joined with her husband in the execution of a deed, or acknowledged the same, is not sufficient to overcome the certificate of the officer as to her acknowledgment, and his testimony in support thereof.
    Appeal from the Circuit Court of Cook county; the Hon. M. F. Ttjlby, Judge, presiding.
    This is a proceeding in chancery, instituted by Miner and others, constituting a mercantile firm of Boston, as creditors of Eli D. Terry, deceased, to set aside certain deeds made by Terry and his wife, during his life, to Caroline A. Jackson, the appellant.
    The first deed called in question is a conveyance of a lot and dwelling house known as 1393 Indiana avenue, in Chicago, alleged to have been made about December 21, 1871. The second is a conveyance of a house and lot in Chicago known as 134 Paulina street. The ground of attack is the allegation that these conveyances were made with intent to cheat and defraud complainants and other creditors of Terry. The property on Indiana avenue is alleged to be of the value of $8000, and that on Paulina street to be worth about $6000. It is charged that each of these deeds was made without any pecuniary, legal, or equitable consideration, and for the purpose of defrauding creditors. It is also charged that in the making and acknowledging of the deed for the property on Indiana avenue, the wife of Terry was personated by some other woman, and really never joined in the same, or released her dower.
    Caroline A: Jackson, answering, denies the fraud alleged in the bill, and denies most of its allegations, and vindicates the deeds in question, saying they were made “as so much paid to her towards an actual indebtedness to her by Terry. ”
    By leave of court she amended her answer, and set up that in November, 1870, she procured Terry, as her agent, to purchase for her the property on Indiana avenue, and that the same was then so bought by her with her own money, through him as her agent, and that he, without her knowledge, took the title in his own name, and that the title was afterwards conveyed to her merely because it was her property in equity ; that his title was merely that of trustee, the purchase money being furnished by her.
    By consent, the widow of Terry, Mrs. Caroline Terry, was made a party defendant, and she answered the bill, and filed a cross-bill against complainants and Caroline Jackson, stating the facts substantially as stated by complainants in the original bill, and charging that she never joined in the deed for the Indiana avenue property, and she claims dower in both properties. Issues were formed and proofs taken.
    The circuit court, on final hearing, granted the relief sought in the original bill, finding that the deeds in question were made with intent to delay and defraud creditors, and setting the same aside as void against creditors, and also sustained the claim of Mrs. Terry for dower in both pieces of property,—in one, upon the ground that her release of dower was obtained by fraud, and in the other, upon the ground that she never joined in the deed or made the acknowledgment thereon indorsed. From each of these decrees Caroline A. Jackson appeals.

      Messrs. Elbridge & Toubtellotte, for the appellant, after stating and discussing the facts, made the following among other points of law as applicable to the case:
    The appellees, to maintain their bill, must show that they were existing creditors at the time of the conveyances, or they must show that the conveyances were actually made with the intent and purpose of defrauding subsequent creditors, and that the grantor was insolvent at the time. Hudnal v. Wilder, 4 McCord, 294; Cole v. Tarier, 31 Ala. 244; Converse v. Hartley, 31 Conn. 372; Ward v. Hollins, 14 Md. 158; Thacher v. Phinney, 7 Allen, (Mass.) 146; Lynch v. Raleigh, 8 Ind. 273; Horn v. Volcano & Co. 13 Cal. 62; Lyman v. Cessford, 15 Iowa, 229; 1 Grant Cases, 74; 11 Mo. 540; 88 Ill. 385; Mixell v. Lutz, 34 id. 386; Moritz v. Hoffman, 35 id. 553; Gridley v. Watson, 23 id. 186; Woodrich v. Page, 68 id. 157; Griffin v. First National Bank, 74 id. 259.
    The mere fact of an indebtedness existing does not render a voluntary conveyance void, if there was no intent to defraud creditors. Moritz v. Hoffman, 35 Ill. 553.
    It must be averred and proved that the grantor, at the time of the conveyance, was insolvent. Patrick v. Patrick, 77 Ill. 555.
    In the case of a voluntary conveyance by an insolvent debtor, if the debtor pay the claim, the conveyance can not be set aside by the creditor for a debt subsequently contracted. Hudnel v. Wilder, 4 McCord, 294.
    ■ Even a conveyance without consideration, made to defraud creditors of the grantor, is valid against subsequent creditors, with notice of the first conveyance, and recording a deed is such notice. Stivers v. Morse, 47 N. H. 532; McNeely v. Rucker, 6 Blackf. 391; Fowler v. Stoneum, 11 Texas, 478.
    ■ As to the force of denial of signature, as against the acknowledgment before a notary, we refer to Myers v. Parks, 95 Ill. 410.

