text:
    In Matter of Estate of William F. Sternberg, Deceased. Sternberg Dredging Company, Plaintiff-Appellee, v. Estate of William F. Sternberg, Deceased, Defendant-Appellant.
    Gen. No. 10,070.
    Third District.
    May 14, 1956.
    Rehearing denied June 11, 1956.
    Released for publication June 11, 1956.

      Claude M. Swanson, of Paxton, and M. H. Scott, of Piper City, for appellant.
    Lawrence R. Hatch, of Champaign, and Oris Barth, of Urbana, for appellee; Thomas S. McPheeters, Jr., of St. Louis, Missouri, of counsel.
   JUDGE REYNOLDS

delivered the opinion of the court.

On March 1, 1935, after the death of C. H. Stern-berg, Deceased, his heirs entered into an agreement for the operation of a certain farm in Pulaski County, Indiana, jointly owned by the said heirs. These heirs were O. E. Sternberg, H. J. Sternberg, L. E. Stern-berg, Minnie Hilbrant, Emma A. Walther, Jessie Sternberg, and W. F. Sternberg, each having a one-seventh interest in said farm, and the chattel property thereon consisting of livestock and other chattels. By this agreement, the seven heirs agreed that W. F. Sternberg should attend to the active management of the farm, making improvements to the farm and conducting a livestock business, and constituted and appointed the said W. F. Sternberg their true and lawful attorney in fact, and agent, to do and perform the following acts: 1. To demolish certain buildings on farm and erect others, as in his judgment were necessary, together with other improvements. 2. To take charge of the livestock and other personal property and to purchase other livestock as he saw fit, to care for, feed and prepare livestock for market. 3. To buy any and all feed needed to take care of the livestock. 4. To pay taxes on the property, to insure the buildings thereon, and to make such repairs and improvements as he might deem advisable. 5. To arrange for the farming of the property. 6. To sell crops and livestock, upon such terms and for such prices as he might deem proper. 7. To employ such labor and help as he might think proper. 8. To settle, adjust and compromise any debts, claims, demands or matters of dispute in the conduct of the business of the farm. 9. To operate under the name of Carl H. Sternberg Estate, W. F. Sternberg, Agent. 10. To execute note or notes to a bank or banks to be selected by W. F. Sternberg, as such agent. 11. To execute chattel mortgages as such agent. 12. To deposit money of the business in such bank or depository as he might choose, and to issue checks and payments in the transaction of the business. 13. To inventory the personal property owned by the heirs once each year, on or about January 1st. 14. To keep written accounts of receipts and expenditures. 15. To annually, make a written report of such inventories and accounts. 16. To receive as compensation $10 per trip to the farm, and the sum of $5 per day for attending the business of the farm operation, together with necessary expenses. 17. To distribute, when he deemed it advisable, such profits to the heirs, according to their rights, and if he deemed it advisable, demand that the heirs should contribute money for the carrying on of the business, the contribution of each heir to be according to his or her interest. 18. To use his own judgment in the conduct of the business, but if he desired, to consult with O. E. Sternberg.

The agreement provided for sale of the interest of an heir, and for the termination of the agreement. It also provided that the agreement should be construed liberally in favor of the powers granted to said agent, W. F. Sternberg.

On January 27, 1943, W. F. Sternberg as agent for C. H. Sternberg Heirs, executed and delivered to the H. J. Sternberg Dredging Company, a note due two years after date, with interest at 6% in the amount of $7,500. On the same day, January 27, 1943, another note signed as before, by W. F. Sternberg, Agent of C. H. Sternberg Heirs, due two years after date, with interest at 6% in the amount of $2,952.64, to H. J. Sternberg Dredging Company, was executed and delivered. The stock of the Sternberg Dredging Company, a Delaware corporation, was owned, except for two shares, by H. J. Sternberg, one of the C. H. Stern-berg heirs, and one of the signers of the agreement of March 1, 1935. These two notes with accrued interest, are the basis for the claim in this cause.

