text:
    The People of the State of Illinois, Plaintiff-Appellee, v. James Ciconte, Defendant-Appellant.
    Gen. No. 52,237.
    First District, Fourth Division.
    July 31, 1968.
    Rehearing denied and opinion modified January 8, 1969.

      Jerome Rotenberg, Rotenberg, Schwartzman & Richards, of Chicago, for appellant.
    John J. Stamos, State’s Attorney of Cook County, of Chicago (Elmer C. Kissane and Sheldon Schapiro, Assistant State’s Attorneys, of counsel), for appellee.
   MR. PRESIDING JUSTICE McCORMICK

delivered the opinion of the court.

After a jury trial the defendant was convicted of possession of marijuana in violation of chapter 38, section 22-3 of Illinois Revised Statutes 1963, and sentenced to the Illinois State Penitentiary for a period of not less than five nor more than seven years.

Contention on Appeal : That the defendant was not proved guilty beyond a reasonable doubt; that defendant was not proved guilty beyond a reasonable doubt because of the failure of any State witness to identify him in open court; that the trial court improperly limited the cross-examination of certain State witnesses by the defendant ; that the closing argument of the prosecutor was prejudicial; that the prosecutor improperly commented to the jury on the defendant’s failure to testify; and that there was reversible error in the instructions given by the court and its refusal to instruct as requested by the defendant.

Evidence : On February 17, 1966, several agents of the Federal Bureau of Investigation went to 165 North 22nd Avenue, Melrose Park, Illinois. Agent Ramon Stratton, who had been with the F. B. I. for 15 years, knocked on the rear door of the lower level of the house, and presented a search warrant to Mrs. Elizabeth Ciconte (whom Stratton believed to be the mother of the defendant) who answered the door. The second floor of the building in question has an entrance separate and distinct from the first floor, and Mrs. Ciconte went with the agents to the second floor where she unlocked the door to a large room. There the agents observed a number of articles of clothing, principally men’s, but also some women’s clothing, items of wood and workmen’s tools, and cardboard cartons. Stratton found a blue-gray overnight case in which was a brown paper sack containing one or two pounds of a green seed, a tobacco can, a measuring spoon, over 100 small brown manila envelopes, and a jar containing over 100 capsules or pills. Under the bed was a cardboard carton inside which was a large amount of stalks, crushed green plants and seeds, approximately three pounds in weight. There was also a plastic bag with more than a pound of a crushed green plant and seeds, samples of which were taken. Stratton also found about 300 automobile ignition keys and a billfold which contained a driver’s license issued to James Angelo Ciconte at 165 North 22nd Avenue, together with a number of other personal identification cards in the name of James Angelo Ciconte.

The next day, February 18, Stratton saw the defendant in apartment 705 at 18 East Elm Street, in Chicago. The defendant showed him a copy of the search warrant which Stratton had left at the Melrose Park house the day before, and Stratton also saw the automobile keys, various tools, and the same wallet he had seen the day before at the Melrose Park address, containing the driver’s license and identification cards of James Angelo Ciconte. The automobile keys were in a small corrugated box, as they had been when Stratton saw them the previous day in Melrose Park.

On cross-examination Stratton stated that he did not see any workmen on the premises in Melrose Park, but the building appeared to be undergoing repairs. He stated that he knew the tools he saw at 18 East Elm Street were the same ones he had seen the day before in Mel-rose Park because he had marked them.

On redirect examination Stratton testified that at the Elm Street apartment there was one pair of men’s shoes, one pair of socks, one pair trousers, one or two shirts, one jacket and one outside jacket, and three pairs of gloves, at the time the defendant was arrested. Fingerprints of the defendant were found on items in the room.

Special Agent James L. Mahan testified that there were two entrances to the second floor of the Melrose Park house — one at the front and one at the rear; that there was an unmade bed in the room with sheets and covers on it. He testified to the finding of the light blue-gray case and its contents, and to the finding of a large cardboard box under the bed in which were two or three pounds of a greenish type plant. He also testified to the finding of the tools, the automobile keys — which he said were on a wire ring in a cardboard box — and the billfold with the driver’s license and identification cards of James Angelo Ciconte.

Donald Norton, an inspector with the Illinois Division of Narcotics, testified as a witness for the State that he had received from Agent Stratton three manila coin envelopes (People’s Exhibits 2, 3 and 4) containing the crushed green plants.

Sergeant Charles Vondrak, a chemical analyst for the Chicago Police Crime Laboratory, testified that the crushed green plants found in the exhibits contained cannabis sativa, commonly referred to as marijuana, from which the resin was not removed.

The State’s last witness was Ronald Gunderson, who testified he knew the defendant on February 17,1966, and had known him for a year or two before that. He stated he had visited the defendant ten or fifteen times in Mel-rose Park, at which times he had observed men’s clothing and knives in the second floor bedroom; that the defendant collected knives. He had never seen anyone else sleeping in that room, but had seen defendant’s mother and sister in the basement of the house. Gunderson testified that he had been convicted of armed robbery, but was not now a narcotics addict.

At the close of the State’s case the court denied defendant’s motion for a directed verdict. The defendant did not take the stand or offer any evidence. The case was submitted to the jury which found the defendant guilty as charged.

Opinion : The defendant first raises the point that the State failed to prove him guilty beyond a reasonable doubt and argues that under the evidence in the case the State did not sustain the burden of showing that no one other than the defendant was responsible for the presence of the marijuana found on the premises. People v. Fox, 24 H12d 581, 182 NE2d 692, lays down the rule that in order to support a conviction of the crime of possession of narcotic drugs the State must prove not only that the defendant had knowledge of the presence of the narcotics, but also that they were in the immediate and exclusive control of the accused. The court said at page 584:

“By the same decisions it is settled that actual physical possession is not required and that possession may be constructive as well as actual.
• •••••
“Constructive possession, it is said in Rodella v. United States, (9th cir) 286 F2d 806, 311, is that which exists without actual personal present dominion over a chattel, but with an intent and capability to maintain control and dominion. In the same case, where the constructive possession of a cache of narcotics was at issue, the following also appears (p 312): ‘The Restatement of Torts, § 216, defines “possession of a chattel” as being where a person has physical control of a chattel with intent to exercise control in his own behalf, or, one who has had such physical control with such intent to exercise control although he is no longer in physical control, if he had not abandoned it and no other person has obtained possession.’ (Emphasis the court’s.) ”

In People v. Galloway, 28 Ill2d 355, 192 NE2d 370, the court said at page 358:

“To support a conviction of the crime of unlawful possession of narcotic drugs the People must prove not only that the accused had knowledge of the presence of the narcotics, but also that they were in his immediate possession and control. (People v. Smith, 20 Ill2d 345; People v. Matthews, 18 Ill2d 164.) At the same time, however, we have adopted the view that actual physical possession is not required to be proved, it being sufficient if constructive possession is established, and further, because the element of knowledge is seldom susceptible of direct proof, have held that knowledge may be proved by evidence of acts, declarations or conduct of the accused from which it may be fairly inferred that he knew of the existence of the narcotics at the place where they were found. (People v. Embry, 20 Ill2d 331; People v. Mack, 12 Ill2d 151.) In particular, in cases such as we have here, it is our view that ‘where narcotics are found on the premises under the control of defendant, this fact, in and of itself, gives rise to an inference of knowledge and possession by him which may be sufficient to sustain a conviction for unlawful possession of narcotics, absent other facts and circumstances which might leave in the mind of the jury ... a reasonable doubt as to his guilt.’ (People v. Nettles, 23 Ill2d 306, 308-309.) Whether there is possession and whether there is knowledge are both questions of fact to be determined by the jury, or by the court where a jury is waived, and, as in the case of other factual determinations committed to a jury in criminal proceedings, its findings will not be disturbed on review unless the evidence is so palpably contrary to the verdict, or so unreasonable, improbable or unsatisfactory as to create a reasonable doubt of guilt. People v. Mack, 12 Ill2d 151.”

Also, in People v. Embry, 20 Ill2d 331, 169 NE2d 767, the court held that the question of whether the accused had knowledge of the narcotics was one of fact and was for the jury or for the court where the jury was waived. The court held that even if it was assumed that the evidence showed the defendant’s wife had possession of the drugs, this would not preclude a finding that defendant was also in possession of the drugs. The court said at page 335:

“In People v. Wheeler, 5 Ill2d 474, where the question was whether defendant was in exclusive possession of stolen goods, we held that the rule that possession must be exclusive does not mean that the possession may not be joint. This question has never been squarely presented to us in a case involving possession of narcotics, but courts of other jurisdictions have held that possession of narcotics may be joint. (People v. Hood, 50 Cal App2d 197, 309 P2d 856; Gonzales v. People, 128 Colo 522, 264 P2d 508.) We are of the opinion that these cases express a sound rule. To hold otherwise would permit two or more persons to gain immunity from prosecution on a charge of unlawful possession of narcotics by proving joint possession of the drugs. Such a result would be contrary to reason and would defeat the purpose of the Uniform Narcotic Drug Act.”

