text:
    Crerar Clinch Coal Company, Appellant, v. Board of Education of City of Chicago, Appellee.
    Gen. No. 47,011.
    First District, First Division.
    April 1, 1957.
    Released for publication April 24, 1957.

      William H. Yan Oosterhout, of Chicago, for appellant; John M. O’Connor, Jr. and James 0. Wood, Jr., and Robert H. Klugman, all of Chicago, of counsel.
    Frank R. Schneberger, of Chicago, for appellee; Frank S. Righeimer, James W. Coffey, and John T. Mehigan, all of Chicago, of counsel.
   JUDGE FRIEND

delivered the opinion of the court. Crerar Clinch Coal Company, a corporation, brought an action under section 57% of the Civil Practice Act (Ill. Rev. Stat. 1953, ch. 110, par. 181.1) against the Board of Education of the City of Chicago for a declaration that defendant was obligated, under its written contracts of June 24, 1953 with plaintiff, to pay for coal at the prices fixed therein, and that a subsequent amendment to the Sales Tax or Retailers’ Occupation Tax Act (Ill. Rev. Stat. 1953, ch. 120, par. 441, sec. 2) did not give defendant the right to deduct two per cent from the contract price. Plaintiff further sought to compel payment to it of the sum of $5,130.36, representing the aggregate sales tax after August 1, 1953, the effective date of the legislative amendment, which the board had refused to pay. Defendant answered, admitting substantially all the material allegations of the complaint but claiming that the amendment of section 2 of the Retailers’ Occupation Tax Act, which exempted from that tax the gross receipts of sales to governmental bodies after August 1, 1953, its effective date, gave defendant the right to deduct two per cent from the contract price. Plaintiff’s motion for judgment on the pleadings was denied, and it thereupon elected to stand on the pleadings. Defendant’s motion for summary judgment was granted. The court declared that even though there was no apparent ambiguity in the contract, defendant had rightfully deducted from the contract price an amount equal to the two per cent Retailers’ Occupation Tax because the payment of such amount would be an unjust enrichment at the expense of the taxpayers. Plaintiff seeks a reversal of the adverse judgment, with a finding that defendant wrongfully withheld such amount and with an order that defendant pay the balance owing.

No evidence was adduced upon the hearings. From the facts established by the pleadings it appears that on June 24,1953 plaintiff entered into written contracts with the board for the sale and delivery of coal for use in the public schools of Chicago for the period commencing August 1,1953 and ending May 31,1954. The contracts particularly specified the only circumstances under which the price for coal could be adjusted, either up or down; a change in the Retailers’ Occupation Tax Act was not mentioned. Subsequent to the execution of the contracts the Illinois Legislature enacted an amendment to section 2 of the Retailers’ Occupation Tax Act, which, by its terms became effective August 1, 1953, excluding from said tax the proceeds of sales to all public bodies, including the Board of Education. Shortly after the amendment became effective the board notified plaintiff that it would deduct from the price of coal delivered after August 1, 1953 the computed amount of the sales tax, and from August 1953 through April 1954 it withheld, in paying plaintiff’s invoices, a total of $5,130.36. During this period the parties had agreed that, by accepting the reduced amount in payment of the invoices, plaintiff neither waived nor prejudiced its claim for the full amount.

This suit was brought primarily to construe the written contracts between the parties for the purchase of coal. The composite price to be paid per ton was stated in the contracts; the amount of the Betailers’ Occupation Tax was not specified. Both the specifications and the contracts were prepared by defendant, which puts it into the position of defending the instruments, so to speak, under the rule holding that “an instrument is to be construed most strongly against its author.” Cemetery Assn. v. Village of Calumet Park, 398 Ill. 324. If there were any ambiguity in the contracts — and here there is not — they would be construed more strongly against their author. Dixon v. Montgomery Ward & Co., Inc., 351 Ill. App. 75.

Authorities cited by plaintiff uniformly hold that where a contract provides a specific price for the article sold, the purchaser cannot claim a reduction in price because of the elimination or reduction of a tax, such tax being absorbed or buried in the contract price. In Cupples Co. v. Mooney (St. Louis Court of Appeals, Mo.), 25 S.W.2d 125, the seller sued for the balance due under a contract. The purchaser sought to reduce the price by the amount of the Federal excise tax which had been repealed subsequent to the excution of the contract. In denying defendant’s claim for a reduction in the contract price, the court said: “The contract provided for the payment of a definite price for each tube, and the fact that the agreed price happened to include a tax, and that the tax law was subsequently repealed, did not give defendant the right to claim a reduction in the contract price, any more than would have been true if the cost of the raw materials going into the manufacture of the tubes had been reduced.” The principle enunciated in the Missouri case was followed by Federal and state courts which had before them the Agricultural Adjustment Act passed in 1933 and declared invalid in 1936. In all these cases it was admitted that the miller or seller had passed on the burden of the tax by including it in the contract price. Nevertheless the courts uniformly held that where the contract price was a composite one the purchaser was not entitled, on past deliveries, to a refund of the tax amount.

In Noll Baking & Ice Cream Co. v. Sparks Milling Co., 304 Ill. App. 624, the purchasers sought to recover back from the seller the processing taxes paid by the buyers to the seller while the Agricultural Adjustment Act was in effect. The contract provided for a price revision if the tax were changed but made no provision for a revision if the tax were invalidated. In affirming the trial court’s dismissal, the Appellate Court observed that “while the question of the recovery back of processing taxes has apparently never been passed upon by a court of last resort in Illinois, in the final analysis, this is but an old principle dressed in a new garb, the fundamentals are the same. . . . We have carefully examined all the cases cited by counsel for plaintiffs, and find no authority in any of them for holding that plaintiffs would be entitled to recover back the amount of the processing tax, voluntarily paid, with a full knowledge of the facts.” In the Noll case plaintiffs relied primarily on a decision of the New York Court of Appeals written by Judge Cardozo, Wayne County Produce Co. v. Duffy-Mott Co., 244 N. Y. 351, 155 N. E. 669, but the case distinguishes itself, for Judge Cardozo says: “This is not a case where the item of the tax is absorbed in a total or composite price to be paid at all events. In such a case the buyer is without remedy, though the annulment of the tax may increase the profit to the seller . . .” Following the reasoning of the Wayne County Produce Co. case, the Illinois Appellate Court stated: “The conclusion is irresistible, in the instant case, that the amount of the alleged tax was included and absorbed in the price named in the contract, and paid by the buyer, including, not only the tax, but the cost of the raw product, the cost of milling and processing the flour, the shipping rate, cost of the sack or barrel and the profit of the seller, a composite price where one item could not be set apart from any of the other component elements.” After a discussion of Johnson v. Igleheart Bros., Inc., 95 F.2d 4, strikingly similar on the facts to the Noll case, the Appellate Court said: “It is not the province of the courts to add to contracts of parties, elements which they did not themselves provide, nor to protect one of the contracting parties against a subsequent contingency, which would have been advantageous to him, had he but foreseen it. The circuit court of appeals . . . says, in the Igleheart case, ‘In the instant case the amount of the alleged tax was included and absorbed in the price named in the contract and paid by the buyer, and we think it was a price to be paid at all events.’ ” The Appellate Court concluded that it felt “constrained to hold under the ruling in the Igleheart case, supra and other cases cited in this opinion, that the consolidated complaint did not state a cause of action . . .”

The Igleheart case involved an interpretation of contracts in which the Agricultural Adjustment Act figured, with contractual provisions for an increase or a decrease in the price of flour dependent upon corresponding changes in the tax imposed under the Act. The court said: “The parties to this contract dealt with the subject of taxes. In fact, they covered specifically the subject of process taxes. They provided against either an increase or a decrease in said process tax. . . . It is urged upon us . ... that notwithstanding the want of express language to cover the situation presented, the court should construe the contracts as containing an implied promise to refund to the plaintiff that part of the purchase price which went to make up the processing tax. In other words, we are asked, by construction, to afford the plaintiff protection against a contingency other than that which the parties themselves provided. ... It seems clear to us that the law is well settled that where parties expressly contract, under what circumstances an obligation may arise with reference to a certain subject-matter, where the same is entered into without fraud or mutual mistake, it excludes the possibility of an implied covenant of a contradictory or different nature. . . . There is no claim of fraud or mutual mistake; the parties were dealing at arms’ length, and so far as is shown, there was no effort or intention on the part of either to prevent the other from incorporating any provision necessary for the protection of the contracting parties. If the parties had desired or intended to provide for the contingency here presented, they could and, no doubt, would have done so. Generaba speciabbus non derogan!.” The court set out the definition of the word “price” as given in Lash’s Products Co. v. United States, 278 U. S. 175: “ ‘The price is the total sum paid for the goods. The amount added because of the tax is paid to get the goods and for nothing else. Therefore it is part of the price’ ”; and it concluded “that plaintiff is not entitled to recover under the contracts sued upon and we might add, based upon the facts disclosed, that he is without remedy either in law or equity.” The Igleheart case was a decision of the Court of Appeals for this circuit; certiorari was denied by the Supreme Court (304 U. S. 585), and rehearing was denied (305 U. S.670).