H. J. Sternberg died January 10th, 1944, and after-wards, on October 21, 1949, the stockholders of the Sternberg Dredging Company, unanimously voted to dissolve.. This dissolution consent was filed in the office of the Secretary of State for Delaware on October 24, 1949. On April 17th, 1950, W. F. Sternberg died. On July 5, 1950, the claimant, Sternberg Dredging Company, filed in the County Court of Ford county, Illinois, claim against the estate of William F. Sternberg, Deceased, in the amount of $16,715.61. The defendant estate filed an answer and numerous defenses, and the pleadings are quite voluminous, but since the matters raised will be considered later in this opinion, it is not necessary to detail them at this time. On February 25,1952, the County Court of Ford county, Illinois entered judgment for the claimant against the Estate of William F. Sternberg, Deceased, in the amount of $17,750.41. This judgment was appealed to the Circuit Court of Ford county, and on December 2, 1952, the Circuit Court held that while the claimant corporation had been at one time authorized to transact business in the State of Illinois, that it had failed to pay its franchise tax to the State of Illinois, and had failed to file annual reports, and that on November 15, 1950, the Secretary of State of the State of Illinois had revoked the authority of the claimant corporation to transact business in this State, and that by reason of such revocation, the claimant corporation could not maintain its action against the defendant estate, and dismissed the suit with costs against the claimant and remanded the claim to the County Court. The claimant corporation appealed this order to the Appellate Court, and this Court, in the case of Sternberg Dredging Co. v. Estate of Sternberg, 351 Ill. App. 514, reversed the judgment of the Circuit Court and remanded the cause to that Court, holding that the Circuit Court erred in entering a final judgment against the claimant corporation, instead of continuing or abating the action until such time as the corporation filed the annual reports and paid the franchise taxes. Afterwards, the claimant corporation paid the franchise taxes and made the annual reports and filed its motion to re-instate the cause, with certificate from the Secretary of State of Illinois, that the claimant corporation had complied with all the provisions of the Business Corporation Act of Illinois. The cause was re-instated, and on May 9th, 1955, the Circuit Court entered its order and judgment allowing the claim in the amount of $20,040.05 and costs of suit against the defendant estate. The Circuit Court held that there was no partnership, that the obligation was joint and several, and could be enforced against any one of the obligors, and that the claimant corporation was not one of the obligors. From that judgment the defendant estate has appealed to this court. Thus this cause has been before the County Court of Ford county one time, before the Circuit Court of Ford county twice, and in this Court twice. Since some of the numerous defenses interposed by the defendant estate were passed upon in the decision of this Court in Sternberg Dredging Co. v. Estate of Sternberg, 351 Ill. App. 514, it will not be necessary to consider them. But in order to properly pass upon the case, it will probably be necessary to review them. Defense No. 1 was cured by amendment. Defenses Nos. 2, 3, 4, 5, 7 and 9 were disposed of by this Court in the case of Sternberg Dredging Co. v. Estate of Sternberg, 351 Ill. App. 514. Defense No. 8, contending that the act of loaning the money by the claimant was ultra vires was also disposed of by this Court in the same case. This leaves only defense No. 6, as amended, and defenses Nos. 8, 10, 11, 12 and 13, for this Court to pass upon. These defenses are interrelated and present these questions: 1. In what capacity did William F. Stern-berg sign the notes? 2. Was there a partnership? 3. Was the claimant corporation, being owned wholly by one of the heirs, namely Herman J. Sternberg, an agent of Herman J. Sternberg, and if so, shall the corporation be treated as if Herman himself was plaintiff herein?

It must be conceded that in signing the notes William F. Sternberg acted in a representative capacity as agent for himself and the other heirs of C. H. Stern-berg. It must be also conceded that by the terms of the agreement dated March 1, 1935, he was authorized to sign the notes in a representative capacity. The defendant admits this by its second defense, when this language appears “That the notes described in said claim were executed by the seven heirs of C. H. Stern-berg, deceased, by William F. Sternberg, also known as W. F. Sternberg, their agent thereunto duly authorized.” This being the case, if the estate of William F. Sternberg, can be held liable, it must be as one of the principals.

The second question “Was there a partnership” presents a very disputed question. The Circuit Court held that it was not a partnership, that no partnership was intended by the agreement dated March 1, 1935, that nowhere in the agreement does the word “partnership” appear, but that the heirs were acting as a group of individuals operating a joint enterprise. The Circuit Court also pointed out in its opinion, that Herman J. Sternberg died January 10, 1944, and that by Section 31, Uniform Partnership Act, Chapter 106%, Ulinois Revised Statutes, the partnership would be dissolved by the death of any partner, yet no effort was made by William F. Sternberg or any other heir to wind up the alleged partnership.

The Uniform Partnership Act, Chapter 106%, Illinois Revised Statutes, Section 6, defines a partnership as “An association of two or more persons to carry on as co-owners a business for profit.”

Section 7, Chapter 106%, Ulinois Revised Statutes sets out rules to determine whether a partnership exists, as follows: — “(4) The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business, but no such inference shall be drawn if such profits were received in payment:

“(a) As a debt by installments or otherwise;

“(b) As wages of an employee or rent to a landlord; “(c) As an annuity to a widow or representative of a deceased partner;

“(d) As interest on a loan, though the amount of payment vary with the profits of the business;

“(e) As the consideration for the sale of the goodwill of a business or other property by installments or otherwise.”