In the case before us the evidence is that the Federal agents found, besides the narcotics, various articles clearly belonging to the defendant, including a billfold with a driver’s license and personal identification cards in the name of the defendant. The agents seized the drugs, then discovered that the defendant had moved to the Elm Street apartment; the agents then found the same articles which they had previously found in the premises in the Melrose Park apartment, including tools which had been marked by the inspectors when they found them in Melrose Park. The fact that the agents were admitted to the Melrose Park apartment by a woman they believed to be the mother of the defendant is immaterial, because the only inference that could be drawn from that fact was that if defendant alone did not have possession of the narcotics, then the woman had joint possession with him. Besides this, when the agents found the defendant at the Elm Street address, he showed them the search warrant which had been left at the Mel-rose Park address the day before. Also, there was the testimony of Robert Gunderson that he had visited the defendant ten or fifteen times in Melrose Park and had never seen anyone besides the defendant sleeping in the room, although he had seen the mother and sister in the basement of the house.

Following the rule laid down in the cases, an inference could properly be drawn by the jury that at the time the narcotics were seized by the agents by virtue of a search warrant, the defendant had possession of the drugs, sufficient to support the verdict that the defendant was guilty beyond a reasonable doubt.

The defendant next argues that the State failed to produce any witness to identify the defendant. However, the record shows that the defendant was the only person on trial and the only male subject mentioned throughout the whole course of the trial.

The record shows that when Agent Stratton was testifying he was asked, “Did you have occasion to see the defendant again immediately after February 17, 1966?” He answered that he did, and the form of the question was objected to. The question was then asked, “Did you have occasion to see him subsequent to February 17, 1966 ?” and the witness answered he had had occasion to see him next on February 18, 1966. The question was objected to and the objection was overruled by the court. The witness then testified that he saw the defendant in Chicago at 18 East Elm Street, in apartment 705. This testimony is omitted — undoubtedly inadvertently — from the abstract. Stratton also testified that when he saw the defendant on February 18 at Elm Street “the defendant Ciconte showed me a copy of the search warrant that I had left at 165 North 22nd Avenue in Melrose Park on the day before.” The identification was sufficient.

The defendant contends that the court improperly limited his cross-examination of a State’s witness. During the cross-examination of Stratton the court refused to permit him to answer the question of whether the person identified as Elizabeth Ciconte was the mother of James Ciconte, and the defendant alleges that the witness was not permitted to answer as to whether Elizabeth Ciconte owned the premises. The defendant then tried to show the relationship of the parties by a report prepared by Stratton from information given to him by persons who did not testify at the trial. The court sustained the State’s objection on the ground that the information which the defendant attempted to put into the record was hearsay. The testimony the defendant sought to introduce was an attempt to show the truth of the statements. This was improper.

In People v. Wright, 65 Ill App2d 23, at page 28, 212 NE2d 126, the court said: “In our opinion these statements made by the complaining witness and repeated by the police officers as to the identification of defendant are hearsay and inadmissible.” See also People v. Carpenter, 28 Ill2d 116, 190 NE2d 738. The ruling of the court in the instant case was not improper.

The defendant urges that the State’s Attorney made the following statement in his closing argument: “I submit that the evidence is now before you, and the State’s evidence is uncontradicted at this time,” arguing that the statement that the evidence was uncontradicted could only be considered as a comment to the fact that the defendant did not testify, and that the court erred in following the rule laid down in People v. Norman, 28 Ill2d 77, 190 NE2d 819, where the court said at page 81:

“This court has held that a prosecutor could properly call the attention of the jury to the fact that the State’s evidence was uncontradicted even though the circumstances were such that the defendant was the only person who could have denied the People’s evidence. (People v. Keagle, 7 Ill2d 408; People v. Novak, 370 Ill 220; People v. Birger, 329 Ill 352.) Although the prosecutor emphasized the uncontradicted character of the People’s case, there was no evidence whatever presented by the defense, and statements pointing out the fact that the People’s case was uncontradicted are not a reference to the failure of the defendant to testify within the meaning of this statute.”

The same ruling was sustained in People v. Wollenberg, 37 Ill2d 480, 487, 229 NE2d 490; People v. Radford, 87 Ill App2d 308, 232 NE2d 100, decided in 1967; People v. Carver, 77 Ill App2d 247, 252-254, 222 NE2d 17. After following these cases we hold that no error was committed by the trial court.

Furthermore, there was no objection by the defendant in the instant case to any statement in the argument made by the State’s Attorney. In People v. Conrad, 81 Ill App2d 34, 225 NE2d 713, it was said at page 49:

“Defendant attempts to raise on appeal for the first time the alleged prejudicial nature of other statements made by the prosecutor. However, since no objection was made at trial the issue is waived. People v. Winters, 29 Ill2d 74, 80, 193 NE2d 809; People v. Switalski, 394 Ill 530, 69 NE2d 315.”

We hold that no error was committed by the trial court and that in any case, the matter cannot be considered by us.

Defendant further argues that the trial court committed error in refusing certain instructions offered by defendant. One of these was sufficiently covered by the given instructions tendered by the State. The second instruction is with regard to circumstantial evidence and is as follows:

“The law, in regard to circumstantial evidence, is this: In order to justify a jury in finding a verdict of guilty based on circumstantial evidence, the circumstances must not only be consistent with the guilt of the defendant, but they must be inconsistent with any other reasonable hypothesis that can be predicated on the evidence or stated in another form, it is not sufficient that the circumstances proved coincide with, account for, and therefore render probable the hypothesis of guilt asserted by the prosecution, but they must exclude to a moral certainty and beyond a reasonable doubt, every other hypothesis but the single one of guilt, or the jury must find the defendant not guilty.”

In People v. Johnson, 88 Ill App2d 265, 232 NE2d 554, the court said at page 286:

“On the other hand, the last sentence in defendant’s refused instruction No. 3, rendered the entire instruction incorrect, and therefore the instruction was properly refused. In summary, this instruction required the jury to find the defendant not guilty unless the circumstances excluded ‘to all moral certainty, every other hypothesis but the single one of guilt of the defendant.’ If this approach were to be followed in an instruction, it is not ‘every other hypothesis’ of defendant’s innocence which must be ex-eluded on the basis of the evidence, but every ‘reasonable hypothesis.’ [Citing cases.] ”

In the instant case, the failure of the instruction to state every other reasonable hypothesis renders the instruction improper.

The defendant also objects to the court’s refusal to give Instruction D-10, which is as follows:

In order to find the defendant guilty as charged in the indictment, you must first find that the prosecution has proved beyond a reasonable doubt:
(1) That on February 17,1966, the defendant possessed and had under his control a substance which was a narcotic drug, to wit: marijuana,
(2) That he knew that the substance was a narcotic drug, to wit: marijuana,
(3) That said possession was other than as authorized in the Uniform Narcotic Drug Act of the State of Illinois.
In the event that you believe that the prosecution has failed to prove any one of the foregoing elements beyond a reasonable doubt, then it is your duty to find the defendant “Not Guilty.”

The defendant argues in his behalf that the court failed to advise the jury that in order to find him guilty it must be proved that the defendant had knowledge of the fact that the substance was marijuana. The instruction which the court did give setting forth the elements of the crime was the same as the refused instruction just quoted except that it omitted subparagraph (2). However, the court did give the following instruction:

The Court instructs the jury that the State must establish from the evidence beyond a reasonable doubt knowledge on the part of the defendant of the presence of narcotics and must establish that the narcotics were in the immediate and exclusive control of the defendant. The question whether the accused had such knowledge is one of fact for the jury to decide.

If it is considered that°that instruction would not be sufficient to require proof that the defendant knowingly had possession of marijuana, the case of People v. Truelock, 35 Ill2d 189, 220 NE2d 187, is controlling. There the court gave the following instruction, over the objection of the defendant:

“The court instructs the jury in the language of the statute that it is unlawful for any person to possess or have under his control any narcotic drug except as authorized in the statute.”