      Messrs. Boutell and Wateeman, for the appellees Miner, Beal & Haekett:
    Although a deed for past cohabitation is good as between the parties, it is void as against creditors, being simply a voluntary gift. Even seduction is no consideration. 1 Parsons on Contracts, (5th ed.) 435; Binnington v. Wallis, 4 B. & Aid. 650; Beaumont v. Reeve, 8 Q. B. 483; Wait v. Day, 4 Denio, 443; Sherman v. Barrett, 1 McMullan, (S. C.) 162; Hargrooves v. Meray, 2 Hill’s Ch. (S. C.) 222.
    “If the donor is insolvent at the time of the transfer, the conveyance is generally deemed to be void as to subsequent creditors.” Bump on Fraud. Con. (2d ed.) 314, 315.
    The plaintiffs stood in the position of continuing creditors, and such creditors are not included in the rules which apply to merely subsequent creditors. Bump on Fraud. Con. 314, 315, (2d ed.); May on Fraud. Con. 52, 63, 64; Hunt on Fraud. Con. 50; Holmes v. Pinney, 3 Kay & Johns. Ch. 99; Parish v. Murphree, 13 How. 99; Townsend v. Windham, 2 Ves. Sr. 1; Bay v. Cook, 31 Ill. 343; Case v. Phelps, 39 N. Y. 164; 1 Am. Lead. Cases, 42; Story’s Eq. Jur. secs. 361, 362; 1 Smith’s Lead. Cases, 46, 47; Bev. Stat. 540, chap. 59, sec. 4.
    Messrs. Gault & Low, for the appellee Caroline Terry.:
    The question of law is this: Is a married woman’s dower barred in the property conveyed by a deed in which she joined, when that deed is afterward attacked and set- aside as having been designed to hinder, delay and defraud the creditors of the grantor? Upon this proposition the law is very clear, having been passed upon and decided in the negative by our Supreme Court on many different occasions. Blain v. Harrison, 11 Ill. 384; Summers v. Ball, 13 id. 483; Stribling v. Ross, 16 id. 122; Gove v. Cather, 23 id. 634; Morton et al. v. Nolle et al. 57 id. 176.
   Mr. Justice Dickey

delivered the opinion of the Court:

Eli D. Terry, on the first of January, 1870, was a married man, living at Park Eidge, a village of some 400 to 600 inhabitants, located some ten or twelve miles north-west from Chicago, and was the proprietor of one of the largest clothing stores in the city of Chicago, keeping on hand usually a stock of goods of the value of about f 50,000, and apparently doing a very successful business. His wife was an invalid; and though they had lived there nearly a year, his wife was, during that time, confined to the house, and so continued until some time in the spring of 1870. In March, 1871, he removed to Chicago, and took up his residence at 401 Monroe street, and there lived until his death, which occurred February 5, 1875. About the first of January, 1870, Caroline A. Jackson, then about 24 years of age, who had been supporting herself for about eight years, and managing her own affairs, engaged in teaching, book-keeping, etc., came to Park Eidge from Indiana, for the purpose of teaching for two months a school at that place, instead of her cousin, who had taught up to that time. She taught there until the first of March of that year, and then went to her friends in Ohio; returned to Chicago early in May of that year; boarded at a boarding house on the North Side until June of that year; then went to housekeeping in a house on Lincoln street; remained there until November of that year, and at that time moved to a house on Indiana avenue, and lived there until' the fall of 1872, when she removed to a house on Paulina street, and was living in that house at the time of the commencement of this suit. The controversy in this suit relates to the properties mentioned as on Indiana avenue and on Paulina street.

The property on Indiana avenue, so far as the title papers show, was bought by Eli D. Terry, in November, 1870, through a contract of purchase, made about the time Caroline Jackson began to occupy the same. The deed was made to Terry in pursuance to this contract, about January 1, 1871, and in December, 1871, Terry and wife conveyed this property to Church, and Church conveyed the same to Caroline A. Jackson. The property on Paulina street was conveyed to Terry, by Henry Waller, by deed dated September 1, 1872, and was conveyed to Caroline A. Jackson by Terry (his wife not joining), by deed dated December 3, 1874, and acknowledged and delivered about January 23, 1875, being less than two weeks before the death of Terry. These deeds were all recorded soon after their delivery.

It is shown that no money or other value was paid at the time of the deed by Terry to Church, or at the time of the deed from Church to Caroline A. Jackson; and although a note of over $8000, from Terry to Miss Jackson, was surrendered by her on the receipt of the deed for the property on Paulina street, she testifies the surrender of this note was a sham to conceal the real character of the transaction, and that this note formed no part of the consideration for that deed. This proof, standing alone, indicates that the deeds through which Caroline A. Jackson derived title to both of the properties in question, were merely voluntary, and without any valuable consideration. And while such deeds were valid as against Terry and his heirs, yet they may be avoided by then existing creditors, if he were then unable to pay his debts.

The substance of the story presented by the testimony of Miss Jackson is, that equitably neither of these properties ever was the property of Terry; that while for certain reasons the contracts of purchase and conveyances were taken in Terry’s name, yet in fact the purchases were made by him for her, and were paid for with her own money, given to Terry for that purpose. She concedes that she received all this money (and considerably more, which she applied otherwise,) from Terry, and says it was so paid to her in part satisfaction of a preexisting indebtedness of Terry to her. When pressed for the source of this indebtedness, she says, in substance, that on about the 12th of February, 1870, she became engaged to be married to Terry, and .that by their agreement they were to be married about the 1st of May of that year; that at that time, and upon one or more occasions between that time and the first of May, she and Terry had sexual intercourse with each other; and that during all that time she had no knowledge, thought or suspicion that Terry was a married man; and that when the time appointed for their marriage arrived, Terry failed and refused to marry her; and in consideration of her claim upon him for this breach of promise and deception, and also of past sexual intercourse, Terry agreed to pay her $30,000, and she agreed to accept the same- in satisfaction of her wrongs; and that in part performance of that agreement he did pay to her, from time to time, large sums of money, in all as much as $16,000 to $18,000; and that the money with which each of these properties was bought was a part of these moneys thus received by her from Terry.

