author: Mr. Justice Mulkey

text:
    Jacob Bremer et al. v. The Calumet and Chicago Canal and Dock Company.

      Filed at Ottawa November 11, 1887.

      1. Freehold—whether iwoolmed—on bill to remove cloud on title—trying legal titles in equity. Except under special circumstances, a freehold is not involved in a bill to remove an alleged cloud upon title to land, although it is necessary for the complainant to allege title in his bill. Courts of equity will not, under the guise of removing a cloud, try legal titles, but will remit them to a court of law.
    2. Same—the pwrticula/r case. A, the owner of real estate, sold the same to B, who gave therefor his three notes for the unpaid price, bearing eight per cent interest, secured by deed of trust on the premises, and on a sale under the trust deed A became the purchaser, and received a deed. B made a conveyance to C, which A sought to have set aside as a cloud on his title. B and C answered, and by cross-bill set up, that by a subsequent arrangement with A new notes were given for the price, without interest until their maturity, secured by a mortgage without any power of sale, and sought to have the sale under the trust deed set aside, and this charge was denied. The court denied the specific relief prayed, but under the general prayer allowed a redemption from the trustee’s sale, thereby practically setting aside the trustee’s deed: Held, that on the issues under the cross-bill the question of a freehold was involved, and therefore a writ of error did not lie from the Appellate Court, and this, regardless of the fact whether A objected to the decree on the ground it gave him money in place of the land.
    3. Allegations and proofs—in chancery. In a chancery suit, proofs without corresponding allegations in the bill are just as unavailing to a party as allegations without proof.
    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. George Gardner, Judge, presiding.
    Mr. Edward Boby, for the plaintiffs in error:
    The decree of foreclosure of the trust deed was error. The Calumet and Chicago Canal and Dock Company, in its bill, did not seek to foreclose, and the matter of foreclosure was not before the court. Cable v. Ellis, 120 Ill. 144.

      Although the complainant may make out, by proof, a case which entitles him to relief, yet he can not recover upon a bill, the allegations of which are not adapted to the case proved. Gibson v. Carson, 3 Ala. 421; Clements v. Kellogg, 1 id. 330; Piatt v. Valter, 9 Pet. 405; Lindsay v. Etheridge, 1 Dev. & B. Eq. 36; Maher v. Bull, 44 Ill. 97; Carmichael v. Reed, 45 id. 108; Hall v. Towne, 45 id. 493; Barrett v. Sargeant, 18 Vt. 305.
    This case is not one in which a freehold is involved. The matter in dispute on the writ of error forms the test.
    Mr. John B. Cohrs, for the defendant in error:
    Under the decisions of the Supreme and Appellate Courts it seems that a freehold is involved, and that the writ of error should be dismissed by the Appellate Court. Hollingsworth v.Koons, 13 Bradw. 158; Monroe v. Van Meter, 100 Ill. 347; Theological Seminary v. Gage, 103 id. 175; Cheney v. Teese, 113 id. 444; Lehmann v. Rothbarth, 111 id. 185; Shelton v. Blake, 115 id. 275.
   Mr. Justice Mulkey

delivered the opinion of the Court:

The Calumet and Chicago Canal and Dock Company, claiming to be the owner in fee of lots 1 and 2, block 47, Iron-workers’ addition to the village of Hyde Park, brought its biH to the December term, 1885, of the Superior Court of Cook county, to have set aside, as a cloud upon its title, a deed for the same property, executed by Charles G-. Harris to the defendant Bremer. Harris purchased this, with other property of the company, receiving a warranty deed for the same, and to secure the deferred payments, executed to the company a deed of trust upon it, and subsequently sold it to other parties, through whom Bremer claims. The company repurchased the property at the trustee’s sale under the trust deed, and received from the trustee a deed therefor, which is the title it relies on in this litigation. The Superior Court, on the hear■ing, denied the specific relief prayed, hut under the prayer for general relief entered a decree permitting Harris, and those claiming under him, to redeem from the trustee’s sale, and this decree was affirmed by the Appellate Court for the First District, whence the ease is brought here for review.

The bill charges, in substance, that the complainant, on the 10th of March, 1874, being the owner in fee of the west half of the north-west quarter of section 17, town 37 north, range 15 west, of which the lots in question are a part, by its deed of that date, for the consideration of $40,000 paid and to be paid, sold and conveyed the same in fee to Charles G. Harris, said deed being duly recorded on the 28th of May then next following; that to secure the unpaid purchase money, the said Harris delivered to complainant his three promissory notes of that date, for the sum of $10,000 each, payable, respectively, March 12, 1875, March 12, 1876, and March 12, 1877, with interest thereon at the rate of ten. per cent per annum; that to secure said notes, the said Harris executed a deed of trust upon the purchased premises to George W. Smith, as trustee, authorizing him to sell the same upon default of payment of said indebtedness, or any part thereof; that said trust deed bore date March 12, 1874, and was recorded on May 28th next following; that Harris- and one William H. Colehour, on the 10th of March, 1875, conveyed, by warranty deed of that date, the south twenty acres of the eighty-acre tract in question to George H. Sturgis, in trust for Samuel Hale, Joseph H. Brown and Joseph T. Torrence, which deed was recorded June 5, 1875; that on the 16th of October, 1875, Harris made, acknowledged and caused to be recorded a plat of the remaining sixty acres of said land, to be known and designated as the Ironworkers’ addition to the village of Hyde Park, which plat was duly approved by the corporate authorities of said village; that on November 6, 1875, by deed of that date, recorded November 26,1875, Harris conveyed the entire eighty-acre tract to the said William H. Colehour; that the latter, on the said 6th day of November, 1875, conveyed the lots in question to John Bremer, plaintiff in error; that Harris having made default in the payment of the first note, the whole indebtedness was declared due, as provided in the trust deed, and the trustee, at the request of the company, proceeded to advertise and sell the property, including the lots in question ; that the same was sold and struck off to the company on the 25th of April, 1876, for the sum of $30,000, and Smith, the trustee, thereupon executed to the company a deed, in due form, for the premises, which was properly recorded on the 17th of May, 1876. Bremer answered, and also filed a cross-bill, making the company, and his grantor, William H. Cole-hour, parties. The latter, on appearing, also filed a cross-hill, making the company, Bremer, Charles W. Colehour and Edward Boby parties defendant.

All these parties claim through Harris, and adversely to the company. Their defence to the company’s hill, and their claim for relief under their respective cross-bills, depend substantially upon the same alleged state of facts. They all concede that the original agreement with respect to the purchase of the property provided for the conveyance of it by the company to Harris, and for the making of the trust deed and the three notes by him to the company, as charged in the original hill, with the qualification that the notes were to bear no interest until after due, when, as all parties agree, they were to bear ten per cent per annum. On the other hand, the company claims they were to draw eight per cent interest from date till due, and the notes produced by them in evidence are so drawn. To this it is rejoined by plaintiffs in error, that these notes are not the ones prepared under the original agreement ; that, on the contrary, they were executed and delivered under a subsequent agreement, which annulled the former one, and was adopted by the parties in lieu of it.

It is claimed by plaintiffs in error, and is so set up in their pleadings, that the Smith trust deed, and the three notes secured by it, (which, as they allege, were drawn without interest until after due,) were drawn up and signed by the proper parties, and placed in the hands of the secretary of the company until certain incumbrances upon the property could be removed j that before this was done, the parties entered into a a new agreement annulling the former one, and that in consequence of it there never was any delivery of the Smith trust deed or the series of notes belonging to it. By the new and substituted agreement, Harris, as is alleged, was to execute to the company, for the deferred payments, his three promissory notes, for $10,000 each, bearing date March 12,1874:, payable at the company’s office in one, two and three years, respectively, with interest at the rate of eight per cent per annum till due, and ten per cent per annum after due, “to be secured by a mortgage, without power of sale, to A. S. Downs, the secretary of the company, as trustee, securing $875 of said principal, with the interest to grow due thereon, on each of said blocks of said land of five acres each, with the provision that any lot or lots of such subdivision should, from time to time, be released from the lien of said mortgage upon the payment of $50 of said principal, with interest thereon, for each lot so released.” This substituted agreement, it is alleged, was fully carried out, though in attempting to do so, as is claimed, Harris, by mistake, acknowledged the Smith trust deed instead of the Downs mortgage, but that on discovering the mistake, the latter was also acknowledged and delivered to the company. It is further charged that the first series of notes belonging to the Smith trust deed was returned by the company to Harris, and by him destroyed, but that the company, though promising to do so, failed to return the deed. The defendant in error contends that this entire defence and claim for relief under the cross-bills is without any foundation in fact.

The evidence upon the facts, outside of the conveyances referred to in the pleadings, is conflicting; but in the view we take of the case it will not be necessary to determine upon which side of the controversy the truth is to he found. Nor will it be necessary to consider a number of other matters in the record which counsel have discussed in the briefs.

While the question is not at all pressed upon our attention, yet, upon mature consideration, we are of opinion that the Appellate Court should not have assumed jurisdiction of the cause, but should have dismissed the writ of error, on the ground that the case involves a freehold. The defendant in error not only claimed the fee in the property, but he held a deed purporting to convey one, and which, in form, was not only legally sufficient to pass one, but was manifestly intended by both the parties to it to have that effect. By the decree rendered, this deed has been practically set aside, and may result in forcing the company to accept a sum of money in lieu of it. The fact that the company does not object to the decree on this ground, for the reason that it may prefer the money to the land, does not at all affect the question. This question does not arise merely by reason of the formal allegation in the original bill that the company is the owner in fee of the property. Such an allegation is always necessary when the owner in fee files a bill to remove an alleged cloud upon his title. Nevertheless, except under special circumstances, a freehold is never involved in that class of cases, for courts of equity will not, under the guise of removing a cloud, try legal titles, but will refer them to a court at law. The question here arises rather from the issues upon the cross-bills, wherein it is claimed, that by virtue of the company’s deed to Harris he acquired the fee to the land in question, and which he, and those claiming under him, still hold, as they claim, subject to the Downs mortgage. The company replies, that no such a mortgage as the Downs mortgage was ever executed, and that all that is said about it, and the notes accompanying it, is a pure fabrication, and that whatever title Harris, or those claiming under him, acquired through the company’s deed, to him, was cut off and forever barred by Smith’s sale and conveyance of the property to the company, under the trust deed made by Harris to Smith. There is no pretence that Smith’s deed to the company can in any view be regarded as a mortgage, for, as already seen, it is absolute in form, and was clearly intended to be so in legal effect, by the party making it as well as by the party receiving it. Moreover, there is nothing alleged, either in the original bill or either of the cross-bills, which would warrant the court in treating it as a mortgage. Nor is there anything alleged, in either the bill or cross-bills, that would authorize Harris, or those claiming under him, to come in and redeem from the trustee’s sale, for, as already seen, by the original bill the complainant is simply asserting an absolute title, and asking to have the deed under which the other parties claim set aside as a cloud on its title, and the latter say that the Smith trust deed was never delivered, and consequently never became operative. Such being the allegations in the bill and cross-bills, there was a mere conflict of titles involving a freehold.