In Truelock the court further said at page 192:

“The defendant argues that the instruction and form of verdict should have contained the word ‘knowingly’ since knowledge is an essential element of the crime of unlawful possession of narcotic drugs.
“We agree that the trial court erred in giving the objected to instruction and form of jury verdict in this case. Without proof that a defendant has knowingly possessed a narcotic drug, a defendant cannot be convicted of the crime of unlawful possession of narcotic drugs, and the jury in this case should have been so instructed. However, we do not think that the error in this case requires reversal. ‘Even though error may have been committed in giving or refusing instructions it will not always justify reversal when the evidence of defendant’s guilt is so clear and convincing that the jury could not reasonably have found him not guilty.’ (People v. Ward, 32 Ill 2d 253, 256.) In the present case, the evidence of the defendant’s knowledge of the presence of narcotics is clear and convincing. We do not think that a jury could reasonably have found the defendant not guilty in this case, and therefore, reversal is not justified.”

Truelock applies squarely to the case before us. We must further consider that in the instant case there was an instruction that there must be knowledge on the part of the defendant of the narcotics under his control.

We have considered all the instructions which were given by the trial court and conclude that, taken as a whole, they were fair and correct. The judgment of the Circuit Court should be affirmed.

Affirmed.

DRUCKER and ENGLISH, JJ., concur.


source: Caselaw Access Project

author: MR. JUSTICE DAVIS

license: Public Domain

text:
    Perry Johnson and Ray P. Gardner, Individually and as Representative of a Class, Plaintiffs (Ray P. Gardner, Appellee), v. Central Standard Life Insurance Company, an Illinois Corporation, Illinois Bankers Life Assurance Company, an Illinois Corporation, Alfred MacArthur, et al., Defendants (Reliance Standard Life Insurance Company and Alfred MacArthur, Appellants).
    Gen. Nos. 51,857, 52,499. (Consolidated.)
    First Judicial District.
    September 25, 1968.
    Rehearing denied and supplemental opinion January 15, 1969.

      Kirkland, Ellis, Hodson, Chaffetz & Masters, and Carl Pomerance, of Chicago (Thomas M. Thomas, John J. Edman, and Owen M. Johnson, Jr., of counsel), for appellants.
    George B. Christensen, of Chicago, and Robert J. Clendenin, of Monmouth (Winston, Strawn, Smith & Patterson, of Chicago, of counsel), for appellees.
   MR. JUSTICE DAVIS

delivered the opinion of the court.

Ray P. Gardner and another brought this suit as a class action on behalf of some 41,000 former shareholders of Illinois Bankers Life Assurance Company (“Assurance Company”). The plaintiffs sought an accounting for secret profits allegedly obtained by certain of the defendants, who at the time, occupied a fiduciary relation to the plaintiffs as either the dominant stockholders, directors, or attorney for the Assurance Company.

The case was referred to a master who recommended an accounting against the defendants, Central Standard Life Insurance Company (“Central Standard”), and Alfred MacArthur; and that the other individual defendants be dismissed. The circuit court entered a decree in substantial conformity with the master’s recommendation.

The defendants, Central Standard and MacArthur, appealed and contend that their actions were taken pursuant to court orders in another proceeding, and that plaintiffs’ present action constituted an improper collateral attack against those orders; that the defendants’ conduct was not improper and did not constitute a breach of any fiduciary duty owed by reason of MacArthur’s positions; and that the plaintiffs’ action is barred by reason of estoppel and laches. The plaintiffs filed a cross appeal which asked for reinstatement of the defendant, John B. Gallagher, and asserted that the trial court erred in limiting, somewhat, the relief recommended by the master.

This dispute is an outgrowth of Winger v. Chicago City Bank & Trust Co., reported in 325 Ill App 459, 60 NE2d 560 (1945), and in 394 Ill 94, 67 NE2d 265 (1946), on appeal. Winger arose out of a reinsurance contract entered into in 1929, between the Assurance Company and Illinois Bankers Life Association (“Association”). It was there held that the assets of the Association had been obtained fraudulently by the Assurance Company and, consequently, a constructive trust was declared of the entire capital stock of the Assurance Company for the benefit of those persons who were policyholders of the Association as of November 19, 1929.

In 1946 the case was remanded with directions to the circuit court to carry out the distribution of the Assurance Company stock to those who were the Association policyholders as of the 1929 date. Decrees were entered in 1947 to implement the distribution of the Assurance Company stock. The stock was first converted into 325,-000 shares. Thereafter, 97,500 of these shares were awarded to plaintiffs’ attorneys in the Winger case, as fees. This represented 30% of the new stock. The defendant, Vernon Loucks, received the majority of these shares and subsequently, by 1950, acquired 75,500 of them. By the end of 1950 — the beginning of the critical time with reference to the case at bar — he had obtained authority to sell, along with his 75,500 shares, the other 22,000 shares which had been awarded as fees, thus controlling the disposition of the total 97,500 shares.

By this time, only 138,500 of the remaining 227,500 shares had been distributed. These had been distributed to some 41,000 shareholders in lots averaging less than 4 shares each. On December 20, 1950, the Assurance Company filed a petition in the court which indicated that some 89,600 shares of the stock ultimately would not be deliverable under the court’s previous distribution order because of the impossibility of locating all persons entitled thereto.

The Assurance Company represented that four plans had been suggested to it for the disposition of these 89,600 shares of stock; namely,

1. Reduction of total number of shares by the number of shares incapable of distribution;

2. Distribution of the so-called “undeliverable” shares pro rata either to all stockholders or to those who had received their shares because they or their predecessors in interest had been policyholders of the Association on November 19, 1929;

3. Sale of the shares, with proceeds to be credited to the surplus of the company; and

4. Distribution of the shares to a pension fund to be established for employees of the company.

No order was entered on this petition until June 5, 1951.

In the meantime (December 27, 1950), Loucks entered into two contracts with MacArthur, under the terms of which the 97,500 shares originally awarded as attorneys’ fees were sold to MacArthur at a guaranteed price of $15 per share, and a price of $20.50 if, on the final determination in the Winger case, the voting strength of these shares would be maintained at 40 to 42%. The latter price is the one ultimately paid for the stock.

At the time the contract was entered into, MacArthur was the chief executive of Central Life Insurance Company and he and his family owned 75% of this company, which in turn owned 92% of Standard Life Insurance Company. The former reinsured the latter in May of 1951 and the name was changed to Central Standard (the defendant) . Its present name is Reliance Standard Life Insurance Company. Without disclosing the transaction to Central Life Insurance Company at the time, MacArthur contracted to buy the stock from Loucks, on its behalf, for approximately two million dollars. MacArthur stated that from the very beginning it was his intention to consolidate the three insurance companies through reinsurance.

At the directors’ meeting of Central Life held on March 22, 1951, a special committee was appointed to investigate plans and formulate methods for future expansion. The special committee was composed of MacArthur, John B. Gallagher (one of the defendants), and David Kadyk, a director and attorney for the company. The committee was given a million dollars for this purpose. Gallagher and Kadyk were aware of MacArthur’s contract with Loucks. A confidential memo was prepared by MacArthur, for Gallagher and Kadyk, which recited that the million dollar fund placed at the committee’s disposal was to be used for the acquisition of the Assurance Company stock under the contract entered into with Loucks.

Thereafter, on March 27, 1951, at the Assurance Company shareholders’ meeting, MacArthur, through the 97,-500 shares of stock purchased from Loucks, placed himself, his son-in-law, Loucks, and Gallagher on the six-man board of directors of the Assurance Company. The MacArthur-dominated Board brought about the hiring of the Central Life attorney, Kadyk, in lieu of the present Assurance Company attorneys and this was accomplished a few days later. Kadyk, a director and attorney for Central Life, then also represented the Assurance Company in the Winger case.

At this time, the petition filed in December of 1950, for the disposition of the undeliverable stock, was still pending, and no action had been taken on it. Loucks then advised the court that he had sold his stock to MacArthur; that there were two classes of former policyholders of the Association: those who had received their stock in the Assurance Company, and those who had not because they had not been located; and that special counsel should be appointed to represent each of them as separate classes. The court then appointed special counsel for each of these two classes to represent them on the petition before the court.

Hearings were held on this petition in April and May. MacArthur was present at some of them, and Kadyk represented the Assurance Company. On June 5, 1951, the court entered two decrees which provided that approximately 90,000 unclaimed shares should not, in any manner, be disposed of without compensation; that the shares should be offered to the then existing shareholders on a pro rata basis at a price of $5 per share; that after the initial offering the existing shareholders would be entitled to purchase additional shares at the $5 price; that the holders of the 97,500 shares (MacArthur interests) purchase all remaining shares at $5 per share; and that the funds from the purchase of the stock be held by the Assurance Company for the benefit of those whose stock was being sold until March 4, 1953, after which time, the funds remaining would be the property of the Assurance Company.