The agreement dated March 1, 1935, after giving to William F. Sternberg certain general authority to transact the making of improvements and farming the land and conducting a livestock business, authorized him to conduct the business in the name of Carl H. Sternberg Estate, W. F. Sternberg, Agent. It also authorized him to execute a note or notes to such bank or banks for money as he might desire to be used in carrying on the business therein authorized. It also provided for the keeping of accounts, the making of reports and the division of profits of the business. Even if there was no general partnership, it would seem that the heirs of C. H. Sternberg, Deceased, were partners in the operation of the farm, and the raising of livestock. Phillips v. Reynolds, 236 Ill. 119; Van Housen v. Copeland, 180 Ill. 74; Parish v. Bainum, 306 Ill. 618, 622; Ditis v. Ahlvin Const. Co., 408 Ill. 416. In the Ditis case, supra, the Court held that the association there was a joint adventure, and in determining what was necessary to constitute a joint adventure or a partnership, the Court said: “We also pointed out in the Parish case that an agreement to share losses is not necessary to constitute one a partner, but that the test is sharing in the profits. Measured by these decisions,, the conclusion is strengthened that the substance of the relationship created between the parties by their transactions was that of joint adventurers.” And the Court in that case also said: “. . . and while it is said that a joint adventure is not regarded as identical with a partnership, the relation of the parties is so similar that their rights and liabilities are usually tested by the rules which govern partnerships. We have further held, in considering such land trading ventures, that the parties engaged in such an enterprise, though no general partnership exists, are partners in the particular transaction. (Parish v. Bainum, 306 Ill. 618.)” In the case of Parish v. Bainum, 306 Ill. 618, on page 623, the Court there said: “ ‘The requisites of a partnership are, that the parties must have joined together to carry on a trade or venture for their common benefit, each contributing property or services and having a community of interests in the profits.’ (Meehan v. Valentine, 145 U. S. 611.)”

In the case of Harmon v. Martin, 395 Ill. 595, this language is used: “It is well settled in this state that where parties agree to engage in one or more particular transactions for the purchase and sale of real estate for profit, this constitutes a partnership as to the particular transaction or transactions. (Parish v. Bainum, 306 Ill. 618; Phillips v. Reynolds, 236 Ill. 119; . . . ).”

In the case of Rizzo v. Rizzo, 3 Ill.2d 291, the Court said: “The requisites of a partnership are that the parties must have joined together to carry on a trade or venture for their common benefit, each contributing property or services, and having a community of interest in the profits. ... It has been held that, as between the parties, the existence of a partnership relation is a question of intention to be gathered from all the facts and circumstances. (Goacher v. Bates, 280 Ill. 373.) Written articles of agreement are not necessary, for a partnership may exist under a verbal agreement, and circumstances may be sufficient to establish such an agreement. (Einsweiler v. Einsweiler, 390 Ill. 286, 291; Haug v. Haug, 193 Ill. 645, 647.) Such factors as the mode in which the parties have dealt with each other; the mode in which each has, with the knowledge of the others, dealt with other people, (Van Buskirk v. Van Buskirk, 148 Ill. 9) and the use of a firm name, (Einsweiler v. Einsweiler, 390 Ill. 286,) have been deemed material in determining the existence of a partnership. The essential test, however, is the sharing of the profits, (Parish v. Bainum, 306 Ill. 618,) but it is not necessary that there be a sharing of the losses in order to constitute a partnership.”

In the case of Einsweiler v. Einsweiler, 390 Ill. 286, that court citing with approval People v. Sholem, 244 Ill. 502, said: “It is well settled in this state that written articles of agreement are not necessary, but that a partnership may exist under a verbal agreement, and circumstances may be sufficient to raise an inference of such an agreement.” A partnership may exist even though the partners’ contributions, capital and services differ in amount and nature. Carter v. Wright, 275 Ill. App. 224. In this case there was a firm name agreed upon by the heirs, namely the “Carl H. Stern-berg Estate, W. F. Sternberg, Agent.” Although the evidence shows that a number of names were used, such as Carl H. Sternberg Estate, Carl H. Sternberg Heirs, and others, yet, by the agreement itself, it was to be known as the Carl H. Sternberg Estate. There was a sharing of profits, and the agreement provided for a contribution for losses. There was a holding out to the public that William F. Sternberg was the agent or managing partner for the Carl H. Sternberg Estate, or the Carl H. Sternberg Heirs.

It does not appear except in defendant’s Exhibit 3 as to just what the money borrowed from the Sternberg Dredging Company was used for, but from Exhibit 3, it appears that the money was placed in the farm account and used in the operation of the business for the benefit of all the heirs. The exhibits also show distribution of profits from the business made to the various heirs. In considering all of the elements that made up the operation of this business, the manner in which it was conducted, the apparent purpose for which the money was borrowed, the apparent use of the money, it would seem to this Court that there can be no question that a partnership in fact, if not in name, was in effect between these seven heirs of Carl H. Sternberg, Deceased. That even though it was not a general partnership, it was a partnership for the particular purposes set forth in the agreement of March 1, 1935. Having held that it was a partnership, the question then arises as to the liability of the estate of William F. Sternberg, Deceased, on these notes. It is true that by the Uniform Partnership Act, the death of a partner terminates the partnership. While the partnership was technically dissolved, the relations of the survivors would not be changed, and if this was an obligation of the partnership at the time the notes were made, the death of Herman J. Sternberg did not change that relationship. Apparently, nothing was done by the surviving partners to wind up the partnership or to have an accounting among themselves. Nevertheless, we do not believe that this would change the status of William F. Sternberg as to liability on these notes. In the case of Parish v. Bainum, supra, where one partner purchased the interest of a partner and the business was continued, the court said this: “While the partnership was technically dissolved the relations of the survivors were not in any way changed.” A number of cases have been cited by the claimant that one partner may sue another partner without resorting to a partnership accounting. Most of these cases were decided prior to the enactment of the Uniform Partnership Act.

