author: Mr. Justice Craig

text:
    Sater C. Comer v. Alice A. Comer et al.

      Filed at Springfield March 23, 1887.

    1. Evidence—possession of bonds, as presumptive evidence of ownership—and of evidence in rebuttal of such presumption. The fact that a person, for several years before his death, had the undisputed possession of a number of United States government bonds, and collected and used the interest accruing thereon, affords presumptive evidence that he was the absolute owner thereof. But such evidence of ownership may be overcome by proof explaining the possession, and showing he had but a life interest in the bonds, and held them under such title.
    2. So where a widow, for many years after her husband’s death, had the possession of $6000 of government bonds which had belonged to him before his death, and she collected and used the interest accruing thereon, up to her death, without objection on the part of any one, this was held presumptive evidence of her ownership; but proof of her frequent declarations, made at various times while she held the bonds, and at one time shortly before her death, that she was to have only the interest on the same as long as she lived, and that on her death the bonds were to be divided among the heirs of herself and husband, was deemed sufficient to overcome the presumption of ownership arising from, such possession of the property.

      3. Same—evidence as to a gift by a husband to his wife. The declaration of a husband, before his death, that he had given his government bonds to his wife, is not sufficient to show title in her, when it appears that he referred to a letter or writing, in the nature of a testamentary disposition, which is void, because not properly attested, as a will, as the evidence of the gift.
    4. Same—declarations of parly-—whether inconsistent with his claim of title. Where a husband attempted, by a void writing, to give his wife the right to the interest accruing on a lot of government bonds during her life, after which he died, leaving two sons as his only heirs, the declaration of one of the sons that the bonds belonged to his mother, there being at the time no question of title raised, and no one having acted upon the faith of such admission, was held not sufficient evidence against his heirs to show absolute title in his mother, and give her the right to devise or bequeath the whole of the bonds to her other son. The bonds might well be spoken of as the mother’s, she, by consent of both sons, being allowed to receive the interest thereon during her life.
    5. Disposition op propebty—whether an executed contract, or of a testamentary character. If an attempted or intended disposition of property be of a testamentary character, not to take effect in the owner’s lifetime, such disposition will be inoperative unless declared in writing, in conformity to the statute relating to wills.
    6. A person having government bonds on deposit with his bankers, placed in their hands a writing, directed to them, as_ follows: “Gents:—Of the seven-thirty government bonds of mine in your hands, I hereby assign to my wife, H. C., $6000, she to draw the interest of the same, you keeping possession of the same. * * * My wife to draw the interest until her death, have no control of the principal, so far as disposing of them is concerned,— the bonds at my death to revert to my heirs. The above assignment to take effect at my death, I controlling them in the meantime. ” It was not attested as a will: field, not an absolute disposition of the property, or executed contract, but rather an executory contract, testamentary in its character, and void, because not executed according to the requirements of the statute.
    7. Same—disposition of an estate by agreement, independently of the Statute of Descents. It is competent for the widow and heirs of a deceased person to make a different disposition of the personal property left by him, from that provided by the Statute of Descents, and when they do so by contract duly made, the disposition agreed upon will bind them.
    8. A person died intestate, leaving a widow and two sons, his only heirs, and $6000 of government bonds, and leaving no debts: Held, that the widow took, by law, one-third of the bonds, and each of his sons one-third. The three, however, entered into an agreement that the widow should receive all the interest on the bonds during her life, and that at her death the bonds should be equally divided between the sons: Held, that the agreement was a valid and binding one.

      9. Contract—tico papers as part of the same contract, one of them a copy. When two persons enter into a written contract between themselves, and attach thereto a copy of another writing relating to the subject matter of the contract, such copy may be regarded as a part of the written contract, and is admissible as original evidence.
    Appeal from the Appellate Court for the Third District;— heard in that court on appeal from the Circuit Court of. Hancock county; the Hon. William Marsh, Judge, presiding.
    Messrs. Manier & Miller, and Messrs. Hooker & Edmunds, for the appellant:
    The long undisputed possession of the bonds by Mrs. Comer affords prima facie evidence of her ownership, and casts the burden of proof on those denying her rights.
    The court below erred in admitting secondary evidence of the contents of the letter of Samuel Comer to George C. Anderson & Co., without any proof of the loss or destruction of the original.
    The recitals in the release given by Mrs. Comer to the bank, may be regarded as the declarations of the bankers. She was compelled to sign such paper as they demanded, as a condition for the surrender of her bonds. This paper, so signed by her and Sylvester Comer, does not, of itself, create any trust. The recital of the release refers to the letter of Samuel Comer of December 28, 1866, to the bankers, as creating the alleged trust. That letter fails to create a trust, or if it creates any, it is imperfect and executory, and being executory, and without a valuable consideration, will not be enforced by a court of equity. A voluntary trust will not be enforced. Clark v. Lott, 11 Ill. 105; Hill on Trustees, *83.
    The attempted disposition of the bonds was testamentary, not to take effect until after the donor’s death, and therefore void for want of proper attestation. Badgley v. Votrain,. 68 Ill. 25; Olney v. Howe, 89 id. 559; Cline v. Jones, Ill id. 563; Basket v. Hassell, 107 U. S. 602; Carr v. Silloway 11 Mass. 124; 1 Jarman on Wills, (5th Am. ed.) 18-20.

      By the release to the bank, Sylvester L. Comer released the trust, if there was one. Henderson v. Sherman, 47 Mich. 274; Hill on Trustees, *579-581.
    The witness Stewart .testifies to the declaration of Samuel Comer, that he had given all his bonds to his wife, to make her independent,—to do with them as she pleased; and Sylvester always spoke of the bonds as his mother’s.
    The heirs recognized and admitted her right to the bonds, and never made any objection to her use of them. Even if Samuel Comer never gave them to her, and they became assets of the estate, she had a right to them, as widow, as part of her specific allowance, and as her dower. York v. York, 38 Ill. 525; Kellogg v. Graves, 5 Ind. 501; Cross v. Casey, 25 Ill. 562.
    Her interest in the estate was a sufficient consideration for the release of the bonds to her by the heirs.
    Messrs. Mack, Baird & Mack, for the appellees:
    The copy of Samuel Comer’s letter attached to the release of the bankers, was original evidence, and properly admitted. 1 Greenleaf on Evidence, secs. 23, 97, 189; Carver v. Jackson, 4 Pet. 83.
    The admissions of Harriet Comer, in the release given by her and Sylvester, show that she only claimed a life estate in the bonds, and amount to a declaration of trust, which is binding on her and her privies. Welsch v. Savings Bank, 94 Ill. 207; Bigelow on Estoppel, 573.
    The intention,of Samuel Comer, in his letter to Anderson ■& Co., to create a trust, is manifest. Equity looks at the intent rather than the form, and treats that as done, which, in good conscience, ought to be done. 1 Pomeroy’s Eq. Jur. sec. 378.
    That his letter amounts to a declaration of trust, see Otis v. Beckwith, 49 Ill. 121; Ray v. Simmons, 11 R. I. 266; Hill v. Stevenson, 63 Maine, 364; Martin v. Funk, 75 N. Y. 134;
      Howard v. Savings Bank, 40 Vt. 597; Blanchard v. Sheldon, 43 id. 512; Blasdel v. Locke, 52 N. H. 238; Minor v. Rogers, 40 Conn. 512.
    Mrs. Comer, by her written agreement with the bank and. Sylvester, and her subsequent acts and declarations, is es-topped from denying Sylvester’s right to half of the principal of these bonds. Welsch v. Savings Bank, 94 Ill. 181; Byrne v. Morehouse, 22 id. 603; Smith v. Whittaker, 11 id. 417; Herrick v. Swartwout, 72 id. 340; Gridley v. Hopkins, 84 id. 528.
   Mr. Justice Craig

delivered the opinion of the Court:

This was a bill in equity, brought by Alice A. Comer, and others, administratrix and heirs of Sylvester L. Comer, deceased, against Sater C. Comer and the Hancock County National Bank, for the purpose of determining the rights of the parties, and for a division of $5000 of United States bonds, and a note and mortgage of $1000, which were on deposit in the bank.

Samuel Comer died intestate in July, 1867, leaving a widow, Harriet Comer, and two sons, Sylvester L. and Sater C. Comer, as his only heirs. He left an estate of $25,000, and no debts. No letters of administration were issued upon his estate. Prior to his death, Samuel Comer owned United States bonds deposited with George C. Anderson & Co., bankers, of Keokuk, Iowa, and on the 28th day of December, 1866, he placed in the hands of his bankers, a writing, which was as follows:

“Hamilton, December 28, 1866.
“George G. Anderson & Go.:
“Gents—Of the seven-thirty government bonds of mine in your hands, I hereby assign to my wife, Harriet Comer, $6000, she to draw the interest of the same, you keeping possession of the same, and when matured, to convert into five-twenty government bonds, first series, to remain in your hands, my wife to draw the interest until her death, have no control of the principal, so far as disposing of them is concerned,—the bonds, at my death, to revert to my heirs.
“The above assignment to take effect at my death, I controlling them in the meantime.
(Signed) Samuel Comer.
(“Will you be kind enough to file this with my bonds?”)