All this may be true; but in view of certain well established facts in the case, the story, in some essential respects, seems so extremely improbable that we can not adopt it as the truth. We can not believe that on February 12, 1870, Caroline A. Jackson was not aware of the fact that Terry was a married man. She was introduced to him very soon after her arrival at Park Eidge, and by her story he seems to have been very much interested in her from their first meeting. They met first at a church sociable in Park Eidge, and she says they had then and there a conversation of at least an hour, in which he requested that she should correspond with him. A few days after, he attended public exercises in her school, and there renewed his request, and she assented to it and took his address in Chicago, and they exchanged letters from that time until February 12 (some five weeks), and in the meantime she met him several times at church sociables, and upon two occasions he called on her at her boarding house, and this, without the knowledge of the lady with whom she boarded. She called in the meantime once or twice at his store in Chicago, • being deeply veiled when she made these calls, and talking with no one else at the store; and at one of these visits she dined with him at one of the principal hotels in Chicago. She meanwhile attended frequent religious meetings and church sociables, and at the religious meetings sung in the choir. Terry appeared at some of these sociables, and when he did the ladies very generally inquired of him in relation to the health of his invalid wife. He usually spoke freely oü that subject, and one witness speaks of one conversation, in which Miss Jackson took part, in which he spoke distinctly of his wife in her hearing and presence. His residence was one.' of the prominent buildings in the village, with spacious grounds and ornate shrubbery, and stood only a few blocks from the boarding house of Miss Jackson, and in plain view from the door of that house. He was regarded as one of the principal citizens, and was usually at' home each night, going to his store in Chicago in the morning on the railroad train, and returning in the evening. It seems highly improbable that Miss Jackson, mingling with the pupils of the only school of the place, and with the ladies at most of the church sociables, and sitting in the choir at most of the religious meetings during these five or six weeks, in a village of not exceeding 600 inhabitants, could remain in such utter ignorance as to the status of a man who was making love to her so vigorously. The secrecy of his visits at her boarding house, of their correspondence, and especially of, her visits to his store in Chicago, with the readiness with which she consented to visit his private rooms in Chicago on the day of the alleged marriage contract, all indicate that she was aware that it was illicit love that prompted his actions, and that she tolerated his attentions when she was aware of the fact that he was a married man.

From all the circumstances, we are forced to believe that the marriage contract is a fiction; that the money lavished on this woman was merely in view of illicit intercourse, past and expected; that the house on Lincoln avenue was bought with that view, and used for that purpose, and so with the house on Indiana avenue, and also the house on Paulina street. That Terry was enamored of Carolina A. Jackson we do not doubt, nor do we doubt that this attachment continued until his death; but we are persuaded that the purchase of these houses for her in his name, and their conveyance, were mere gifts or grants, without such consideration as should shield them from the claims of creditors as to debts owing at the time of the grants, which he at that time was unable to pay.

As to the property on Paulina street, the grant was made when Terry must have known that he was insolvent, and the debts due to the complainants, which now remain unpaid, were then in existence. As against the complainants, to the extent of the unsatisfied part of their claims, the deed to Miss Jackson for the Paulina street property can not properly he allowed to stand. The decree of the circuit court in that regard is therefore affirmed.

Regarding the conveyance of the property on Indiana avenue as also a mere voluntary conveyance, it remains to inquire whether the complainant creditors of Terry are in a condition to enable them to call it in question. It is conceded that the debts now due to them accrued in 1873 and 1874. The property was bought for her and put in her possession in 1870, and the conveyance was made in December, 1871, and was on record. At that time he seems to have been solvent, and in good credit. It is said, however, that at that time Terry did owe these complaining creditors a considerable amount, and that early in 1872 Terry compromised with his creditors at fifty cents on the dollar, and procured releases, and that although he afterward paid the fifty peícent agreed upon in the compromise, still the other half of the debt has never been paid, and in justice the estate ought to be held for that, because these creditors were ignorant of this conveyance to Miss Jackson, and would not have accepted the compromise if they had been aware of the true state of the case. To sustain this position, a ease should be made upon the pleadings, and sustained by proof, which would authorize the setting aside of that compromise of 1872. No such ease is made. The compromise was made chiefly on account of his losses by the fire of 1871. ' There is no proof of any false representations or other fraud on the part of Terry in making this compromise. The mere fact that he omitted to mention that he had held title to this property, and had made a gift of it to another, is not a sufficient basis for such a decree.

It is suggested that the fifty per cent embraced in that compromise which was paid, was not really paid, but was simply changed into another form through new credits,—in other words, that it was paid by goods afterwards sold on credit by the creditor to the debtor, and this debt was simply turned over and changed, by successive credits, in such way that the present indebtedness merely represents the fifty percent agreed in the compromise of 1872 to be paid for the releases. The proof fails to show such a case. The supposed connection between the present debt and that of 1872, is not shown satisfactorily by the proofs.

As to the claim of Mrs. Terry for dower in this property, we think it ought not to be sustained. She denies that she ever joined in the deed of this property to Church, or released her dower therein. In this we think she is mistaken. The testimony of Barker, the notary, and the evidence of the certificate of the notary, show satisfactorily that she did execute the deed and make the acknowledgment.

The decree of the circuit court is therefore reversed, and the cause remanded for other and farther proceedings in accord with the views here expressed.

Decree reversed.


author: Mr. Justice Scott Mr. Justice Mulkey, Per Curiam :

text:
    William Truesdale et al. v. The Peoria Grape Sugar Company.

      Filed at Ottawa September 26, 1881

      Rehearing denied March Term, 1882.