Other decisions hold that one partner in a business cannot maintain an action at law against the other upon a demand growing out of the partnership transaction until the accounts are settled and a balance struck. Milligan v. MacKinlay, 209 Ill. 358; Hartzell v. Murray, 224 Ill. 377; Commons v. Snow, 194 Ill. App. 569; Carter v. Wright, 275 Ill. App. 224. The point is not important to this case, unless it is determined that the claimant corporation was in fact Herman J. Sternberg, one of the heirs, and that the money loaned was loaned in fact, by Herman J. Sternberg, and not by the claimant corporation. This will be discussed later in this opinion.

Under the law as it now exists in Illinois, a partner is jointly and severally liable only for wrongful acts or omissions of any partner acting in the ordinary course of the business or for misapplication of property of a third person. Sections 13 and 14, Chapter 206%, Illinois Revised Statutes. All other debts and obligations of the partnership create a joint liability against the partners. There is nothing in this ■record to show that there was any wrongful act or omission on the part of William F. Sternberg acting in the ordinary course of the business of the partnership, and there is nothing to show that he misapplied any property. That being the case, the only liability that could be chargeable to William F. Sternberg, if alive, or to his estate after death, would be a joint liability with the other heirs or partners.

Prior to 1917 the debts of the partnership could be enforced against any one of the partners. But in 1917 this State adopted the Uniform Partnership Act, Chapter 106%, Hlinois Revised Statutes, and that Act changed the liability of a partner. Under certain conditions and for certain acts, a partner could be held severally. All other debts of the partnership could only be enforced against the partners jointly.

This brings us to the third' issue, namely, was the claimant corporation, being owned wholly by one of the heirs, namely Herman J. Sternberg, an agent of Herman J. Sternberg, and if so, shall the corporation be treated as if Herman was plaintiff herein? It is apparent from the record that Herman J. Sternberg was in absolute control of the corporation, so far as voting authority was concerned. It is probable that the owners of the outstanding two shares, John It. Shepley and Fred A. Sheppard were in fact “dummy” owners or holders. However, as the .Circuit Court pointed out, there is nothing in the record to show whose money was advanced for the notes, or that the money advanced was in fact, the money of Herman J. Sternberg. Nothing appears to show the solvency or insolvency of the corporation. By our opinion in Stern-berg Dredging Co. v. Estate of Sternberg, 351 Ill. App. 514, this Court recognized the right of the claimant corporation to sue, provided it paid the franchise taxes due the State of Illinois and made its annual reports. This Court has no authority or right to hold, in the absence of proper proof, that the claimant corporation was not in fact the true obligee of the notes. There is nothing in the record to prove agency for Herman J. Sternberg. In support of its position, the defendant estate cites the case of Dregne v. Five Cent Cab Co., 381 Ill. 594. It is true that that case said: “The legal fiction of distinct corporate existence will be disregarded when necessary to circumvent fraud or where the corporation is so organized and controlled, and its affairs so conducted, as to make it a mere instrumentality of another corporation.” But in the same opinion, the court also said: “A corporation is an entity separate and distinct from its shareholders and, generally, from other' corporations with which it may have relations. Indeed, the fact that the shareholders of two corporations are identical does not, necessarily, mean that the two corporations are to be considered as a single entity.” And the Court in that same case quoting from Marr v. Postal Union Life Ins. Co., 40 Cal.App.2d 673, 105 P.2d 649, said: “Before the courts will disregard the corporate entity of one corporation and treat it as the alter ego of another, even though the latter may own all the stock of the former, it must further appear that there is such a unity of interest and ownership that the individuality of the one corporation and the owner or owners of its stock has .ceased, and further, that the observance of the fiction of separate existence would under the circumstances sanction a fraud or promote injustice.” While the language deals with two corporations the reasoning would apply to a corporation and a principal stockholder. In this case, no fraud has been shown. No unity of interest between the stockholders and the corporation has been proved. On the contrary, so far as the record discloses, the corporation was in fact the loaner and the real payee of the notes. We must therefore conclude, that the Sternberg Dredging Company, was and is the proper plaintiff and that the fact that Herman J. Sternberg was in complete control would make no difference, in the absence of any proof that the ownership tended to sanction a fraud or promote injustice.

This disposes of the contention of the defendant that the claimant corporation must be treated as Herman J. Sternberg and therefore as one of the partners. That being the case, an accounting of the partnership is not a condition precedent to suit.

Summarizing, we hold that William F. Sternberg signed the notes in a representative ■ capacity, namely as managing partner or agent for the partnership business ; that the business was a partnership; that William F. Sternberg was not guilty of any wrongful act of commission or omission, in the conduct of the business nor did he misapply any of the funds of another so as to render himself severally liable; that the obligation was a partnership obligation; that the Estate of William F. Sternberg, Deceased, under the law of the Uniform Partnership Act, was only liable jointly with the other partners; that the Sternberg Dredging Company, a corporation, was a separate entity from Herman J. Sternberg; that the Sternberg Dredging Company need not wait for an accounting of the partnership before bringing suit, and that the death of the partner, Herman J. Sternberg terminated the partnership, but that it did not alter the obligations of the partners, as to acts performed or done before the death of Herman J. Sternberg.