Prior to the entry of these decrees, Kadyk advised the court that MacArthur would buy all the unpurchased stock if the price for the stock were $5 per share, or under; and the court heard evidence, under which it subsequently made its determination that the stock was worth $5 per share as an income investment.

A notice was sent out to the shareholders shortly thereafter, advising them of their rights to purchase additional stock as provided in the decrees, and fixing July 14, 1951, as the final date for receipt of bids therefor. A brief financial statement of the company, as of December 31,1950, accompanied the notice.

One of the participants in the hearings threatened an appeal from the June 5, 1951, decrees, but the board of directors of the Assurance Company, at the suggestion of Attorney Kadyk, offered $20,000 in settlement, and the party in question caused the appeal to be dismissed prior to the July 14,1951 sale date.

As a result of the decrees, 89,677 shares were offered for sale. The scattered shareholders had a right to subscribe to 55,129 of these on the pro rata basis, but apparently ended up exercising these rights only to the extent of 5,056 shares. The MacArthur interests purchased the remaining 84,621 shares, which gave them a total of 182,121 shares of the total 325,000 shares issued and outstanding.

Shortly thereafter — in August or early September— MacArthur revealed to the Assurance Company president that Central Standard proposed to reinsure the Assurance Company. An actuary was engaged to value the Assurance Company for the purposes of reinsurance or consolidation. His report indicated that, on the basis of a conservative estimate, the value per share of the Assurance Company stock was $13.23, including the anticipated funds that the company would retain as unclaimed proceeds from the stock sold under the June decrees.

Thereafter, work proceeded on the reinsurance contract. On September 27, 1951 — prior to the execution of the contract between the two companies — MacArthur, his son-in-law and Gallagher resigned as directors of the Assurance Company. The resignations were accepted on October 17,1951. On October 24, 1951, the new board approved the reinsurance contract. The contract stated that all of the assets and obligations of the Assurance Company were assigned to Central Standard, which would pay to the Assurance Company shareholders therefor an initial sum of $5 per share and further payments of $1 per share each year for ten years. The $15 total represented the commuted value of a cash price per share of $13.27. The Assurance Company stockholders approved the contract on November 26, 1951, and the first payments were made on January 18, 1952. From then on, Central Standard had all of the assets and all of the stock of the Assurance Company.

The master found that by the spring of 1951, MacArthur had become the controlling stockholder and a director of the Assurance Company; that thereby he assumed a fiduciary relationship to the other Assurance Company shareholders; and that he breached this relationship. We believe the master was correct in these conclusions.

It is apparent that MacArthur, from the outset — notwithstanding his testimony before the court in the Winger case in the spring of 1951, wherein he stated that he had no present intention with reference to reinsurance of the Assurance Company — intended to consolidate, through reinsurance, the three insurance companies. Without informing the court or the other shareholders, he “permitted” Kadyk — a director of Central Life (later Central Standard), and a member of its special committee appointed to acquire the Assurance Company — to represent the Assurance Company in the Winger case on the important issue of how approximately 90,000 unclaimed shares of Assurance Company stock were to be disposed of.

MacArthur or attorney Kadyk, procured testimony before the hearings that the value of this stock was in the neighborhood of $5 per share. No mention was made, nor was any attempt made to solicit evidence of the value of this stock in event of reinsurance or consolidation of the insurance companies. It cannot be controverted that the value of the stock in such an event was substantially greater — being in the area of $15 per share. There also can be no question that such an event was imminent.

The notice which was sent to the shareholders advising them of the right to purchase stock at $5 per share under the decrees of the court, offered not one word to enlighten the other shareholders of the impending consolidation or reinsurance developments. True, it fully advised them of their rights under the decrees, but it did not advise them that MacArthur, the controlling stockholder and a director of the Assurance Company, was contemplating reinsuring the company; that in such an event the stock would be worth more than $5 per share; and that MacArthur had agreed to buy all of the unsubscribed stock at the price of $5 per share.

The large number of small stockholders scattered throughout the country, who had no actual contact with the proceedings or knowledge of the internal affairs of the company, in exercising their judgment as to whether or not to subscribe for this stock at $5 per share, were at a distinct disadvantage in competing with MacArthur. Thus, out of the 89,677 shares offered at $5 per share to the shareholders, the scattered and small shareholders exercised their rights as to only 5,056 shares, although 55,129 such shares were available to them. And, thus, MacArthur was able to acquire 84,621 additional shares.

Later, when the reinsurance agreement was to be carried out by Central Standard by the payment of $15 per share to the Assurance Company shareholders, 182,121 of the total 325,000 shares were in MacArthur’s or Central Standard’s hands. Also, since all of the assets of the Assurance Company were to become the property of Central Standard under the reinsurance contract, including the amount paid into the fund for these shares which remained unclaimed on March 4, 1953, this sum would become the property of Central Standard. When this sum was ultimately established, it totalled $348,065.

The net result was that Central Standard purchased the 84,621 Assurance Company shares under the June, 1951, decrees at $5 per share, for a total consideration of $421,305, out of which, however, $348,065 was returned to it out of the windfall from the unclaimed shares fund. Thus, the net cost to Central Standard was approximately $73,240 for the 84,621 shares. At the same time, the scattered stockholders had purchased only 5,056 shares and their net cost was a total of $25,280.

We need go no further than the decision in Winger v. Chicago Bank & Trust Co., 394 Ill 94, 108, 67 NE2d 265 (1946), for the oft-stated rule that the directors of a corporation stand in a fiduciary relation to the corporation and its stockholders.

In speaking of the duty owed by the directors of a corporation to its stockholders, the court, in Dixmoor Golf Club v. Evans, 325 Ill 612, 156 NE 785 (1927), at pages 615 and 616, stated:

“The law is well settled that a trustee cannot without a breach of the trust deal with its subject matter in such a manner as to make a profit for his own benefit. It requires no very keen moral perception to recognize the obvious justice of this universal rule of law, of justice and of morality. The directors of a corporation are trustees of its business and property for the collective body of stockholders in respect to such business. They are subject to the general rule in regard to trusts and trustees, that they cannot, in their dealings with the business or property of the trust, use their relation to it for their own personal gain. It is their duty to administer the corporate affairs for the common benefit of all the stockholders and exercise their best care, skill and judgment in the management of the corporate business solely in the interest of the corporation. (Farwell v. Pyle-National Electric Headlight Co., 289 Ill 157.) The stockholders are entitled to the utmost fidelity of the directors to the interest of the stockholders. It is a breach of duty for the directors to place themselves in a position where their personal interests would prevent them from acting for the best interests of those they represent. (Gilman, Clinton and Springfield Railroad Co. v. Kelly, 77 Ill 426; Hooker v. Midland Steel Co., 215 id. 444.) A director of a corporation cannot become the purchaser of property of the corporation which it is his duty to sell. (Chicago Hansom Cab Co. v. Yerkes, 141 Ill 320.) He is subject to the ordinary rule that an agent to sell cannot sell to himself, and an agent to buy cannot buy of himself. The interests of buyer and seller are inconsistent, and an agent cannot represent both interests at the same time. While a director is not disqualified from dealing with the corporation and buying its property or selling property to it, he must act fairly and be free from all fraud or unfair conduct, his transactions will be subjected to the closest scrutiny, and if not conducted with the utmost fairness, to the end that the corporation shall have received full value, they will be set aside.”

In Winger, the court again pointed out at page 110, the high standards by which a fiduciary must be tested. It stated that generally, in the absence of a fiduciary relationship, fraud must be proved by those asserting it; but a fiduciary dealing with his beneficiaries is tested by a different standard. In such cases, equity raises a presumption against the validity of the transaction and casts upon the fiduciary the burden of proving affirmatively compliance with equitable requisites in order to overcome the presumption. Thus, the fiduciary may not benefit by dealing with the beneficiaries to their disadvantage.