    1. Remedy—laying railroad traclt in street, by consent of city. A court of equity will not take jurisdiction to restrain the lajung of a railroad side-track by a company in the public street in front of its own properly, to connect with the main track of a railway, under license by the city council, by ordinance, on a bill by private individuals owning property in the vicinity, but not abutting on the part of the street to be used.
    2. Any damages that may be sustained by property owners in a city by reason of the construction of a railroad track under the license of the city holding the fee of the street, must be sought in an action at law.
    Appeal from the Appellate Court for the Second District;— heard in that court on appeal from the Circuit Court of Peoria county; the Hon. D. McCulloch, . Judge, presiding.
    Mr. Julius S. Stabr, and Messrs. Cooper & Tennery, for the appellants:
    While it is true that a city holds the fee of the streets, it is in trust for the benefit of the public, and the city authorities have no rightful power to alienate them or divert them to other uses. Carter v. City of Chicago, 57 Ill. 287; Stack v. City of East St. Louis, 85 id. 379; Kreigh et al. v. City of Chicago, 86 id. 407; City of Alton v. Transportation Co. 12 id. 60; City of Quincy v. Jones, 76 id. 23; City of Chicago v. Rumsey, 87 id. 35.

      The cases sustaining the grant of the privilege to construct a railroad track in a public street, are placed upon the ground that railways are improved highways, and subserve the public good as such, which reason fails here. G. B. and W. R. R. Co. v. Hartley, 67 Ill. 443; Stack v. City of East St. Louis, 85 id. 378.
    The public are entitled to the use and enjoyment of the whole highway, and no individual can appropriate a portion of it to his own exclusive use. The King v. Russell, 6 East, 427; People v. City of St. Louis, 5 Gilm. 571; Hart v. Mayor of Albany, 5 Wend. 584.
    As to the jurisdiction of courts of equity to prevent a nuisance, or obstruction of a highway, by injunction: People v. City of St. Louis, 5 Gilm. 571; Green v. Oakes, 17 Ill. 249 ; Corning v. Lawrence, 6 Johns. Ch. 439; Hills v. Miller, 3 Paige, 254; Chicago and Vincennes R. R. Co. v. People, 92 Ill. 170.
    If by contiguity be meant actual contact, then- the property of complainants can not be said to be contiguous; but this term, we conceive, is to be taken in a wider sense, so as to embrace property specially damaged by the obstruction. Green v. Oakes, 17 Ill. 250; Craig v. People, 47 id. 487; Carter v. Chicago, 57 id. 281; Corning v. Lawrence, 6 Johns. Ch. 254; High on Injunctions, sec. 528.
    Messrs. Puterbaugh & Puterbaugh, for the appellee:
    As to the power of a city to authorize the laying of a railroad track in and along its public streets, counsel cited Moses v. Pittsburgh, Ft. Wayne and Chicago R. R. Co. 21 Ill. 516; Murphy v. City of Chicago, 29 id. 279; Stetson v. Chicago and Evanston R. R. Co. 75 id. 74; Patterson v. Chicago, Danville and Vincennes R. R. Co. 75 id. 588; City of Quincy v. Chicago, Burlington and Quincy R. R. Co. 92 id. 23.
    The laying of a railroad track upon a street will not be enjoined at the suit of an adjacent land owner, who simply owns up to the line of the street, and over whose land the road does not pass, where no special damage is shown to the complainant different from that to all the other property owners. High on Injunctions, secs. 522, 533; Bigelow v. Hartford, etc. 14 Conn. 565; O’Brien v. Norwich, etc. 17 id. 372; Frink v. Lawrence, 20 id. 117, and cases cited supra.

    The rule requiring complainants to show a special injury peculiar to themselves, distinct .from the general inconvenience experienced by the public, is inflexible. Corning v. Lawrence, 6 Johns. Ch. 439; McCowan v. Whitesides, 31 Ind. 235; Davis v. Mayor, 4 Kern. 506; Dawson v. St. Paul, etc. 15 Minn. 136; High on Injunctions, sec. 528.
   Mr. Justice Scott

delivered the opinion of the Court:

In view of the previous decisions of this court it will not be necessary to enter upon any elaborate discussion of the questions raised on this bill. Private individuals, owning property and carrying on business in the vicinity, seek to enjoin defendants from laying a side-track in the street in front of their own property, to connect with any railroad previously constructed in the street. It is alleged in the bill an ordinance was about to be passed by the city council of Peoria that would authorize defendants to do the acts the. injunction was intended to prevent. Conceding, as the bill does, the ordinance of the city will warrant the action of defendants in constructing a railroad track in the street, it must be considered as definitely settled by the previous decisions of this court that equity will not entertain jurisdiction to restrain the contemplated act. It is not alleged any portion of complainants’ lands will be taken or touched by the proposed railroad track, nor are complainants abutting land owners. Their property is in the vicinity, on the same street, but not adjacent to the proposed improvement. The railroad track is to be constructed on the street, the fee of which, it is conceded, is in the corporation granting the privilege to lay such track. When this hill was filed, the sidetrack was not then constructed. It was to be built under, and in Conformity with, an ordinance of the city council. No direct injury would be done to complainants’ lands, and at .the utmost only consequential damages would be sustained. The nature and extent of such damages could only be ascertained after the completion of the work. It may be, if the ordinance granting the license shall be observed in the construction of the side-track, no serious detriment will result to complainants or others from its construction. But be that .as it may, the track is to be constructed on lands not owned by complainants, and under a license from the only party having lawful authority to grant the privilege, and any expected damages that may be sustained by reason of the proposed work, can only be recovered in an action at law. Equity will not entertain jurisdiction to enjoin the proposed work. The rule of law on this subject is so well settled by previous decisions of this court, it is not deemed necessary to discuss it again as a new question. The following cases contain a full expression of the views of the court on the questions discussed by counsel in this ease: Stetson v. Chicago and Evanston R. R. Co. 75 Ill. 74; Pattersons. Chicago, Danville and Vincennes R. R. Co. 75 id. 588; Peoria and Rock Island Ry. Co. v. Schertz, 84 id. 135; Cairo and Vincennes R. R. Co. v. The People, 92 id. 170.