The bonds were in the hands of Anderson & Co. when Samuel Comer died, and remained with them until the firm was dissolved, by the death of Anderson, when they passed into the hands of Bower, Barclay & Co., successors to Anderson & Co. There they remained until the 29th day of June, 1871, when Sylvester L. and Harriet Comer took the bonds from Bower, Barclay & Co., and deposited them in the Hancock County National Bank, at Carthage. Upon receipt of the bonds, the following agreement was executed

“Whereas, Samuel Comer, deceased, before his death, deposited with George C. Anderson & Co., $6000 in government bonds, under the trust and conditions specified in the paper, (a copy of which is hereto attached,) for the benefit of Harriet Comer, his wife, during her life, with remainder of the principal to the heirs of said Samuel Comer: Now, for the purpose of other and better investment, and for a valuable consideration to each of us moving, it is agreed by the said Harriet Comer, and by Sylvester L. Comer and Sater C. Comer, the only heirs of said Samuel Comer, that the said George C. Anderson & Go., and their successors, and all members of said firm, are hereby released from said trust; and the said Bower, Barclay & Co., with whom said bonds are on deposit, are authorized and empowered to deliver and pay over to the said Harriet Comer the said $6000 of bonds.
“Witness our hands, this June 29th, 1871.
Harriet Comer,
S. L. Comer. ”
Witness: R. C. Parrott.

A copy of the writing of Samuel Comer, of December 28, 1866, was attached to the agreement. Harriet Comer received the' interest on the bonds while living. On the 29th day of April, 1883, she died, leaving a will, under which Sater C. Comer is sole legatee of her estate.

It is claimed by complainants, that on the death of Samuel Comer one-half of the bonds passed to Sylvester L. Comer, subject to the right of Harriet Comer to receive the interest during her life, and that upon her death one-half thereof became the absolute property of the heirs of Sylvester L. Comer, he having died intestate; while on the other hand it is claimed, that Harriet Comer was the absolute owner of the bonds, and the. title to the same passed to Sater C. Comer, under the will of his mother. As Sater C. Comer set up title to all the bonds, and the note and mortgage, under the will of Harriet Comer, his mother, it devolved upon him to establish, by the evidence, that she owned the property at the time of her death. The fact that Harriet Comer had the undisputed possession of the bonds for several years before her death, and used the interest accruing thereon, may be regarded as presumptive evidence that she was the owner; but such evidence of ownership may be overcome by proof explaining that she had hut a life interest in the property, and held under such title.. Upon this point complainants introduced four witnesses, who, at different dates, and some of them on various occasions, had conversations with Harriet Comer in regard to the bonds, and she stated that she was to have the interest as long as she lived, and after her death the bonds were to be divided among the children. This evidence may he regarded as sufficient to overcome the presumption of ownership, which arose from Harriet Comer’s possession of the property. If she was the absolute owner, it is strange that soon after her husband’s death she declared that she was only to have the interest on the. bonds. This was repeated on various occasions, and reiterated only a short time before her death. Her declarations and conduct are .inconsistent with the theory that she owned the bonds, and .had the right to dispose of them as she might think proper.

, But it is. said, the title of Harriet Comer was established by the declarations of Samuel Comer, in his lifetime. One witness testified, that Samuel Comer stated to him, a short dime before his death, that he had given the bonds to his wife. But it is apparent, from the cross-examination of the witness, that the terms of the gift were embraced in the letter of Samuel Comer, addressed to George C. Anderson & Co., which, if a binding obligation, shows a manifest intention to give her only the interest on the bonds during her life.

Much reliance is placed in the declarations of Sylvester L. Comer, at the time the bonds were deposited in the bank .at Carthage, to defeat his title and establish title in Harriet Comer. Mr. Ferris, the president of the bank, testified as follows: “On the 29th day of June, 1871, Mrs. Harriet Comer, and her son, Dr. Sylvester L. Comer,- came into the Hancock County National Bank of Carthage, Illinois. The doctor says, ■‘Ma has some government bonds, which she wants to leave with you.’ She handed me a package of bonds out of her satchel. He said, ‘She wants to deposit some money, also.’ I said we would not enter the bonds in the same way with the deposit of money,—that we would keep the bonds without ■charge, and would deliver the same bonds when called for. He said, ‘You enter it in the back part of the pass-book, and make a memorandum instead of a receipt,—ma may lose the receipt.’ I entered a credit of $250 with her on the first page, and a memorandum of the bonds on the last page. ”

"When all the circumstances are considered, we do not regard this evidence of controlling importance. The question of title was not up for discussion or determination. Mrs. Comer was rightfully in the possession of the bonds. They belonged to her during life, and the statement made by Sylvester, to the effect that they were her bonds, was not inconsistent with his claim of title to one-half thereof after her death. In one sense they were her bonds, and it was proper for Sylvester to speak of them as such, although the title, after her death, was in his brother and himself. Had the question of title been up for consideration, or had any right been acquired on the faith of Sylvester’s statement, a different question might be presented; but such was not the case.

It is claimed, on behalf of complainants, that a trust was created by the writing of December 28, 1866, under which Harriet Comer was to have the interest on the bonds during her natural life, and upon her death they were to be equally divided between Sylvester and Sater Comer, heirs-at-law of Samuel Comer. We think it manifest, from the reading of that writing, that Samuel Comer intended to give his wife, after his death, the interest on the bonds during her life, and at her death the bonds were to be equally divided between his two sons; but whether the writing can be sustained as an instrument creating a trust, presents a serious question. We think it may be declared a general rule, that if the intended disposition of property be of a testamentary character, not to take effect in the testator’s lifetime, such disposition will be inoperative unless declared in writing, in conformity to the statute relating to wills. (Perry on Trusts, see. 92.) Here there was no absolute disposition of the bonds by the writing, but Samuel Comer retained the control and disposition. The last clause of the agreement leaves no room for doubt on this point. It is as follows: “The above assignment to take effect at my death, I controlling them (the bonds) in the meantime.” The only reasonable construction which we are able to' place on the writing is, that at the death of the party who executed it, the property should be disposed of in a certain specified manner. This is not an absolute disposition of property— an executed contract—but rather an executory contract, testamentary in character.

If we are correct in this, the bonds were unaffected by the writing, and upon the death of Samuel Comer passed as intestate property—one-third to the widow, Harriet Comer, and two-thirds to Sylvester and Sater Comer. But no reason is perceived why these parties might not make such disposition of the bonds as they thought proper, and we think the evidence shows clearly that they did contract among themselves that the widow should have the interest on the bonds during her life, and at her death they should be divided between Sylvester and Sater Comer. Thomas Buggies testified, that shortly after the death of Samuel Comer, the two sons of the deceased, Sylvester and Sater, executed a contract in writing, in relation to the disposition of the bonds. “The agreement set forth that there were some United States bonds in George C. Anderson & Co.’s bank, to the amount of $4000 or $5000 or $6000. I don’t remember the exact amount. The agreement was, that they were to remain on deposit in George C. Anderson & Co.’s bank, and that their mother was to draw the interest on those bonds, and neither of them was to interfere with it during her lifetime. The agreement was deposited with me. ” The witness also testified, that after Anderson’s death they came and said they wanted to remove the bonds and deposit them somewhere else. But this is not all. When the bonds were removed, Sylvester and the widow, Harriet Comer, executed a written contract, of date June 29, 1871, which makes the letter of December 28, 1866, a part of the contract, where the same disposition of the property is agreed upon. By these two agreements, all three of the parties agreed that the widow should have the interest during life, and at her death the bonds should be divided. Is there any reason why these contracts should not be enforced ? They were deliberately made, based upon a sufficient consideration, and we are aware of no reason why the contracts thus made should not be enforced.

It is insisted, that a copy of the writing of December 28, 1866, was not competent evidence, without first accounting for the loss of the original. The copy put in evidence was attached to the contract of June 29, 1871, by Harriet Comer and Sylvester Comer, and thus made a part of that agreement, and as a part of that contract it may be regarded as original, and not secondary, evidence.

In conclusion, we are satisfied that the judgment of the Appellate Court was correct, and it will be affirmed.

Judgment affirmed.

Mr. Justice Sheldon concurs in the conclusion, with the exception that he thinks on the death of Samuel Comer the two sons took each a one-third interest in the bonds, and the widow, under our Statute of Descents, took a one-third interest in them as her absolute personal estate, and she having devised all her interest in the bonds to Sater Comer, makes his interest in them a two-thirds interest, and the interest of Sylvester Comer’s representatives, a one-third interest.


source: Caselaw Access Project

author: Mr. Justice Mulkey

license: Public Domain

text:
    Frances M. Doyle v. George Wilkinson.

      Filed at Ottawa May 12, 1887.