An excellent statement of the standards of conduct required of an officer, director or dominant shareholder of a corporation, is found in Pepper v. Litton, 308 US 295 (1939), at page 311:

“He who is in such a fiduciary position cannot serve himself first and his cestuis second. He cannot manipulate the affairs of his corporation to their detriment and in disregard of the standards of common decency and honesty. He cannot by the intervention of a corporate entity violate the ancient precept against serving two masters. He cannot by the use of the corporate device avail himself of privileges normally permitted outsiders in a race of creditors. He cannot utilize his inside information and his strategic position for his own preferment. He cannot violate rules of fair play by doing indirectly through the corporation what he could not do directly. He cannot use his power for his personal advantage and to the detriment of the stockholders and creditors no matter how absolute in terms that power may be and no matter how meticulous he is to satisfy technical requirements. For that power is at all times subject to the equitable limitation that it may not be exercised for the aggrandisement, preference, or advantage of the fiduciary to the exclusion or detriment of the cestuis. Where there is a violation of those principles, equity will undo the wrong or intervene to prevent its consummation.”

In discussing the doctrine of corporate opportunity and the dangers implicit in permitting a fiduciary to deal in his own behalf with the property of his beneficiaries, we stated in Paulman v. Kritzer, 74 Ill App2d 284, 219 NE2d 541 (1966), (affd 38 Ill2d 101, 230 NE2d 262 (1967)), at page 291:

“This doctrine is but one of the manifestations of the general equitable rule which demands of an officer or director of a corporation the utmost good faith and loyalty in his relations to the principal which he represents, and requires an undivided and unselfish loyalty to the corporate principal without conflict between this duty and the self-interest anticipated of human nature. The rule, described as inveterate and uncompromising in its rigidity, rests upon the broad foundation of a wise public policy that, for the purpose of removing all temptation, extinguishes all possibility of profit flowing from a breach of the confidence imposed by the fiduciary relation. Guth v. Loft, Inc., 23 Del Ch 255, 5 A2d 503, 510, 511 (1939); Pelcak v. Bartos, 328 Ill App 435, 66 NE2d 465 (1st Dist 1946); 3 Fletcher Cyc Corp, Sec 861 (1965 Ed).”

Under the factual background we have cited, it was a breach of his fiduciary duties for MacArthur to fail to disclose to the shareholders all the pertinent developments throughout the early part of 1951 wherein the stock of the Assurance Company was involved. Northern Trust Co. v. Essaness Theatres Corp., 348 Ill App 134, 141, 108 NE2d 493 (1952); Agatucci v. Corradi, 327 Ill App 153, 157, 158, 63 NE2d 630 (1945); Wood v. MacLean Drug Co., 266 Ill App 5, 13, 15 (1932).

In Speed v. Transamerica Corp., 99 F Supp 808, affd 235 F2d 369, on page 829, the court stated:

“The duty of disclosure stems from the necessity of preventing a corporate insider from utilizing his position to take unfair advantage of the uninformed minority stockholders. It is an attempt to provide some degree of equalization of bargaining position in order that the minority may exercise an informed judgment in any such transaction.” (Emphasis added.)

The virtual certainty of the reinsurance of the Assurance Company by Central Standard, its effect on the valuation of the stock, the promise of MacArthur to buy all unsubscribed stock at a price of $5 per share, and the facts surrounding the fund which ultimately was certain to be unclaimed, are all matters that should have been brought to the attention of the shareholders.

The breach of fiduciary duties is not rectified by the assertion — as made by the defendants — that the sale of the undeliverable stock was made pursuant to court decrees. The plaintiffs do not, and we do not, challenge these orders. The court was there concerned with eliminating the existence of the undeliverable stock. It sought to wind up a matter that had been before the court for many years, and had it known all of the matters we have recited, it might well have made a different determination. The critical point is that the court did not have before it any question of the existence and scope of the fiduciary duty owed by MacArthur to the other shareholders of the Assurance Company. MacArthur was not even a party to that litigation, and he might well have complied with the orders of that court without breaching any fiduciary duty. The choice was his. He chose not to disclose, and in so doing breached the trust placed in him as a director by the shareholders of Assurance Company.

The Winger case dealt with different parties and a different cause of action. It may not be a basis of estoppel by judgment. Smith v. Bishop, 26 Ill2d 434, 436, 437, 187 NE2d 217 (1963); Chidester v. Cagwin, 76 Ill App2d 477, 484, 485, 222 NE2d 274 (1966). The fiduciary duty owed by MacArthur in the process of making the acquisition of Assurance Company unclaimed or preemptive shares was not litigated in Winger, and the orders there may not be the basis for an estoppel by verdict. Seymour v. Heubaum, 65 Ill App2d 89, 105, 211 NE2d 897 (1965); Chas. Ind Co. v. Cecil B. Wood, Inc., 56 Ill App2d 30, 36, 205 NE2d 786 (1965). The defendants cannot use the orders entered in the Winger case as a shield to protect their acts allegedly done thereunder, when those acts otherwise would constitute a breach of a fiduciary duty.

The defendants also claim that the plaintiffs are estopped because they obtained all the benefits of the orders in the Winger case. They subscribed to the unclaimed stock; voted for the reinsurance agreement; and accepted the benefits accorded them under that agreement for the stock which they held. The plaintiffs do not, however, challenge the orders in Winger, and they do not challenge the reinsurance agreement. There is nothing inconsistent with the present action and the plaintiffs’ conduct in asserting their rights under the Winger decrees. What is challenged is: the failure of MacArthur to make a full disclosure to the shareholders so that all could exercise, intelligently, knowingly, and with the greatest possible degree of equality, the rights which they had. A fiduciary may not withhold material matters from a beneficiary and then assert that the latter, who acted without the knowledge of the facts withheld, is estopped by his acts. Freeman Coal Min. Corp. v. Burton, 388 Ill 604, 614, 58 NE 589 (1945); 13 Fletcher Cyc Corp, c 58, § 5864; 18 ILP, Estoppel, § 23.

The defendants further assert that the plaintiffs are guilty of laches in not filing this suit until 1956. The master found against this contention, and correctly so. Laches is a failure to assert a right over a period of time, which, when taken in conjunction with all of the other circumstances, would result in undue prejudice to the other party. Seymour v. Heubaum, supra, 105, 106. It is a question addressed to the sound discretion of the court and will not be disturbed on appeal unless the determination of the court is so clearly wrong as to constitute an abuse of discretion. Trustees of Schools of Tp. No. 38 v. City of Chicago, 308 Ill App 391, 401, 32 NE2d 180 (1941). We find no inequity in permitting the plaintiffs to proceed with this action and believe the master was correct in finding the plaintiffs not guilty of laches.

The master recommended that the defendants, Central Standard and MacArthur, account to the plaintiffs: (1) for the profits realized on the acquisition of the 82,677 unclaimed shares (apparently 84,621 shares as computed by the defendants), on the “preemptive” offering at $5 per share; (2) for the residue of the proceeds retained after March 4, 1953, in the fund for the purchase of the undeliverable shares; and (3) for the amount retained by Central Standard by reason of the reinsurance agreement providing that it should pay the shareholders of the Assurance Company direct rather than pay the monies to the Assurance Company; and on the investment return on the last two items.

The trial court held with reference to the first item of accounting that Central Standard — under the orders in the Winger case — had the right to subscribe for approximately 34,550 shares by virtue of its prior holdings of 97,500 shares; and that if the other shareholders had been fully informed and had purchased all of the remaining unclaimed shares, the defendants would still have been entitled to 34,550 shares. The trial court thus limited the accounting to the profits realized on the shares acquired over and above those shares Central Standard could have obtained by virtue of its ownership of 97,500 shares. The plaintiffs complain of this limitation.

We believe that the trial court was correct in this respect. This action is not an attack upon the decrees or orders in the Winger case. The defendants may not be deprived of what they lawfully could have obtained under those orders.

We are sympathetic with the principle asserted in the argument of the plaintiffs: that a fiduciary should not be permitted any profit from a breach of his trust, and that it is important to uphold that policy in order to discourage temptation. The acquisition of the stock attributable to the original 97,500 is not, however, a profit resulting from any breach of trust, and the asserted rule of law is inapplicable.

While the plaintiffs have not attacked the reinsurance contract, as such, we believe the master and trial court were correct in finding that the amendment to the reinsurance contract — whereby Central Standard was to pay the shareholders, rather than the Assurance Company, for the stock — permitted Central Standard to retain substantial sums because of inability to locate certain additional shareholders. This amended plan was subject to the approval of the Assurance Company shareholders. Since Central Standard had acquired complete controlling interest of the Assurance Company stock by this time, such an amendment was assured of passage and Central Standard assured of an additional windfall. The trial court was correct in holding that an accounting must also be had as to this item.