In Consolidated Flour Mills v. Ph. Orth Co., 114 F.2d 898, 132 A.L.R. 697, an action brought by the seller, the Circuit Court of Appeals for this circuit again considered substantially the same question. Contracts between the milling company and the distributor of flour for sale of flour to the distributor declared that the purchase price to be paid by the distributor reflected the amount of the processing tax paid by the company and provided against the contingency of an increase or a decrease in the processing tax. The amount of the processing tax was not specified, although it could be quite accurately computed. The court there held that the contracts could not be construed as constituting agreements by the company to refund to or to reimburse the distributor in the event that the tax was declared unconstitutional. The court said: “Moreover this is a case where only one price, the price paid for the flour, was stated. The contracts and invoices reveal that the defendant did not pay two separate funds to the plaintiff, namely, a fund for the fjour and a fund for the tax. . . . There is evidence that the price reflected the tax but this is not evidence that the buyer paid a separate fund for the flour and a separate fund for the tax. ‘The amount added because of the tax is paid to get the goods and for nothing else.’ Lash’s Products Co. v. United States, 278 U. S. 175, . . . ‘Perhaps the price is larger because of the tax but . . . no part of the price paid can be identified as money paid only for the tax.’ Continental Baking Co. v. Suckow Milling Co., 7 Cir., 101 F.2d 337, 339. ... In construing these flour contracts — contracts where only one price (the price paid for the flonr) was stated— the courts have not held that such contracts were agreements to refund any part of the purchase price in the event that processing tax was invalidated. It follows that evidence that the bakers bore the incidence of tax, that the defendant promised its customers the benefit of a refund by the plaintiff and that the defendant had contracts with its customers which were similar or dissimilar to the contracts in issue here, is of no avail.”

Golding Bros. Co. v. Dumaine, 93 F.2d 162, is to the same effect. That case involved an attempt by the purchasers to recover, under contracts with the seller, the amount of the processing tax included in the purchase price after the tax had been held unconstitutional and had been refunded to the seller. In denying relief, the court said: “From the foregoing statement of facts it appears that the sale contracts in each case provided that the appellants, the purchasers, should pay for the goods a stated price per yard, not a stated price per yard plus the amount of the tax payable thereon; that, in the contracts, so far as concerned delivered portions of the goods, no provision was made for any decrease in price, but that, as to undelivered portions, if their cost was increased or decreased, due to governmental action under the statutes named and affecting the selling cost, the pieces for such deliveries were to be modified to the extent that they were affected by such governmental action or legislation. It seems to be well settled that, where a sales contract provides that the purchaser is to pay a stated price and that alone, the purchaser cannot recover from the seller the amount of the tax, if the tax is later done away with by a repeal of the statute or by its being declared unconstitutional, or, if the tax is simply reduced, recover the amount of the reduction, even though the tax had not been paid by the vendor, or, if paid, refunded to him. [Citing numerous decisions.]”

Defendant here argues that even though the contracts state a composite price, nevertheless, because plaintiff elected to stand on the pleadings without replying to defendant’s answer and expressly denying its conclusions, plaintiff thereby admitted that “the price plaintiff was charging for coal included the sales tax which plaintiff was passing on to the defendant;” but inasmuch as the contract was made a part of the complaint and contained no reference to the tax, defendant’s contention that the tax was a part of the price was nothing more than its interpretation of the contract, and therefore a legal conclusion as distinguished from a well-pleaded fact. Legal conclusions pleaded in an answer are never admitted by failure to reply thereto. In re Estate of Frayser, 401 Ill. 364; Reinhardt v. Security Ins. Co., 312 Ill. App. 1. This is particularly true where the facts are contained in an exhibit attached to the complaint. Bunker Hill Country Club v. McElhatton, 282 Ill. App. 221. See also Marcus v. S. S. Kresge Co., 283 Ill. App. 556, where the complaint was based upon an alleged contract of sale which, as an exhibit, was made a part of the complaint by reference. The court held that the contract controlled the allegations of the bill, citing numerous cases.

In his oral opinion at the conclusion of the hearing in the instant case, the trial judge, to whom briefs had been submitted, recognized that the authorities relied on by plaintiff sustained its position, namely, that because the contract fixed a composite price rather than a separate undertaking to pay a tax in addition to the price named, plaintiff would be entitled to retain or collect the tax money. “That,” he conceded, “apparently is the law as laid down in virtually all the cases cited by the Plaintiff,” but he held that “to allow the plaintiff to recover for what the legislature intended to be a benefit to the taxpayers would be an unjust enrichment at the expense of the taxpayers.” This contention was rejected in Golding Bros. Co. v. Dumaine, as indicated in the quotation from that decision earlier in this opinion.

There is no merit to defendant’s contention that section 6 of the Retailers’ Occupation Tax Act (Ill. Rev. Stat. 1953, ch. 120, par. 445), prescribing the conditions under which a retailer can recover a tax voluntarily paid through mistake or error, is applicable to this proceeding. The conditions under which the legislature allows such refund are not applicable to a suit involving a contract price under a clear and unambiguous agreement.

Lastly, it is urged that because plaintiff’s prayer for relief asked not only for a declaration of plaintiff’s rights under the contracts but also for a proper accounting between plaintiff and defendant and payment of the balance owing plaintiff under the contracts, plaintiff’s action becomes a suit for an accounting or an equitable proceeding requiring the interposition of a court of equity and the application of equitable principles, particularly the doctrine of unjust enrichment. Burgard v. Mascoutah Lumber Co., 6 Ill.App.2d 210, Jones v. Hodges, 2 Ill.App.2d 509, and section 57½ (paragraph 181.1) of chapter 110 of the Illinois Revised Statutes 1953, all hold that construction of a contract is a proper type of action under the Declaratory Judgments Act, that such an action is statutory and sui generis, and that the action retains its nature even though the plaintiff requests, and the court grants, an accounting, money damages or other incidental relief.

For the reasons indicated, the judgment order of the Circuit Court is reversed, and the cause remanded with directions that an order be entered finding the issues in favor of plaintiff and declaring defendant to have wrongfully deducted $5,130.36 from the contract price, and that judgment be entered in favor of plaintiff for that amount.

Judgment order reversed, and the cause remanded with directions.

NIEMETEE, P. J. and BURKE, J., concur.


source: Caselaw Access Project

author: JUDGE FRIEND

license: Public Domain

text:
    Sam Kars and Eva Kars, Appellants, v. John S. Knauf, doing business as Knauf & Weber Roofing Company, Raymond L. Lutgert Construction Company, Inc., and Sidney H. Morris & Associates, Inc., Appellees.
    Gen. No. 47,052.
    First District, First Division.
    April 1, 1957.
    Rehearing denied April 24, 1957.
    Released for publication April 24, 1957.

      Morgan, Halligan, Lanoff and Curtis, Friedman & Marks, all of Chicago, for appellants; Joseph T. McGuire, and Louis S. Friedman, of Chicago, of counsel.
    Halfpenny & Hahn, of Chicago, for John S. Knauf, doing business as Knauf & Weber Roofing Company, Johnson & Bateman, of Chicago, for Raymond L. Lutgert Construction Company, Inc., and Alvin D. Simon, of Chicago, for Sidney H. Morris & Associates, Inc., appellees; Donald E. Bateman, James F. Flanagan, and Alvin D. Simon, all of Chicago, of counsel.
   JUDGE FRIEND

delivered the opinion of the court.

Sam and Eva Kars, husband and wife, filed an amended complaint against John S. Knauf, doing business as Knauf and Weber Roofing Company (hereinafter referred to as Knauf), a general roofing contractor, Raymond L. Lutgert Construction Company, Inc. (hereinafter referred to as Lutgert), general building contractors, and Sidney H. Morris and Associates, Inc. (hereinafter referred to as Morris), architects, seeking damages for the faulty construction of the building which was erected for plaintiffs at 4345-49 North Central Avenue in Chicago. All the defendants answered, and Morris in addition filed a counterclaim, seeking a $1,000 balance allegedly due for architectural services rendered.

Under the terms of a written agreement Morris undertook to prepare preliminary sketches, working drawings and specifications, and to assume the supervision of work in the erection of a one-floor retail store building, “with family dwelling above,” on vacant property owned by plaintiffs. Lutgert, as general contractor, undertook the construction of the building, also under written agreement, and Knauf, under a written subcontract with Lutgert, agreed to construct a roof on the building in accordance with the architect’s plans. The work began about March 1, 1949 and was substantially completed in August of that year. Each store occupied approximately one-half of the first floor of the building, and above the north store was a family dwelling. Shortly after the completion of the building plaintiffs moved into the living quarters, and after installing the necessary equipment and acquiring a stock of merchandise, they opened and operated a retail variety and general merchandise store. The south store was leased to the National Tea Company which occupied it and began operating a supermarket.