      1. Appeal—from order of Appellate Coyrt—on motion to re-tax costs. No appeal lies from the judgment of the Appellate Court in overruling a motion to re-tax the costs in a cause decided in that court.
    2. Action—to recover costs. A party entitled to costs, either as an officer or party to a suit, may maintain an action of assumpsit or debt for the amount legally due him. The action is upon an implied contract.
    Appeal from the Appellate Court for the Second District;— on motion in that court to quash fee-bill and re-tax costs.

      Messrs. Doyle, Morris & Pierson, for the appellant.
    Mr. E. F. Bull, for the appellee.
   Mr. Justice Mulkey

delivered the opinion of the Court:

This is an appeal by Frances M. Doyle, from an order of the Appellate Court for the Second District, overruling a motion by her to re-tax the costs in a certain cause lately pending in said court, on the appeal of George Wilkinson. The latter having been successful in his appeal, there was a judgment against the appellee, (appellant here,) for costs, which were taxed by the clerk, in the usual manner, at $72.30, for which amount he issued fee-bills and executions, and directed the same to the sheriff of Iroquois county, for collection. Mrs. Doyle, feeling herself aggrieved at the manner in which the costs had been taxed, replevied the fee-bills, and the matter having been thus brought before the Appellate Court, that tribunal, after due consideration, overruled, as already seen, the motion to re-tax, and thus sustained the clerk’s taxation of the costs.

Pending the appeal- in this court, appellee entered a motion to dismiss the appeal, on the ground that this court had no jurisdiction to hear it, as the amount in controversy was less than $1000. From the limited consideration the court was then able to give to the matter, owing to the great amount of conference work before it, pending the call of the docket, it was thought, and so ruled, that the motion ought not to be allowed. But upon more mature reflection and consideration of the question, we are satisfied that the appeal does not lie. No principle is better settled than that it is the duty of every court, from the highest to the lowest, when it discovers it has assumed jurisdiction in a cause where none is given by law, to dismiss the suit, and this without regard to how far it has progressed, or the steps which may have been taken in it.

The legal costs taxed by the clerk were a simple money demand. Part of it was due the clerk, and the balance to Wilkinson, the successful party in the appeal. Either might have maintained debt or assumpsit for the amount legally due him. The action, in such case, is upon an implied contract; therefore it is, within the meaning of the Appellate Court act, an action ex contractu. The parties, however, were not bound to bring such an action. The law authorized the clerk to tax the costs, and issue a fee-bill and execution therefor, which was done. But he had no right to tax anything but legal costs. Whether they were so or not, the appellant had the right to have the question determined in the manner she did. Her action was simply to suspend the proceeding instituted by the parties entitled, for the collection of the costs in question. By the appellant’s motion to re-tax, she submitted to the court, for determination, the validity of each item of costs in the fee-bills. By denying the motion, the court, in legal effect, decided that the full amount of $72.30 was due from appellant, as charged in the fee-bills, which was nothing more nor less than passing upon a purely money demand arising ex contractu, and from which no appeal therefore lies. It is true that the order is not, in form, a money judgment or decree, but the effect is precisely the same, as it removed all impediments to the collection of the amount in controversy. The substance and effect of the order are to be looked to, rather than its form. The process by which the Appellate Court reached its conclusion upon the motion, was, necessarily, to take up, one by one, the disputed items in the fee-bills, and determine whether the appellant owed the amounts as therein charged. In doing this, the court, just as in any other case between debtor and creditor, was bound to apply the law to the facts before it. Having reached the conclusion, as it necessarily must, that appellant owed the total amount claimed in the fee-bills, instead of entering up a judgment for that amount, as would have been the proper practice in an ordinary suit for costs, it accomplished the same result by entering an order,—the only one it was authorized to enter,— overruling the motion to re-tax the costs, the legal effect of which, as we have already seen, was to simply fix, in dollars and cents, the amount of appellant’s liability upon the fee-bills.

The appeal will be dismissed.

Appeal dismissed.


author: Mr. Justice Shope

text:
    Charles Stose v. Jacob Heissler et al.

      Filed at Ottawa March 22, 1887.

    1. Lease—;fixing rental value by referees—unanimity required—of the rights of the parties when referees fail to agree. Parties chosen to fix the rent which a lessee shall thereafter pay for the use of property, there being at the time no rent due, are not, strictly speaking, arbitrators; but unless otherwise provided, they must all agree as to the sum to be paid.
    2. A lease of premises provided, that the rent, from and after a certain day, should be agreed upon by three disinterested persons, to be chosen, one by the lessor, and one by the lessees, and these two to select the third. This being done, only two of the referees were able to agree upon the rent: Held, that the parties were entitled to the concurrent judgment of the three, and were not bound by the rent so fixed by a mere majority of the referees, and that had they agreed as to the rent, their decision would have been conclusive on the parties, except for fraud.
    3. Where the parties to a lease fix the rent to be paid only up to a certain date, four years short of the term, and provide therein that the rent for the remainder of the term shall be agreed upon by three disinterested persons, to be chosen as therein provided, and it happens that such referees can not agree as to the rent to be paid, this will not terminate the lease and exonerate the lessees from paying a fair and reasonable rent thereafter; and the lessor may recover the reasonable rental value of the premises, on showing his inability to have the same fixed as contemplated in the lease; and in such case, it will be presumed that the rent for the balance of the term was intended to be made payable at the same times and in the same manner as provided in the lease for the first part of the term, in the absence of anything indicating a contrary intention.

      4. And where there is no provision in the lease for the selection of other referees in case those who have been selected shall fail to agree, no further duty in that regard will devolve upon either party, but at once, upon the disagreement of the referees selected, the lessor may have his action to recover for a fair and reasonable rental value of the premises.
    Appeal from the Appellate Court for the 'First District;— heard in that court on appeal from the Superior Court of Cook county; the Hon. Sidney Smith, Judge, presiding.
    This was an action brought by Charles Stose, in the Superior Court of Cook county, against Jacob Heissler and August Junge, for the recovery of a month’s rent, claimed to be due under a lease by the plaintiff to defendants, of certain real estate in the city of Chicago. The lease was for the term of ten years, beginning May 1, 1878, and ending May 1, 1888, in which the defendants covenanted to pay to the plaintiff, as rent, the sum of $110 per month, for and during, the time from the first day of May, 1878, to the first day of May, 1879, and the sum of $125 per month for and during the time from the first day of May, 1879, to the first day of May, 1884, “and payable on the first day of each and every month. ” The lease then provides: “The rent for the remaining four years shall be made and agreed upon by three disinterested parties, owning and renting property in Chicago,—each party of the first and- second parts to select one man, and the said two selected to agree upon a third party. The parties to this lease agree hereby to abide the decision of the parties selected.” The rent was all paid up to the first day of May, 1884. This action was brought to recover the rent for the month of May, 1884, which is claimed to have become due on the first day of that month. This is denied by the defendants, who claim that the rent from May 1, 1884, to May 1, 1888, does not become due until the end of the term.
    Prior to May 1, 1884, the plaintiff selected James Campbell, and the defendants selected Charles Kozminski, and they selected James C. Sinclair, under the foregoing provision in the lease, to determine what rent should be paid for the remainder of the term. These persons, so selected, met, but failed to agree as to what would be a fair and reasonable rent; but on April 30, 1884, the said James Campbell and James C. Sinclair made and delivered to the parties a writing, signed by them alone, which, after various recitals, concludes as follows: “That the said James Campbell, Charles Kozminski and James C. Sinclair, being selected as aforesaid, did, on the 25th day of April, 1884, meet together, and did then and there determine and agree upon the sum of two hundred and fifteen dollars ($215) per month, as being the proper and reasonable rent to be paid by said second parties from May 1, 1884, to May 1, 1888.” It appears that Kozminski refused to sign the same, believing the rent therein named to be too much.
    The declaration contained five counts, the first being based upon the finding of said Campbell and Sinclair, treating it as a valid award, and binding on the parties. The second count sets out the leasing, and the terms of the lease, according to their legal effect, and the selection of the property holders, as in the first count, and charges that Kozminski, selected by the defendants, neglected and refused, and still neglects and refuses, to agree with Campbell and Sinclair, and fix upon a monthly rental, of which the defendants had notice, by means whereof said defendants became liable to the plaintiff for so much money as the premises were reasonably worth, on the first day of each and every month, from the first day of May, 1884, for and during and until May 1, 1888, as rent for the use and occupation of said premises, and that the same are reasonably worth $250 per month, and concluding in the usual form. The third count makes the lease itself a part of the same, and then shows the selection of the three, persons, their meeting together, and the refusal of Kozminski to agree with the other two, substantially as in the second count, and claims $250 a month as a reasonable rent for the premises. The fourth and fifth counts were for use and occupation, generally. A general demurrer was filed to each count, which the court sustained to the first, second and third counts, but overruled as to the fourth and fifth counts. Thereupon the plaintiff entered a nolle prosequi as to the fourth and fifth counts, and the court rendered judgment for the defendants on the demurrer. The plaintiff appealed to the Appellate Court for the First District, where the judgment of the Superior Court was affirmed, and he brings the ease here by his further appeal.
    Mr. William C. Wilson, and Mr. David L. Zook, for the appellant.
    Messrs. Barnum, Rubens & Ames, for the appellees.
   Mr. Justice Shope

delivered the opinion of the Court:

The question presented by this record is, whether the court below erred in sustaining the demurrer to the first, second and third counts of the plaintiff’s declaration. By the first count the plaintiff sought to recover $215, a month’s rent, according to the terms of the written lease, and relying upon the finding of two of the three referees chosen under the provisions of the lease, as an award final and conclusive as to the rent to be paid under the lease. The lease does not show, upon its face, that he is entitled to receive that sum per month for the use of the demised property after May 1, 1884. In the lease, the parties did not fix the rent from and after that date, but provided a mode by which it was to be determined, and, when ascertained in that mode, was to be as binding as if fixed by themselves and inserted in the lease. The monthly rental after May 1, 1884, was to be fixed by three disinterested persons, owning and renting property in Chicago, each of the parties to the lease to select one, and those thus chosen to select the third. The parties had the right to make such an agreement, and if the persons so selected had agreed upon the rent to be paid, their decision, in the absence of fraud, would have been conclusive upon the parties. The language of the lease on this point is: “The rent for the remaining four years, from May 1, 1884, to May 1, 1888, to be made and agreed upon by three disinterested parties, ” to be chosen, etc. The plaintiff contends that the provision for the selection of three persons to fix' the rent, indicates an intention that a majority might fix the rent, otherwise an odd number would not have been agreed upon. In this respect, the submission does not differ from an ordinary submission to arbitrators, and the power of the referees to make a binding award should be construed in the same way. The matter of fixing the rent was confided to the judgment, experience and discretion of the persons nominated by the parties and the one to be selected by such nominees. The confidence of the parties was in the united judgment of the three, and they agreed to be bound by nothing less than their concurrent judgment. If the conclusion of Campbell and Sinclair is to be taken, it can not be said that the rent has been agreed upon “by three disinterested persons. ”

We do not think the reference in this case was an arbitration, in the strict sense, for the reason that when the lease was made there was no difference or dispute between the parties to be settled, nor was there any at the time the referees were selected, and, as stated by this court in a similar case, (Norton v. Gale, 95 Ill. 533,) “the object was to preclude or prevent the arising of differences,—not to settle differences which had arisen.” In that case, the rent, after five years, was fixed at six per cent of the appraised value of the demised premises, and before the end of the five years each party was to select an appraiser, who were to select a third in ease they could not agree, and their award was to be final. The two appraisers did agree, but failed to give the parties notice of the time and place of their meeting, which failure to give -the parties an opportunity to be heard would have been fatal,-had the proceeding been an arbitration of matters in dispute. This court held that there was no arbitration, referring to Leeds v. Burroughs, 12 East, 1; Lee v. Hemingway, 3 Nev. & M. 860; Collins v. Collins, 26 Beav. Ch. 306; Garred v. Macey, 10 Mo. 161; Currey v. Lackey, 35 id. 389; opinion of Senator Seward in Garr v. Gomez, 9 Wend. 649; Mason v. Bridge, 14 Me. 468; Oakes v. Moore, 24 id. 214; Rochester v. Whitehouse, 15 N. H. 468; Russell on Arbitration, (3d ed.) 43; Morse on Arbitration and Award, 40.

The persons here selected were not to make an award for the payment of money by one party to the other. No rent was then claimed to be due, and had they agreed upon the rent to be paid under the lease after May 1, 1884, no action would lie on the award itself. The action would have to be brought on the lease, and the amount fixed upon by the persons chosen, as rent to be paid under the lease, would, in the absence of fraud, afford conclusive evidence of the extent of the lessees’ liability thereunder. It is also true that these referees had no power, under their appointment, to give a binding construction of the lease, as, whether the rent for the last four years was payable monthly, monthly in advance, annually, or at the end of the term. (McAvoy v. Long, 13 Ill. 147.) The extent of their authority, under.the provision in the lease, was simply to agree upon what would he a fair and reasonable rent per month for the unexpired term.

But whether the lease provided for a submission to arbitrators, or whether their finding is technically an award or not, is immaterial, as it makes no difference whether its binding effect grows out of their contract that the rent shall he fixed by the united judgment of the three, or from treating the finding as in the nature of a judgment. In either event, it is equally binding and conclusive.

This court has frequently held, that when parties have provided in their contract, in advance, that the quantity of work done, etc., shall be determined by an engineer or architect,.his estimate is conclusive upon them, except for fraud or mistake. Canal Trustees v. Lynch, 5 Gilm. 526; McAvoy v. Long, 13 Ill. 147; Mills v. Weeks, 21 id. 561; McAuley v. Carter, 22 id. 53; Parmelee v. Hambleton, 24 id. 608; Wallace v. Holmes, 36 id. 156; Korf v. Lull, 70 id. 420; Snell v. Brown, 71 id. 133; Coey v. Lehman, 79 id. 173; Taylor v. Renn, 79 id. 181; Downey v. O'Donnell, 86 id. 49; Finney v. Condon, 86 id. 78; Downey v. O'Donnell, 92 id. 559; Vermont Street M. E. Church v. Brose, 104 id. 206.

• At common law, all the executors were required to join in the execution of a power of sale, when it was not coupled with an estate, and it would not survive in case of the death of one. (Wardwell v. McDowell, 31 Ill. 364; Clinefelter v. Ayers, 16 id. 329.) In the first of these cases this court said: “At the common law, it is not doubted that a naked power, such as this has been decided to be, not coupled with any interest in the thing or estate, could only be exercised by the joint action of the donees of the power. The power does not survive in case of the death of one of the donees. (Sugden on Powers, 129.) So, in the execution of a will, where one named with others, as executor, refused to accept and qualify, the others could not execute the will. ” In Sinclair v. Jackson, 8 Cow. 553, the court say: “It is a settled rule, that when a trust or authority is delegated for mere private purposes, the concurrence of all who are intrusted with the power is necessary to its execution. Green v. Miller, 6 Johns. 39; Franklin v. Osgood, 14 id. 560; Sugden on Powers, 162, 263.” So, under a submission of matters in dispute to arbitrators, their award must be unanimous, unless otherwise agreed. Towne v. Jaquith, 6 Mass. 46; Maynard v. Frederick, 7 Cush. 252; Bannister v. Read, 1 Gilm. 92.

It follows, that the finding of the rent by only two of the persons selected, is not binding on the defendants. They never agreed to abide by such a-finding. As the first count sought to recover the rent as fixed by only two of the referees, it was clearly bad, and the demurrer was therefore properly sustained thereto.

The demurrer to the second and third counts presents an entirely different question. These counts set forth the terms of the lease and the selection of the three persons, in accordance with the provision therein, and their inability or failure to agree as to the amount of the rent to be paid, and sought to recover a reasonable rental therefor.

It is evident that the parties contemplated the payment of a reasonable rent during the remainder of the term, and that the amount alone should be left to future adjustment. The parties might have left the amount of the future rent to be agreed upon by themselves. In that case, if they, after an honest attempt to do so, had failed to come to an agreement, the leasing would not have terminated, but the parties would have been left to show, by proper evidence, in the appropriate proceeding, what, was a reasonable rental for the demised premises. What the parties could do themselves, they might’ do through their duly authorized agents. The persons selected to determine the reasonable rental, may be regarded as their duly authorized special agents, deriving their powers from the instrument under which they were appointed. If they had all agreed, their award would have furnished the sole evidence of what was a fair and reasonable rent for the unexpired term. Failing after a bona ficle attempt to make such adjustment, it is to be treated the same as a failure of the parties to agree, and the same results would follow. They may show, by other evidence, what rent should be paid for the residue of the term. The very object of submitting the matter to the judgment of three disinterested persons, was to dispense with the necessity of a resort to other evidence.

In Phippen v. Stickney, 3 Mete. 384, Stickney agreed, in case he became the purchaser of a tract of land, to convey a portion of it to Phippen on such terms as they might after-wards agree upon, or upon such terms as the witnesses to the written agreement should decide to be just and reasonable. The contract was duly executed by the parties, and attested by three witnesses. The parties failing to agree, the three witnesses were brought together, and the parties had notice. Two of them agreed upon and signed a finding, that Phippen should pay to Stickney $180 for the land he had agreed to convey, but the third, who was present, did not agree, and refused to sign the same. The defendant having refused to perform the award, and convey, suit was brought against him, on his agreement. The court there said: “The only remaining objection is, that the. plaintiff is not entitled to recover, because there has been no valid award made by the persons agreed upon by the parties, fixing the sum to be paid by the plaintiff, to entitle him to a conveyance from the defendant. The objection is, that of the three arbitrators selected by the parties, two only concurred in the award. This would constitute a valid objection to an action on an award on a submission, at common law, there being no stipulation that a majority should decide. The question arises here, however, under different circumstances, the plaintiff founding his cause of action on the promise of the defendant to convey to him the land. In a case like the present, it appears that the plaintiff has done all in his power to procure an award fixing the amount to be paid by him, in pursuance of the terms of the contract. We do not think that the act of any one of the persons thus selected as arbitrators, in refusing to concur with his associates in fixing the sum to be paid, should operate to divest the rights of the plaintiff arising under this contract. If the sum to be paid by the plaintiff, before he was entitled to the conveyance, could not be adjusted in the manner contemplated by the parties, and this state of things occurred without the fault of the plaintiff, the effect must be that he must pay for the land such a sum as was reasonable, and such sum as the arbitrators ought to have awarded.”