The judgment of the Appellate Court will be affirmed.

Judgment affirmed.

Mr. Justice Mulkey,

dissenting:

I do not concur in the decision of this case. It is, in my judgment, a new and dangerous departure from well established fundamental principles. The necessary effect of "it will be to invite encroachments upon public rights for the benefit of a favored few, and place such as are unable to protect themselves at the mercy of those who, by their power and influence, are able to control municipal legislation in obtaining grants of exclusive privileges, often to the detriment, and sometimes ruin, of their less influential neighbors.

It is true the fee of the streets is generally, as in the present case, in the corporation, yet they are held in trust for the people generally, and can only be used for the ordinary purposes of streets. They can not be lawfully used for any purpose which is not open alike to all classes of persons, without regard to whether they are powerful and influential, or otherwise. Any attempt on the part of municipal authorities to appropriate public streets, or any part of them, to the exclusive use or benefit of a mere private person or corporation, to the injury of neighboring proprietors, is a manifest breach of a public trust, and a flagrant outrage upon private' rights, and a court of equity, in such cases, is the only forum that affords an adequate remedy. To say that equity will not interpose in such cases, to me seems like confounding all distinctions between equitable and legal remedies, and denying equitable jurisdiction in matters of trust,—a class of cases supposed by Story and other eminent authors to be cognizable in courts of equity only.

The present case is simply this: The municipal authorities granted to appellee, an extensive manufacturing company, the right to construct and put in operation a railway in one of the public streets of the city, to be used exclusively by the company in the transaction of its own private business, in which the public had no interest whatever. The direct effect of building and operating this railway will be to destroy the street altogether for the ordinary purposes of a highway, and thereby materially injure the property and business of appellants carried on upon and near the street in question, and the decision in the present case holds that equity will not interpose, by injunction, to prevent an injury of this kind. No authority is cited which sustains it, and I confidently assert none can be found. If the proposed railway, when put in operation, would be open to the public generally, then I concede, under the previous decisions of this court, an injunction would not lie at the suit of a private individual, however much he might be injured by the building and operating of such a road. But such is not the case here. The city had the right to permit a railway to be constructed in one of its streets which, when completed, would be open to the public generally, for the carriage of goods or passengers, or both, on equal terms to all; but it had no authority to permit such a road to be constructed or operated for the exclusive use of a mere private company. In the one case, the city has a discretion to do or not do; in the other, there is no power to act at all. In the former case, equity will not interpose, but remit the parties to a court of law, and such relief as that tribunal affords. In the latter case, there being a total want of authority on the part of the city to act at all, and the attempt to do so being a clear breach of a public trust with respect to the ownership and control of the streets, a court of equity, according to all the authorities, should and does interposé.

If a city may make such a grant as this at all, it may absolutely fill a public street with mere private structures and enterprises, in which the public generally have not a particle of interest, to the detriment and utter ruin of other property and business in the neighborhood, and in such cases nothing but the restraining power of a court of equity affords anything like adequate relief. To remit him to a court of law, under such circumstances, amounts to a simple denial of justice. While a suit in a court at law, which is powerless to avert the threatened injury, is dragging its slow length along through the various courts to final determination, one’s property may be ruined, his business broken up, and he in the end will be permitted to recover only for the immediate results of the original wrong. A flourishing and profitable business is gone, which he perhaps can never again restore. All his prospective profits are swept away from him by the wrongful act of the defendant, and he is not permitted to recover anything on account of them.

Under the present decision this almost fruitless suit at law is the only remedy which an enlightened jurisprudence affords. I repeat, this is simply a denial of justice. I hold it to be one of the highest duties of the courts of the country to steadily and firmly resist all encroachments of power upon the rights of the people. Thiá, I submit, has not been done in the present ease, and for this and other reasons already assigned, I respectfully, but earnestly, dissent from the conclusion reached by a majority of the court.

Mr. Justice Walker, and Mr. Justice Dickey : We fully concur in the views expressed in the above dissenting opinion.

Subsequently, upon an application for a rehearing, the following additional opinion was filed:

Per Curiam :

The only question argued on the motion for a rehearing, and not discussed in the original opinion, that is deemed necessary now to be remarked upon, is the point made that the side-track, although constructed under an ordinance of the city granting a license to lay it in a public" street, is solely for the “convenience and benefit” of the corporation constructing it. This is a misapprehension of the law. Section 12, art. 11, of the constitution, provides, that “railways heretofore constructed or that may hereafter.be constructed in this State, are hereby declared public highways, and shall be free to all persons for the transportation of their persons and property thereon, under such regulations as may be prescribed by law. ” The track defendant was authorized by ordinance to construct, when completed and attached to the principal track, is as much a “public highway, ” in the sense that term is used in the constitution, as is the road of the company to which it is attached, and no doubt is entertained the company is subjected to the same duty to use it for the “convenience and benefit” of the public as any part of its main track.

It is different, as this court has decided in Koelle v. Knecht, 99 Ill. 396, where such structures are built by individuals on their own lands for mere private use. But that is not the case here. This track was laid, or is to be laid, in a public street, under an ordinance of the city granting the privilege. It will be perceived, on examination, the ordinance contains nothing that indicates the switch, when built, was to be for the sole use of the corporation' constructing it. On the contrary, the corporation, in its answer, denies it will prevent the use and occupation of the street by the public. Since its construction this switch is a part of the main track with which it is connected, and is in the same sense a “public highway, ” to be used by the company for the same purposes, “under such regulations as may be prescribed by law. ”

The petition for rehearing will be denied.