Plaintiffs introduced considerable evidence of roof leaks in the rear of the building as early as July 1949, prior to taking possession of the building, and of further leaks during the Christmas rush in December 1949, and again on several occasions in February 1950. They notified Morris, who referred the complaint to Lutgert; Knauf, in turn, was notified of the defective condition of the roof. None of the defendants remedied the defects, and accordingly plaintiffs were obliged to order repairs through independent contractors, incurring expenses for material, labor and installation, for the recovery of which this suit was instituted.

The case was tried by the court without a jury. At the close of plaintiffs’ case all three defendants moved for a directed finding. The motion was sustained as to Knauf and denied as to Morris and Lutgert. Thereupon Morris called two witnesses, and Lutgert, through his counsel, actively participated in the defense. Prior to the conclusion of defendants’ case, Morris and Lutgert renewed their motions for a directed finding. The court granted the motions and entered judgment accordingly. Morris had leave to amend his counterclaim to alleg'e an account stated of $1,000, with interest, or an aggregate of $1,312.50, for which judgment was entered.

Under the settled rule in this state, when defendants put in evidence after the denial of their motions at the close of plaintiffs’ case for a directed verdict, the motions are waived. In the leading case of Goldberg v. Capitol Freight Lines, Ltd., 314 Ill. App. 347, affirmed 382 Ill. 283, plaintiff brought an action against defendants for personal injury claimed to have resulted from their negligence, and was awarded a verdict in her favor. In the course of trial one of the' defendants, a bus company, had made a motion for a directed verdict at the close of plaintiff’s case, which was denied. Thereafter the company introduced evidence and subsequently attempted to renew its motion for a directed verdict. On appeal, counsel for the bus company asserted that the court erred in refusing to direct a verdict in its favor at the close of plaintiff’s evidence and again when it renewed its motion at the close of all the evidence. The Appellate Court, in passing on the latter contention, said: “The motion made by the Bus Company at the close of plaintiff’s evidence could not be renewed after the Bus Company put in evidence, and the motion could not be reserved, as the court attempted to do. When defendants put in evidence after making their motion at the close of plaintiff’s case, for a directed verdict, that motion was out of the case for all time. It could not be reserved and it could not be renewed. Popadowski v. Bergaman, 304 Ill. App. 422; Kahler v. Marchi, 307 Ill. App. 23; Hirshman v. National Mineral Co., 311 Ill. App. 169.

“In the Popadowski case we said: ‘Where a defendant makes a motion at the close of plaintiff’s case for a directed verdict, if he desires to save his point, he must introduce no evidence. But if he puts in his evidence and desires a directed verdict, he must make a second motion for a directed verdict. The court in passing on the second motion must do so in view of all the evidence. (Cook v. Aevermann, 244 Ill. App. 644 (Abst.); Joliet, A. & N. Ry. Co. v. Velie, 140 Ill. 59; Fowler v. Chicago & W. I. R. Co., 182 Ill. App. 123.) Some opinions inaccurately state the law to be that where a defendant moves for a directed verdict at the close of plaintiff’s case and the motion is overruled and defendant then introduces his evidence, he must “renew” his motion at the close of all the evidence. In such case the motion made at the close of plaintiff’s case cannot be renewed. It is out of the case for all time and, as stated, if defendant desires to have the court of review pass on the question whether plaintiff had made out a prima facie case, at the close of all of the evidence, he must make a second motion based on all the evidence.’ ”

If defendants wanted the court to review and pass on the question whether plaintiffs had made out a prima facie case, at the close of all the evidence, it was then incumbent upon them to make a second motion based on all the evidence. This they failed to do. The procedure followed was, in effect, an attempted sbort-cut midway in the trial.

Morris argues that his motion for a directed verdict, offered subsequent to the introduction of testimony on his behalf, was treated by the court as a submission of the case on its merits, but the wording of the order entered by the court specifically negatives this contention; it recites that the motion “at the close of Plaintiffs’ evidence” and “renewed during- the course of Defendant’s presentation of Defendant’s evidence and prior to conclusion of the Defendant’s evidence, . . . allowed.” There is no merit to the contention of Morris and Lutgert that the “error here, if any, was procedural”; it was clearly error to allow defendants to renew their motions after they had presented evidence or participated in the defense.

Since the case will have to be retried, we do not pass on the question whether plaintiffs made a prima facie ease. However, the trial judge was evidently of the opinion that they had done so; otherwise he would not have denied the motions of two of the defendants and required them to proceed to produce evidence in support of their answers.

In his original counterclaim Morris had a claimed balance of $1,000 due for architectural services. He amended his counterclaim during the trial to an account stated, thus assuming the burden of proving, by a preponderance of the evidence, each of the elements of the action of an account stated. Morris testified that he gave instructions to the firm’s chief bookkeeper to bill the Karses in the amount of $1,000, but the original of the statement was not produced at the trial, nor was any notice to produce the original served upon plaintiffs. Neither of the plaintiffs was called under section 60 of the Civil Practice Act during the trial: no testimony was offered to show why the person who was in charge of the firm mailing did not testify at the trial. The mere dictating of a letter and the custom of mailing are not sufficient to show receipt of a letter. State Bank of East Moline v. Standaert, 335 Ill. App. 519.

Morris further testified that Mr. Kars “never objected to any portion of the work we did. He was completely happy with it. There was some objection to the floor covering but everybody agreed that it was acceptable.” Kars, however, had testified, in connection with his main suit, that he had become obligated to a number of firms for various types of repair necessitated by the defective roofing work; in addition some of his store merchandise had become damaged as the result of the leaking roof. More eloquent, indeed, than plaintiff’s testimony is his action in instituting suit to recover damages for what he considered faulty construction of his building.

Defendant counsel argue that the payment by the plaintiffs of the judgment entered against them on the counterclaim has caused it, if not indeed the entire case, to be moot as to Morris. But the law is that a counterclaim is a separate and distinct cause of action. Wilson v. Tromly, 404 Ill. 307. In the case before us, the counterclaim was for an account stated for the balance of the architect’s fee; there was a separate pleading, in effect a separate trial upon the counterclaim, and a separate judgment order. The payment of the counterclaim does not in any way affect the issues in the main case. The payment after judgment is upon no different footing than if plaintiffs had paid the architect his fee in full before the main suit was filed. It should be pointed out that the counterclaim issues involve only one of the three defendants; the other two defendants were paid in full before the suit was filed. The payment of the judgment on the counterclaim cannot result in making the main case moot as to the one counterclaiming defendant.

Defendants’ contention that plaintiffs’ payment of the judgment was “voluntary” suggests that the word means different things to different people. Plaintiffs’ counsel appeared before Judge Fisher on a motion for leave to file their motion to vacate the various judgments entered in the cause, including the judgment on the counterclaim. When Morris’ attorney objected to the motion, the court, upon his insistence, refused to allow it unless the order granting leave to file expressly provided that the execution of the judgment upon the counterclaim would not be stayed — this despite the provision of the Practice Act (Ill.Rev. Stat. 1955, ch. 110, sec. 68.3, par. 2) that “a motion filed in apt time stays execution, . . .” At that stage of the proceedings plaintiffs had two courses of action open to them: to start an appeal from the judgment and file a supersedeas bond; or to press their motion to vacate the judgments before considering the question of appeal. To adopt the first course would mean embarking upon an expensive and time-consuming appellate procedure when there was still a good chance, or so plaintiffs’ counsel felt, that they would be successful in their endeavor to have the various judgments vacated. Without the protection of section 68.3, paragraph 2 of the Practice Act, plaintiffs’ counsel again had to make a choice between two courses of action — whether to pay the judgment or permit a levy. The judgment was paid, not because plaintiffs acquiesced in the decision of the trial court and the judgment subsequently entered thereon, but because they were under a legal and practical compulsion to pay it; they felt they could not afford a levy upon the goods, wares, merchandise and fixtures of their place of business. In the early case of Richeson v. Ryan, 14 Ill. 74, it was held that the payment or satisfaction of a money judgment before an execution issues was not a bar to writ of error or appeal. The Ricbeson case has not been overruled and has been followed in an unbroken line of decisions: Lott v. Davis, 262 Ill. 148; Jacksonville Hotel Building Corp. v. Dunlap Hotel Co., 350 Ill. 451; First National Bank of Jonesboro v. Road District No. 8, 389 Ill. 156. In the Richeson case the court said: “If the judgment had been collected by execution, there would not be a doubt of the right of Richeson to prosecute the writ of error. A payment made under such circumstances would be compulsory, and would not preclude him from afterwards reversing the judgment, if erroneous, and then maintaining an action to recover back the amount paid. The payment in question must equally be considered as made under legal compulsion. The judgment fixed the liability of Richeson, and he could only avoid payment by procuring its reversal. He was not bound to wait until payment should be demanded by the sheriff. He was at liberty to pay off the judgment at once, and thereby prevent the accumulation of interest and costs. By so doing, he did not waive his right to remove the record into this court, for the purpose of having the validity of the proceedings tested and determined.”

For the reasons indicated, the judgments are reversed, and the cause remanded for a new trial.

Reversed and remanded.