Whether the proofs, without regard to the pleadings, would warrant the decree rendered, is a question not important to consider, as the decision of it could not affect the conclusion to be reached, the one way or the other, for nothing is better settled than that proofs without allegations are just as unavailable as allegations without proofs. 1 Daniell’s Oh. Pr. *434, and notes.

As already indicated, we are of opinion that the Appellate Court erred in taking jurisdiction of the cause, and for that error its judgment will be reversed, and the cause remanded with directions to dismiss the writ of error.

Judgment reversed,.


source: Caselaw Access Project

author: Mr. Justice Shope

license: Public Domain

text:
    Benjamin Poyer v. The Village of Des Plaines.

      Filed at Ottawa November 11, 1887.

    1. Criminal proceeding—prosecution under city ordinance. Ordinances of towns and cities for the protection of persons and property and preservation of peace and good order, and proceedings under them, although civil in form, to recover a penalty, are quasi criminal in character.
    2. Chancery—jurisdiction—to restrain a criminal or quasi criminal prosecution. Courts of equity will not, as a general rule, interfere to restrain criminal or quasi criminal prosecutions, or take jurisdiction of any case or matter not strictly of a civil nature.
    3. Same—as, in case of prosecutions wider city or village ordinance. Where ordinances have been enacted by the proper authorities, a court of equity will not interfere, by injunction, to restrain their enforcement in the appropriate courts, upon the ground that such ordinances are alleged to be illegal, or because of the alleged innocence of the party charged. Nor will that court enjoin such proceedings for the purpose of determining the validity of the ordinance in a court of law, when the defendant has an adequate remedy at law for any injury he may sustain.
    4. Same—to prevent irreparable injwry—and a multiplicity of suits. There are two exceptions, clearly recognized, to the rule that courts of equity will not interfere to restrain trespasses, whether committed under the forms of law or otherwise, which are, first, to prevent irreparable injury; and second, to prevent a multiplicity of suits.
    5. Before a court of equity will interfere to prevent a trespass or an illegal prosecution under an ordinance, upon the ground of irreparable injury, facts and circumstances must be alleged from which it may be seen that irreparable mischief will be the result of the act complained of, and that the law can afford the party no adequate remedy. A general allegation to that effect will not suffice.
    6. To entitle a party to maintain a bill of peace, or bill to prevent a multiplicity of suits at law, there must be a right claimed affecting many persons. If the right is disputed between two persons only, not for themselves and all others in interest, but for themselves alone, the bill will not lie, unless the complainant’s right has been established at law.
    7. Injunction—damages on dissolution. On the dissolution of an injunction, which defeats the object of the bill, the court may, at the same time, grant leave to the defendant to file suggestions of damages, and give him time in which to do so, which it may, in effect, do, by continuing the case; and in that event the court will not lose jurisdiction by subsequent continuances.
    8. Obd inance—valid in pa/rt and in part void. If there are several prohibitions in an ordinance, some of which are void and others valid, if a penalty is provided applying to each offence separately, the ordinance may be enforced as to offences in respect to which it is valid, as if the void parts had been omitted, and a prosecution will be presumed to be under that part of the ordinance which is valid.
    Appeal from the Appellate Court for the First District;—■ heard in that court on appeal from the Circuit Court of Cook county; the Hon. Thomas A. Moban, Judge, presiding.
    This was a bill filed by appellant to restrain the village of Des Plaines from prosecuting seven suits then pending, and to restrain others threatened, under the following ordinance:

      “Be it ordained by the president and hom'd of trustees of the village of Des Plaines:

    “Sec. 1. That all public picnics and open air dances within the limits of said village are hereby declared to be nuisances.
    “Sec. 2. That for any person or persons to rent, use, or allow to be used, any yard, ground, grove or other real estate within the corporate limits of the village of Des Plaines, for public picnic purposes, or to permit or in any way allow the use of such property for any purpose by which disorderly persons are gathered in or about said village of Des Plaines, shall constitute and is hereby declared to be a nuisance. Any person creating or permitting any nuisance mentioned and declared in this ordinance to exist, having the right or power to abate the same, shall be subject to a fine of not less than $50 and not exceeding $100 in every case; and each renting, using or allowing to be used of any such premises for the purposes aforesaid, or any of them, shall be deemed the creating of a nuisance, and the author thereof be subject to a like fine.”
    Passed and approved the 10th day of May, 1883.
    The allegations of the bill sufficiently appear in the opinion of the court to understand the points determined. A general demurrer was sustained and the bill dismissed.

      Mr. John Gibbons, for the appellant:
    The ordinance, in so far as it attempts to prohibit all picnics and out-door amusements, has been adjudged invalid. That a court of equity may enjoin prosecutions under invalid ordinances, see Wood v. Brooklyn, 14 Barb. 425; Railroad Co. v. Mayor, 54 N. Y. 159; West v. Mayor, 10 Paige, 539; Gartside v. East St. Louis, 43 Ill. 47; Butler's Appeal, 73 Pa. St. 448; Mayor v. Radeke, 49 Md. 217; Page's case, 34 id. 564; Mayor v. Pilkington, 2 Atk. 302;. Frewin v. Lewis, 4 M. & C. 249; Burnett v. Craig, 30 Ala. 135.
    Where irreparable injury will result from a nuisance, a court of equity will enjoin the same. (Wahle v. Reinbach, 76 Ill. 322.) And while such court will not interfere to prevent a single trespass when the person committing or threatening it is able to respond in damages, yet when he is insolvent, or when trespasses of a grave character are threatened to be repeated, equity will interfere. Owens v. Crossett, 105 Ill. 354; Hamilton v. Stewart, 59 id. 330; Railway Co. v. Chicago, 96 id. 620; Goodell v. Lassen, 69 id. 145; Gardener v. Village of Newburg, 6 Johns. Ch. 162.
    The suggestion of damages filed long after the expiration of the term at which the injunction was dissolved, came too late. Albright v. Smith, 68 Ill. 181.
    Messrs. Stiles & Lewis, and Mr. C. S. Cutting, for the ■appellee:
    The court had no jurisdiction to enjoin the prosecution of ■suits at law under the ordinance, even if it was void, there being a complete remedy at law. Yates v. Village of Batavia, 79 Ill. 500; Phillips v. Stone Mountain, 61 Ga. 386; Garrison v. City of Atlanta, 68 id. 64; Pierce v. City of Little Rock, 39 Ark. 412; Medical Institute v. Hot Springs, 34 id. 559; Burnett v. Craig, 30 Ala. 135; Cohen v. Goldsboro, 77 N. C. 2; Devron v. First Municipality, 4 La. Ann. 11; Levy v. City of

      Shreveport, 27 id. 620; Gaertner v. Fond du Lac, 34 Wis. 497; Torpedo Co. v. Clarendon, 19 Fed. Rep. 231.
    A general allegation of irreparable injury is not sufficient to give equitable jurisdiction. Johnson v. Kier, 3 Pittsb. 204; Ameling v. Seekamp, 4 G. & J. 468; 1 High on Injunctions, 34.
    The assessment of damages was properly had at a succeeding term. The case of Albright v. Smith, supra, does not apply.
   Mr. Justice Shope

delivered the opinion of the Court:

The purpose of the bill filed in this case was to restrain the village of Des Plaines, its officers and others, from prosecuting seven suits pending against the complainant for violations of an ordinance of said village, and from instituting other prosecutions for other alleged offences under such ordinance. The preamble to the ordinance in question recites, that by reason of the holding of public picnics, etc., within the village, the disorderly and vicious classes had gathered and congregated in the village, from Chicago and other places to which the village is adjacent, and that the peace of the community had been disturbed thereby, and the persons and the property of the residents therein rendered unsafe; that the police of the village was powerless to protect persons and property within the village against such disorderly persons so. gathered at picnics and like assemblages. The bill alleges, in substance, that complainant has grounds within the village which he has fitted for picnics and other out-door amusements, and that the assemblages upon his grounds have been orderly and well conducted. It then avers the invalidity of the ordinance, and that the prosecutions, seven in number, have been maliciously brought to ruin his business and reputation, and that he will suffer irreparable injury therefrom unless the same are enjoined; that upon trial of one of the cases he was found guilty, and a fine of $50 assessed against him, from which he has prosecuted an appeal to the Criminal Court of Cook county, where the same was then pending; that the other causes are pending in justices’ courts for trial, and that the defendants threatened to institute other prosecutions, etc., and prays for an injunction restraining such prosecution, and if that can not he done, that all but one of the pending suits be enjoined until the validity of the ordinance shall be determined in a court of law. A demurrer was sustained and the bill dismissed.

It is not questioned but that the general subject matter of this municipal legislation was within the scope of the power conferred upon the village by the act under which it is incorporated, nor that the ordinance was duly passed and published, in conformity with said act, prior to the institution of the suits sought to be enjoined. Ordinances like that under consideration are intended to protect and preserve the peace and good order of society within the municipality, and proceedings under them, although civil in form, to recover a penalty, are quasi criminal in character. Courts of equity will not, as a general rule, interfere to restrain criminal or quasi criminal prosecutions, or take jurisdiction of any case or matter not strictly of a civil nature. Story’s Eq. Jur. sec. 893; 2 Daniell’s Ch. Pr. 1620; Montgomery Railroad Co. v. Walton, 14 Ala. 209.

The questions arising in the prosecutions sought to be enjoined can be determined in the tribunal in which they are pending, or in that to which they may be taken by appeal. The legality or illegality of the ordinance is purely a question of law, which the common law court is competent to decide. If the defendant is not guilty of violating this provision, as alleged, the determination of that fact is peculiarly within the province of that court. In either event, appellant had a full and complete defence at law.