Rehearing denied.


author: Mr. Justice Scholeteld

text:
    Charles H. Hirschman v. The People of the State of Illinois.

      Filed at Ottawa November 10, 1881

      —Rehearing denied March Term, 1882.

    1.. Criminal law—evidence—on indictment for manslaughter—as tending to explain cond/uct of accused. On a trial of one for manslaughter, in shooting his father, who was shown to have been of a quarrelsome disposition when under the influence of liquor, and ill-tempered, and abusive towards his wife, the defendant’s counsel offered to prove by a witness that the defendant in going to and from his work had to pass by the house of the witness, and that she knew of her own knowledge that it had been the uniform habit of the defendant, at all times when he knew that there was at the time difficulty between his mother and the deceased, to refrain from going home, so as to keep out of the same, at such times expressing a desire to avoid being present, and that the difficulties between the deceased and his wife were of frequent occurrence about the time of the killing: Held, that all of such evidence was properly excluded, as not tending to enlighten the issue.
    2. Same—as to previous conduct of the deceased. On such trial, it appeared that, at the time of the killing, the father was intoxicated and angry, and just preceding the act of shooting he had been engaged in a quarrel with his wife—the defendant’s mother—but it was held, evidence of the previous conduct of the deceased towards his wife was not admissible as tending to show whether the shooting was accidental, or in self-defence, or was willfully and maliciously done.
    3. Same—as to previous good character of accused—evidence m respect thereto■—and its effect. On the trial of one for manslaughter, the defendant is allowed to give evidence only of his previous general character in regard to peace and quiet, etc., and not proof of particular transactions in which he may have been previously concerned. The witness can not be called upon for his personal knowledge of the prisoner’s acts and conduct.
    4. On a charge of crime the previous good character of the accused is but a circumstance to be considered by the jury, in connection with all the other evidence, in determining the question of guilt or innocence. If the evidence of guilt is complete and convincing, when considered with the evidence of previous good character, the evidence of good character will not avail.
    5. Instbtjction—as to good character—construed. On the trial of one for manslaughter, an instruction that the defendant’s evidence of his general reputation for peaceableness was allowable, and should be considered by the jury as a circumstance in the case; but that if, from all the evidence in the case, the jury were satisfied, beyond a reasonable doubt, of the guilt oi the accused, it was their duty to find him guilty, notwithstanding the fact he had before borne a very good character for peaceableness, was held not erroneous, as in effect directing the jury to disregard the proof of good character.
    6. Same—as to credibility of impeached witness. An instruction that the testimony of a defendant in a criminal case is to be tested by the same rules applicable to other witnesses in determining his credibility and the weight of his evidence, and that if the jury, after considering all the evidence in the case, find the accused has willfully and corruptly, testified falsely to any fact material to the issue, they have the right to entirely disregard his testimony, excepting in so far as it is corroborated by “other credible evidence,’’ is not erroneous. The “other credible evidence," in such connection, includes all kinds and every kind of evidence.
    7. Witness—credibility of defendant in criminal case. The jury in a criminal case are not bound to believe the testimony of the defendant, any further than it may be corroborated by other credible evidence, and there is no impropriety in so instructing them.

      Writ oe Error to the Criminal Court of Cook county; the Hon. Kirk Hawes, Judge, presiding.
    Messrs; J. N. & W. F. Barker, and Mr. Egbert Hervey, for the plaintiff in error:
    The court erred in excluding the testimony as to the universal habit of the boy in keeping away from home at all times when he knew there was a difficulty between his mother and his step-father. Wharton on Criminal Law, sec. 1327.
    As a defence, character for truthfulness may be set up, and Lord Denman once permitted the following questions: “What is the character for veracity and honor?” and, “Do you consider him a man likely to commit perjury?” See Wharton on Grim. Ev. 60.
    “And the character he is entitled to prove must be such as would make it unlikely that he would be guilty of the particular crime with which he is charged. ” 1 Wharton on Grim. Law, sec. 646. See, also, 2 Eussell on Crimes, 784, 785, and cases cited; 1 Greenleaf on Evidence, 54.
    “It is conceded on all sides that evidence of character, when offered by the defence in criminal cases, is always relevant. Technically, therefore, it is always material.” Wharton on Crim. Ev. 66. See, also, Remsen v. People, 57 Barb. 324; Epps v. State, 19 Ga. 102; Harrington v. State, 19 Ohio, 264.
    Hence it is error in a judge to tell the jury, that “in a plain case a good character would not help the prisoner, but in a doubtful case he had a right to have it cast into the scales and weighed in his behalf,” (State v. Henry, 5 Jones, (N. C.) 65,) the true rule being that in all cases a good character is to be considered of weight. United States v. Whitaker, 6 McLean, 342; Cancemi v. The People, 16 N. Y. 505; Stover v. The People, 56 id. 319; People v. Ashe, 44 Cal. 288; People v. Bell, 49 id. 486; People v. Shepard, id. 629.