NIEMEYER, P. J. and BURKE, J., concur.


author: JUDGE ROETH

text:
    Raymond W. Dawson, Plaintiff-Appellee, v. Jack Maxwell and George Carl Wright, Defendants. Jack Maxwell, Defendant-Appellant.
    Gen. No. 10,090.
    Third District.
    April 15, 1957.
    Released for publication May 1, 1957.
    Chester Thomson and Alan Wienman, both of Bloomington, for appellant.
    Herrick and Rudasill, of Clinton, for appellee; Wirt Herrick and A. J. Rudasill, both of Clinton, of counsel.
   JUDGE ROETH

delivered the opinion of the court.

Plaintiff Raymond Dawson sued defendants Jack Maxwell and George Wright for damages for personal injuries received in a fist fight. The charge in the complaint is that defendant Maxwell struck the plaintiff and defendant Wright incited, aided and abetted the striking. The case was tried before the court without a jury. The court found defendant Wright not guilty and defendant Maxwell guilty and fixed plaintiff’s damages at $2,500. After overruling post trial motions, judgment was entered for plaintiff and against defendant Maxwell for the above amount. This appeal by the defendant Maxwell followed.

Two grounds for reversal are assigned by defendant, namely: (1) the court erred in refusing to grant a jury trial (2) the judgment is against the manifest weight of the evidence. Counsel for defendant both in their briefs and upon oral argument rely principally upon the first ground above noted.

The record in the case at bar reveals that the complaint was filed on December 27, 1954. No jury trial was demanded. On January 14, 1955 the defendants appeared by two attorneys and filed a motion to dismiss the complaint and to dismiss certain paragraphs thereof. February 1,1955 this motion was set for hearing on February 9, 1955. On that day arguments were heard on the motion and the cause was taken under advisement. On February 10, 1955 a written demand for jury trial was filed by the defendants. This demand reflects, for the first time, the presence of a new attorney as counsel for defendants in addition to those representing defendants at the time suit was commenced. Subsequently on February 26, 1955, as reflected by the common law record, the written demand for jury trial was noted as being on file, the motion to dismiss was denied and defendants were ruled to plead by April 1, 1955. On March 19, 1955 a demand for bill of particulars was filed by the defendants. Plaintiff subsequently complied with this demand by filing a bill of particulars on March 28, 1955.

On March 16, 1955 counsel for defendants obtained leave of court to file a motion for jury trial together with affidavit in support thereof, the same to be filed by March 25,1955. Pursuant to the leave thus granted, on March 22, 1955 defendants filed a written motion for allowance of jury trial which motion was supported by the affidavit of one of the attorneys of record for defendants. The affidavit sets up the employment by defendants of the additional counsel and that he discovered the absence of a jury demand whereupon he placed the demand for jury trial of February 10 on file. The affidavit further recites the fact that the pleadings are not settled, the case is not at issue and not ready for trial. The affidavit further recites that the failure to file a demand for jury trial was due to an oversight of affiant and his associate counsel and was overlooked because counsel were under the impression that the plaintiff had demanded a jury trial. Thereafter on March 28, 1955 plaintiff filed a motion to strike defendants’ jury demand. The only ground assigned in said motion was that the demand was not filed when defendants first appeared.

Pursuant to the rule to plead defendants filed their separate answers on March 29, 1955 to which replies were filed on May 23,1955. On May 19, 1955 the court sustained plaintiff’s motion to strike the jury demand and struck the same and denied defendants’ motion for leave to file jury demand.

Nothing further appears to have been done in this case until October 27, 1955 when the case was set for trial before the court on November 21, 1955 at which time it was tried.

We approach the claimed error in refusing to grant a jury trial with the recent opinion of Supreme Court in Hudson v. Leverenz, 10 Ill.2d 87, 139 N.E.2d 255, before us. In that case the court noted:

“However, even though a plaintiff does not file his jury demand ‘at the time suit is commenced,’ or a defendant ‘at the time of filing his appearance,’ this court has said that the right to have a jury is not necessarily foreclosed. It is held that by reason of section 59 of the Civil Practice Act and Supreme Court Rule 8, the trial court may, in its discretion and under certain circumstances, extend the time for filing the request for jury trial. See Stephens v. Kasten, 383 Ill. 127.”

The court further observed:

“While the power of the legislature to regulate the right of jury trial in some reasonable manner has long been recognized in this State, this court has stated that a statute doing so ‘should be liberally construed in favor of the right and the inclination of the court should be to protect and enforce the right.’ (Morrison Hotel and Restaurant Co. v. Kirsner, 245 Ill. 431, 433.) For this reason, in Stephens v. Kasten, 383 Ill. 127, a defendant in a negligence action was held entitled to a jury trial despite the failure to file a jury demand with the first pleading. But this decision turned on the particular factual situation there present, showing that the filing of a jury demand at a later date ‘did not tend to inconvenience the court or parties litigant or prejudice any rights in any manner whatsoever.’ (p. 135.) For the case had not been set for trial, and in fact was not tried before the court until some eleven months later.”

We believe that the gist of the Supreme Court’s opinion in Hudson v. Leverenz, supra, is that each case, where this question arises, must be judged upon its own facts. Under the factual situation appearing in that case wherein it was not disputed that plaintiffs would be inconvenienced by the granting of a jury trial, the Supreme Court concluded that the trial judge did not abuse his discretion in refusing the request for jury trial.

It is recognized that the trial judge, in extending or refusing to extend the time for filing a demand for jury trial, is called upon to exercise discretion. However, the discretion thus vested in the trial judge is a judicial one and its exercise is subject to review.

The record here, in our opinion, presents a case wherein there is nothing in the record tending to show that the granting of a jury trial would tend to inconvenience the court or parties litigant or prejudice any rights in any manner whatsoever. Had such been the fact, counsel for plaintiff could well have brought the same to the attention of the court by counter-affidavit as was done in Hudson v. Leverenz, supra. Under the factual situation appearing in the record before us, we hold the opinion that the trial court should have granted a jury trial and that its failure to do so constituted an abuse of discretion and was error. This holding malees it unnecessary to consider the second assignment of error.

Accordingly the case will be reversed with instructions to allow the demand of the defendant Maxwell for jury trial and to grant him a new trial before a jury.

Reversed and remanded.


author: JUDGE CARROLL

text:
    Harlan E. Moore & Company, Plaintiff-Appellant, v. Champaign National Bank, a National Banking Association, Defendant-Appellee.
    Gen. No. 10,091.
    Third District.
    February 26, 1957.
    Rehearing denied April 6, 1957.
    Released for publication April 6, 1957.

      John Alan Appleman, of Urbana, for plaintiff-appellant.
    Thomas, Mulliken & Mamer, of Champaign, for defendant-appellee.
   JUDGE CARROLL

delivered the opinion of the court.

This action was brought to recover the proceeds of certain checks cashed by the defendant bank allegedly in violation of its deposit agreement with plaintiff.

There is little dispute concerning the principal facts. On or about March 2, 1951, Harlan E. Moore and Co., plaintiffs, filed with defendant the regular corporation form of signature card showing that J. W. Wilkie was authorized to sign checks for plaintiff on its general account. A similar card was filed with defendant on April 6, 1951 authorizing Wilkie to sign checks on the payroll account of plaintiff. These signature cards remained on file with the defendant until November 22, 1952 when they were canceled by • H. E. Moore, president of the plaintiff corporation.

Wilkie was employed by plaintiff early in 1951 as a bookkeeper. He had charge of cash disbursements, accounts payable and purchase journal records. He also paid invoices for supplies and expenses, signed checks made to petty cash, reconciled the bank statements, made bank deposits and signed payroll checks. At the end of each month it was his duty to check the bank statements and canceled vouchers to determine whether the charges made against the bank account were correct and whether the canceled checks were in agreement with plaintiff’s records.

The wages and salaries of employees and officers of plaintiff were paid by checks drawn on its payroll account with defendant. There appears to have been no deviation by plaintiff from this practice until the transactions which gave rise to this litigation occurred. The payroll account was maintained by depositing therein checks drawn weekly against plaintiff’s general account for the amount of the payroll disbursements. These checks and also others drawn to petty cash were signed by Wilkie.

Plaintiff is a corporation having several subsidiary divisions, one of which is the Roofing and Insulation Supply Co., which carried an account in defendant bank. Wilkie was authorized to draw checks on the account of this subsidiary and did draw checks thereon for the petty cash and payroll accounts.

At the end of each month, during the period'from May 1951 through November 1952, defendant delivered to plaintiff the ledger statement showing debits and credits as entered on plaintiff’s account during the month together with canceled vouchers. At the time of delivery of each monthly statement and accompanying vouchers to plaintiffs a receipt was taken by defendant. With the exception of two which were signed by H. E. Moore, president of plaintiff corporation, all of these receipts were signed by Wilkie. The form of such receipts is as follows:

“Received of the Champaign National Bank of Champaign, Illinois,

Statement of my account to Aprl. 30, 1951, with 211 vouchers showing CREDIT balance of $21,740.99 and I agree to examine same carefully, and if not correct to give notice and make all reclamations within ten days.”

Plaintiff failed to give notice of any claim of error in these statements and also failed to make any reclamation within 10 days.