When ordinances have been enacted by the proper authority, a court of equity will not interfere, by injunction, to restrain their enforcement in the appropriate courts, upon the groudd that such ordinances are alleged to he illegal, or because of the alleged innocence of the party charged. Nor will that court enjoin such proceedings under the ordinance for the purpose of determining the validity of the ordinance in a court of law, when, as in this case, the defendant has an adequate remedy at law. West v. Mayor, 10 Paige, 539; Davis v. American Society, 6 Daly, 81; Cohen v. Commissioners of Goldboro, 77 N. C. 2; Devon v. First Municipality, 4 La. Ann. 11; Yates v. Village of Batavia, 79 Ill. 500; Moses v. Mayor, 52 Ala. 198; Burnett v. Craig, 30 id. 135; Hamilton v. Stewart, 59 Ill. 330; Davis et al. v. American Society et al. 75 N. Y. 362.

In JPest v. Mayor, supra, Chancellor Walworth, in delivering the opinion of the court, says: “The question as to the validity of the corporation ordinance does not properly belong to this court for decision, where the complainants, as in this case, have a perfect defence at law if the ordinances are invalid, or if they do not render the complainants, or those in their employ, liable for the penalty. And it would be a usurpation of jurisdiction by this court if it should draw to itself the settlement of. such questions, when their decision was not necessary in the discharge of the legitimate duties of the court.”

If the ordinances are invalid, they furnish no warrant for prosecutions, or the imposition of fines, or the recovery of penalties under them, and would be no. shield, in an action at law, against those responsible for the injuries inflicted upon the complainant by such prosecutions. If the authorities of this village can be enjoined from prosecuting under an ordinance preservative of the peace, (as this one certainly is,) so they might be restrained from the enforcement of any other ordinance of the village. Then effort to discharge their duty to the public would be rendered unavailing, and the community left at the mercy of the lawless and vicious elements of society until such time as the question could be settled in the courts of equity. If it should at last be determined that the ordinance was valid, that court would be powerless to enforce its provisions or impose the penalties denounced against its violation, but must remit the cases to the courts of law, which, before the assumption of jurisdiction by the courts of equity, had the right to determine every question submitted to and determined in the equity jurisdiction.

There are, however, two exceptions, clearly recognized, to the rule that courts of equity will not interfere to restrain trespasses, whether committed under the forms of law or otherwise, which are, first, to prevent irreparable injury; and second, to prevent a multiplicity of suits. Mayor of Brooklyn v. Meserole, 26 Wend. 132; Moore v. Smedley, 6 Johns. Ch. 28; Owens et al. v. Crossett, 105 Ill. 356; Gartside v. City of East St. Louis, 43 id. 47.

In Owens et al. v. Crossett, supra, and kindred cases, the jurisdiction is maintained upon the express ground that the trespasses were continued, and the trespassers being wholly insolvent, there was no adequate remedy at law, and the injury was therefore irreparable. There is no allegation in the bill in this case showing insolvency of the defendants thereto, or their inability to respond in damages to any amount for which the complainant might recover damages. The bill contains only a general allegation of irreparable injury. Before a court of equity will interfere to prevent a trespass upon this ground, “the facts and circumstances must be alleged, from which it may be seen that irreparable mischief will be the result of the act complained of, and that the law can afford the party no adequate remedy.” Goodell v. Lasson, 69 Ill. 145; Livingston v. Livingston, 6 Johns. Ch. 497; High on Injunctions, 34, and authorities.

It is insisted by counsel that a court of equity should restrain, these prosecutions in order to prevent the multiplicity of suits. Bills of peace will lie, under some circumstances, for the purpose of quieting and suppressing litigation. It is said, however, that to entitle a party to maintain a bill on this ground there must be a right claimed affecting many persons, “for if the right is disputed between two persons only, not for themselves and all others in interest, but for themselves alone, the bill will be dismissed.” 2 Story’s Eq. sec. 857.

In the case of West v. Mayor, supra, the chancellor, quoting from what he had said in Oakley v. Mayor of New York, which was a bill for injunction to restrain prosecutions under the market ordinances of the city, uses the following language: "If the objection to the legality of these ordinances was well taken, the complainant has a perfect defence at law, and this court would not grant an injunction to protect him against a multiplicity of suits until his right to such protection had been established by a successful defence at law in some of the suits, ” and cites in support the case of Eldridge v. Hill, 2 Johns. Ch. 281, and concludes: “I am not aware of any case in which this court has sustained such a bill to prevent the defendant from suing at law where the rights of the party depended upon a question of law merely, and where the defendant in the case at law must eventually succeed without the aid of this court, if the law is in his favor.”

Edgerton v. Hill, supra, was a bill for injunction to restrain all but one of a series of prosecutions for the erection and maintenance of a nuisance, and to enjoin the bringing of other suits threatened to be brought for its continuance. Kent, 0. J., denied the injunction, saying: “No case goes so far as to stop these continued suits between two single individuals so long as the alleged cause of action is continued, and there has been no final or satisfactory trial or decision at law upon the merits.” In McCoy v. Chillicothe, 3 Ohio, 379, it is held that the repetition of actions for trespasses between the same parties is not that multiplicity of suits which will induce a court of equity to interfere by injunction. In this case the bill alleges the pendency of the suit sought to be enjoined, but does not show that the complainant had established the invalidity of the ordinance at law. On the contrary, it is shown that in the only case tried, the validity of the ordinance was sustained at law. If the ordinance is valid, as held by the court imposing the penalty mentioned, equity will certainly not interfere to protect the complainant from deserved punishment for its violation, nor because the common law court may have erred in its judgment as to the complainant’s guilt or innocence. Nothing could be more detrimental to society, and provocative of violations of law, than for courts of equity to interfere in such cases by injunction, and thereby protect repeated acts in violation of ordinances which might each furnish new ground of complaint. While the injunction continued, the functions of municipal government would be suspended, and irreparable injury might thereby ensue. If the municipal law be of doubtful validity, the complainant can not, by his willful and repeated violation of its provisions, each furnishing separate grounds for prosecution and depending upon separate facts, create this ground for equitable interposition without first settling the validity of the ordinance in the courts of law. If he fears the prosecution of other suits he can refrain from the repetition of his acts in violation of its provisions until the proper forum has determined its invalidity.

The case of Third Avenue Railroad Co. v. Mayor of New York, 54 N. Y. 159, cited by counsel, was a bill to enjoin all but one of seventy-seven suits brought against the railroad company for running its trains into the city without 'a license, as' provided by ordinance. The bill attacked the validity of the ordinance, •and it was held that a demurrer to the bill was properly overruled, upon the ground that had the suits been brought in a -court of record, they could have been consolidated under a statute authorizing the consolidation of causes as a matter of right, and as the magistrate’s court in which they were pending was without such power, and as the prosecutions of all at the same time, separately, would be onerous and oppressive, the case was one, in the opinion of the court, where equity jurisdiction might properly be invoked and exercised. This •case can have no application here, nor does it conflict with the rule announced in West v. Mayor, supra, and kindred cases.

The ease of Wood v. City of Brooklyn, 14 Barb. 425, relied on by counsel, is clearly distinguishable from the case at bar. There the ordinance was clearly void, and provided for arrest, imprisonment and imposition of a fine for an act the complainant wds clearly authorized by the statutes of the State to do, and it further appeared prosecutions had been threatened, but were delayed and not commenced against him, and the court found that the fact that the ordinance remained apparently in force, so that the threatened prosecutions might be brought under it and the complainant imprisoned before trial, injured his business, and that therefore, there being no actual trespass, there was no adequate remedy at law for such injury.

In the subsequent case of Davis et al. v. American Society et al. 75 N. Y. 362, in which the complainant sought relief from the enforcement of a penal statute, upon the ground, among others, that they had not in fact violated the law, the Court of Appeals held that a court of law was a proper forum in which to try that question, and refused the relief, distinguishing that case from Wood v. City of Brooklyn.

In this case the ordinance is not claimed to be wholly illegal. That part of the ordinance which prohibits the renting or permitting the use of any yard, grounds, etc., for any purpose-whereby disorderly persons are congregated, has not received judicial construction, but it would seem to fall clearly within the general powers conferred by law upon this corporation. If there are several prohibitions in an ordinance, some of which are void and others valid, if a penalty is provided applying to each offence separately, the ordinance may be enforced as tooffences in respect of which it is valid, as if- the void portions had been omitted. (Dillon on Mun. Corp. 421, and note.) The bill is wholly silent as to what portion of the ordinance the prosecutions complained of were brought under, and the presumption would be that they were prosecuted under the valid ordinance. This clearly distinguished this case also from Wood v. City of Brooklyn, and authorities of like import.

It is urged that the circuit court erred in awarding damages upon the dissolution of the injunction. It appears that the order dissolving the injunction was accompanied by an order duly entered, granting leave to the defendants to file suggestion of damages, and the cause was continued until the next term of court, and thereafter regularly continued,- from term to term, until the 3d of January, 1885, when suggestions were filed under the leave granted June 19,1884. The cause again appears to have been continued, from term to term, until November 2, 1885, when the suggestion came on for hearing. It was then objected that the court had no jurisdiction to assess damages, because the suggestions were not filed during the term at which the injunction was dissolved, but the court, notwithstanding this objection, heard evidence and assessed the same. In this case, as in Albright et al. v. Smith et al. 68 Ill. 181, the object of the bill was defeated by the dissolution of the injunction, and the order made thereon was a final order. It was competent, however, for the court to grant leave to the defendant to file suggestion of damages, and, for any reason satisfactory to the court, to extend the time in which to file the same, which, in effect, the court did by the entry of its order and continuing the case. The court, after having granted such leave, did not lose jurisdiction by the subsequent continuances. It is apparent that complainant had notice of the leave upon which the case was kept on the docket, and might, at any time, have insisted upon the disposition thereof. We are of opinion that the court retained jurisdiction for the purposes of assessment of damages.

The evidence clearly sustains the finding of the court in respect of the damages allowed. Finding no error in this record, the judgment of the Appellate Court will be affirmed.

Judgment affirmed.


author: Mr. Justice Magruder

text:
    John Harmon et al. v. The Auditor of Public Accounts et al.

      Filed at Ottawa September 26, 1887.