In Hood v. Hartshorn, 100 Mass. 120, a lease for five years contained a clause, that at the expiration of the term, the building erected by the lessee should be appraised by three disinterested men, one to be chosen by the lessor and one by the lessee, and the third by the two thus chosen, and that the lessor should purchase the building at the price set by such appraisers. The appraisers so selected neglected and refused to set a price for the buildings. That court says: “This clause is to be construed with reference to its subject matter. By its terms, the appraisement was not to be made until the expiration of the lease. This would give no time for the removal of the buildings in case the appraisers should fail to agree, and by operation of law they would become the property of the lessor, without any conveyance or transfer. It would be unreasonable to construe the agreement so as to render the obligation of the lessor to pay for them, entirely dependent upon the making of an appraisement. The appraisement is to be regarded as a mere- method of ascertaining the price to be paid for them. Yet the stipulation is not void. It gives the lessor certain rights, which are preliminary to the right of the lessee to maintain an action for the price. It binds the lessee to do all that was reasonably in his power to procure the stipulated appraisement. ” The court say that case is unlike that of Phippen v. Stickney, in,this, that there, the referees were named, and when they failed to make an appraisement, the stipulated method of ascertaining the value wholly failed, there being no obligation resting on either party to appoint other appraisers, and hold, that when those selected failed to agree, others should be selected. But the court also hold, that it was a question of fact for the jury to decide, whether the lessee had reasonably done all he could do on his part to fulfill the contract and procure the appraisement.

There is no provision in the lease before us for the selection of other referees in case those first selected failed to agree, and we can not say,' as a matter of law, that such an act.is a condition precedent to the plaintiff’s right to recover rent. The plaintiff has done all that the written contract required him to do, unless we, by construction, annex terms and conditions thereto other than the parties saw fit to incorporate. If he is required to select a second time, on a failure of those first chosen to agree, how many times must appraisers be selected ? The courts can not make contracts for the parties, but can only construe them as made. If the plaintiff should select another appraiser, there is nothing to prevent the defendants from selecting the same person they did before. If they did so, it could not be held to be a breach of the contract. It might have been more satisfactory if the contract had provided that the determination of a majority should be binding; but the parties did not so contract, and while we can not require the defendants to accept the finding of only two of the referees, neither can we require the plaintiff to seek the appointment of other referees before he can maintain his action.

It would be an easy matter for a party owing money, when the amount to be paid depended upon the unanimous finding of referees or appraisers, to indefinitely postpone a right of action against him, if we should make such finding a condition precedent to a recovery. He might select a referee unduly prejudiced against the other party, and yet it be impossible to show bad faith or collusion with his appointee. The facilities afforded an unwilling party to defeat an adjustment of this kind, are such that we are not disposed to require a party entitled to recover pay for the use of his property, to make any further effort to procure an appraisal or award than the parties have themselves required. If the plaintiff had refused to select a referee, and.had thus prevented the fixing of the rent for the unexpired term, this would not, of itself, have terminated the lease, but it would have authorized the defendants to rescind the contract. They would not be bound to hold the .premises at an uncertain - rental. But if they should not choose to rescind the contract, and hold the premises to the end of the term, can they hold free of any obligation to pay rent for the four years ? We think not. If, then, they continued to occupy the premises after a failure to fix the rent in the mode agreed upon, without the fault of either party, they should be required to pay a reasonable rent therefor.

In Lowe v. Brown, 22 Ohio St. 463, which was in equity, it was stipulated in an indenture by which a building lot was leased for ninety-nine years, renewable forever, that at the expiration of each successive period of twenty years the ground should be re-valued by three disinterested men,-—one to be selected by the lessor, one by the lessee, and the third by the two thus chosen,—who should appraise the same at its true value, and report the amount in writing, and that eight per cent thereon should be the annual rent for the succeeding twenty years. The appraisers-thus chosen could not agree,—only two of them made an appraisal. The court held: First, in order to a valid execution of the power, the appraisers must all unite, and that a majority could not make a valid report; second, if they could not agree, and two of them, only, made a report of their appraisement, and one party to the lease refused to select new appraisers in accordance with its provision's, the other party might bring his action to set aside such invalid report, and for the valuation of the leasehold ground,—that in such action the court might refer the case to the -master to take testimony, and report therewith the true value of the ground. The court further say: “The power of the court, after the appraisement was declared to be invalid, to order a re-appraisement in the mode provided in the lease, may well be questioned. For it is said to be a well settled principle of equity jurisprudence, that a court of equity will not enforce the specific performance of an agreement to refer any matter in controversy between adverse parties, to arbitrators. (Conner v. Drake, 1 Ohio St. 166.) It is quite apparent from the record, that an appraisement in the mode prescribed in the lease could not have been effected without the exercise of such a power in both respects.’’

This court has held, that when the parties to a contract make an architect an umpire to settle all disputes,- and agree that his decision shall be final, payment to be made on condition that the architect shall certify to the amount due, they will be bound by the agreement, and that unless the architect acts in bad faith, refuses to act, or is prevented from acting from unforeseen or uncontrollable cause, no action can be maintained for extra work, without his certificate. But when the architect refused to act, and wrote on the back of the account presented by plaintiff to him, “I * * * most respectfully decline to further try to adjust the differences between the parties in interest, ” it was qlso held, that the plaintiff “had a right to sue, without making! further effort to get the architect to make a settlement, and give a certificate of the amount due.” It would seem, therefore, that when the plaintiff in this case had done all that he was required to do, under the contract, to fix the rental value of the premises, and failed, without fault on his part, his right to sue for and recover a reasonable rent as it should fall due is sustained, both upon principle and by authority.

The point is made by the defendants, that the rent for the four years after May 1, 1884, does not fall due until the end of the term. This depends upon the proper construction of the lease, taking all its parts and provisions into consideration. It will be seen, that for the first year of the term the rent was payable monthly in advance, and for the next five years at an increased rate, likewise payable monthly in advance. The rent for the last four years of the term was to be fixed and agreed upon by three disinterested parties, to be selected as provided in the lease. If the rent for the last four years was not due until the expiration of the term, there was no reason for selecting appraisers before that time, as the .fair rental could, at the end of the term, be better known than four years before. The parties, by selecting the appraisers before May 1, 1884, have given a construction to the terms of the lease at variance with that new contended for by the defendants. But, aside from this, it is evident that both parties contemplated payment of the rent monthly. ' They understood it to be payable in advance, and the object of selecting the appraisers was to furnish evidence of the amount to be paid each month of the unexpired term, in advance. It would be strange that plaintiff should require the rent paid with such particularity for the first six years, and should contract for the use of his property for the last four years without any security. Taking the lease as a whole, the conduct of the parties, and the nature of the property, into consideration, we have no hesitation in holding that the rent for the entire term was intended to be payable monthly in advance.

We think the court below erred in sustaining the demurrer to the second and third counts in the declaration. As said in Hood v. Hartshorn, supra: “The stipulation for an appraisement of the rental value was not void, but gave the lessees certain rights preliminary to the plaintiff’s right of recovery. ” It therefore became necessary for him to show that he had taken all the steps required of him by the terms of the lease, to have the rent fixed by appraisers, and the failure to have it thus fixed, in order to entitle him to recover' what was a reasonable rent per month of the premises. It was necessary for him to show a valid reason for not procuring the stipulated appraisal, before he could be allowed to introduce other evidence.

The judgment of the Appellate Court and that of the Superior Court are reversed, and the cause remanded to the Superior Court of Cook county for further proceedings.

Judgment reversed.


author: Mr. Justice Sheldon

text:
    The City of Chicago et al. v. Dwight F. Cameron et al.

      Filed at Ottawa May 12, 1887.