Shortly after his employment by plaintiff, Wilkie devised a scheme for embezzling Ms employer’s money which he operated in the following manner: He made out and signed certain checks on plaintiff’s general account payable to “cash for payroll.” He presented these checks to the bank which paid him the amounts thereof in cash, which he embezzled. He then filled in the check stub or duplicate to show the name of a supplier with which his employer ordinarily did business and made a cash disbursement entry corresponding to the check in the cash disbursement journal. When the canceled checks were returned by the bank at the end of a month, Wilkie, to whom the duty of examining and reconciling the bank statements was entrusted, would withdraw the “cash for payroll” checks and destroy the same.

By following this practice, Wilkie was able to conceal his embezzling from his employer for many months. The record shows that during that period the defendant bank cashed for Wilkie some 56 of these checks, amounting to $39,817.98.

Wilkie presented the first of the checks in question to Leroy Britton, one of defendant’s tellers. On that occasion and before cashing the same Britton called the attention of Lyle Blue, another teller to the fact that Wilkie was presenting a payroll check and asked Blue for his opinion. Blue went to Britton’s window and asked Wilkie why he was cashing the payroll check and if it was the intention of the plaintiff to do so in the usual course of business. Wilkie’s reply was that plaintiff had crews of workmen in other areas, such as Lincoln, Decatur and Bloomington; that when these crews completed a job and returned to town, they wanted their money; that plaintiff was also employing a considerable amount of pickup labor in addition to its regular crews; that this pickup labor wanted its money every other day and this was the reason for obtaining the payroll in cash. Wilkie at that time also presented a payroll slip upon which was listed the number of $20’s, 10’s, 5’s and l’s and pieces of silver required. Blue thereupon told Britton to go ahead and cash the check.

Wilkie’s embezzlement scheme was not discovered until November 13, 1952 when an accountant for plaintiff came upon suspicious checks and check copies. The defendant was then notified of the discovery.

The complaint as amended contained five counts. Counts 1 and 5 charged defendant with breach of its duty to plaintiff as a depositor in paying out monies from its account without authority from plaintiff, giving the dates and amounts of such payments. In count 2 plaintiff relies upon Secs. 234 and 241, Chap. 98, Ill. Rev. Stat. 1953, alleging the acts of defendant in view of its knowledge of plaintiff’s practice of paying all wages and salaries by check to amount to bad faith. In count 3 plaintiff relies upon negligence and alleges therein that defendant knew plaintiff paid all wages by check upon a special payroll account; that in the exercise of ordinary diligence when plaintiff’s employee presented checks marked “cash for payroll” defendant was under a duty to investigate and to either refuse to cash such checks or communicate with plaintiff but negligently failed to do either and paid over funds to Wilkie on said checks.

Defendant filed a motion to dismiss the cause or in the alternative to strike the complaint. This motion was allowed in part and count 1 was stricken.

The defendant filed an answer with special defenses. The substance of these defenses are that on or about the first day of each month beginning with May 1951 and continuing through November 1952, defendant furnished plaintiff a statement of plaintiff’s account together with canceled vouchers; that one of plaintiff’s agents signed a receipt for each monthly statement ; that by said receipt plaintiff agreed to examine the statement and vouchers and if not correct, to give notice and make a reclamation within 10 days; that plaintiff has given no notice nor made any reclamation within a reasonable time after delivery of statement and vouchers to its agent; that by virtue of which plaintiff has waived or in the alternative is estopped from claiming upon the checks described in the complaint; that on numerous occasions plaintiff’s account was overdrawn; that upon notice thereof plaintiff repaid such overdrafts; that such overdrafts should have been notice to plaintiff of an irregularity in its account; that Wilkie was held out to plaintiff to have full authority to draw checks on its account without limit as to amount or payee; that Wilkie had real, apparent or ostensible authority from plaintiff to issue checks payable to fictitious payees or to cash; that the payee in checks upon which plaintiff makes its claim was not the name of any person and were therefore bearer instruments and defendant was authorized to pay the amounts thereof to any person presenting the same; that any losses suffered by plaintiff on account of payment upon checks drawn by Wilkie are the results of plaintiff’s negligence in failing to discover Wilkie’s embezzlement for more than a year; in failing to examine monthly statements and vouchers and to notify defendant of errors; in failing to investigate the cause of overdrafts of its account and in failing to have sufficient audits of its books and accounts and to employ proper methods to safeguard the funds of the corporation.

The cause was tried on counts 3 and 5 by a jury which returned a verdict for the defendant. The court, after overruling plaintiff’s post-trial motions, entered judgment on the verdict and this appeal followed.

Plaintiff’s theory of the case is that the defendant owed the plaintiff as a depositor, a duty not to pay out its money or to debit its account for payments made to Wilkie on checks made payable to “cash for payroll.”

The defendant takes the position that Wilkie, by virtue of the signature card filed with defendant and the authority held out by plaintiff’s officers to the defendant, was authorized to sign checks to cash or other bearer instruments but that in any event plaintiff was guilty of such contributory negligence as to bar recovery.

Plaintiff urges that the trial court erred particularly in (1) refusing to strike defensive pleadings relating to fictitious payee; (2) refusing to give certain instructions tendered by plaintiff and in giving certain defense instructions; (3) in withdrawing the issue of bad faith from consideration by the jury; (4) admitting in evidence the receipts signed by plaintiff’s agents upon delivery of the monthly statement and canceled vouchers; and (5) in instructing the jury as to contributory negligence without limiting such instruction to the negligence count of the complaint.

In considering the several errors assigned, there appears to be certain general observations which appropriately should be made. The authority of Wilkie to sign checks drawn on plaintiff’s account is not in dispute. The signature cards applying to both the general and payroll accounts leaves no doubt on that subject. The subject of the controversy between the parties was the authority of Wilkie to cash the checks in question. The rights of third parties are not involved. Basically the issue is simple and may be stated thus: Was the defendant in failing to inquire of plaintiff as to whether Wilkie was authorized to receive the cash upon the checks guilty of such negligence as entitles plaintiff to recover?

It is obvious from an examination of the checks in question that the same are not payable to the order of a fictitious or nonexistent or living person not intended to have any interest in the same and do not qualify under Paragraph 3 of Section 9 of the Negotiable Instrument Law, Chapter 98 Illinois Revised Statutes 1953 which specifies the conditions under which instruments payable to fictitious persons are payable to bearer. These checks are for all intents and purposes made payable to cash. The addition of the words “for payroll” may have served the convenient purposes of Wilkie in attempting to convince the teller that the proceeds of the checks was to he used in the course of plaintiff’s business, but it did not make the payee a fictitious person. The drawing of checks to cash is a common practice and is employed for the purpose of withdrawing cash from a deposit account.

Checks thus drawn are in legal effect payable to bearer and are negotiable. Transfer thereof can be accomplished as it was in this case by delivery without endorsement. However, the fact that the checks thus delivered to defendant were insofar as their form was concerned, bearer instruments, does not render the defendant a holder in due course nor does such fact imply authority to sign the same. Because the checks in form met the requirements for negotiability of the Negotiable Instrument Law, it does not follow that the same were in fact negotiated.

The checks were presented by Wilkie to the defendant for payment and were not negotiated. Payment by the defendant destroyed the character of the checks as negotiable instruments and thereby transmuted the same into canceled vouchers. Such payment discharged the instruments and the defendant was not a holder thereof. 8 Am. Jur. Bills & Notes, Sec. 302; First National Bank v. United States National Bank, 100 Ore. 264, 197 Pac. 547.

Since the defendant was not a holder in due course it becomes obvious that any issue as to whether it qualified as such was not an issue for consideration by the jury. The checks were not negotiable but were cashed with funds from plaintiff’s account.

In its answer defendant denied having any duty to ascertain whether Wilkie was authorized to execute checks payable to fictitious payees or'to cash or bearer instruments and affirmatively alleged in substance that since such checks were bearer instruments the defendant was authorized to pay the amount thereof to any person presenting the same. Plaintiff contends that any such affirmative allegation should have been stricken. The apparent basis for such argument is that the same amounted to reliance upon being a holder in due course. This appears to be only an allegation that the checks cashed by Wilkie were bearer instruments transferable without endorsement. Furthermore, we find nothing in the record indicating that plaintiff claimed to be a holder in due course.

Plaintiff complains of error by the trial court in giving an instruction (No. 40) which is in the language of Sec. 9 of the Negotiable Instrument Law [Ill. Rev. Stats. 1955, Ch. 98, § 29] and states the conditions under which an instrument is payable to bearer. The particular complaint is that the instruction was not applicable to the facts in the case and the giving thereof tended to confuse the jury. When the instructions are considered as a whole, we think it was made plain to the jury that the checks were in fact bearer instruments. Merely furnishing the jury with a description of the term' “bearer instrument” without comment, as the court did, would not appear to be prejudicial to plaintiff’s case. Likewise, we do not think the court erred in denying plaintiff’s motion to strike the defensive pleadings in which the defendant referred to fictitious payees.