To hold otherwise would be to violate the terms of the Uniform Partnership Act, which is the law governing this matter. To hold otherwise would be to penalize the Estate of William F. Sternberg while permitting the other partners who shared in the money obtained from the claimant corporation to avoid their fair share of payment. It may well be that the heirs of C. H. Sternberg did not intend to create a partnership, but the fact that they intended to, and did share in the profits of the business, by law operated to create a partnership, and it being a partnership, obligations of the partnership should be jointly borne and paid. There is a legal obligation and debt owing tó the claimant corporation, but it is one of all .the partners and not the sole obligation of the Estate of William F. Sternberg, Deceased.

For the reasons above, stated, this cause is reversed and remanded.

Reversed and remanded.


source: Caselaw Access Project

author: JUDGE CARROLL

license: Public Domain

text:
    Freeman A. Dalton, Eleanor M. Dalton, Lon Dean Dalton, a Minor, by Freeman A. Dalton, His Father and Next Friend, and Linda Jean Dalton, a Minor, by Freeman A. Dalton, Her Father and Next Friend, and Linox Welding Supply Company, Plaintiffs-Appellees, v. John C. Alexander, H. R. Alexander, and Service Motor Corporation, Defendants-Appellants.
    Gen. No. 10,061.
    Third District.
    May 14, 1956.
    Rehearing denied June 18, 1956.
    Released for publication June 18, 1956.

      Earl S. Hodges, of Springfield, and McLeod, Donahue & Col-win, of Fond du Lac, "Wisconsin, for defendants-appellants; Duane L. Traynor, of Springfield, of counsel.
    Livingstone, Mueller, Drake and Davlin, of Springfield, and Giachini, Ley and Cross, of Chicago, for plaintiffs-appellees.
   JUDGE CARROLL

delivered the opinion of the court.

This is an action to recover for personal injuries and property damage resulting from an automobile collision which plaintiffs allege was caused by the neglect and wilful and wanton misconduct of the defendant, John C. Alexander.

The accident occurred on April 13, 1953. On April 12, 1955, the complaint was filed and on the same date summons returnable May 16, 1955 was personally served upon John C. Alexander and upon H. R. Alexander and Service Motor Corporation, nonresidents of Illinois by filing copies thereof with the Secretary of State of Illinois. On May 18, 1955 an order of default was entered as to all defendants for failure to appear or answer the complaint. On July 18, 1955, a jury demand having been withdrawn, the court heard the evidence offered on behalf of the plaintiffs and on July 26,1955 judgments for the several plaintiffs were entered as follows: Freeman A. Dalton, $10,150; Eleanor M. Dalton, $2,000; Lon Dean Dalton, a minor, by Freeman A. Dalton, his father and next friend, $3,000; Linda Jean Dalton, a minor, by Freeman A. Dalton, her father and next friend, $500; and Linox Welding Supply Company, an Illinois Corporation, $360.

On July 11,1955 the defendants filed their respective petitions supported by affidavits to vacate the default judgment and order of default or in the alternative to open the default judgment and for leave to answer and defend the cause on its merits. No counter-affidavits were filed.

The petitions came on for hearing on September 6, 1955 and, so far as the record discloses the court heard no evidence and the matter was taken under advisement and continued to September 27, 1955. On September 16, 1955, plaintiffs filed a motion to dismiss defendants’ petitions and also filed therewith a brief of law and argument in support thereof. No disposition was made of the plaintiffs’ motion. On September 27, 1955 the defendants’ petitions were denied and this appeal followed.

The collision occurred on April 13,1953 at 11 o’clock A. M. at the intersection of U. S. Route 66 with Moore-head street, a road leading into Chenoa, Illinois to the East. The weather was fair and the pavement consisting of two lanes, was dry. Plaintiff Freeman A. Dalton was driving a Buick automobile owned by Linox Welding Supply Company, North on Route 66. His wife and two minor children were riding with him. John C. Alexander, accompanied by his wife Evaline was proceeding South on said highway in a Ford car owned by Service Motor Corporation. The complaint alleges that John C. Alexander was driving and operating the Ford automobile for his own pleasure and benefit as agent or servant of H. B. Alexander and Service Motor Corporation, or in the alternative, Service Motor Corporation was the owner of said Ford automobile which H. B. Alexander and Service Motor Corporation by their, his, or its agent or servant, John C. Alexander, drove.

The plaintiff’s version of the actual occurrence as it appears from the testimony of Freeman A. Dalton is that he approached the Moorehead street intersection at a speed of approximately 45 or 50 miles per hour; that there was no traffic preceding him; that the Ford car driven by John C. Alexander was coming toward him; that about the time he was 20 feet from the intersection, Alexander started turning into the intersection; that Alexander was then about 10 feet from the intersection; that plaintiff was unable to stop; that he tried to miss defendant’s car by swerving to the left; that plaintiff’s car went into a field or ditch.