    1. Trust—wrongful application of securities by officers of a corporation-purchaser with notice. The appropriation of the bonds of a railway company, by its president and general manager, to the payment of the debts of other corporations, from which the railway company derives no practical benefit, is a breach of trust, and illegal and void as to the railway company; and-such bonds will be void in the hands of all persons acquiring them with notice of the facts showing the illegality of them delivery for unauthorized purposes.
    2. Corporations —stockholders—preserving the corporate property and interests—rights and remedies of the stockholders. Where a corporation having a right of action against directors, officers or others, for wrongfully dealing with corporate property, or wrongfully exercising corporate franchises, either actually or virtually refuses to institute or prosecute a suit, in order to prevent a failure of justice an action may be brought and maintained by a stockholder or stockholders, either individually or suing on behalf of themselves and all others similarly situated, against the wrongdoing directors, officers and other persons; but it is absolutely necessary that the corporation shall be joined as a party, usually defendant.
    3. Where there is a reasonable certainty that a demand on the corporation to bring suit will be nugatory, the stockholder, as one of the beneficial parties in interest, may bring the suit without first having requested the managing body of the corporation to do so.

      i. The remedy of stockholders against the wrongful acts of the directors or other officers of a corporation is not confined to the prevention of an unlawful act, but in a case where an act would be enjoined, a court of equity may declare the same act, if consummated, void. So if corporate bonds are delivered for improper purposes, by an officer having charge of them, a court of equity may declare them void, and cancel them, and set aside a deed of trust given to secure their payment.
    5. Bes judicata—difference in effect of judgment as a bar and as an estoppel. There is a difference.in the effect of a judgment as a bar, and as an estoppel in a suit upon a different cause of action. A judgment upon the merits constitutes an absolute bar to a second suit upon the same cause of action. But when the second suit is upon a different cause of action, the inquiry must always be as to the point or question actually litigated and determined in the original action, and only upon that is the judgment conclusive in another action.

      6. Laches—delay on the part of stockholders to interpose to protect corporate interests. Where no attempt was made to enforce the payment of bonds of a railway company wrongfully delivered for other than a corporate purpose, it was held, that a delay of eleven and a half years in the bringing of a suit by stockholders to cancel and set aside such bonds, and the deed of trust given to secure their payment, was not a bar to the relief sought.
    7. Assignment of error— by whom. Parties holding railroad bonds wrongfully issued or delivered to them, can not be heard to urge as error that the rights of others not before the court have been determined. The fact that the decree may be erroneous as to others not legally brought before the court, can be urged only by them. A party can avail himself only of error 'which may injuriously affect himself.
    Appeal from the Appellate Court for the Second District;— heard in that court on writ of error to the Circuit Court of LaSalle county; the Hon. Charles Blanchard, Judge, presiding.
    Mr. George W. Smith, for the appellant the city of Chicago:
    The railroad company had ample authority to issue the bonds, and there was a sufficient consideration. They were delivered in satisfaction of certain debts of other companies, which may have been for the benefit of the railroad company.
    The finding that the bonds were not used in the construction, equipment or operation of the railroad, does not establish a want of consideration. Railroad Co. v. Thompson, 103 Ill. 187.
    Failure of consideration should have been pleaded by the corporation. It was a proper defence in an action at law.
    The circuit court of Cook county, in a cause to which the railroad company was a party, had determined the bonds to be valid and lawfully outstanding. This was sufficient to oust the jurisdiction. Whitney v. Stevens, 97 Ill. 482; Mail v. Maxwell, 107 id. 555; Land Co. v. Peck, 112 id. 408.
    The complainants were not entitled to bring the suit. It is not a bill to restrain the issue of bonds, nor to compel officers or directors to reimburse the railroad company, but is a bill directed against bondholders, which the corporation did not approve, but to which it submitted. It sought to wrest from them their property. It was without precedent, and destitute of principle. Morawetz on Corp. sec. 383, et secq.; 3 Pomeroy’s Eq. Jur. sec. 1088, et seq.; Gray v. Lewis, L. R. 8 Ch. App. 1035; Russell v. Wakefield, L. R. 20 Eq. 479; Hawes v. Oakland, 104 U. S. 450; Detroit v. Deane, 106 id. 537; Brewer v. Boston Theater, 104 Mass. 378.
    Complainants did not apply to the directors to file a bill, nor did they call a meeting of stockholders; and no damage is shown to complainants.
    The decree is invalid, and not binding on non-resident ■owners of bonds.
    Mr. J. L. High, Mr. E. F. Bull, and Mr. D. S. Wegg, for the appellees:
    Equity has jurisdiction, at the suit of a single stockholder, to prevent the misapplication of the funds or credit of a corporation by its officers or agents, and to afford relief if such fraudulent misappropriation has already been consummated. 3 Pomeroy’s Eq. 10; Wood’s Railway Law, sec. 63; Robinson v. Smith, 3 Paige, 222; Coleman v. Railroad Co. 10 Beav. 1; Dodge v. Woolsey, 18 How. 341; Solomons v. Laing, 12 Beav. 377; Bliss v. Anderson, 31 Ala. 613.
    The court has jurisdiction to release the trust deed as a cloud upon the title of the railroad company. Rev. Stat. chap. 22, sec. 50.
    If complete remedy could have been had at law, the objection is waived by pleading to the merits. Darby v. Dixon, 4 Bradw. 187; Seminary v. Gage, 103 Ill. 175.
    Appellees are not entitled to the presumption of bona fide ownership of the bonds, as the court finds that the bonds were illegally and fraudulently delivered, in the first instance, without consideration, and in payment of debts of other corporations, and that the holders of such bonds took them with full knowledge of -these facts. Smith v. Sac County, 11 Wall. 139.

      The case of Chicago and Great Western Railroad Land Co. v. Peck, 112 Ill. 408, is not res judicata upon the issues presented in this action. To entitle the former judgment to be pleaded as res judicata in bar of a subsequent action, there must be an absolute identity of the subject matter, of the parties, of the cause of action, and of the purpose or object sought. The subject matter of the prior action was the indebtedness of the improvement company, the water and gas company and the land company; the cause of action was the deed of trust executed by the land company to Jewett; the purpose or object of the action was the enforcement of that deed of trust by a decree of foreclosure. Neither the subject matter, the cause of action, nor the purpose sought in that litigation, was identical with the subject matter, the cause of action, or the purpose sought in the case at bar. Freeman on Judgments, sec. 252; Bigelow on Estoppel, 22; Aspden v. Nixon, 4 How. 467; Miller v. McManus, 57 Ill. 128; Hanna v. Reid, 102 id. 596; Packet Co. v. Sickles, 24 How. 333; 5 Wall. 580; Cleaton v. Chambliss, 6 Rand. 86.
    The right of action of a stockholder to obtain relief against a fraudulent misappropriation, by the officers of the corporation, of its funds or securities, is not affected by the fact that he purchased his stock after the commission of the fraud which hé seek to redress. Ramsey v. Railroad Co. 8 Abb. Pr. (N. S.) 174; Ramsey v. Gould, 57 Barb. 398; Young v. Drake, 8 Hun, 61.
    Plaintiffs in error can not be heard to complain as to the effect of the decree upon non-resident bondholders served by publication. Having answered upon the merits, they can only be heard 'as to such errors as are personal to themselves. Welch v. Post, 99 Ill. 471; Virden v. Needles, 98 id. 366; Henrickson v. VanWinkle, 21 id. 274; Horner v. Zimmerman, 45 id. 14; Short v. Raub, 81 id. 509.
    The objection that the stockholders can not sue as such, goes to their personal capacity to maintain the action, and should have been raised by a demurrer, or by plea in limine. The rule of equity pleading is well established, that objections to the capacity in which plaintiff sues, should be raised by demurrer, if the disability is apparent upon the face of the bill,—otherwise, by a plea- analogous to a plea in abatement at common law. Mitford’s Eq. Pl. (Tyler’s ed.) 245, 318-321; Story’s Eq. Pl. secs. 493, 494; 1 Daniell’s Ch. 52, 57, 84. See, also, Huftalin v. Misner, 70 Ill. 205.
    Mr. John S. Miller, for the appellants, in reply.
   Mr. Justice Sheldon

delivered the opinion of the Court;

The La Salle and Chicago Railroad Company was incorporated, in 1867, for the construction of a railroad from La Salle to Chicago. The act of incorporation authorized the company to borrow money, to issue bonds, to sell them at such price as they should bring, and to mortgage its property and franchises to secure the payment of the bonds. It provided that the affairs of the company should be managed by a board of directors. In 1872 the name of the corporation was changed to the Chicago and Great Western Railroad Company. On the first day of March, 1873, the directors of the company, by resolution, authorized the issue of bonds to the aggregate amount of $8,000,000, the same to be used in the construction and equipment of the line of railroad to be built. One thousand of these bonds, amounting to $1,000,000, were executed March 1, 1873, and secured by a deed of trust of the same date, conveying to the Farmers’ Loan and Trust Company of New York all the property and franchises of the company. These bonds came into the hands of Emery E. Childs, the president and manager of the company.

Prior to this time, a corporation known as the Riverside Improvement Company, organized under an act approved March 11, 1869, for the purpose of purchasing, improving and selling suburban property in the vicinity of Chicago, had become largely indebted for the purchase and improvement of certain lands at Riverside, in Cook county. Another corporation, known as the Riverside Water and Gas Company, incorporated April 6, 1869, for the purpose of supplying water and gas to the town of Riverside, had also become largely indebted and embarrassed in its enterprises at that place. Emery E. Childs, who was the president of the Riverside Improvement Company, and vice-president and general manager of the Riverside Water and Gas Company, acquired the control of another corporation, known as the Mercantile Warehouse and Loan Company, and caused its name to be changed to the Chicago and Great Western Railroad Land Company. He then caused the Riverside Improvement Company and the Riverside Water and Gas Company to convey their property to the land company, subject to a large amount of mortgage and other indebtedness. Childs then became the president and general manager of the land company. He also owned a majority of the capital stock of the Chicago and Great Western Railroad Company, and was its president and manager. Instead of .using the bonds of the railroad company for the purpose of constructing its road, Childs used seven hundred and fifty of the bonds in payment and satisfaction of the debts of the improvement company, of the water and gas company, and of the land company. Childs also delivered two hundred and fifty of the bonds to Joshua C. Saunders and other persons, without any consideration accruing to the railroad company other than what will be adverted to hereafter as claimed to be such.