      The court erred in the third instruction, which assumes that the defendant is contradicted, and calls attention to isolated facts, and is erroneous in form and substance, as settled by decisions of this court. It gives undue prominence to an isolated fact, viz: the testimony- of the accused, and is defective in its closing sentence, . as. held by this court in Angelo v. Faul, 85 Ill. 106.
    An instruction as to what the presumption of law is upon a disputed fact, is extremely likely to mislead the jury, and should not be given. Guardian Mutual Life Ins. Co. v. Hogan, 80 Ill. 35; Garretson v. Pegg, 64 id. 111; Cornwell v. Cornwell, 91 id. 414.
    "When the court assumes to direct the attention of the jury to the facts, it should refer them to all the facts, so as to present the case fairly for both parties. Evans v. George, 80 Ill. 51; Ogden v. Kirby, 79 id. 556; Elston Gravel Road Co. v. The People, 96 id. 584.
    Mr. James McCartney, Attorney General, for the People:
    The instruction complained of does not in fact exclude from the consideration of the jury evidence of the defendant’s character. It but tells the jury, that if, “from all the evidence in the case, they are satisfied,” etc., how to find. There is nothing objectionable in this.
    There is no error in the instruction to disregard the testimony of an impeached witness, except so far as it is corroborated by other credible evidence. See Angelo v. Faul, 85 Ill. 106; Huddle v. Martin, 54 id. 258; Crabtree v. Hagenbaugh, 25 id. 233 ; Yundt v. Hartrunft, 41 id. 9; Miller et al. v. People, 39 id. 457.
    Mr. Luther Laflin Mills, State’s Attorney for Cook county, and Mr. Henry W. Thompson, assistant State’s Attorney, also for the People.
   Mr. Justice Scholeteld

delivered the opinion of the Court:

Michael Boylan was shot and instantly killed by means of a pistol in the hands of his step-son, Charles H. Hirschman, on the evening of August 28, 1880, at Hyde Park, in Cook county. Because of this killing, Hirschman was subsequently convicted, by the circuit court of Cook county; of the crime of manslaughter, and sentenced to the penitentiary for the term of three years, and this writ of error is prosecuted for .the purpose of having us review the record of that conviction. The main defence interposed upon the trial was, that the shooting was accidental, although it was also contended that the defendant, under the circumstances, would have been justified in taking the life of the deceased as in his necessary self-defence.

The defendant and a sister, as also several half sisters, children of the deceased, were residing in the family of the deceased, with their mother. The deceased was a teamster, employed, through the day, away from the house, and on the evening in which he was killed he returned home late— near nine o’clock—and, the evidence shows, in an intoxicated condition. When intoxicated he was ill-tempered, and frequently abusive and violent towards his wife and other members of his family. On this occasion, it appears, in consequence of not receiving a satisfactory answer as to the quality of the supper that awaited him, he became abusive towards his wife, and the defendant and his sister. However, he ate his supper, and then examined the feed of his horses, and cut some green grass for them. Preliminary to this, and in order to sharpen his scythe for cutting the grass, he procured a whetstone. After cutting the grass, he went to the well, which was near the porch, and commenced pumping water for his horses. Quitting this, he advanced towards the house, and was in the act of ascending the steps leading up to the porch, when he received the fatal shot from the pistol in the defendant’s hands. It is claimed the defendant had been up-stairs playing cards with a young friend, and knew nothing of the conduct of the deceased until he came down stairs to see his friend depart; that immediately after his friend had departed he went upon the back porch; that the deceased, who was then pumping the water, on seeing him there quit his pumping, and with the stone with which he had whetted his scythe in his hand, advanced rapidly up the steps towards the defendant, uttering an abusive epithet, and aimed a blow at him with the stone, when the defendant, in endeavoring to retreat, fell, and the pistol was accidentally discharged. It is claimed the defendant had had the pistol for some time, and on this evening had been oiling it, and temporarily put it in his pocket to await the departure of his friend before putting it away, and thus it was in his pocket when the deceased rushed upon him.

Upon the trial, one Mrs. Moots testified that she had known the defendant for ten years,—that he was a very good boy—“no fighting, no quarreling, ” adding: “People can’t tell that Charlie is bad. All the neighbors say that Charlie is good.” And thereupon the counsel for the defendant addressed the court as follows: “We offer to prove by this witness that the defendant, in going to and from his work, had to pass by her house, and that she knew of her own knowledge that it had been the uniform habit of defendant, at all times when he knew that there was at the time difficulty between his mother and the deceased, to refrain from going home, so as to be able to keep out of the difficulties, the defendant at such times expressing the desire to avoid being present at the time of such difficulties.” And the counsel also proposed to prove by the witness that she knew that difficulties between deceased and his wife were of frequent occurrence at the time of defendant passing her house, etc., but the court refused to admit all and every part of such evidence to be given, and defendant excepted. The errors assigned question this ruling, and counsel, in argument, insist it was erroneous.

It will have been observed that the witness was permitted to give evidence of the general character of the defendant in regard to peace and quiet, etc., and this is as far as the authorities go. Boscoe’s Grim. Evidence, (5th Am. ed.) 97; 1 Greenleaf on.Evidence, sec. 55. Says Wharton, in his work on Grim. Law, vol. 1, latter part of sec. 636, (7th ed.): “The proper question is, not ‘personal knowledge’ by the witness, but the defendant’s ‘general reputation.’ ” The quotation of this author in sec. 646, from Mettermaier, which counsel have copied into them brief, as shown in the latter part of the section, is not the law here. In 2 Bussell on Crimes, 784, (7th Am. ed.) the author, after explaining that in all criminal prosecutions the prisoner is always permitted to call witnesses to speak of his general character, etc., adds: “The inquiry must also be made with reference to the general character of the prisoner, for it is general character alone which can afford any test of general conduct, or raise a 0 presumption that the person who had maintained a fair reputation down to a certain period, would not then begin to act an unworthy part, and, therefore, proof of particular transactions, in which the prisoner may have been concerned, are not admissible.” See, also, McCarty v. The People, 51 Ill. 231; Hopps v. The People, 31 id. 385; Wharton’s Criminal Evidence, (8th ed.) sec. 60; Cathcart v. Cowen, 37 Pa. St. 108.