The affidavit of John C. Alexander filed in support of his verified motion recites in substance that the Ford automobile in which he and his wife were riding at the time of the collision was loaned to him by Service Motor Corporation for his personal use and pleasure; that it was then being driven for the convenience of he and his wife and was not being used for or on behalf of any other person; that as he approached the intersection of Moorehead street with Boute 66, he desired to make a left-hand turn; that he saw the Dalton Buick car approaching at a distance of 600 to 700 feet to the South; that he turned on his directional light indicating a left turn; that he considered he had ample time to make the turn safely; that he did turn and reached the point where his automobile was entirely off the paved portion of the highway; that the Buick automobile when 100 feet from the intersection, left the pavement to its right and continued along the shoulder on the East side of the paved portion of the highway and struck with its right rear against the right rear of the Ford; that the Buick continued across Moorehead street and came to a stop in a field; that when it entered the intersection the Buick was travelling 60 to 70 miles per hour and was skidding along the East shoulder of Route 66; that on the day of the accident he telephoned his son, H. R. Alexander at Fond du Lac, Wisconsin and told him of the occurrence; that on April 13, 1955 he and his wife were preparing to go to the home of a daughter in State Line, Indiana who was seriously ill and about whose condition he was worried and nervous; that he did not understand the meaning of the summons served upon him and had never been involved in any court proceedings; that he talked with the clerk of the circuit court about the matter and told him of his anxiety about his daughter’s condition; that he could only recall that the clerk said it was probably someone wanting to get some easy money; that on April 13, 1955 he telephoned the Lumbermen’s Mutual Casualty Insurance Company at Peoria and talked with a man whose name he did not know; that he told this man that he had received notice of suit; that he was told by the man with whom he talked that there was nothing he had to do; that the Insurance Company office had a record of the matter and would take care of it and that he had no cause to worry; that he thereafter assumed the Insurance Company knew of the suit and further assumed that H. R. Alexander, his son, had advised the Company of the suit; that he heard nothing about the matter until July 27, 1955 when he read an article in a Springfield newspaper to the effect that a judgment had been taken against him; that prior to reading the newspaper article at no time did he know that the cause had not been answered or that a judgment was to be taken against him; and that he retained no one to represent him as he believed the Insurance Company would look after his interests.

The affidavit of H. B. Alexander states that he is a son of J ohn C. Alexander and resides at Fond dn Lac, Wisconsin; that his father is 72 years of age and lives in Springfield, Illinois; that the Ford automobile which John C. Alexander was driving on April 13, 1953 was the property of Service Motor Corporation of Fond du Lac, Wisconsin; that said automobile was loaned to John C. Alexander and Evaline Alexander for their personal use; that on or about April 13, 1953, John C. Alexander informed him by telephone that the said automobile had been involved in an accident near Chenoa, Illinois on U. S. Boute 66; that thereupon he notified the Dana Insurance Agency of Fond du Lac, Wisconsin of the accident; that said Agency was handling the insurance coverage on the Ford automobile involved in the accident; that Edward W. Dana, representing the Agency prepared a notice of the accident and advised affiant that the same would be transmitted to Lumbermen’s Mutual Casualty Insurance Company; that nothing came to his attention relative to the claim until April 8,1955 when he received a letter from John C. Alexander in which the father advised that he had received demands and calls from one Sylvester Carter, an attorney in Springfield, Illinois; that affiant wrote Carter suggesting that Lumbermen’s Mutual Casualty Insurance Company at Peoria be contacted; that affiant then heard nothing further concerning the matter until April 16,1955 when he received a copy of the summons by mail; that upon receipt of said summons affiant called Edward W. Dana by telephone and informed him of the receipt of the summons; that Dana stated the matter had been reported to the Insurance Company and the same would be given proper attention; that affiant also talked with his personal attorney who informed him there was nothing he need do so long as he had referred the matter to his Insurance Company and had the assurance of the Company that it would look after the matter; that he heard nothing further concerning the claim until July 29, 1955 when he received a letter from his father notifying him of the judgment; that he was then unable to locate Edward W. Dana but did call the Insurance Company office at Peoria and was informed that the Company had no knowledge of the judgment.

The affidavits of R J. Hammond, claims adjuster and claims supervisor for the Insurance Company and Howard A. Ideson who was a claims supervisor for the Company were also filed in support of the motions. The substance of the recitals in these affidavits are that the Peoria office of the Company received notice of the accident on April 17,1953 from its Oshkosh, Wisconsin claims office; that on May 4, 1953 the claim was assigned to John T. Burke, a company adjuster; that on June 1, 1953 the Chicago office of the Company received a letter from a law firm representing plaintiffs addressed to John C. Alexander at Springfield; that this letter suggested an attempt to settle plaintiffs’ claims without court action; that on December 18,1953 the claim was reassigned to Hammond; that during the period from December 18, 1953 to April 4, 1955 there were numerous contacts between Hammond and Brennan then representing the plaintiffs in an effort to effect a settlement of the claim; that although requested to do so several times, plaintiffs failed to furnish the adjuster with a statement of the special damages claimed; that the amount of the doctor bills for the Dalton family was $169.50 with $125 expended by them for X-rays; that Freeman A. Dalton claimed to have been totally disabled for two and one-half weeks and partially disabled for an additional three weeks but gave no estimate as to his loss of earnings; that Brennan asked $2000 in settlement of the case, which demand was later reduced to $1500; that Brennan said he thought he could get his clients to take $1000; that the last negotiations concerning a settlement took place on April 4, 1955 at which time the adjuster suggested to Brennan that a figure of $750 would be considered by the Company; that Brennan told Hammond that the offer was not acceptable and that he would refer the matter for suit to some attorney in Springfield and that at that time Hammond was given the impression by Brennan that no steps had been taken towards the filing of a suit; that on April 13, 1955 Ideson received a call from John C. Alexander and concluded that his call related to a demand made on him by the attorney for plaintiffs and that no suit had been filed.