The plaintiffs complain of the dismissal of the defendant, Gallagher. We think the master and trial court were correct in this regard. The evidence of wrongful action and breach of duty clearly established the case against MacArthur. There was little by way of evidence to indicate that Gallagher was guilty of any actual wrongdoing.

The defendants also appealed from the order of the trial court assessing master’s fees and charges against them. Because of our determination herein, it is apparent that this order must also be affirmed.

The decrees and orders of the trial court, assessing fees and charges, and for an accounting are affirmed, and the cause is remanded to the trial court with directions to proceed with the accounting in a manner consistent with the views expressed herein.

Affirmed and remanded with directions.

MORAN, P. J. and SEIDENFELD, J., concur.

MR. JUSTICE DAVIS delivered the supplement to opinion on denial of petition for rehearing.

Upon rehearing, the defendants urge that we overlooked the in rem jurisdiction of the Winger case over the rights of all Assurance Company shareholders in the constructive trust stock and the consequent conclusiveness of its orders in regard to accountability for the purchase of stock under these orders.

Our opinion, and that of the trial court, recognized that the orders in the Winger case could not be collaterally attacked. We concede that the Assurance Company stock owned by MacArthur, as well as that of all other shareholders, was subject to the in rem jurisdiction of the Winger Court orders. The distinction noted in our opinion was that MacArthur, individually, as opposed to his stock, was not subject to the jurisdiction of the Winger litigation. Likewise, his conduct in a fiduciary capacity was in no way subject to the jurisdiction of that court. It was his conduct in relation to that proceeding, which is challenged in the case at bar as a breach of his fiduciary responsibilities.

The petition suggests that we recognized that MacArthur was a party to that proceeding by stating that he could have complied with the orders of the court in the Winger case without breaching any fiduciary duty. This conclusion is not warranted from the opinion. We clearly state therein that MacArthur, individually, was not a party to the Winger litigation, and we also pointed out that MacArthur as director, officer, and principal stockholder, was, in effect, the Assurance Company at the time it was complying with the Winger orders with reference to the disposition of the stock. While MacArthur denies it, we believe it a justifiable conclusion that, at the time, he was well aware of what subsequently was going to happen in regard to this stock; and that because of the fiduciary duty which he then owed to the other stockholders, he could, and should, have caused the notice to the other shareholders to contain a full disclosure of the transaction. We did not state that he could have complied with the court order in the Winger case “as a party,” but rather, that he could have complied thereunder as the individual controlling the Assurance Company.

It is undisputable that he could have carried out the Winger orders in a manner such that no cause of action would arise. However, because of his dominant position and superior knowledge in relation to what was about to transpire, he could not carry out the orders of the court in the Winger case without fully advising the other shareholders of such circumstances.

It is in this that he breached his fiduciary duty. It is for these reasons that we are not collaterally attacking the Winger orders, but rather, the manner in which MacArthur used these orders. We recognize that the defendants assert that this is a distinction without a difference, but we regard it as a legally sufficient distinction. Our decision on this point is not an attack on the Winger case final orders, but rather is the determination of a cause of action arising from the defendant’s breach of a fiduciary duty in carrying out these orders. It is our conclusion, as stated in the original opinion, that a fiduciary cannot make use of a valid court order in a manner such that he breaches his fiduciary duties to others without becoming accountable for his actions.

The petition for rehearing also asserts that all of the defendants were, in effect, insulated from direct dealing with the other Assurance Company shareholders by virtue of the Winger court orders.

They urge that all of this action was “judicial action.” We believe, and our original opinion sets forth that the manner in which the judicial order was carried out was truly a “corporate action” and a corporate determination. There were in fact direct dealings between the fiduciary and the shareholders, resulting from the court orders, but we refuse to accept that the court orders insulated the defendants from the obligations imposed upon them by reason of their fiduciary relationship.

The petition likewise asserts that the court made factual conclusions unsupported by the record. The first such conclusion is that MacArthur did not disclose to the Winger court his intention to consolidate the insurance companies. The pertinent statement in the opinion refers to MacArthur’s testimony wherein he testified that he had no present intention with reference to reinsurance of the Assurance Company. He testified that a merger or consolidation of some sort was under consideration, but indicated in his testimony that nothing was definite in that he had no present intention with reference to reinsurance.

We implied in the opinion that the statement that he had no present intention with regard to reinsurance was not correct. Such was also the conclusion of the master. It is based upon obvious factors: the resultant value of the Assurance Company to him was present only if he had the reinsurance; the speed with which the transaction took place; the acquisition of the stock in the winter; the hearings in the spring; the order as to disposition in the summer; the determination to reinsure later in the summer. Consequently, we believe it to be a fair conclusion that MacArthur had an intention to rein-sure throughout this entire period of time, in event he could get a substantial portion of the other Assurance Company stock.

The other factual conclusion under attack is the statement in the opinion that there was a “virtual certainty” of reinsurance in the spring of 1951. While we regard such circumstance as a virtual certainty, the original opinion actually refers to the matters that MacArthur should have disclosed at the time the notice of the court ordered sale was sent out to the other shareholders. This was in June of 1951 and shortly before the fact of reinsurance was made known by MacArthur to the president of the Assurance Company (in August or early September) . When we view the entire transaction, it is apparent that MacArthur went into this transaction initially with fairly well-defined intentions and with the idea that through reinsurance this could be a very profitable investment for him. We conclude that the factual conclusions, insofar as they are drawn in the opinion, are supported by the record.

Upon rehearing, it is also contended that we erroneously concluded that the stock of the Assurance Company would have been worth substantially more than $5 in the event of “any” reinsurance or consolidation of the three insurance companies. The defendants point out that if the reinsurance had gone the other direction, the value of the Assurance Company stock would not have been greater. This may well be so, but the point that is made in the opinion is that the sole testimony produced at the hearing was with reference to the value of the stock being approximately $5 per share. If MacArthur could have this set as the value for the disposition of the stock and obtain substantial holdings at this price, then realistically there could have been but little question of the reinsurance of the Assurance Company by Central Standard, with the resulting increase in value of the Assurance Company stock.

We did not suggest in the opinion, however, as concluded by the petitioners, that the basis for the decision was that this testimony before the Winger court constituted some sort of intrinsic fraud. While we referred to the entire transaction to set the stage for what MacArthur intended and accomplished, we limited the breach of fiduciary duty by MacArthur to events which were subsequent to the Winger court orders — the failure to disclose in the notice and in the subsequent transactions.

The master’s finding, the decree of the trial court, and our opinion, outline the extent and manner in which the defendants should account. The petition urges that we detail the manner of the accounting. It is our purpose to leave the details of such accounting to the trial court upon remand.

Lastly, the petitioners contend that the plaintiff has suffered no wrong. However, it might turn out on the subsequent accounting that this is not true and that he is yet entitled to additional funds. Be that as it may, the suit is brought as a class action on behalf of the shareholders, many of whom did not exercise rights otherwise available to them, in part, presumably because of their lack of information. Thus, this class of shareholders have suffered a wrong and should have a cause of action. We hold that a fiduciary cannot assert an estoppel against the beneficiaries, whom it misled.

For the foregoing reasons, we adhere to the opinion as originally adopted, and the petition for rehearing is denied.


text:
    Emma Marshall McInturff, etc., Plaintiff-Appellee, v. Chicago Title & Trust Company, etc., Defendants. Appeal of William Forbrich and Milton J. Holloway, Defendants-Appellants.
    Gen. No. 52,739.
    First Judicial District.
    September 25, 1968.
    Rehearing denied and supplemental opinion November 26, 1968.

      William H. Symmes, John W. Kearns, Jr., Kirkland, Ellis, Hodson, Chaffetz & Masters, of Chicago, for appellants.
    Querrey, Harrow, Gulanick & Kennedy, of Chicago (John T. Kennedy, of counsel), for appellee.
   MR. JUSTICE DAVIS

delivered the opinion of the court.

This is a wrongful death action. The plaintiff, as administrator of the estate of Otis S. Mclnturff, deceased, sought to recover damages allegedly caused by the negligent conduct of the defendants, William Forbrich, Milton J. Holloway, and Chicago Title & Trust Company, individually, and as trustee under certain trusts, in maintaining a stairway in a building in which the decedent worked as janitor. By amendment, the plaintiff also sought to recover for the funeral expenses of the decedent.

The Chicago Title & Trust Company, as Trustee, held record title to the property in question, and Forbrich and Holloway were beneficiaries under the Trust.