There was a failure of proof that Wilkie, as an agent of plaintiff, was a fiduciary within the meaning of Sec. 1, Fiduciary Obligations Act, (Par. 234, Chap. 98, Ill. Rev. Stat. 1953) and the court therefore correctly directed a verdict as to count 2. Sec. 8 of the above Act provides in substance that where a check is drawn pursuant to authority by a fiduciary upon his principal’s account, the bank may pay such check without being liable to the principal unless the bank pays the same with actual knowledge that the fiduciary in drawing such check is committing a breach of his trust or with knowledge of such facts that its action in paying the check amounts to bad faith. The evidence shows the defendant to have had no actual knowledge that Wilkie was employing the checks to embezzle his employer’s money. Likewise, there appears to be no evidence of any facts known to the defendant or the existence of circumstances which would reasonably lead it to suspect that Wilkie was doing anything dishonest. The question of whether the defendant was guilty of negligence in paying the checks is quite another matter from that as to whether it did so in bad faith.

Plaintiff also points to errors in the giving of instructions 39, 43 and 44. Instruction 39 informed the jury in effect that if Wilkie did certain acts within the apparent scope of his authority, the plaintiff was bound thereby. The rule of law stated in this instruction is well established and the giving of the same was not error in this case. Mechem on Agency, Secs. 83-84.

By instruction 43 the jury was informed that if it found plaintiff guilty of contributory negligence the plaintiff could not recover. By the language used therein it was made applicable to the facts in the case. The court did not err in giving the same.

By instruction 44 the court defined bearer instruments in terms of the evidence and instructed the jury that if it found that plaintiff had accepted the benefit of checks so drawn by Wilkie then such fact could be considered as evidence of Wilkie’s authority to draw checks payable to bearer against Wilkie’s account. Since there is evidence in the record that plaintiff did on numerous occasions cash checks in effect payable to bearer other than those in dispute, it was not error to give this instruction.

Plaintiff contends that the trial court erred in admitting in evidence the monthly receipts for statements and vouchers on the ground that incorporation therein of the requirement that depositors give notice within 10 days amounted to placing a limitation on the right of depositor to make reclamation regardless of when an error in the account was discovered. We think the court’s instruction to the jury that such provision has no legal effect sufficiently removed the objection made by plaintiff. It would appear that the receipts were properly admitted in evidence as material on the issue as to whether plaintiff exercised due care with regard to his deposit account.

Plaintiff does not argue that the verdict is against the manifest weight of the evidence, but bases its contention for reversal solely upon the ground that error by the trial court in its rulings upon evidence and instructing the jury prevented the plaintiff from receiving a fair trial. In this situation, the ultimate question confronting the reviewing court is whether there is a reasonable basis for the conclusion that but for the errors assigned, the verdict of the jury might have been different.

In none of the cases cited in the briefs did we find a factual situation which may be said to closely parallel that which is presented by the record herein. Plaintiff insists however that the exact legal question confronting us was before the court in People ex rel. Nelson v. Peoples Loan and Trust Co., 285 Ill. App. 552. In that case the Whitcomb Co. and one of its officers both carried accounts with the defendant bank in Rochelle, Illinois. Heim, who was authorized to sign checks drawn on the company account, wrote a check on his personal account for $25,000. At that time, he had on deposit only $44.24. When this check was presented to defendant in due course of business, it was not protested but held by defendant and Heim was notified of his overdraft. Heim then drew a check for $25,000 on the company account in a Chicago bank and forwarded same to defendant with directions to deposit it in his personal account. Without inquiry as to the validity of the transaction, the defendant credited the proceeds of the check to Heim’s account. The court held that since defendant knew when the check for $25,000 was presented that Heim had only a small balance in his account, and that since "Whitcomb Co. was not indebted to the bank the latter should have inquired of Whit-comb Co. as to whether the transaction was legitimate.

There is a marked distinction between the facts in that case and those revealed by this record. Here Wilkie drew checks to cash for payroll in what appeared to be the usual course of business of his principal. The defendant did not take the proceeds of the checks and apply them to his account in the defendant bank. The defendant’s teller did make inquiry of Wilkie as to the reason for plaintiff’s drawing cash for payroll and received a plausible explanation under the circumstances. The teller’s conversation with Wilkie amounted to an inquiry as to whether in the course of its business the plaintiff was changing its method of handling payroll payments. In view of the fact that the evidence indicates that Wilkie was in charge of plaintiff’s banking business with defendant, it would appear reasonable to conclude that the teller did what a reasonably prudent bank employee would have done under similar circumstances. Therefore, we do not think that the rule announced in the Peoples Loan and Trust Co. case is helpful in resolving the questions raised on this appeal.

Plaintiff argues that defendant is guilty of a breach of its duty to plaintiff in failing to make an inquiry of plaintiff as to whether "Wilkie was authorized to draw cash on the checks which he presented. Plaintiff does not indicate the person or persons to whom this inquiry should have been directed. Wilkie was one of three persons authorized to draw checks on plaintiff’s account. The evidence shows that Wilkie in addition to his authority to write checks, had exclusive charge of the banking business of plaintiff with defendant. Under these circumstances it would seem that an inquiry concerning the checks would reasonably and ordinarily be made of the person handling plaintiff’s business with the bank and in this case that individual was Wilkie.

In this case the fact must not be overlooked that plaintiff owed the defendant the duty of exercising reasonable care and supervision over its bank account with defendant. Plaintiff admits that it failed to examine monthly statements of its account furnished by defendant during the whole period covered by Wilkie’s embezzlements. It goes without saying that if such an examination had been made, it would have led to the discovery of Wilkie’s wrongdoing. As to the duty of plaintiff in that regard, in Cosmopolitan State Bank v. Lake Shore Trust and Savings Bank, 343 Ill. 347, the court said: “A depositor of a bank who receives from it a statement of his account with its paid checks as vouchers is bound to examine the account and vouchers and report to the bank, without unreasonable delay, any errors which may be discovered.” Similar language is found in Phillip v. First National Bank, 297 Ill. App. 498. Where, as in the instant case the irregular transaction went on for a period of approximately one and one-half years, the defendant might reasonably expect plaintiff to discover in a month or two if anything was wrong. Empire Trust Company v. Cahan, 274 U. S. 473.

The plaintiff’s rights do not appear to have been prejudiced by the court’s rulings on the admission of evidence. The object of review by this court is not to determine whether the record is completely free of error but to ascertain whether upon the trial there has been such error as might prejudice the rights of a party. Wilson v. C. & W. I. R. Co., 365 Ill. 405; People v. Storer, 329 Ill. 536. In this regard we find no error which can be considered as prejudicial to plaintiff’s rights and which would warrant the granting of a new trial.

It is the conclusion of this court, that the record herein is free of error prejudicial to plaintiff’s rights and that upon the facts it is a reasonable assumption that no different verdict would be reached on another trial.

For the reasons herein indicated, the judgment of the circuit court is affirmed.

Affirmed.


author: PRESIDING JUSTICE NIEMEYER.

text:
    Samuel Nicosia, Plaintiff, v. Halbert Frank Riley, Jr., et al., Defendants. Henry Ilg, Cross-Plaintiff, Appellant, v. Halbert F. Riley, Jr., et al., Counter-Defendants, Appellees.
    Gen. No. 47,097.
    First District, First Division.
    March 12, 1957.
    Released for publication May 2, 1957.
    James A. Sprowl, John D. Knodell, Jr., Thomas P. Sullivan for counter-plaintiff Henry Ilg, Johnston, Thompson, Raymond, Mayer, Jenner & Bloomstein, of counsel; A. F. W. Siebel and Arthur F. Siebel, for eounterdefendants, Halbert F. Riley, Jr. and Charles Y. Haliday.
   Opinion by

PRESIDING JUSTICE NIEMEYER.

Not to be published in full.


text:
    Frances Sucher, Appellee, v. Josef Nabenkoegl, Jr., Executor of the Estate of Joseph Ribich, Deceased, Appellant.
    Gen. No. 47,046.
    First District, First Division.
    March 12, 1957.
    Released for publication May 2, 1957.
    Siegan & Rubinoff, for appellant; F. Patrick Conlon, for appellee.
   Opinion by

PRESIDING JUSTICE NIEMEYER.

Not to be published in full.


author: JUDGE BURKE.

text:
    Affiliated Distillers Brands Corp., Plaintiff-Counterdefendant-Appellee, v. Gold Seal Liquors, Inc., Defendant-Counterclaimant-Appellant.
    Gen. No. 47,024.
    First District, First Division.
    March 12, 1957.
    Behearing denied March 27, 1957.
    Beleased for publication May 2, 1957.
    McConnell, Van Hook & Pasehen, for appellant, Thomas C. McConnell, W. Donald MeSweeney, Francis J. McConnell, and Edward B. Wagner, of counsel. Arvey, Hodes & Mantynband, for plaintiff-appellee, affiliated Distillers Brands Corp., Louis M. Mantynband, Irwin I. Zatz, and Henry J. Shames, of counsel.
   Opinion by

JUDGE BURKE.