      1. Fobmeb adjudication—conclusive as between two defendants in chancery. A decree settling adverse interests of two defendants in a chancery suit, when they have had a hearing on the merits and an opportunity of asserting their respective claims, will conclude them as fully as if the suit had been brought by the one against the other, so far as it affects rights presented to the court and passed upon.
    2. Same—suit by tax-payers involving validity of municipal bonds— upon whom decree binding. So where a bill was filed by certain tax-payers of a town, on behalf of themselves and the other tax-payers, against a railway company, the town, and the 1 supervisor and town clerk thereof, to enjoin such town and its officers from issuing bonds of the town to the railway company in pursuance of a vote at a special town meeting, and the same was dismissed by this court, on appeal, for want of equity, this court holding there were no sufficient grounds shown for the relief sought, it was held, that the obligation resting upon the town to issue the bonds was just as binding, by reason of the decision of this court, as though judgment had been rendered in a mandamus proceeding, or in a suit on the bonds.
    3. Same—the prior adjudication as a ban to any funther litigation concerning the validity of the same bonds. And where, in such suit, the liability of the town to issue its bonds in aid of the railway company is adjudged against the town, under a bill denying such liability, other taxpayers and citizens of the town will be concluded by the decree, and they can not, by another bill to prevent the collection of a tax to pay such bonds when issued, dispute their validity upon any of the grounds which were or could have been litigated in the prior suit.
    4. Same—conclusiveness—upon whom, and in respect to what matters. The value of a plea of a former recovery does not depend upon the reasons given by the court for rendering the judgment or decree. The principle of res 'judicata extends not only to the questions of law and fact which were decided in the former suit, but also to the grounds' of recovery or defence ' which, under the issues, might have been,' but were not, presented.
    5. Same—whether validity of election in respect to municipal bonds was involved in prior suit. A bill to enjoin town authorities from issuing bonds in aid of a railroad, after referring to the provision of the charter for calling an election, charged that said special town meeting and election were in conflict with the constitution, and that the ballots deposited by the . voters of the town at such special meeting for said donation were illegal and void, in this, “that the said voters had no legal power to determine; by the casting or depositing of their said ballots, as aforesaid, at said special town meeting and election, whether said town should make such donations * * * as to bind, * * * by their votes deposited at said special town meeting and election, the said town to make said donation or to issue their said bonds,” etc. The prayer was, that the town be enjoined from making any donation in bonds under said special town meeting, and that such town meeting and election be decreed null and void. The answer averred that “said special town meeting and election were held, conducted and return thereof made in all respects as required by law:” Held, that not only the validity of the election was at issue, but every question affecting the validity of such election, as, whether it should have been held by three judges and two clerks instead of by one moderator and one clerk; and the bill having been dismissed on the merits, the validity of the election could not afterward be questioned on the latter ground by a second bill to enjoin the levy and collection of taxes with which'to pay the bonds of the town.
    6. Same—judgment or decree against municipal corporation—upon whom binding. A judgment or decree against a county or township, or its legal representatives, is binding on all its citizens, though not parties to the suit. If the same is for a sum of money, it imposes an obligation against the citizens which they are compelled to discharge; and if, for the purpose of its payment, the proper authorities levy and attempt to collect a tax, none of the citizens can, by instituting proceedings to prevent the levy or collection of the tax, dispute the validity of the judgment, or re-litigate any of the questions which were or could have been litigated in the original action.
    7. Purchasers—innocent holders of municipal bonds—purchasing on the faith of a judicial decision. After the decision of this court holding the validity of an election in a town for the issue of its bonds in aid of a railroad, and their issue in pursuance of such ruling, the bonds in the hands of purchasers for value, without notice, who bought relying on the faith of the decision of this court, will be protected. The obligation of a contract can not be impaired by a decision of the courts, any more than by legislative action.
    Appeal from the Appellate Court for the Second District;— heard in that court on appeal from the Circuit Court of Ogle county; the Hon. William Brown, Judge, presiding.
    Messrs. Cook & Lawrence, and Messrs. W. & W. D. Barge, for the appellants:
    If there was no legislative authority for then’ issue, the bonds are void, even in the hands of innocent holders. Barnes v.
      Lacon, 84 Ill. 461; Ottawa v. Perkins, 94 U. S. 269; Town of Ciloma v. Eames, 92 id. 278; Dickson County v. Field, 111 id. 95; School District v. Stone, 106 id. 103; Oakland v. Skinner, 94 id. 255; Town of Middleport v. Life Ins. Co. 82 Ill. 563;
    As to the question whether the town is estopped from making a defence by the decision in Railroad Co. v. Pinckney, 74 Ill. 277, see Clark v. Wolf, 29 Iowa, 197; State v. Wilson, 74 Mo. 232; Chicago v. Robinson, 4 Wall. 672; 1 Greenleaf on Evidence, secs. 533, 535; Freeman on Judgments, sec. 178; Scotland County v. Hill, 112 U. S. 188; Geneva Bank v. Riverside, 25 Fed. Rep. 229.
    The town can not represent or estop the tax-payers. Bouton v. Boooklyn, 15 Barb. 7; How. Pr. 198; Denton v. Jackson, 2 Johns. Ch. 320.
    The complainants in this case were not parties in the Pinckney suit, and they are not bound as privies. Bigelow on Estoppel, (4th ed.) 337; Cromwell v. Sac County, 94 U. S. 351; Mail v. Maxwell, 107 Ill. 554; Gardner v. Raisbeck, 28 N. J. Eq. 71; Smith v. Turner, 1 Hugh, 373; DuPage County v. Jenks, 65 Ill. 275; Valsain v. Cloutier, 3 La. 170; Quackenbush v. Ela, 5 Barb. 473; Lawrence v. Hunt, 10 Wend. 80; Knox v. Exeter, 42 N. Y. 10; King v. Parker, 15 N. H. 1; Russell v. Place, 94 U. S. 606; Keaton v. Hock, 16 Iowa, 24; Burt v. Steenburgh, 4 Cow. 559; Eastman v. Cooper, 15 Pick. 276; Cooper v. Corbin, 105 Ill. 224; Scates v. King, 110 id. 458.
    The matter relied on in this case was not determined in the Pinckney case, and hence that case is no bar. Packet Co. v. Sickles, 5 Wall. 580; Davis v. Brown, 94 U. S. 423; Miles v. Caldwell, 2 Wall. 35; Campbell v. Rankin, 99 U. S. 261.
    Mr. J. A. Crain, for the appellee The German Insurance Company of Freeport:
    A former adjudication may be relied on as an estoppel if the parties in the two suits are substantially the same. Hanna v. Read, 102 Ill. 605.

      A citizen and tax-payer of a municipality has a right to file' a bill in equity to restrain the corporate authorities from issuing its bonds without sanction of law, and have a decree protecting the other tax-payers. Prettyman v. Supervisors, 19 Ill. 406; Chestnutwood v. Hood, 68 id. 136; Colton v. Hanchett, 13 id. 615; Drake v. Phillips, 40 id. 389; Howard v. Drainage Co. 51 id. 131; Coal Co. v. Blanchard, 54 id. 241 ; Sherlock v. Winnetka, 59 id. 391; Marshall v. Silliman, 61 id. 220; Richards v. Donagho, 66 id. 74; Decker v. Hughes, 68 id. 35; Ryan v. Linch, 68 id. 161; Sherlock v. Winnetka, 68 id. 532; Mason v. Shawneetown, 77 id. 534; Railroad Co. v. Coyer, 79 id. 374; Rutland v. Dayton, 60 id. 62; Springfield v. Edwards, 84 id. 631.
    When the plaintiffs sue in behalf of a class of persons, and are defeated on the merits, no subsequent action by the same parties or "by others of the same class can be maintained. State ex rel. v. Railroad Co. 13 S. C. 290; Commissioners v. Hinchman, 31 Kan. 736; State v. Wilson, 74 Mo. 232.
    A judgment against a county binds all the citizens and taxpayers of the county. Freeman on Judgments, sec. 188.
    The principle of res judicata embraces not only what was determined in the former case, but also extends to any other matter properly involved, and which might have been raised and determined in it. Rogers v. Higgins, 57 Ill. 244; Fishli v. Fishli, 1 Blackf. 360; Stockton v. Ford, 18 How. 418; Kelly v. Donlin, 70 Ill. 378; Ruegger v. Railroad Co. 103 id. 450; Hamilton v. Quimby, 46 id. 90; Garrick v. Chamberlain, 97 id. 620.
    Mr. M. D. Hathaway, for the other appellees:
    The decree in the Pinckney case is res judicata, and a bar to the relief sought in this suit. That established the validity of the original donation, and binds the complainants in this case. It is sufficient' if the same questions are presented by the pleadings, or might have been presented and decided under the issues. Girardin v. Dean, 49 Texas, 243; Greathead v. Bromley, 7 T. R. 456; Davis v. Talcott, 12 N. Y. 184; Barrett v. Failing, 8 Ore. 152; Bellinger v. Craine, 31 Barb. 537; Freeman on Judgments, (3d ed.) see. 275; Long v. Webb, 24 Minn. 380; Armstrong v. St. Louis, 69 Mo. 409; Ruegger v. Railroad Co. 103 Ill. 449; Hamilton v. Quimby, 46 id. 90; Kelly v. Donlin, 70 id. 378; Garrick v. Chamberlain, 98 id. 620; Rogers v. Higgins, 57 id. 244; Bailey v. Bailey, 115 id. 551.
    The authorities are uniform that res judicata covers whatever 'might have been litigated in the former suit. Aurora City v. West, 7 Wall. 82; Fischli v. Fischli, 1 Blatchf. 360; Smith v. Ontario, 18 id. 454; Lindsley v. Thompson, 1 Tenn. Ch. 272; Knight v. Atkinson, 2 id. 394; Dewey v. Peck, 33 Iowa, 242; McGregor v. McGregor, 21 id. 441; Faught v. Faught, 98 Ind. 470; Bates v. Spooner, 45 id. 489; Petersine v. Thomas, 28 Ohio St. 596; Martin v. Rooney, 41 id. 141; McMiken v. Morgan, 9 La. Ann. 208; Preble v. Supervisors, 8 Bliss, 358.
    As to identity of parties, see Springfield v. Edwards, 84 Ill. 636; State v. Railroad Co. 13 S. C. 290; Sabin v. Sherman, 28 Kan. 289; Ferry v. Waterbury, 35 Conn. 526.
    It makes no difference that the railway company and the town were co-defendants, as the decree settled the validity of •the donation as between these parties. Louis v. Brown Township, 109 U. S. 162; Corcoran v. Canal Co. 94 id. 741; Scotland County v. Hill, 112 id. 188.
    As to the point of counsel that the decree is not res judicata, because, in the Pinckney case, the town by its answer admitted the validity of the bonds, there is little need of any extended discussion. It is well settled that where a judgment is entered where the facts are admitted upon the record, is as conclusive as a judgment after litigation. Hillsboro v. Nicholls, 46 N. H. 385; Gates v. Preston, 41 N. Y. 113; Valkenburgh v. City, 43 Wis. 574; Secrist v. Zimmerman, 55 Pa. St. 446;
      Chamberlain v. Preble, 11 Allen, 370; Wolford v. Compton, 79 Va. 333; Brown v. Mayor, 66 N. Y. 385.
    The court can not declare these bonds void as against these defendants. They bought in reliance on the Pinckney decree, and no State court can impair the obligation of their contract. Gelpeke v. Dubuque, 1 Wall. 175; Trust Co. v. Debolt, 16 How. 432; Green v. Conness, 109 U. S. 104; County of Rolls v. Douglas, 105 id. 728; Douglas v. Pike County, 101 id. 677; Olcott v. Supervisors, 16 Wall. 678; Havemeyer v. Iowa City, 3 id. 294; Stevens v. Pratt, 101 Ill. 266.
   Mr. Justice Magruder

delivered the opinion of the Court:

This is a bill filed on April 28, 1882, in the circuit court of Ogle county, by John Harmon, Samuel Domer, Daniel Eager and Eeuben S. Marshall, resident property owners and taxpayers in the town of Mount Morris and county of Ogle, against the Auditor of the State, the treasurer and clerk of said county, the collector of said town and the holders of the bonds hereinafter described, charging that fifty bonds of said town of $500 each and twenty-five bonds of said town of $1000 each, dated May 3, 1875, payable May 1, 1885, drawing ten per cent interest payable annually, and all issued and signed by John W. Hitt, the supervisor, and H. H. Clevidence, the town clerk of said town, are void for want of power in said supervisor and clerk to issue the same, and praying that the same may be decreed to be null and void, and that the officers of the law may be perpetually enjoined from collecting any taxes to pay the same from the property of complainants and the other tax-payers of the town. Answers were filed denying the allegations of the bill and setting up the defences hereinafter mentioned. The circuit court dismissed the bill for want of equity and its decree has been affirmed by the Appellate Court, from which the case comes to us by appeal.

The same indebtedness involved in this suit has already been passed upon by tins court in Chicago and Iowa Railroad Co. et al. v. Pinckney et al. 74 Ill. 277. In that case Daniel J. Pinckney, John W. Hitt, Jacob H. Munnua, John E. McCoy, Milton E. Getzendaner and John Sprecher, then resident property owners and tax-payers of the town of Mount Morris, filed their bill on November 11, 1871, in the circuit court of Ogle county, against the Chicago and Iowa Railroad Company, the town of Mount Morris, Charles Newcomer, the then supervisor and Henry H. Clevidence, the then town clerk of said town, “to enjoin the town and its officers from issuing bonds to the Chicago and Iowa Railroad Company in the sum of $75,000.” After answers and replications filed and hearing had, the circuit court decreed in accordance with the prayer of the bill, and, upon appeal, this court, at the September term, 1874, held that the town had power to issue the bonds, and reversed the decree of the circuit court and dismissed the bill filed therein, as will be seen by reference to the opinion in 74 Ill. 277.

After the opinion of this court in .the Pinckney case had been filed and while the proceedings on rehearing were still pending, negotiations were begun for a settlement of the claim of the railroad company against the town for the $75,000 of bonds. Communications in writing, dated November 14,1874, signed by property owners and tax-payers in the town, were addressed to the complainants in the Pinckney suit, advising a compromise with the company and pledging the influence of the subscribers to induce the town to assume the expenses of the litigation. Two of these communications were signed respectively by Reuben S. Marshall and Samuel Domer, two of the appellants herein. At a special town meeting held on March 19,1875, resolutions were passed, accepting a previous proposition made by the president of the railroad company to the town supervisor to take bonds to-the amount of $50,000 in lieu of the bonds amounting to $75,000, agreeing that the town would pay all the expenses of the Pinckney suit amounting to $1600, and thanking the supervisor for his efforts in. making the settlement. At the annual town meeting held on April 6, 1875, the proceedings of the special town meeting and the resolutions there adopted were “fully ratified and approved.”

By this compromise the town was saved from a possible indebtedness of $25,000. Its liability to issue bonds to the amount of $75,000, which the railroad company was entitled to receive by virtue of the decision made in its favor, was discharged by the issuance of bonds amounting only to $50,000. The latter bonds, so issued in compromise of the railroad company’s claim, are the bonds hereinbefore referred to as being dated May 3, 1875, fifty of $500 each and twenty-five of $1000 each, and which this bill is filed to cancel. All of them are now in the hands of innocent holders, who have purchased them in good faith, relying upon the former decision of this court as to their validity. One of the appellees, the German Insurance Company of Freeport, owns $26,500 of them purchased for value and before maturity.

The defendants set up the former proceedings in the Pinckney suit, as a bar to the relief sought by the present suit.

Both the Chicago and Iowa Railroad Company and the town ■of Mount Morris were parties to the Pinckney suit. In that suit it was decided that the town had the power to issue the bonds, and that the railroad company was entitled to have them issued in pursuance of the vote taken and by reason of its compliance with the conditions exacted of it. The decision so made was final and binding as between the 'railroad company and the town, and, as between them, established the validity of the bonds. If the bonds had been issued and suit had been brought on them by the company against the town, it will not be claimed that the latter could have defended on the ground that the election, in pursuance of which the bonds were issued, was invalid.

It makes no difference that the railroad company and the town were both defendants in the Pinckney suit. “In chan eery suits, where parties are often made defendants because they will not join as plaintiffs, who are yet necessary parties, it has long been settled that adverse interests as between co-defendants may be passed upon and decided, and, if the parties-have had a hearing and an opportunity of asserting their rights, they are concluded by the decree as far as it affects rights presented to the court and passed upon by its decree.” Corcoran v. Chesapeake and Ohio Canal Co. 94 U. S. 741; Louis v. Brown Township, 109 id. 162; Scotland County v. Hill, 112 id. 183.

The obligation, which rested upon the town to issue bonds to the amount of $75,000 to the railroad company, was just as binding by reason of the decision in the Pinckney case as though judgment had been rendered in a mandamus proceeding or in a suit on the bonds. If this be so, then the complainants, as citizens of the town, can not by a proceeding to prevent the collection of a tax to pay the bonds, dispute their validity upon any of the grounds which were or could have been litigated in the Pinckney suit. The law upon this subject is thus stated in Freeman on Judgments, (3d ed.) sec. 178:

“A judgment against a county, or its legal representatives, is a matter of general interest to all its citizens, is binding upon the latter, though they are not parties to the suit. A judgment for a sum of money rendered against a county imposes an obligation against the citizens which they are compelled to discharge. Every tax-payer is a real, though not a nominal, party to such judgment. If, for the purpose of providing for its payment, the officers of the county levied and endeavored to collect the tax, none of the citizens can, by instituting proceedings to prevent the levy or enforcement of the tax, dispute the validity of the judgment nor re-litigate any of the questions which were or which could have been litigated in the original action against the county.”

The views of the text writer are sustained by the following authorities: Clark v. Wolf, 29 Iowa, 197; Treadway v. Rail way Co. 39 id. 663; State ex rel. Wilson v. Rainey, 74 Mo. 229; Commissioners v. Hinchman, 31 Kan. 729.

It is claimed, however, that the Pinckney suit is to he regarded as a controversy between the complainants therein on one side and the defendants therein on the other side, and not merely as a controversy between two of the defendants, the railroad company and the town. In this view, it is urged that the decree in that suit can not be pleaded as a former adjudication in the present suit, for the reason that the complainants there were not the same persons as the complainants here. The proceeding instituted by Pinckney and others was a chancery proceeding. The present proceeding is also upon the chancery side of the court. Where the action is at law and a judgment in an action at law is pleaded as a former recovery, the defence has a more restricted character than in a chancery suit.

The Pinckney bill was filed by certain property owners and tax-payers,eas representatives of a class. Though not formally stating, that it is filed on behalf of all the other tax-payers in the town, yet it constantly refers to them and their interests in the questions involved. It alleges that “your said orators and the other tax-payers of said town” will suffer injury; that the issue of the bonds will be in violation of the rights “of your said orators and the other tax-payers of said town,” and an attempt to deprive “your orators and the other tax-payers of said town” of their property, etc., and to take the property of “your said orators and said other tax-payers of said town” for a private use without compensation to “yóur said orators and said other tax-payers.” Its prayer is, that the town be restrained from “collecting any taxes upon the taxable property of said town of Mount Morris to pay said bonds.”

Moreover, the Pinckney suit was adopted by the town as its own litigation, when the town paid the expenses of it and compromised it through the town officers and by resolutions of the town meetings.

The present suit was begun by Harmon and others, also tax-payers and property owners of the town, as representatives of the same class, for whose benefit the Pinckney bill was filed. The complainants in this proceeding were represented by the complainants in the former suit, and are therefore bound by the decree therein entered. The remedy in suits of the character here indicated is in the interest of a class of individuals having common rights that need protection, and, in the pursuit of that remedy, individuals have the right to represent the class to which they belong. This jurisdiction, in some respects, rests on the principles of a proceeding in rem.

We, therefore, think that there is sufficient identity between the parties filing the present bill and those who filed the bill in the Pinckney case to justify the pleading of the decree entered there as res judicata in this case. The views here expressed are sustained by the following authorities: State v. C. & L. Railroad Co. 13 So. Car. 290; Ferry v. Town of Waterbury, 35 Conn. 526; Sabin v. Sherman, 28 Kan. 289; Smith v. Swormstedt, 16 How. 303.