On the first of March, 1873, the land company executed its deed of trust, conveying certain lands at Riverside to John N. Jewett, as trustee, to secure the payment of the railroad bonds above described. The railroad bonds recite on their face that they are secured by the railroad company’s trust deed, and also that the bond is entitled to the benefits and security of a special sinking fund, derived from sales of property at Riverside, Illinois, in the manner provided by the Jewett trust deed. .Default having been made in the payment of interest on the bonds, suit was brought in the circuit court of Cook county, by F. W. Peck and others, holders of the bonds, for the foreclosure of the Jewett trust deed. A decree of' foreclosure was rendered, which, on being brought before this court, was modified in certain particulars. See Chicago and Great Western Land Co. v. Peck, 112 Ill. 408.

On November 27,1884, the appellees filed their bill, setting out the above, with other facts, and alleging that on October 14,1884, they became subscribers to the capital stock of said railroad company, with a view to carry out the purposes of said road, and to obtain subscriptions. The bill also alleged, that default was made in the payment of interest on said bonds, and that by a decree of the circuit court of Cook county, the trust deed to Jewett had been foreclosed for the benefit of the holders of said bonds. It stated the names of the owners of bonds, among them appellants, so far as known, and alleged that all acquired the bonds with full notice of the matters stated, and well knew that, as against the railroad company, they were ultra vires and void; that the company, through its president, had been requested to file a bill to obtain a release of the railroad de.ed of trust, but had refused to do so. The bill stated, that by reason of the cloud, further subscriptions could npt be obtained, and appellees were greatly damaged. The prayer was, that the bonds might be decreed to be null, and that the Farmer’s Loan and Trust Company should release the trust deed. Process was issued and served upon some resident defendants, among them appellants.

The answer of appellants, as well as of certain others who answered, denied that the bonds were ultra vires, claimed that appellants were bona-fide holders for value, and that the question of the validity of the bonds was res judicata, by reason of the decree of the circuit court of Cook county.

The railroad company answered, and averred that none of the bonds were used in building or equipping its road, but were placed in the hands of its president, and used, without authority, in payment of debts of the Riverside companies, above named; that said companies owned large tracts of land near Chicago, from which it expected to derive a large amount of business, provided said companies could be relieved from pecuniary embarrassment. It did not claim that said bonds were not lawfully issued, but submitted the question of ultra vires for determination. It admitted that it never received, directly, a money consideration for them; that it had been requested, and refused, to file a bill to procure a release of the trust deed made by it, preferring to submit said question to the decision of the court, and to remain neutral as between the stockholders and those claiming to be bondholders. The bonds show upon their face that they are secured by the two trust deeds which have been mentioned, and the Jewett trust deed makes the foreclosure of the railroad trust deed a condition precedent to a sale or foreclosure under its provisions. The Jewett trust deed recites that it was given for a debt of the railroad company. The decree entered March 4, 1885, found the facts, in substance, as set forth in the bill.

It is insisted by appellants, that the evidence, and the facts found by the decree, do not sustain the decree of the circuit court that the bonds in controversy were issued without authority of law, and were null and void as against the railroad company. The decree finds that Childs, “without any authority, used seven hundred and fifty of said bonds, and which came into his hands as the active manager of said railroad company, in satisfaction of debts and obligations of said improvement company, and said, gas and water company, and of said land company, and not in any way in or about the construction, equipment or operation of the said line of railroad, and that all the persons who received said bonds from said Childs well knew that the only consideration therefor was the indebtedness of the said several companies other than the said railroad company, and that said bonds, as against said railroad company, were ultra vires, and wholly null and void, * * * and that the present holders of the bonds acquired them with full notice of the matters heretofore found, and well knowing the bonds were, as against said railroad company, ultra vires and void.” Then follows the finding as to the remaining two hundred and fifty bonds, which, being somewhat different, and more strongly against the bonds, and appellants’ bonds being part of the seven hundred and fifty bonds, we will confine'ourselves to the finding as to the seven hundred and fifty bonds.

It is said this finding does not exclude the fact that the bonds were used for a proper, corporate purpose; that in consideration of the payment of such debts, the land company might have agreed to construct the railroad in part, or to furnish some portion of its equipment; that such a contract would have been valid, and a delivery of the bonds in pursuance thereof would have been binding upon the company. But there is nothing in the decree, or in the evidence, upon which to base any such supposition, and it is not, therefore, to be indulged. And further, it would be inconsistent with the finding that the bonds were used in satisfaction of the debts, ■“and not in any way in or about the construction, equipment or operation of the said line of railroad.”

Again, it is said the evidence before the court showed,—and that the decree does not exclude the fact,—not only that the seven hundred and fifty bonds were used in satisfaction of the debts -of the other companies, but also that by the same transaction the land company gave to the railroad company, by the Jewett trust deed, the security of the Riverside lands for its whole authorized issue of construction bonds, to the amount of $8,000,000, and that the seven hundred and fifty bonds were used to extinguish prior liens on those lands in favor of the security thus obtained by the railroad company for its construction bonds; that while such use of the bonds was not strictly “in any way in or about the construction, equipment or operation of said railroad, ” it was for a proper corporate purpose, viz., to enhance the security which the railroad company got for the remaining $7,000,000 of bonds which were authorized to be issued for the construction of its road. The $1,000,000 of bonds which were issued, were, by the Jewett deed of trust, preferred over the remaining $7,000,000, and of said $1,000,000, the first $200,000 were to be paid in the order of their numbers, in case of foreclosure. The subsequent proceedings in the Peck case, referred to, show a sale, under the decree of foreclosure in that case, of the-premises in the Jewett trust deed, and that the proceeds of the sale failed to satisfy the first $100,000 of the bonds which Peck and others held, but left a deficiency of some $20,000.

Under these circumstances, the idea of the Jewett deed of trust furnishing any real security for the remaining $7,000,-000 of railroad bonds which were authorized to be issued for the construction of the railroad, was too mythical to be counted upon as a substantive matter, and justified the court in finding that such alleged security was but nominal,—one-existing merely on paper,—and that the bonds were used in. the payment of the debts of the said Riverside companies, simply, and not in any way for the benefit of the railroad. We think that is the fair import of the court’s finding. Such use of the bonds for the payment of the debts of the Riverside companies was not for a corporate purpose. It was a breach of trust, and made the delivery of the'bonds illegal and void as against the railroad company. (See Pearce v. Madison and Indianapolis Railroad Co. 21 How. 441.) Appellants having taken the bonds with full notice of all the facts as to their issue, do not occupy the position of bona fide holders for value, and stand in no better situation than those to whom the bonds were at first delivered. We can not say the decree is not sustained by its finding of facts and the evidence.

It is insisted, the complainants were not entitled to bring the suit; that the relief asked should have been sought by the corporation; that it was not the province of the stockholders to seek it in despite of the corporation. Generally, it is so, that actions to obtain relief against wrongful dealings with the corporate property, by directors and officers, must be brought by and in the name of the corporation; yet courts of equity recognize that the stockholders are ultimately the only beneficiaries, and there are well recognized cases in which a stockholder may individually bring suit. The doctrine is laid down by Mr. Pomeroy in his work on Equity Jurisprudence, (vol. 3, page 10,) as follows: “Wherever a cause of action exists, primarily in behalf of the corporation, against directors, officers and others, for wrongfully dealing with corporate property, or wrongful exercise of corporate franchises, so that the remedy should regularly be obtained through a suit by and in the name of the corporation, and the corporation, either actually or virtually, refuses to institute or prosecute such a suit, then, in order to prevent a failure of justice, an action may be brought and maintained by a stockholder or stockholders, either individually or suing on behalf of themselves and all others similarly situated, against the wrongdoing directors, officers and other persons; but it is absolutely indispensable that the corporation itself should be joined as a party—usually as a co-defendant.” The author proceeds afterward to state wherein the corporation’s refusal to prosecute may be virtual, and is not required to be actual in order for a stockholder to sue, as, where there is a reasonable certainty that a demand for a suit by the corporation would be nugatory,—that in such ease the stockholder may bring the suit without first having requested the managing body of the corporation to do so. It is here found that the corporation, through its president, was requested and refused to bring suit. Childs appears to have been the head and front of all these Biverside companies, and to have himself constituted about all there was of the railroad company. The decree finds that he was its president and manager, and the owner of a majority of its stock. He was the president and manager of the land company, a principal officer in the improvement and in the gas and water companies, and he induced the latter companies to convey their property to the land company. He was the officer who committed the breach of trust. Under the circumstances, we think it may be inferred, with reasonable certainty, that had request been made of the board of directors, or other managing body of the corporation, to bring suit, it would have been refused. We are of opinion-that the facts found and appearing present a proper case, under the authorities, for a suit by a stockholder.