Not to be published in full.


text:
    Betty Donoho, Appellee, v. O’Connell’s, Inc., Appellant.
    Gen. No. 47,008.
    First District, First Division.
    March 12, 1957.
    Released for publication May 2, 1957.
    Albert M. Howard, for appellant, Charles D. Snewind, of counsel; Lewis L. Root, Pereival E. Thompson, and Kellam Foster, for appellee.
   Opinion by

JUDGE BURKE.

Not to be published in full.


text:
    First Coin Machine Exchange, Inc., Appellee, v. City of Chicago, a Municipal Corporation, and Richard J. Daley, Mayor of City of Chicago; William T. Prendergast, City Collector of the City of Chicago; and John C. Marcin, City Clerk of City of Chicago, Appellants. Gilbert Kitt and Virginia Kitt, Copartners doing business as Empire Coin Machine Exchange, Appellee, v. City of Chicago, a Municipal Corporation, and Richard J. Daley, Mayor of City of Chicago; William T. Prendergast, City Collector of City of Chicago; and John C. Marcin, City Clerk of City of Chicago, Appellants.
    Gen. Nos. 47,144, 47,145, 47,158, consolidated.
    First District, First Division.
    March 12, 1957.
    Released for publication May 2, 1957.
    Cases Nos. 47,144, 47,145, 47,158: John C. Melaniphy, Corporation Counsel of the City of Chicago, for defendants-appellants, Sydney R. Drebin, and Robert J. Collins, Assistant Corporation Counsel, of counsel. Case No. 47,144: Foster, Richards & Hurst, for appellee, Stanley H. Richards, Donald A. Mitchell, and Albert M. Sheppard, of counsel. Cases Nos. 47,145, 47,158: no brief filed for appellants.
   Opinion by

JUDGE BURKE.

Not to be published in full.


text:
    Dorothy Garrett, Appellee, v. National Tea Co., Appellant.
    Gen. No. 47,049.
    First District, First Division.
    March 12, 1957.
    Released for publication May 2, 1957.
    Kirkland, Fleming, Green, Martin & Ellis, for defendant-appellant, David Jaeker, Thomas D. Allen, and John J. Edman, of counsel; Williams & Leonard, for appellee, John L. Roach, of counsel.
   Opinion by

JUDGE BURKE.

Not to be published in full.


text:
    The Mid-City National Bank of Chicago, a National Banking Association, Appellee, v. John Gray and Louverta Gray, Appellants.
    Gen. No. 47,039.
    First District, First Division.
    March 12, 1957.
    Released for publication May 2, 1957.
    Howard T. Savage, for appellants; Gustav E. Beerly, Jr., for appellee, Gustav E. Beerly, Jr., of counsel.
   Opinion by

JUDGE BURKE.

Not to be published in full.


text:
    People of the State of Illinois, Appellee, v. Martin Lewis, Appellant.
    Gen. No. 47,062.
    First District, First Division.
    March 12, 1957.
    Eeleased for publication May 2, 1957.

      Harold M. Tyler & Oliver A. Clark, for defendant-appellant; Benjamin S. Adamowski, State's Attorney of Cook county, for defendant in error, Gordon B. Nash, Charles D. Snewind, Francis X. Riley, and William S. White, Assistant State’s Attorneys, of counsel.
   Opinion by

JUDGE BURKE.

Not to be published in full.


text:
    People of the State of Illinois, Defendant in Error, v. Roger E. Richardson, Plaintiff in Error.
    Gen. No. 47,017.
    First District, First Division.
    March 12, 1957.
    Released for publication May 2, 1957.
    Simon Herr, for plaintiff in error; Benjamin S. Adamowski, State’s Attorney of Cook county, for defendant in error, Gordon B. Nash, and William Sylvester White, Assistant State’s Attorneys, of counsel.
   Opinion by

JUDGE BURKE.

Not to be published in full.


author: JUDGE FRIEND.

text:
    Thomas E. Brunner, Appellant, v. Yellow Cab Company, and Irving Schimmel, Appellees.
    Gen. No. 46,975.
    First District, First Division.
    March 12, 1957.
    Released for publication May 2, 1957.
    Warren J. Hickey, and Edward Wolfe, for appellant, Edward Wolfe, of counsel; Kirkland, Fleming, Green, Martin & Ellis, for appellees, David Jacker, John M. O’Connor, Jr., and Robert Klugman, of counsel.
   Opinion by

JUDGE FRIEND.

Not to be published in full.


text:
    People of the State of Illinois, Defendant in Error, v. James H. Crocket, Plaintiff in Error.
    Gen. No. 47,021.
    First District, First Division.
    March 12, 1957.
    Released for publication May 2, 1957.

      Moore, Ming & Leighton, for plaintiff in error, George N. Leighton, of counsel; Benjamin S. Adamowski, State’s Attorney of Cook county, for defendant in error, John T. Gallagher, Rudolph L. Janega, and William L. Carlin, Assistant State’s Attorneys, of counsel.
   Opinion by

JUDGE FRIEND.

Not to be published in full.


text:
    People of the State of Illinois, Defendant in Error, v. Thomas E. Hayes, Plaintiff in Error.
    Gen. No. 47,084.
    First District, First Division.
    March 12, 1957.
    Released for publication May 2, 1957.
    Charles A. Bellows and Jason Ernest Bellows, for plaintiff in error; Benjamin S. Adamowski, State’s Attorney, of Cook county, for defendant in error, John T. Gallagher, Rudolph L. Janega, and William L. Carlin, Assistant State’s Attorneys, of counsel.
   Opinion by

JUDGE FRIEND.

Not to be published in full.


author: JUSTICE CROW

text:
    Matthias P. Ward, Plaintiff-Appellant, v. Forest Preserve District of Winnebago County, a municipal corporation, and Granville H. Coburn, Defendants-Appellees.
    Gen. No. 10,985.
    Second District.
    February 11, 1957.
    Rehearing denied May 7, 1957.
    Released for publication May 7, 1957.

      John R. Snively, of Rockford, for appellant.
    Robert R. Canfield, State’s Attorney, and Rosario A. Gaziano, Assistant State’s Attorney, both of Rockford, for appellees.
   JUSTICE CROW

delivered the opinion of the court.

On December 8, 1954 Matthias P. Ward, as plaintiff, brought an action against the Forest Preserve District of Winnebago county, a municipal corporation, and Granville H. Coburn, its superintendent, as defendants to recover damages for slander. Motion to dismiss complaint on behalf of both defendants was filed and after hearing had an order was entered by the trial court granting the motions to dismiss the complaint filed December 8, 1954 and said complaint was dismissed accordingly. Leave was then granted by the court to plaintiff to file an amended complaint against the same two defendants.

The amended complaint was in three counts. In each count it is alleged that the defendant, Granville H. Coburn, on the 10th day of May, 1954 in the Forest Preserve spoke the following words: “You (meaning the plaintiff) are a Communist.” On this allegation plaintiff is seeking damages from the defendant, Forest Preserve District of Winnebago county in counts I and II of the amended complaint and from defendant, Granville H. Coburn, in counts I and III of the amended complaint.

A motion to dismiss the amended complaint was made by the defendant, Forest Preserve District of Winnebago county, who moved the court to dismiss the amended complaint and for the court to enter judgment for the defendant, Forest Preserve District of Winnebago county and against the plaintiff for the following reasons:

1. Plaintiff failed to set forth a cause of action against the Forest Preserve District of Winnebago county.

2. This defendant is a municipal corporation engaged fully in maintaining Forest Preserve Districts for the benefit and enjoyment of the public and that it cannot be answerable in slander for opinions of its employees as to the political affiliations of other persons.

3. The alleged slanderous remarks as set forth in the complaint show of themselves that they could not have been issued in the course of the said employee’s employment or relative to its business.

4. The alleged slanderous statement in said complaint is not slanderous per se and no special damages have been alleged in said complaint.

A similar motion to dismiss the amended complaint was filed by the defendant, Granville H. Coburn, who moved the court to dismiss the amended complaint as to him and enter judgment against the plaintiff and for the defendant, Granville H. Coburn, for the following reasons:

1. The complaint fails to set forth a cause of action.

2. The alleged slanderous remarks are not slanderous per se and that the plaintiff has failed to allege special damages.

3. That the statement of this defendant as to the political beliefs of the plaintiff do not constitute slander.

4. The purported allegations in said complaint regarding the publication of the alleged slanderous words are a mere conclusion and insufficient to support a cause of action.

Thereafter order was entered by the Circuit Court of Winnebago county granting the motion to dismiss the amended complaint made by each defendant, namely, Forest Preserve District of Winnebago county, a municipal corporation, and Granville H. Coburn. The plaintiff elected to stand on his amended complaint. The cause is before this court on the appeal of plaintiff from the judgment so entered for the defendants.

Plaintiff argues that the imputation of objectionable political principles or practices is defamatory and actionable per se. Thus, the principal question involved is, whether the spoken words as set ont in the complaint, are, per se, or of themselves, actionable. The complaint does not aver any special damages as resultant from speaking of such words, hence plaintiff’s right of action rests upon whether the alleged statement, was, per se, slanderous.