It is claimed, however, that the cause of action in the present suit is not the same as the cause of action in the Pinckney suit. To support this position reference is made to the case of Chicago and Iowa Railroad Co. v. Mallory, 101 Ill. 583, where it was held, that the provision in the charter of the Chicago and Iowa Eailroad Company for holding an election to authorize subscriptions and donations by the town requires such election to be held by three judges and two clerks as in general elections, and that an election at a town meeting, presided over by one moderator and with only one clerk, is void and confers no authority to issue the bonds. The election in the town of Mount Morris, which authorized the issuance of the bonds above specified, was held at a town meeting, presided over by one moderator, and, therefore, falls within the terms of the decision in the Mallory case. It is too late, however, to apply the doctrine of the Mallory case to the Mount Morris bonds.

The opinion in the Pinckney case only discusses two points: first, whether the constitution of 1870 prohibited a donation by a town to a railroad, where the donation was authorized by a vote of the people before the adoption of the constitution, and second, whether the vote in favor of the Mount Morris donation was void by reason of defects in the petition for the election and in the notice of the election. As the opinion makes no reference to the point discussed in the Mallory case, as the .same is above stated, counsel say that the Pinckney decision is not res judicata as to that point. We are, therefore, asked to set aside the bonds held by the appellees in this case, because the election, which authorized their issuance, was held at a town meeting presided over by one moderator.

The value of a plea of former recovery is not to be determined by the reasons, which the court rendering the former decree or judgment may have given for doing so. (Girardin v. Dean, 49 Texas, 243; Greathead v. Bromley, 7 T. R. 456; Barrett v. Failing, 8 Ore. 152; Freeman on Judgments, (3d ed.) see. 275; Davis v. Talcott, 12 N. Y. 184.) Nor is such former judgment or decree conclusive only as to questions actually and formally litigated. It is conclusive as to all questions within the issue whether formally litigated or not. In Beloit v. Morgan, 7 Wall. 619, it is said: “The principle of res judicata reaches further. It extends not only to the questions of fact and of law which were decided in the former suit, but also to the grounds of recovery or defence, which might have been, but were not presented.”

In Rogers v. Higgins, 57 Ill. 244, it was held: “When a complainant in chancery presents his cause of action before the court, he should bring forward and urge all the reasons which then existed for.its support. After a determination of the suit, the controversy can not be re-opened to hear any additional reason which before existed, and was within the knowledge of the party in support of the same cause of action. The principle of res judicata embraces not only what has aetually been determined in the former suit, but also extends to any other matter properly involved, and which might have been raised and determined in it.”

To the same effect are Ruegger v. Railroad Co. 103 Ill. 449; Hamilton v. Quimby, 46 id. 90; Aurora City v. West, 7 Wall. 82; McMicken v. Morgan, 9 La. Ann. 208; Preble v. Board of Supervisors, 8 Biss. 358.

We think the point now raised against the bonds was presented by the pleadings and issues in the Pinckney suit and might have been raised and determined in that suit. The bill there refers to the sections of the railroad charter, which provide for calling the election. It alleges “that the said special town meeting and election,” etc., “are in direct conflict with the provisions of the constitution of the State,” etc. It further alleges that the “ballots deposited by the voters of said town at said special town meeting and election for said donation were illegal and void in this, that the said voters had no legal power to determine by the casting or depositing of their said ballots as aforesaid at said special town meeting and election whether the said town should * * * make such donation of $75,000, or to bind, * * * by them votes deposited at said special town meeting and election, the said town to make such donation or to issue their said bonds,” etc. The prayer is that the town, etc., “be enjoined from making any donation in bonds * * * under and in pwi'suance of said special town meeting and election,” etc., and that “said special town meeting and election held thereunder may be decreed to be altogether null and void,” etc. The answer admits the provisions of the charter, as alleged, and also admits the special town meeting and election, and avers, that “said special town meeting and election was held, conducted and return thereof made in all respects as required by law." The decree found the equities for the complainants and that the allegations in the bill were true. The order of this court reversed the decree and dismissed the bill.

It is very evident from this review, that the validity of the ■election, authorizing the bonds to be executed, was at issue in the Pinckney suit. Not one question alone,, but every question affecting the validity of the election, was there at issue. Under the issues formed by the pleadings, the question whether the election should have been conducted as a general election with three judges and two clerks instead of being conducted as a town meeting election with one moderator and one clerk, was just as much involved as the question in regard to the ■sufficiency of the petition and notice, which was discussed by this court in its opinion. The fact that the point, afterwards ■decided in the Mallory ease and now pressed upon our attention here, was not brought to our notice in the Pinckney case ■does not destroy the force of the Pinckney decree as a bar to the present proceeding. As was said in Preble v. Board of Supervisors, supra: The complainants could not divide their •cause of action, setting up one ground of illegality in that suit, .•and if they failed in that, bring a second suit for a like purpose, setting up another ground of illegality. They should .have disclosed the entire wealth of their case at once.

Some other points are made by counsel for appellants, but they are of minor importance, and we do not deem it necessary to discuss them. We have carefully weighed them and •do not consider them to be well taken. If there were no other ■answer to them, they could not be allowed to disturb the decree of the Appellate Court in this case for the reason hereinafter stated.

This record shows beyond question, that the defendant bondholders are purchasers for value without notice and that they bought their bonds relying on the Pinckney decree. This being so, we have no power to now declare the donation void as against these defendants, even though the decision in the Pinckney case was wrong. A State court can not, by a decision, any more than the State legislature can, by a statute, impair the obligation of a contract.

By a series of decisions between 1853 and 1859 the Supreme-Court of Iowa upheld the right of the legislature of that State-to authorize municipal corporations to subscribe to certain railroads and to issue bonds accordingly. In a case that came before it after 1859 that court overruled its former decisions upon that subject. In Gelpeke v. City of Dubuque, 1 Wall. 175, the Supreme Court of the United States held that the last decision of the Iowa court could not affect the validity of bonds issued and put upon the market while its earlier decisions-were in force, and laid down the doctrine, which has since been firmly adhered to, that, if a contract, when made, was-valid under the constitution and laws of a State, as they had been previously expounded by its judicial tribunals and as they were understood at the time, no subsequent action by the legislature or judiciary can impair its obligation. Havemeyer v. Iowa City, 3 Wall. 294; Olcott v. Supervisors, 16 id. 678; Green County v. Conness, 109 U. S. 104; Douglass v. County of Pike, 101 id. 677; County of Rolls v. Douglass, 105 id. 728; Stevens v. Pratt, 101 Ill. 206.

The judgment of the Appellate Court is affirmed.

Judgment affirmed.


text:
    George A. Gibbs v. The Union Mutual Life Insurance Company.

      Filed at Ottawa November 11, 1887.

      Mortgage—what constitutes—as to the particular transaction. The-owner of land gave a deed of trust thereon, with a power of sale, to secure a loan of $8000, to an insurance company, after which he sold and conveyed his equity of redemption to B, who was to pay the debt held by theeompany. Binding a judgment against his grantor for a large amount, which was a lien on the equity of redemption, and to cut it off, B made an arrangement with the company whereby it was to foreclose the trust deed, acquire the title, and allow him six months in which to pay the sum du& under the trust deed, and on payment of which the company was to make him a deed. Bailing to make payment, he filed his hill to redeem from the trustee’s sale: Held, that the trustee’s deed to the company did not, under the circumstances, become a mortgage to secure the indebtedness, hut passed the title, and that the hill was properly dismissed.
    Appeal from the Superior Court of Cook county; the Hon. Gwynn Garnett, Judge, presiding.
    Mr. John Woodbridge, for the appellant:
    If, before a trustee’s sale, it is agreed between the holder of the notes and the owner of the equity of redemption that the former shall bid in the property at the sale, and that the latter may pay the notes thereafter and obtain a deed of the prop-. erty, the equity of redemption survives the sale. Life Ins. Co. v. White, 106 Ill. 69.

    If any time is given within which a redemption may be made, the relation of mortgagor and mortgagee continues. Life Ins. Co. v. White, 106 Ill. 69.
    The Statute of Frauds does not apply to such a case. In Pensoneau v. Pulliam, 47 Ill. 58, a verbal agreement was held valid, to the effect that a foreclosure should take place, the mortgagee should bid in the lands, and the debtor should have time to redeem, but no specified time was fixed.
    In Gibbons v. Hoag, 95 Ill. 45, it was held that a bill to redeem could be filed until barred by the Statute of Limitations.
    In Union Mutual Life Ins. Co. v. Slee, 110 Ill. 37, the present defendant interposed the same objections to a right to redeem which it makes here, but the court allowed the redemption.
    In Reigard v. McNeil, 38 Ill. 400, an execution debtor made a verbal agreement with another, under which the latter purchased the debtor’s land at the sale, with the agreement that the debtor should be permitted to redeem, but the purchaser refused to permit a redemption. The court decreed a redemption. See, also, Schoonhoven v. Pratt, 25 Ill. 457.

      Mr. P. S. Gbosscup, and Mr. Leonabd Swett, for the appellee :
    The intention of the parties determines whether a deed is taken absolutely or as a mortgage. Taintor v. Keys, 43 Ill. 334.
    Clear and satisfactory proof is required to show that a deed, absolute in form, is but a security. Lindauer v. Cummings, 57 Ill. 200; Eames v. Hardin, 111 id. 640.
    There can be no mortgage without a mortgage debt. Tiedman on Real Prop. sec. 310; Hickox v. Lowe, 10 Cal. 197; Magnusson v. Johnson, 73 Ill. 156; Hancock v. Harper, 86 id. 145; Miller v. Thomas, 14 id. 428; Ranstead v. Otis, 52 id. 30; Caprez v. Trover, 96 id. 456.
    If the debt is extinguished, the deed can not stand as a mortgage. Robinson v. Cropsey, 2 Edw. Ch. 138.
    The fact that the object was to cut off the lien of the judgment shows that an absolute sale was intended.
   Mr. Justice Mulkey

delivered the opinion of the Court:

The appellant, George A. Gibbs, on the 1st day of September, 1881, exhibited his bill in the Superior Court of Cook county, against the Union Mutual Life Insurance Company of Maine, the appellee, to redeem the lands now in controversy from a trustee’s sale and conveyance, under which the company claims the lands in fee. The trust deed was executed by Daniel Evans, the owner of the lands, to L. D. Boone, on the 2d of November, 1875, to secure a loan from the company to Evans of $8000, payable in five years, and evidenced by the latter’s notes. There was a hearing, upon the merits, in the Superior Court, resulting in a decree dismissing the complainant’s bill. Gibbs brings the case here for review.