An affidavit by Kenneth McLeod, an attorney, recites that H. R Alexander sent him a copy of the summons on April 20, 1955; that affiant called the Dana Insurance Agency and inquired whether Lumbermen’s Mutual Casualty Insurance Company had arranged to defend the action; that he was informed by the Agency that such arrangements had been made; that affiant then wrote H. R. Alexander to the effect that there was nothing further for him to do since the matter had been referred to the insurance carrier.

Summarized, the recitals of the affidavits show that H. R. Alexander notified the insurance agent at Fond du Lac, Wisconsin of the filing of the suit; that the agent assured H. R. Alexander and his attorney that Lumbermen’s Mutual Casualty Insurance Company would look after the defense of the action; that the attorney for H. R. Alexander after contacting the insurance agent advised him there was nothing further for him to do concerning the matter since the same had been referred to the insurance carrier; that John C. Alexander on April 13, 1955, notified the Peoria office of the Insurance Company that he had received notice of the suit; and that the company adjuster did not understand the telephone call of John C. Alexander referred to a pending suit but was under the impression that the notice referred to a demand for settlement made by an attorney.

The Civil Practice Act provides that the court may in its discretion after final judgment set it aside within 30 days upon good cause shown. Chap. 110, Par. 174(7), Ill. Revised Statutes, 1953. The motions in this case were filed within such 30-day period.

In considering the propriety of an order denying a motion to set aside a default, certain general rules must be accorded recognition. As to whether or not such a motion should be allowed rests in the sound • legal discretion of the court to which it is addressed depending upon the facts presented. People ex rel. Elliott v. Benefiel, 405 Ill. 500; Village of LaCrange Park v. Hess, 332 Ill. 236. It is only where there has been an abuse of discretion that a reviewing court will interfere. Busser v. Noble, 8 Ill.App.2d 268. Such a motion must show that the party making the same acted with due diligence to protect his rights and that he has a meritorious defense. Nitsche v. City of Chicago, 280 Ill. 268.

In this State, courts have been liberal in setting aside defaults at the term at which they were entered. That such practice has generally prevailed has been acknowledged in many cases and in City of Moline v. Chicago, B. & Q. R. Co., 262 Ill. 52, the Court said:

“Under the long and well settled practice in this state the courts have been liberal in setting aside defaults at the term at which they were entered when it appears that justice will be promoted thereby. When it appears by the affidavit filed in support of the motion that the party has a defense to the merits, either to the whole or a material part of the cause of action, it has been usual to set aside the default if a reasonable excuse is shown for not having made the defense.”

The result obtained from the application of these rules depends upon the facts to which they are applied.

The plaintiffs filed no counter-affidavits and accordingly the statements of fact in defendants’ affidavits must be taken as true. Lane v. Bohlig, 349 Ill. App. 487.

In view of the allegations of fact appearing in the affidavits, we think the requirement that the existence of a meritorious defense must be shown has been fully met by the defendants.

The defendants contend that the judgments against H. R. Alexander and Service Motor Corporation should not have been permitted to stand because the Trial Court lacked jurisdiction to enter the same. Service upon these particular defendants was obtained pursuant to Sec. 23, Chap. 95%, Illinois Revised Statutes 1953, which reads in part as follows:

“The use and operation by any person of a motor vehicle over the highways of the State of Illinois, shall be deemed an appointment by such person of the Secretary of State, to be his true and lawful attorney upon whom may be served all legal process in any action or proceeding against him, growing out of such use or resulting in damage or loss to person or property,

The fact that plaintiffs complied with this provision of the statute is not in dispute. However, defendants’ affidavits recite that at the time of the accident John C. Alexander was not the servant, agent or employee of H. R. Alexander or Service Motor Corporation but was then driving an automobile loaned to him by said H. R. Alexander and Service Motor Corporation for his personal use and pleasure. In testing the sufficiency of the motion, these affidavits must be taken to be true. When so regarded these facts make a prima facie showing that no agency relationship existed between John C. Alexander and the owners of the car which he was driving. If it be true as defendants claim that the use and operation of the automobile in question was by John C. Alexander as bailee then the so-called “long arm” statute does not apply to these nonresident defendants. Jones v. Pebler, 371 Ill. 309.