The jury, in the wrongful death action, rendered a verdict of $30,000 for the plaintiff and against Forbrich and Holloway, and awarded no damages for funeral expenses. Judgment was entered on the verdicts and Forbrich and Holloway, herein called the defendants, appealed.

The complaint alleged, and the answer denied, that the decedent was in the exercise of ordinary care at and immediately prior to the time when the occurrence in question took place; that as a proximate result of the defendants’ negligence, the decedent did fall on the stairway and so came to his death; that the defendants maintained a stairway without handrails, as required by pertinent municipal ordinances; and that the stairway was unreasonably and dangerously steep and worn. The answer also set forth an affirmative defense that the action was barred by the payment of Workmen’s Compensation to the plaintiff pursuant to the pertinent provisions of the Workmen’s Compensation Act (Ill Rev Stats 1957, c 48, pars 138.1-138.28). The defendants moved for a directed verdict at the close of the plaintiff’s case and at the close of all of the evidence. Each motion was denied.

The defendants’ post-trial motion asked the court to set aside the jury verdict, to arrest the judgment and to enter judgment for the defendants notwithstanding the verdict. It also raised the defense that the action was barred by payment as aforesaid, asserted that it was error for the trial court to refuse to direct a verdict for the defendants, and designated many other alleged errors in connection with the trial. However, we believe that the negligence-proximate cause issue is dispositive of the case and the other alleged errors need not be considered.

In April of 1956, the decedent was hired by Chatain & Company as janitor of the apartment building in question. Chatain & Company was the managing agent of the building on behalf of the defendants and paid wages to the decedent for his services. On December 27, 1958, while so employed, he came to his first-floor apartment from the basement where he had been sweeping and asked his wife whether they had any bandaids. She directed him to the medicine chest in the bathroom and he went in that direction.

Shortly thereafter, Mrs. Mclnturff heard a crashing sound outside the apartment door. She went to the front entrance, opened the basement door which was slightly ajar, and saw her husband lying at the foot of the stairs with his head and shoulders on the concrete floor and his feet and legs on the basement stair. He was pronounced dead upon his arrival at the hospital.

As janitor, it was the duty of the decedent to maintain the building, take care of the furnace and the hot water heater, and report to Chatain & Company anything required in connection with the building. He also made small, emergency-type repairs. He used the stairway daily in the course of his employment. Mr. Chatain occasionally accompanied the decedent to the basement.

There were thirteen steps in the stairs. The risers on the stairs were eight inches high and the treads were worn. The railing on the left side of the stairway began seven steps from the top and there was no railing on the right side. The stairs were part of the original building which was constructed in 1897.

There was testimony that the decedent kept the stairs clean; that he was a careful man; that he had lost fifteen pounds since the summer of 1957; that he was admitted to the hospital on July 16, 1958, and prior thereto was complaining about blood in the urine; and that he had been absent from work for about six weeks during the latter part of 1958, due to an operation for a malignant tumor of the kidney. There was no evidence relative to what took place prior to and at the time of the injury in question.

Testimony of the surgeon who performed the operation, and that of other physicians, indicated that a man with one kidney is capable of living an ordinary life; that a person with cancer has a life expectancy of from five to ten years, at the most, dependent upon numerous factors.

It has long been the law that ordinary care in a particular case is that degree of care which is exercised by ordinarily prudent persons under the same or similar circumstances; that a person has no right to knowingly expose himself to danger and then recover damages for an injury which he might have avoided by the exercise of ordinary care; that a failure to see what is clearly visible is not such conduct as is compatible with due caution for one’s own safety; that damages cannot be assessed upon mere surmise and conjecture as to what possibly happened to cause an injury; that the law requires affirmative and positive proof of actionable negligence as the proximate cause of the injury or damage suffered to warrant an assessment of damages; and that the causal relation between the alleged negligence and the injury must be established by a preponderance of the evidence and with reasonable certainty. Withey v. Illinois Power Co., 32 Ill App2d 163, 170-173 incl., 177 NE2d 254 (1961), and cases cited therein.

The burden rests on the plaintiff in a wrongful death action to prove that the decedent was in the exercise of due care at the time he sustained the injury causing his death, and where there were no eyewitnesses to the accident, it is competent to prove that the deceased was a man of careful habits. Petro v. Hines, 299 Ill 236, 238, 239, 132 NE 462 (1921).

The admission of evidence of careful habits is a concession to the difficulty of proving due care by other means in the absence of an eyewitness. It affords a basis for admitting habit evidence generally to invite the inference that the person on a specific occasion probably acted consistently with his habits; and it is a circumstance tending to prove the exercise of ordinary care. Casey v. Chicago Rys. Co., 269 Ill 386, 391, 109 NE 984 (1915).

There were no eyewitnesses to the occurrence in question. Dr. Okunieff, who had known the decedent for more than a year, had treated him professionally in February and June of 1957, and had seen him on other occasions doing repair work at the building where the doctor had his office, testified, over defendants’ objections, based on remoteness of time, that the decedent was a careful man. This testimony was a circumstance tending to prove due care: it would create a permissive inference of the decedent’s due care.

This inference, however, was subject to rebuttal. Under the circumstances of this case we regard the inference as weak. Dr. Okunieff testified that he had twice treated the decedent and had seen him on occasion doing repair work at the office building. With this foundation as to qualifications, he testified that the decedent was a careful man. His testimony offered no factual basis for his opinion. Therefore, the evidence that the decedent was a careful man could be refuted by less than substantial evidence.

Under the facts of this case, a serious question exists with reference to whether the plaintiff proved that the decedent was in the exercise of ordinary care for his own safety prior to and at the time of the injury in question. The defendants denied such circumstance. A failure on the part of the plaintiff or decedent to exercise ordinary care would constitute contributory negligence and would bar recovery.

Contributory negligence is the want of ordinary care on the part of the person injured or damaged by the actionable negligence of another, combining and concurring with that negligence, and contributing to the injury as a proximate cause thereof, without which the injury would not have occurred. It is a failure to exercise ordinary care, and ordinary care is that care which a reasonably prudent person would take to avoid injury under like circumstances. Schmidt v. Anderson, 301 Ill App 28, 45, 46, 21 NE2d 825 (1939).

Even if we conclude that the plaintiff did prove that the decedent exercised ordinary care for his own safety prior to and at the time of the injury in question, such determination is not dispositive of the case. We must still determine the issue of whether the defendants’ negligence was the proximate cause of the plaintiff’s injury or damage. The negligence involved in the violation of an ordinance does not impose liability unless it proximately causes the injury or damage complained of. Curran v. Chicago & W. I. R. Co., 289 Ill 111, 119, 124 NE 330 (1919).

In order that liability may attach for a negligent act or omission, there must be such a relationship between the act or omission and the injury or damage suffered that the act or omission may be said to be the proximate cause of such injury or damage. Sycamore Works v. Chicago & N. W. Ry. Co., 366 Ill 11, 16, 17, 7 NE2d 740 (1937).

In the case at bar, there is no direct evidence with reference to the proximate cause of the decedent’s fall and his subsequent death. The burden was on the plaintiff to affirmatively and positively show that the defendants’ negligence was the proximate cause of the decedent’s injury. Braswell v. New York, C. & St. L. R. Co., 43 Ill App2d 21, 24, 192 NE2d 592 (1963); Deming v. Hallberg, 221 Ill App 180, 182, 183 (1921). There is no evidence in this case as to how or by what means the decedent suffered the injuries from which he died.

The dubious probative effect of the evidence relative to the careful habits of the decedent — a circumstance tending to prove that he exercised ordinary care at and immediately prior to the time of the injury — was diluted on the issue of proximate cause by the testimony that he was fully aware of the condition of the stair and used it daily in his work; and any inferences which might arise from the evidence in the case in favor of the decedent on the issue of proximate cause were weakened by the testimony that the decedent had lost weight over the last year, had recently undergone an operation for a malignant tumor of the kidney, had missed about six weeks of work, and had a life expectancy of five to ten years, at the most.

The fragmentary evidence on the issue of the defendants’ negligence did not establish any relationship between the alleged negligence and the proximate cause of the decedent’s fall and injury. There was no direct evidence relative to what took place prior to and at the time of the decedent’s injury. There was no proof that the condition of the stairway, or the alleged failure to comply with the handrail ordinances, caused the injury or damage suffered by the plaintiff. The burden was on the plaintiff to establish by a preponderance of the evidence the causal relation between the alleged negligence and the injury sustained by the decedent. Absent proof of a causal relationship between the condition of the stairs and the decedent’s death, the plaintiff was not entitled to recover. Damages cannot be assessed on mere surmise or conjecture as to what probably happened to cause his injury and death. Withey v. Illinois Power Co., supra, 170.