The record in the case is so voluminous, and the arguments of counsel have taken so wide a range, as to forbid any attempt on our part to review the evidence in detail, or to follow counsel in their discussion of it. We shall therefore content ourselves with a statement, in as few words as may be, of what seems to be the vital and controlling issue in the case, and submit our conclusions in respect to it.

After the execution of the trust deed as above stated, Evans, by deed bearing date May 3,1880, and recorded September 16, 1880, conveyed his equity of redemption in the premises to the appellant, Gibbs. Boone, the trustee, on the 18th of May, 1880, sold the property under the trust deed, and the same was bid off by the company at $5000, and the trustee thereupon executed to the company a deed, in due form, for the premises, which was recorded June 26, 1880. Gibbs, by quitclaim deed dated May 18, 1880, and recorded September 16, 1880, conveyed the property to the company; but it is claimed by him that this deed was placed in the hands of the company’s attorney as an escrow, and not to be recorded except on certain conditions, which were never performed, and that the putting of it on record was without his consent, and in violation of the understanding between him and the company. This, however, is positively denied by the latter. Evans quitclaimed to the company July 5, 1882.

From this statement it is clear, that upon the face of the record the company has both the legal and equitable title to the property.

That the foregoing sales and transfers were made, is not disputed, but there is a sharp conflict as to the circumstances under which they were made, particularly the trustee’s sale and conveyance to the company. Gibbs claims that after his purchase he discovered a judgment against Evans, in favor of Faxon, for $7000, which was a prior lien upon the property but was subsequent to the company’s trust deed, and that with the view of cutting off the lien of that judgment, and of obtaining a priority over it, he effected an arrangement with the company, through Warfield, its financial agent, and Kendall, its attorney, by which it was agreed that the property should be advertised and sold under the trust deed; that the company was to bid it off at $5000, if nobody offered more, and take a deed therefor; that Gibbs was to have the privilege, at any time within six months, to redeem from the company, by paying to it the unpaid balance on the Evans notes, then amounting to some $12,000 or $13,000, and, in the event Gibbs failed to redeem, the company was in any event to deliver to him, cancelled, the Evans notes, which Gibbs swears he was, under his contract of purchase from Evans, bound to pay off. The company, in the first place, denies that there was any such a contract or understanding as that claimed by Gibbs, but at the same time it insists that, even conceding the existence of such an arrangement, neither Warfield nor Kendall had any authority from the company to enter into it, and that the company is not therefore bound by it. It is clear, beyond doubt, that the company did not want the property, but that it was anxious to get the money for which it was pledged, and with this view it admits that it agreed with Gibbs that if it bid off the property at the trustee’s sale, it would, after acquiring title from the trustee, convey the property, upon receiving the full amount of the company’s claim, to such person as Gibbs should designate, he claiming that he had or would have a purchaser ready to pay for and take the property from the company as soon as the necessary conveyances could be prepared and exchanged. The company positively denies there was any agreement to extend the time of payment by Gibbs or his proposed purchaser, or to hold the property subject to redemption by either of them, and in this claim we think the company is sustained by the decided weight of evidence. It is true the company’s desire to get the money instead of taking the land induced it to hold the matter open longer than it otherwise would have done, after the trustee’s sale, so as to afford Gibbs every possible opportunity to raise the money.

Accepting, as we do, appellee’s theory of the case as best supported by the evidence, and, therefore, more likely the true lone, we regard the arrangement between the parties, so far as the company is concerned, nothing more than a verbal executory promise, on its part, that in the event it became the purchaser of the property at the trustee’s sale, it would sell the same to Gibbs, or his unknown purchaser, for the amount of its claim under the trust deed. To this verbal promise and undertaking the company has interposed as a defence, among other things, the Statute of Frauds. Outside of this defence, however, the proofs, in our opinion, abundantly show that the company is not at all responsible for the non-performance of its promise, and its failure in that respect is attributable wholly to Gibbs’ own default. It is not pretended that the latter paid or offered to pay for the property in the six months within which he states himself that he was to pay for it, but the contention is that the trustee’s deed to the company, by reason of the circumstances as testified to by Gibbs, became, and is in legal effect, a mere security for the original indebtedness, and that the right to redeem will continue until there is a foreclosure by the company. But, as already stated, we can not accept appellant’s version of the circumstances under which the sale was made. We are satisfied from the evidence that it was the purpose and intention of all the parties to the transaction that the title to the property should become absolute in the company. Any other view would be inconsistent with the object Gibbs had in wanting the property sold under the trust deed,—viz., to free it from the lien of the Faxon judgment. He was willing to take the risk of the company’s keeping its promise with him, and the proofs warrant the statement that his confidence was not misplaced. If appellant has lost any thing by the transaction, it is because he failed to keep his own agreement. Taking this view of the main question in the case, it is apparent that it would be a fruitless task to discuss other questions presented by the record.

It follows from what we have said, that the court below did not err in dismissing complainant’s bill upon the hearing.

Decree affirmed.


author: Mr. Chief Justice Sheldon

text:
    Christopher B. Bouton v. A. B. Dement et al.

      Filed at Ottawa November 11, 1887.
    1. Corporation—capital stock as a trust fund—power to release stockholder’s liability to the prejudice of creditors. The capital stock of a moneyed corporation is a trust fund for the benefit of its shareholders and creditors, and the directors, who hold the same as trustees, have no power to release the obligation of a subscriber to pay his subscription. The capital paid in and agreed to be paid is a fund, which the trustees can not squander or give away.
    2. So the release of a stockholder’s liability for stock taken, and the surrender of his note given for the same, for the worthless obligation of an irresponsible person, is such a dealing with the assets of the corporation by its officers as will not be tolerated, to the prejudice of creditors of the corporation.
    3. In this case a stockholder in an insurance company, being indebted by note of §10,000, secured by deed of trust, for shares of stock of the company, conveyed the land in the trust deed to an irresponsible person, taking his note for §10,255, secured by his deed of trust on the same land, payable to the insurance company, and procured the officers of the company to surrender his note and take the note of his grantee in lieu thereof. The company hypothecated this last note with a bank, which sold the same to the stockholder’s brother-in-law for §1500, which was its full value, and he, in turn, sold the same to the stockholder for the same price; the stockholder was also a director and a member of the finance committee of the insurance company: Held, that while the surrender and cancellation of his note of §10,000 for another, from which only §1500 was realized, was binding on the corporation, it was fraudulent and void as to its creditors.
    4. Gbeditob’s bibb—limiting decree to complainant’s demand. On creditor’s bill by a part, only, of the creditors, filed for themselves alone, and not on behalf of creditors generally, to set aside a fraudulent conveyance and enforce payment of a shareholder’s liability to the debtor corporation, it is error to decree the payment of any larger sum than will satisfy the claims of the creditors joining in the bill.
    5. Assignment fob benefit of obeditobs—powers and rights of an assignee in respect to fraud/alent conveyamaes. A fraudulent transfer of property by a debtor being binding as between the parties, can not be impeached or set aside by the assignee of the debtor under an assignment for the benefit of creditors. A general assignment for the benefit of creditors does not pass to the assignee any interest in property before fraudulently transferred by the assignor, nor any right to avoid such fraudulent transfer. Such right belongs to the creditors alone.
    Appeal from the Appellate Court for the First District;— heard in that court on appeal from the Circuit Court of Cook county; the Hon. T. A. Moran, Judge, presiding.
    Messrs. Beaming & Thompson, for the appellant:
    Complainant in the cross-bill is a voluntary assignee, under a deed of assignment by the Empire Fire Insurance Company, and as such possesses no other or greater powers than those possessed by this assignee at the time of the assignment. His whole power is derived from the deed of assignment. Bishop on Insolvency and Assignments, 270, sec. 292; Starr & Curtis’ Stat. chap. 72, sec. 47; Estabrook v. Messersmith, 18 Wis. 551; Hawk v. Pretzlaff, 51 id. 160; Brownell v. Curtis, 10 Paige, 210; Leach v. Kelsey, 7 Barb. 466; Knowles v. Lord, 4 Whart. 500.
    The original bill having been filed on behalf of complaining creditors alone, and not on behalf of creditors generally, they could, in no event, be entitled to a decree for a larger amount than sufficient to liquidate their judgment and costs.
    The rights of an organized company over its unsubscribed stock, in the absence of restraining legislation, is the same, so far as its right to dispose of it is concerned, as the rights of an individual owner over private property. It may be exchanged for labor or property. Railroad Co. v. Hatch, 1 Dis. O. 84.
    The decree is excessive in amount, and can not be sustained by the evidence in the case. There is no evidence to justify the amount of the decree.
    At the time of the assignment to appellee Cole, the assignor had no right of action against appellant, either present or prospective; hence appellee Cole has no right of action.

      Mr. B. A. Childs, for the appellees:
    No payment has been made for the stock taken by appellant, and he is liable therefor to the creditors of the insolvent corporation. Upton v. Tribilcock, 91 U. S. 45; Sawyer v. Hoag, 17 Wall. 610; New Albany v. Burk, 11 id. 106; Insurance Co. v. Manufacturing Co. 97 Ill. 537; Melvin v. Insurance Co. 80 id. 446; Brigham v. Mead, 10 Allen, 245; Seymour v. Sturgis, 26 N. Y. 134; Morawetz on Private Corp. 588, 589.
    At common law the assignee of an insolvent debtor can sue where the debtor might have sued prior to the assignment. Here, the corporation might have sued. Dewing v. Perdicaries, 6 Otto, 193; Austin v. Daniels, 4 Denio, 301; Neall v. Hill, 16 Cal. 145; Hodges v. Screw Co. 1 R. I. 312; Charitable Corporations v. Sutton, 2 Atk. 401; Hersey v. Veazie, 24 Me. 12; Smith v. Poor, 40 id. 415; Robinson v. Smith, 3 Paige, 222; Moyley v. Austin, 1 Phillips, 790; Brown v. Vandyke, 4 Holst. 795.
    The capital stock of a corporation can not be relieved from its liability to creditors by any artifice, device, mistake or change in its character, whether the transaction be bona fides •or mala fides. Upton v. Tribilcock, 91 U. S. 45; Sawyer v. Hoag, 17 Wall. 610; Bradley v. Farwell, 1 Holmes C. C. 433; Coal and Iron Co. v. Parish, 42 Md. 600; Trustees v. Bosseiux, 3 Fed. Rep. 817; Hun v. Carey, 59 How. Pr. 439; Manufacturing Co. v. Emrie, 54 Ill. 345; Wood v. Dummer, 3 Mason, (U. S.) 308; Charitable Corporations v. Sutton, 2 Atk. 401; Railroad Co. v. Bridges, 7 B. Mon. 556; Sagor v. Dubois, 3 Sand. Ch. 544; Adler v. Brick Co. 13 Wis. 60; Thompson on. Liability of Stockholders, secs. 11, 13, 357.
    The Empire Insurance Company never gave Page anything of value for his.note, and therefore it could not recover upon the same, excepting in an equitable proceeding thereon as the note of Bouton. It came back into Bouton’s hands charged with all the equities against it. Kost v. Bender, 25 Mich. 515; Copp v. Sawyer, 6 N. H. 386; Daniell on Neg. Inst. sec. 805.
   Mr. Chief Justice Sheldon

delivered the opinion of the Court:

This is an appeal from a judgment of the Appellate Court for the First District, affirming a decree of the circuit court of Cook county, against Christopher B. Bouton, rendered on June 80,1886, for the sum of $17,584.92, in the case of a creditor’s bill, brought by A. B. Dement and others, against said Bouton and others, the appeal being by Bouton. The decree was for an indebtedness found to be due from Bouton to the Empire Fire Insurance Company of Wheaton, for shares of the capital stock of said company taken by Bouton.