It is then said, that although a stockholder may interfere to prevent an unlawful transaction where the corporation will not act, yet where an act has been consummated, if the corporation will not act the stockholders can not, except as against directors or others who have been guilty of a breach of trust. In its application to this case, we do not appreciate the force of this distinction. If the court would have interfered to prevent the delivery of the bonds to pay the debts of other corporations, we must think, that where there has been such delivery, and the bonds still remain in the hands of the wrongful recipients, or those standing in their position, equity will in like manner interpose to cancel the bonds and release the trust deed; that where a misapplication of the bonds would have been restrained from being made, such misapplication, if made, would be redressed where capable of being adequately rectified. There would be good defence against the bonds, and they could not be enforced in the hands of present holders. Why may not the bonds be arrested, and not suffered to pass into the hands of innocent holders, where they might be enforced ? Or why be left to remain a cloud upon property, to its great injury?

It is contended that the validity of these bonds, as the bonds of the railroad company, and of the railroad mortgage, was adjudged in the Peck suit. That was a suit brought by Peck and others against the Chicago and Great Western Railroad Land Company, to foreclose the Jewett trust deed, which had been given by that company upon its lands to secure the payment of these railroad bonds. There is a difference between the effect of a judgment as a bar or estoppel against the prosecution of a second suit upon the same cause of action, and its effect as an estoppel in another suit between the same parties upon a different cause of action. In the former case, the judgment, if rendered upon the merits, constitutes an absolute bar to a subsequent action. But where the second suit is upon a different cause of action, the inquiry must always be as to the point or question actually litigated and ■determined in the original action, and only upon that is the judgment conclusive in another action. This distinction is very clearly pointed out in Cromwell v. County of Sac, 94 U. S. 351. And see Russell v. Place, id. 606; Riverside Co. v. Townsend, ante, p. 9.

It is very clear that the cause of action is not the same in the present suit as in the Peck case; and we are satisfied that the question of the validity of these bonds, as against the railroad company, was not litigated and determined in the Peek suit. It appears from that case, (112 Ill. 408,) that various parties held claims against the Riverside Improvement Company, and the Riverside Water and Gas Company, some unsecured, others secured by various trust deeds, and some represented by stock, bonds and other evidences of debt, and that all the evidences of these various classes of indebtedness were given up and exchanged for bonds of the Chicago and Great Western Railroad Company, secured by the Jewett trust deed executed by the Chicago and Great Western Railroad Land Company, to which latter company the other named Riverside companies had conveyed all their property. As between the various companies which were merged into the land company, and these creditors, the transaction amounted to a mere changing of the form of the evidence of indebtedness. These bonds might be considered as in reality, although not in form, those of the land company. The provisions of the two trust deeds were such, that that of the land company could not be foreclosed until after the railroad trust deed had been. The allegations against the railroad company in the Peck bill were, that it had no assets in esse, and nothing upon which a foreclosure could operate which was of any pecuniary value, and that Childs, as the managing officer of both companies, had been guilty of fraud in so framing the trust deeds as to prevent a foreclosure of the Jewett or land company trust deed. The railroad company was made a party, and was defaulted.

It was averred in the Peck bill, “that said railroad company issued, honestly and legally, about $750,000, only, in railroad-bonds ; * * * that besides $750,000 in bonds, said-railroad company, afterwards, under the direction of said Emery E. Childs, wrongfully and fraudulently issued about $250,000 of railroad bonds; ” that the complainants had the same right to foreclose the Jewett trust deed for the amount due upon the bonds “lawfully issued by said railroad company, ” as if the railroad trust deed had been first foreclosed. And in the decree in that case the statement appears, that “the total amount of bonds professedly issued by said railroad company was $1,000,000, but the amount legally and in good faith issued, and now outstanding, is less than $1,000,000.” From these expressions in the bill and decree, touching the lawful issue of bonds, it is argued, that an issue that the bonds were valid as against the railroad company was directly made by the allegations of the pleadings and found by the decree. We do not think this to be the fair construction. The purpose of these allegations was to have excluded from the benefit of the trust deed a portion of the bonds, and not to raise an issue with the railroad company as to whether it had received a consideration for the bonds, and the bonds were valid as against that company. At the utmost, this statement in the decree would be of no practical avail as a determination of the precise question here involved, it not mentioning what or how many bonds were “legally and in good faith issued. ”

But it is said, the issue in the Peck case, as to the right of foreclosure of the Jewett trust deed without a foreclosure of the railroad mortgage, necessarily involved the question of the validity of such railroad mortgage, and that its decision necessarily decided that point. This is not apparent to us. The decision that it was not necessary to have first foreclosed the railroad mortgage, would imply that there had been some sufficient excuse shown for the non-foreclosure of that mortgage ; but we fail to see any necessary implication therefrom that the bonds bad been adjudged to be valid as against the railroad company.

We do not find that there was any -issue made in the Peck suit as to the validity of the bonds as against the railroad company. We do not perceive that it was material in that suit to allege or prove such validity of the bonds, and we do not find that the question of the validity of the bonds as against the railroad company was raised and determined in that case. We are hence of opinion, that the decree there can not be set up in this case as an adjudication of the question of the validity of the bonds as against the railroad company.

The claim of an equitable estoppel in this case, which is urged against appellees, and the cases cited in support thereof, of Bradley v. Ballard, 55 Ill. 413, Chicago Building Society v. Crowell, 65 id. 453, West v. Madison County Board, 82 id. 206, and others of like purport, do not apply here. - Those were cases where the corporation had received the benefit of the transaction which it sought to impeach; and it was held, that when the corporation had received and applied a valuable benefit to the purposes of the company, it should be estopped from repudiating the obligation given therefor. But, as we have already remarked, there was no real consideration received by the railroad company. The supposed benefit that might be received was entirely fanciful.

It is insisted that there has been acquiescence here, and laches in not sooner bringing the suit, which should bar maintenance of the .bill. Some eleven and a half years elapsed after the transaction before the bringing of the bill, and during that time there does not appear to have been any dissent on the part of the corporation or any stockholder. This is not a case where the corporation has lain by and suffered its bonds to be dealt in and pass from hand to hand on the faith of their validity. The expectation was, from the sale of the bonds in the market to raise the means to build the railroad. But there was an inability to sell the bonds, and the project of building the road seemed to have utterly fallen through. The Jewett trust deed, to secure the payment of the bonds, was foreclosed, and not enough realized therefrom to pay the first one hundred of the bonds. It was a condition of that trust deed, that the trust deed given by the railroad company on its property and franchises should first be foreclosed and exhausted before resort to the Jewett trust deed. But so utterly worthless were the property and franchises of the railroad company deemed, that the Jewett trust deed was allowed to be foreclosed without first foreclosing the railroad trust deed, it being held by the court that the foreclosure of that trust deed would be fruitless, and but an idle act. Thus the matter stood and remained,—the enterprise of building the railroad seemingly a total failure. There was no attempt to enforce payment of the bonds against the railroad company ; there could have been no dealing in the valueless bonds, and there was no occasion to file any bill to cancel the bonds. To do so would have been an useless expenditure, which it is not to be supposed any one would have been willing to incur. No sign of life was exhibited on the part of this apparently defunct corporation and enterprise until these appellees moved in the matter. Under the circumstance of such suspended animation, there can hardly be said to have been acquiescence. The building of the railroad would be for the public benefit, and desirable to have acconrplished. If these appellees saw the way for carrying out the enterprise of the road’s construction, we think they should receive encouragement, and be permitted, notwithstanding the length of time after the transaction sought to be impeached, to file their bill to remove the incubus of this railroad mortgage from the franchises of the company.

It is urged that the Chicago and Great Western Railroad Land Company is a necessary party in the case; that the trust deeds show the railroad company was the primary debtor, and the land company stood in the relation of surety to the railroad company, and the decree in this case, in the absence of the land company, assumes to adjudge the land company is the principal debtor, and that the bonds of the railroad company were issued solely for the benefit of the land company, and the other Riverside companies. This is a matter not personal to the appellants, and, as we think, is not for them to complain of. The decree will not be binding upon the land company, and will leave it free hereafter to assert any rights which it may claim to have against the railroad company.

It is said, the decree is plainly erroneous in finding that unknown holders of bonds took them with knowledge of the facts alleged in the bill, and in decreeing the bonds ultra vires as against parties not properly before the court,—that it was impossible for the court below to be informed of the state of knowledge of persons who were unknown to the parties and to the court. The same answer may be made as above,—that this is a matter which does not affect apiiellants, and of which they should not be heard to complain.

The judgment of the Appellate Court will be affirmed.

Judgment affirmed.

Magruder, J., took no part in the decision of this case.