Whether the trial court was correct in sustaining the jury verdict and entering judgment thereon, and in denying the defendants’ motions for a directed verdict at the close of all evidence and for a judgment notwithstanding the verdict, must be tested by the standard set forth in Pedrick v. Peoria & Eastern R. Co., 37 Ill2d 494, 510, 229 NE2d 504 (1967); that is, whether all of the evidence, when viewed in its aspect most favorable to the plaintiff, so overwhelmingly favors the defendants that no contrary verdict based on the evidence could ever stand.

Under the circumstances of this case — the absence of any direct or positive evidence that the defendants’ negligence was the proximate cause of the decedent’s injury; the dubious probative value of Dr. Okunieff’s testimony relative to the decedent being a careful man; and the weakness of the plaintiff’s proof that the decedent was in the exercise of ordinary care at and immediately prior to the injury which caused his death— we believe that it may fairly be said, that all of the evidence viewed most favorably to the plaintiff, so overwhelmingly favors the defendants that no contrary verdict based on this evidence could ever stand. Consequently, the defendants’ motion for a directed verdict at the close of all the evidence should have been allowed. In the light of our conclusions, the judgment of the trial court is reversed without remandment.

Judgment reversed.

MORAN, P. J. and SEIDENFELD, J., concur.

Supplement to Opinion on Denial of Petition for Rehearing

The plaintiff filed a petition for rehearing wherein she contended that the evidence justified an inference by the jury as to the proximate cause of the decedent’s fall. Therein she stated that “In determining proximate cause it is not essential that the causal connection be shown by direct evidence; the causal connection can be shown by facts and circumstances which, in the light of ordinary experience, reasonably suggest that the defendant’s negligence in the manner charged operated proximately to produce the injury.” As authority for this proposition, she cited Lindroth v. Walgreen Co., 407 Ill 121, 131-4, 94 NE2d 847 (1950); Thomas v. Smith, 11 Ill App2d 310, 137 NE2d 117 (1956); and Holsman v. Darling State St. Corp., 6 Ill App2d 517, 522, 523, 128 NE2d 581 (1955).

We concur in the foregoing principle of law as stated by the plaintiff. The term “proximate cause” is an essential and integral element of liability in any negligence action. Thus, any inference that might arise as to probable cause, would, of necessity, be an inference relating to the negligence which caused the injury, and would be treated as such. In our consideration of the foregoing contention, the terms “inference” and “presumption” are used interchangeably.

Generally, no presumption of negligence arises from the mere happening of an accident (Huff v. Illinois Cent. R. Co., 362 Ill 95, 101, 199 NE 116 (1935); Rotche v. Buick Motor Co., 358 Ill 507, 516, 193 NE 529 (1934)); and negligence is not presumed but must be proved as a fact by the party alleging it (Barnes v. Danville St. Ry. & Light Co., 235 Ill 566, 572, 85 NE 921 (1908); Chicago & E. I. R. Co. v. Reilly, 212 Ill 506, 510, 511, 72 NE 454 (1904)). Nevertheless, negligence often is inferred from evidence of an injury or loss and the circumstances of the occurrence which afford sufficient prima facie evidence of negligence. The presumption arises from the nature of the accident and the circumstances and not from the mere fact of an accident itself. Barnes v. Danville St. Ry. & Light Co., supra, 573. Under proper circumstances, an inference of negligence may make a prima facie case for the party in whose favor it obtains, unless rebutted by contrary evidence. Parrino v. Landon, 8 Ill2d 468, 470, 134 NE2d 311 (1956).

There is no evidence in the record, direct or circumstantial, to indicate whether the plaintiff’s decedent slipped, tripped, stumbled, was pushed, blacked out or fell, due to a sudden loss of consciousness which occurred as a residual effect of his recent operation for a malignant tumor of the kidney. There is no evidence with reference to whether the accident occurred immediately before or after the decedent stepped on the stairway and, consequently, no evidence with reference to where on the stairway the accident may have occurred. Likewise, other than the accident itself, there is no- evidence that the alleged failure to comply with the handrail ordinance, the steepness of the stairs or the worn treads thereon, caused the accident; the cause thereof was left to the conjecture of the jury. In fact, there was no evidence of where, how, or why the accident occurred. The evidence that the decedent suffered a fracture of the 4th and 5th cervical vertebrae and of the skull, which caused his death, sheds no light on the issues of ordinary care, negligence and proximate cause.

There was direct and positive evidence that the decedent was fully aware of the condition of the stair and had used it daily in his work; that the decedent had lost weight over the last year; that he had recently undergone an operation for a malignant tumor of the kidney, and had missed about six weeks of work.

From the evidence in this case, there is no substantial proof with reference to whether the plaintiff was in the exercise of ordinary care immediately prior to and at the time of the accident; no proof in respect to whether the accident was the result of the defendants’ negligence ; was caused by the frailty or illness of the decedent, or occurred by virtue of some other force or instrumentality. The foregoing are some of the possible causes of this unfortunate occurrence. Others in the realm of speculation come to mind — causes which are equally likely and for which the defendants would not be liable.

In Wilke Metal Products, Inc. v. David Architectural Metals, Inc., 92 Ill App2d 265, 236 NE2d 303 (1968), at page 275, the court quoted from Condon v. Schoenfeld, 214 Ill 226, 230, 73 NE 333 (1905), as follows:

“It cannot be said that the existence of a certain fact may reasonably be inferred from the evidence when the existence of another fact inconsistent with the first can be, from the same evidence, inferred with equal certainty. The evidence must point to the existence of some particular fact rather than to the existence of another fact inconsistent with the first before it can be said that such evidence alone tends to prove the existence of the first.”

And, in Vance v. Picken, 93 Ill App2d 294, 235 NE2d 266 (1968), at page 298, the court quoted from Celner v. Prather, 301 Ill App 224, 227, 22 NE2d 397 (1939), as follows:

“Proof of a mere possibility is not sufficient. A theory cannot be said to be established by circumstantial evidence, unless the facts are of such a nature and so related, as to make it the only conclusion that could reasonably be drawn. It cannot be said one fact can be inferred, when the existence of another inconsistent fact can be drawn with equal certainty.”

In the case at bar, there is more than one possible explanation for the decedent’s death. The plaintiff’s evidence, including facts and circumstances and the inferences to be drawn therefrom need not negate all other causes of the decedent’s death in order to make out a prima facie case, but the plaintiff must introduce evidence, which with its legal intendments, more strongly supports her theory of recovery than it supports inferences to the contrary. The plaintiff’s evidence did not meet this test.

The cases cited by the plaintiff: Lindroth v. Walgreen Co., supra; Thomas v. Smith, supra; and Holsman v. Darling State St. Corp., supra, can all be distinguished from the case at bar. In Lindroth v. Walgreen Co., supra, and Thomas v. Smith, supra, the crucial question was whether it was error for the trial court to overrule the defendants’ motion for a directed verdict. They are pre-Pedrick cases, and thereunder, a motion for directed verdict or judgment notwithstanding the verdict presented the single question of whether there was any evidence in the record, which standing alone and taken with its intendment most favorable to the party resisting the motion, tended to prove the material elements of such party’s case.

This rule was superseded by the Pedrick rule which provides that a motion for a directed verdict and for a judgment notwithstanding the verdict should be entered only in those cases in which all of the evidence, when viewed in its aspect most favorable to the opponent, so overwhelmingly favors the movant that no contrary verdict based on that evidence could ever stand.

In Holsman v. Darling State St. Corp., supra, the plaintiff fell on a stairway, the treads of which were constructed of badly worn white marble; where worn, the treads were dished and uneven, forming saucers; and they were worn irregularly from one to one and one-eighth inches. The plaintiff testified concerning his fall, and said that he stepped from the platform onto the first tread with his right foot and started to move his left foot to put it on the next tread below when something happened — there was some interference with his feet. Prior to the accident, the plaintiff had no trouble with his feet or hips and had not experienced any blackouts, dizziness, or heart attacks. The jury awarded a verdict and on review the court affirmed and held that there was a causal relationship between the condition of the stairs and the fall sustained by the plaintiff. We recognize the propriety of such decision. However, the facts in Hols-man are far different from those in the case at bar.

In. the light of all the evidence and circumstances in the case at bar, we conclude that under the Pedrick rule a verdict for the plaintiff could never stand. For the foregoing reasons, we adhere to the opinion as originally adopted, and the petition for rehearing is denied.