On October 26, 1878, said Dement and others recovered a judgment against said insurance company, for $3500, as damages, and $17 costs, for a loss upon a policy of insurance issued by the company in January, 1877. On October 1, 1878, the insurance company made an assignment of all its property and effects to William D. Cole, for the benefit of its creditors. An execution upon the aforesaid judgment having been issued, and returned no property found, the plaintiffs therein, Dement and others, on March 2,1880, brought this creditor’s bill upon the judgment, making the company, Bouton, Cole, and others, parties defendant, and praying for discovery and relief. The defendants filed their respective answers, Cole, in his answer, admitting the material allegations of the bill. ° He also filed a cross-bill, as assignee, making all the other parties to the original bill defendants, alleging Bouton’s liability to the company, and breaches of trust on his part and that of other directors and officers of the company, praying for the proper relief, and that the several parties charged with liability to the company be required to pay the several amounts found against them, to him, to be distributed among the creditors of the company.

Bouton’s account, by his answer and testimony, of his alleged liability to the company, is as follows: That about January 15,1875, he was the holder of one hundred and fifty shares of the capital stock of the Union Insurance Company, of the par value of $15,000, which he, at that time, exchanged for two hundred and eighty shares, of the par value of $14,000, full paid Empire Eire Insurance Company stock, with said Empire company; that he did not give his note to the said Empire company for any sum whatever, did not owe said company anything, and did not agree to pay said Empire company anything whatever for said two hundred and eighty shares of its stock, other than the said one hundred and fifty shares of said Union Insurance Company’s stock, which was then delivered in payment of said two hundred and eighty shares of the Empire Insurance Company’s stock; that the Empire Insurance Company of Chicago had purchased a note for $10,000, made by him to his own order, and by him indorsed to the Union Insurance Company, which note afterward came into the possession and ownership of the Empire Eire Insurance Company of Wheaton; that this note was secured by real estate in Cook county, conveyed by a trust-deed to a trustee; that in April, 1877, anticipating bankruptcy, he applied to the Empire Eire Insurance Company of Wheaton for a description of the note, whose officers then requested him to make an effort to get some third party to purchase the land securing the note, and to give a new note with the same security in lieu of his (Bouton’s) note; that this was done with one J. F. Page, to' whom the real estate was conveyed; that Page’s note for $11,200, and trust deed securing it, of the same real estate, were substituted for Bouton’s note and deed of trust, and the latter were cancelled, and surrendered to Bouton; that the Page note was afterward hypothecated to the First National Bank of Chicago, and by it sold to one Cushing, and by Cushing to Bouton, who still holds it. The Union Insurance Company became merged in the Empire Fire Insurance Company.

The finding of the circuit court was, that the change from the Union Insurance Company to the Empire Fire Insurance Company left Bouton a stockholder in the latter comjtany, and left him indebted upon the stock he held there, in the amount of the face of the Page note; that that note stood in place of his liability for that stock, and formed the measure of his said liability. The decree was for the amount of the note after deducting all payments of money made on account of it' by Bouton.

After a full examination of the testimony, we are not prepared to say that this finding of fact by the circuit court was not justified from the evidence. The evidence shows, that from about the time Bouton became a stockholder in the Empire Fire Insurance Company until it made its assignment, he was a director and a member of the finance committee of the company ; that when the Union Insurance Company was merged into the Empire Fire Insurance Company, a certain portion of the stockholders of the former made new subscriptions to the capital stock of the latter company, and their notes held by the Union company were surrendered and given up by the latter company. The books of the Empire Fire Insurance Company, as we read them, show that Bouton took $14,000 of that company’s capital stock, and paid therefor by his note for $10,235.55, which we take to he the same note (or one of the same amount) that had been given by him to the Union Insurance Company. There were suspicious circumstances attending the after-dealing with the note, tending to show it to have been a device to get rid of Bouton’s personal responsibility upon the note. Page, who substituted his note for this note of Bouton, as above stated, was an employe in the Union Foundry Company, of which Bouton was president, and Page was pecuniarily irresponsible. Cushing, who purchased this Page note and trust deed from the bank for $1500, was also an employe of said Union Foundry Company, and the brother-in-law of Bouton. Bouton was with him at the bank, at the time of the purchase. The president of the bank says that on investigation of the property described in the trust deed securing the note, the hank came to the conclusion that $1500 was all that they could realize from the security and note. Afterward, Bouton purchased from Cushing this Page note and deed of trust for the same price Cushing paid for them. Thus, by the dealing, if held valid, which has been had in regard to this note of Bouton for $10,235.55, held by the Empire Eire Insurance Company, and given, as is found, for stock of the company, Bouton is freed from his personal responsibility upon the note, and all that the company and its creditors realize from the note is $1500. Such dealing, to the prejudice of creditors, with the stock and assets of a corporation, between a stockholder and officer, and the corporation, is not to be tolerated.

It is contended, that taking the facts to be- as found by the circuit court, yet the decree is erroneous. As the transaction of the substitution of the note of Page in the place of that of Bouton, and the cancellation and surrender up of Bouton’s note, was approved of and ratified by the directors and the stockholders of the Empire Insurance Company of Wheaton, and the company afterwards used the Page note, and hypothecated it with a bank to raise money, it is insisted that the transaction was a valid one, and binding upon the company. This might be so as to the company, and yet be otherwise as against creditors. As bearing upon what were the rights of creditors under the facts as found in this case, we refer to what was said in Upton v. Tribilcock, 91 U. S. 45, to-wit: “The capital stock of a moneyed corporation is a fund for the payment of its debts. It is a trust fund, of which the directors are the trustees. It is a trust to be managed for the benefit of its shareholders during its life, and for the benefit of its creditors, in the event of its dissolution.” And.further: “Equally unsound is the opinion that the obligation of a subscriber to pay his subscription may be released or surrendered to him by the trustees of the company. This has been often attempted, but never successfully. The capital paid in, and promised to be paid in, is a fund, which the trustees can not squander or give away. They are bound to call in what is unpaid, and carefully to husband it when received.” We are of opinion that the transaction above referred to was valid as against the insurance company, but not so as against creditors.

The original bill having been filed on behalf of the complaining creditors alone, and not on behalf of creditors generally, it is insisted that the complainants in the original bill could, in no event, be entitled to a decree for a larger amount than sufficient to liquidate their judgment and costs, and that the assignee of the Empire Fire Insurance Company was not entitled to a decree against Bouton for any amount.' In this, we agree with appellants’ counsel. The exchange of Bouton’s note for that of Page, and the cancellation and delivery up of Bouton’s note, being valid and binding as uto the insurance company, as we find, the company itself could not impeach the transaction and set it aside, and no more, we think, could the assignee of the insurance company do so. The company, by its assignment, conveyed no greater right, in respect of its property, than the company itself possessed.

It is a rule of extensive prevalence, that a general assignment for the benefit of creditors does not pass to the assignee any interest in property before fraudulently transferred by the assignor, nor any right to impeach or set aside such fraudulent .transfer,—such right belonging to the creditors alone. Brownell v. Curtis, 10 Paige, 210; Leach v. Kelsey, 7 Barb. 466; Vandyke v. Christ, 7 W. & S. 373; Estabrook v. Messersmith, 18 Wis. 545; Jones v. Yates, 9 B. & C. 532, (17 E. C. L. 436) ; Minders v. Culver’s Assignee, 1 Duv. 164; Flower v. Cornish, 25 Minn. 473. And see Carr v. Gale, 3 W. & M. 68. As held by this court, an administrator can not, even for the benefit of creditors, avoid a fraudulent conveyance made by his intestate.

Although there is not unanimity among the authorities upon this subject, as regards an assignee, (see Pillsbury v. Kinggon, 33 N. J. Eq. 287,) we are disposed to accept the rule above stated. We think consistency with our decision with respect to administrators requires its adoption. It would seem, upon principle, that the same rule in this, respect which exists in regard to an administrator, should be held to apply to an assignee under a voluntary assignment. We do not perceive that our statute respecting assignments makes any change of the rule. The assignee, under the above doctrine, is not the representative of creditors, but the agent of the assignor for the distribution of the property assigned. The assignee’s duty, as said in Lund v. Skanes Enskilda Bank, 96 Ill. 153, “is confined to the distribution of the property assigned to him.” Any interest in property before fraudulently transferred by the assignor was not assigned to the assignee.

The decree found that there was due to the complainants in the original bill, from the Empire Insurance Company, $4647.40, with interest from April 16,1886; and that the defendant Bouton was indebted to said insurance company, for capital stock by him taken, in the sum of $17,584.92, and decreed payment by Bouton of the latter sum. In this we find there was error. The decree should only have been against Bouton for the amount found due from him to -the complainants in the original bill, and the cross-bill of Cole should have been dismissed as against Bouton. The bill was not filed in behalf of complainants and other creditors, but in behalf of themselves alone.

The decree of the circuit court of Cook county, and the judgment of the Appellate Court, are reversed, and the cause is remanded to the circuit court of Cook county for further proceedings not inconsistent with this opinion.

Judgment reversed.