We are unable to perceive any theory upon which the conduct of the deceased towards his wife would, in consonance with established legal principles, tend to elucidate whether the defendant’s pistol was discharged by accident, or whether he discharged it in his necessary self-defence, or willfully and maliciously. And however reluctant the defendant may, in general, have been to be present at the quarrels between the deceased and his mother, there is no question that a pistol in his hands was discharged, and resulted in the death of the deceased. It is certain he was then near the deceased. We think the evidence was properly excluded as not tending to enlighten the issue.

The second instruction given by the court, at the instance of the People, is as follows:

“The court instructs the jury, as a matter of law, that the defendant has put in evidence his general reputation for peaceableness; that such evidence is permissible under the law, and is to be by the jury considered as a circumstance in this ease. But the court further instructs the jury, that if, from all the evidence in this case, they are satisfied beyond a reasonable doubt of the guilt of the accused, then it is the duty of the jury to find him guilty, notwithstanding the fact that heretofore the accused has borne a very good character for peaceableness.”

Counsel for defendant insist this is erroneous, because they say it in effect tells the jury to disregard the proof of good character. We do not think this is a reasonable construction of the language employed in the instruction. The jury are therein expressly told that they are to consider the proof of good character as a circumstance in the case. Instead of being told to disregard it, they are told directly the reverse. Good character is but a circumstance to be considered in connection with all the evidence, in determining the question of guilt or innocence. But if the evidence of guilt be complete and convincing, (which implies a consideration of the evidence of previous good character, as well as all other evidence,) then it is well settled law the evidence of previous good character can not, and ought not, to avail. And this is as far as the instruction goes.

The court also, at the instance of the People, in their third instruction, said to the jury:

“The court instructs the jury, as a matter of law, in this State the accused is permitted to testify in his own behalf; that when he does so testify he at once becomes the same as any other witness, and his credibility is to be tested by and subjected to the same tests as are legally applied to any other witness, and in determining the degree of credibility that shall be accorded to his testimony, the jury have a right to take into consideration the fact that he is interested in the result of this prosecution, as well as his demeanor and conduct upon the witness stand, and during the trial; and the jury are to take into consideration the fact, if such is the fact, that he has been contradicted by other witnesses. And the court further instructs the jury, that if, after considering all the evidence in this case, they find that the accused has willfully and corruptly testified falsely to any fact material to the issue in this cause, they have the right to entirely disregard his testimony, excepting in so far as his testimony is corroborated by other credible evidence.”

Counsel for defendant object that this assumes that the defendant is contradicted,—that it gives undue prominence to an isolated fact, viz: the testimony of the accused, and also that it is defective in its closing sentence, as held by. this' court in Angelo v. Faul, 85 Ill. 106. The objection to the instruction in Angelo v. Faul was, that it omitted to include the words “on or by circumstances in evidence.” But here the jury are told they are at liberty to disregard the evidence of the defendant, except “in so far as his testimony is corroborated by other credible evidence, ”—that is, all kinds, or any kind, of evidence that may be before the jury, and not limited, as in Angelo v. Faul. We do not think it can be fairly said that this instruction assumes that the defendant is contradicted, for that is expressly left a question to be determined by the jury. The jury were not bound to believe the evidence of the defendant any further than it may have been corroborated by other credible evidence, (Gainey v. The People, 97 Ill. 270,) and we perceive no impropriety in saying so to them. The instruction, in substance, is sustained by Oraltree v. Hagenbaugh, 25 Ill. 233, Yundt v. Hartrunft, 41 id. 9, Miller v. People, 39 id. 457.

Finally, it is contended as a reason why the judgment below should be reversed, it is not sustained by the evidence. We are not convinced that the court below erred in this regard. There are many and very great improbabilities in defendant’s story that the shooting was accidental. His account of why, in the first instance, he procured a pistol, is not satisfactory, and still less so is his version of why he took it with him down stairs at the time he admits he did. Its proper place, by his own showing, was in his room up stairs. It approaches the marvelous, to say the least, that the deceased could have accidentally come to his death in the manner claimed. But the defendant himself, according to the testimony of Joseph Snyder, on the day after Boylan was killed, admitted that he shot and killed Boylan. He says: “I am captain of Hyde Park police. I saw Charles Hirschman, August 29, 1880, in the station; had a conversation with him. J. went into his cell to see if I knew the boy. I saw that I did not know him,—never saw him in the police station before. I said to him, ‘This is a pretty sad affair.’ He said, ‘Yes, sir; have you heard from mother this morning?’ I said, ‘No, I had not been down.’ I says to him, ‘Boylan is dead.’ He said, ‘Yes, he is dead.’ Says I, ‘How far were you from him when you shot him ?’ He said, ‘About eight feet.’ Says I, ‘Where do you think you hit him?’ He says, ‘Near the center of the breast, I think.’ Then I asked him, did Boylan strike him. He said, no. Did he strike your mother? He said, no. He said Boylan was having some words with his mother, and he walked down stairs and shot him.” * * *

We can not say this evidence should be disbelieved. The jury saw and heard the witness, and all that the able and eloquent counsel could urge to discredit him, and evidently still believed him. This evidence repels the theory that the shooting was in self-defence, as well as that it was accidental. We can have but little doubt that the defendant had witnessed the repeated brutal outrages,, by speech and by blow, of the deceased upon his mother, and endured his reproaches and insult to himself until he became almost crazed with passion, and that then, under its influence, he fired the fatal shot; and this was, as the jury have found, not justifiable or excusable homicide, but manslaughter, if not, technically, a more serious crime.

The judgment is affirmed. . Juclgmmt a¿ffirme^