In considering whether a defamatory charge is actionable or not, the distinction between oral and written words must be kept in mind as the same rules of law do not apply to libel, as to slander, the law of the former being wider than that of the latter. Defamatory matter, printed and published, may be actionable per se, while the same words, orally spoken, would not be so, except they occasion special damages.

The reasons given for such rule are that words written or printed are in more permanent form, are susceptible of wider circulation, and hence capable of inflicting greater injury than those merely spoken; also, that the defamation made in script or print necessitates some measure of deliberation, and so, of itself, imputes an evil intention to the writer, as a person who reduces a defamation to writing, is, by law, presumed to have convinced himself of its truth and acted accordingly. With such considerations in mind the courts have declared the rule as to what spoken defamatory words are, of themselves, and without proof of resultant special damages, actionable.

The common law does not give a right of action for all spoken words, even though they disparage the character of another, and is fully declared by courts of highest standing and respectability, in classifying the various kinds of oral statements which are actionable without allegation or proof of special damages.

There appear to be, at common law, five classes of spoken words which give rise to a cause of action for their false utterance concerning a person in the presence and hearing of others. They are: (1) words imputing to a person the commission of a criminal offense; (2) words which impute that the party is infected with some contagious disease, where, if the accusation he true, it would exclude the party from society; (3) defamatory words which impute to the party unfitness to perform the duties of an office or employment of profit, or the want of integrity in the discharge of the duties of such office or employment; (4) defamatory words which prejudice such party in his or her profession or trade; and (5) defamatory words which, though not in themselves actionable, occasion the party special damages.

That the foregoing is the rule of the common law appears to be thoroughly established, and, as such, is the law of this state, save where it has been changed by statute. The classifications thus enumerated are controlling in Illinois, except as the Slander and Libel Act (1955 Illinois Revised Statutes, Chapter 126, Section 1, et seq.) has enlarged the rule by providing that false, oral accusations' of fornication, adultery and false swearing, are deemed slander and actionable as such.

The utterance complained of, as set forth in the complaint, not being embraced within the category of spoken words, slanderous per se, prescribed by the common law, and not included within the enlargement of same, by our statutory sections previously noted, would not appear to be slanderous unless special damages were alleged and proved.

Plaintiff, however, insists that notwithstanding the general rule of the common law, the courts have passed upon the specific question here involved and that the weight of authority sustains the contention the words charged to have been uttered in the complaint, are actionable per se.

So far as we are advised or have been able to ascertain, the proposition has not been passed upon by the courts of this state; hence it is an open question in this jurisdiction. The authorities are divided in their holdings, and to determine wherein the weight of authority lies necessitates a consideration of the various decisions.

Each of the following cases: Lewis v. Daily News Co., 81 Md. 466, 32 Atl. 246; Washington Times Co. v. Murray, 55 App. D. C. 32, 299 F. 903; Toomey v. Jones, 124 Okla. 167, 254 Pac. 736; Hays v. American Defense Soc., 252 N. Y. 266; Garriga v. Richfield, 174 Misc. 315, 20 N.Y.S.2d 544; Levy v. Gebler, 175 Misc. 746, 25 N.Y.S.2d 148; Bouden v. Tishman, 35 N.Y.S.2d 760; Sack v. New York Times, 56 N.Y.S.2d 794; Wright v. Farm Journal, 158 F.2d 976; Menchler v. Chesley, 297 N. Y. 94; Oppenheim v. Gunther, 193 Misc. 914, 85 N.Y.S.2d 210; Pogany v. Chambers, 134 N.Y.S.2d 691; Gallaher v. Chavalas, 48 Cal.App.2d 52; Utah State Farm Bureau Federation v. National Farmers Union Service Corp., 198 F.2d 20; Burrell v. Moran, 38 Ohio Ops. 185, 82 N.E.2d 334; Ward v. League for Justice, 154 Ohio St. 367, 95 N.E.2d 769; Americans for Democratic Action v. Meade, 72 Pa. D. & C. 306; Matson v. Margrotti, 371 Pa. 188; cited by plaintiff in support of his position involve a libel, a defamation in writing, rather than slander as in the instant case.

Additionally, plaintiff cites the four cases arising in Illinois: Spanel v. Pegler (C. A. 7th Ill.), 160 F.2d 619; Cerveny v. Chicago Daily News Co., 139 Ill. 345, 28 N. E. 692; Ogren v. Rockford Star Printing Co., 288 Ill. 405; Dilling v. Illinois Publishing & Printing Co., 340 Ill. App. 303, each of which is an action to recover damages for the publication of an alleged libel, wherein, as we have seen, the rules differ materially from those where the charge is slander.

In an action of slander in Remington v. Bentley, (1949) D. C. N. Y. 88 F. Supp. 166, the extemporaneous designation of a government economist as a Communist by Elizabeth T. Bentley in answer to questions on a television broadcast called “Meet the Press,” was held to be slanderous per se and actionable without special damage on the ground that the statement was particularly disparaging of the plaintiff in Ms occupation as a government economist. The court stated that in accordance with the thinking of the day, officers of the government and the public would distrust the honesty and judgment of an economist in government employment who was known as a Communist, and also that it was natural to presume, apart from government employment, that an economist who was a Communist would adhere to the economic theories of Communism which are repugnant to the theories historically accepted in the United States.

It was held in Krumholz v. Buffer (1949), 195 Misc. 789, 91 N.Y.S.2d 743, that a complaint alleging that the defendant had called the plaintiff a “dirty Communist” was insufficient to charge slander per se without an allegation that the words concerned the plaintiff in his business and tended to injure him in his business, since it could not be said as a matter of law that such words did or did not concern the plaintiff in his business.

And in Gross v. Mallamud (1951), 200 Misc. 5, 108 N.Y.S.2d 822, it was held not slanderous per se to call one a “Communist and a Communist plant.”

And again in Keefe v. O’Brien (1952) 116 N.Y.S.2d 286 it was held not slanderous per se to call one a Communist.

It was held in Pecyk v. Semoncheck (1952) 61 Ohio L. Abs. 465, 105 N.E.2d 61, that a statement by the defendant at a meeting of a union committee that he knew the plaintiff to be a Communist sympathizer and could prove it was not slanderous per se, in the absence of a showing that the plaintiff was injured in his trade or calling by reason of the scandalous statement, the court recognizing that the same language if written would be libelous per se as tending to subject the plaintiff to public hatred, etc. The court expressly stated that it did not mean to hold that there was no recovery in slander for having been called a Communist or a Communist sympathizer, but that in order to recover damages for such a slander it was necessary to allege and prove special damages.

In the initial appellate decision in New York, the First Department in Gurtler v. Union Parts Mfg. Co. (1955), 285 App. Div. 643, 140 N.Y.S.2d 254, held, in line with earlier trial court decisions, that calling the chief engineer of a manufacturing plant a Communist was not slanderous per se. Even though the engineer had previously worked in a defense plant, the court said that the words did not “touch the plaintiff in his profession.”

The principles of the common law as to the classes of spoken words which are slanderous per se, together with their enlargement by our statutes, are the law of this State, and as such binding upon us. The words complained of do not come within such limitations nor does the weight of authority sustain the contention that such words are actionable per se. Hence, in our opinion, the words in the complaint charged to have been uttered by the defendant, Coburn, are not actionable without allegation of special damages.

No special, damage having been averred, and the words set forth not being slanderous per se, the complaint failed to state a cause of action. The trial court properly granted the motions of defendants to dismiss.

Having fully disposed of all points presented by plaintiff in this appeal we are constrained to make the following observation. The defendant, Forest Preserve District of Winnebago county, was organized under the provision of an act to provide for the creation and management of forest preserve districts (1953 Illinois Revised Statutes, Chapter 57%, Section 1, et seq.). As a municipal corporation it has a different status in the suit from that of the other defendant. It is a general rule that a municipal corporation is not civilly liable for damages suffered by individuals in person or property by tortuous acts which are wholly outside the powers conferred upon the municipal corporation by its charter or other legislative enactment. Since a municipal corporation cannot confer upon its officers and agents lawful authority to represent it beyond its corporate powers, the rule of nonliability applies to ultra-vires acts of such officers and agents, whether the acts are directed by the municipal corporation or are done without express direction or corporate sanction, the liability, if any, resting upon the individuáis who perform such acts. And a municipal corporation may make itself liable for an unauthorized act of one of its officers or agents by a subsequent ratification by its governing body only where the act which it attempted to ratify might have been authorized in advance without exceeding the charter or granted powers of the municipal corporation. The alleged statement by defendant, Coburn, refers to the political principles or practices of plaintiff. Though made in the course of his official duty as superintendent it was clearly not within the scope of his employment, and, as to the municipal corporation, was ultra-vires. It is to be noted that in the instant case there is no claim* of authorization or ratification on the part of the Forest Preserve District of Winnebago county and in our opinion that municipal corporation could not authorize or ratify such an ultra-vires act on part of its employee, so if plaintiff had a cause of action against the defendant, Coburn, he has none against Forest Preserve District of Winnebago county.

The judgment of the Circuit Court of Winnebago county is affirmed.

Affirmed.

DOVE, P. J., dissents.

EOVALDI, J., concurs.