Plaintiffs answer this contention of defendants by saying that since it is deemed that plaintiffs complied with the statute in question in obtaining service upon the nonresident defendants, the jurisdiction of the court to enter judgment against such defendants cannot be attacked by a motion such as defendants have made in this case. Admittedly, if the facts establish that the nonresident defendants are not persons amenable to process under the statute, then no service was had upon them and the judgments as to said defendants are void.

It follows, therefore, that the primary question before this court so far as the judgments against the nonresidents are concerned is their right to relief from such judgments by a motion made within 30 days after the entry of the judgments.

In Ellman v. De Uniter, 412 Ill. 285, where the Supreme Court had under consideration a proceeding brought under Section 72 of the Civil Practice Act [Ill. Rev. Stats. 1953, Ch. 110, § 196] to set aside judgments entered more than 30 days prior to the filing of the petition to vacate such judgments, it was held that the application of equitable principles, when occasion demands, was permissible in determining whether the relief sought should be granted. Speaking with reference to the subject of the scope of the function of such a motion, the Court said:

“While our present Civil Practice Act has not effected a complete amalgamation of the practice and procedure in common-law and suits in equity in this jurisdiction, it is our opinion that there has been a fusion sufficient to enable a court of law, when the occasion demands it, to apply equitable principles in administering the summary relief available under the motion which has been substituted for writ of error coram nobis. Stated differently, it is our belief that the motion may, under our present practice, be addressed to the equitable powers of the court, when the exercise of such power is necessary to prevent injustice.”

In Lichter v. Scher, 4 HL.App.2d 37, where one of the defendants sought to have a judgment set aside on the ground that no service of summons had been made upon it, the Appellate Court applying the principle announced in the Ellman case, held that a motion supported by affidavits under Section 72 of the Practice Act averring as it did that the defendants had not been served was addressed to the equitable powers of the court which would enable it to grant relief against a void judgment.

Under varying factual situations, we find similar holdings in Schnable v. Tuma, 351 Ill. App. 486; Admiral Corp. v. Newell, 348 Ill. App. 180; Lane v. Bohlig, supra.

In the instant case, the defendants seek the same relief which the court in the Lichter case held might be granted on a motion made under Section 72 of the Practice Act. The only distinction between the two cases appears to be the fact that defendants filed their motion and sought to have the judgments vacated within 30 days after their entry. We have discovered no case nor has any been called to our attention in which it has been held that a court may not apply equitable principles in passing upon a motion to vacate a judgment brought under Section 50 [Ill. Rev. Stats. 1953, ch. 110, § 174] of the Practice Act. The plaintiffs argue that since the ruling in the Ellman ease was made in a proceeding brought under Section 72 of the Civil Practice Act, it is not applicable in cases where the motion is filed within 30 days and while the cause is still rightfully before the Trial Court. Such contention is not supported by any authority. There would appear to be no justification for holding that a court is without power to apply equitable principles in passing upon a motion to vacate a judgment simply because the defendants, in the exercise of diligence filed such motion within 30 days after the judgment was entered.

Since the averment that John G. Alexander was not the agent of the nonresident defendants must be taken as true, it follows that the Trial Court should have allowed the motions as to the nonresident defendants and permitted them to defend.

This leaves for consideration the question whether the Trial Court erred in denying the motion of John C. Alexander. As previously indicated herein, we believe this motion shows that he has a meritorious defense to the action. As to whether his motion should have been denied because of its failure to show that he was not guilty of inexcusable neglect depends entirely upon the facts appearing in the affidavits supporting such motion, which we are required to accept as being true. Both terms “excusable neglect” and “inexcusable neglect” have no fixed legal meaning, the question being one of fact depending upon the circumstances of each case. The question here as it is in every case where it is necessary to determine whether or not a person was negligent is whether such person was reasonably justified under the circumstances in acting as he did. Where the neglect of a person can be charged to a reasonable assumption that no action on his part is required, such failure to act is not inexcusable.

There appears to be no hard-and-fast rule by which a court may be guided in cases which require determination as to whether a person is, by his conduct, guilty of inexcusable neglect. As has been observed by reviewing courts on many occasions, determination must depend in each case upon the facts there presented. However, we think the reasoning of the court in the recent case of Busser v. Noble, supra, furnishes a guide which may be safely followed in deciding whether the motion of John C. Alexander is sufficient to establish that he was not guilty of the type of neglect which bars him from the relief sought therein. In the Busser case, the defendant upon being served with summons delivered same to the office of the agency through which he had purchased an insurance policy; that he was advised by the agency that his interests would be protected; that he did not hear from the insurance company; that due to an error or mistake in the insurer’s office the summons was not called to the attention of the claim agent resulting in a default judgment being taken against the defendant. Within 30 days thereafter, the defendant filed his motion supported by affidavits to set aside the judgments and for leave to plead. The trial court denied the motion. On appeal, the Appellate Court reversed the judgment. In so doing, the court made this observation:

“We recognize that where a party is served with process and fails to act from negligence or without any reasonable excuse, he has no right to insist that he be permitted to defend. In the instant case defendant paid attention to this summons. He did not treat it with indifference. He did just what the ordinary individual would do. He delivered it to the agent of his insurance carrier. He thereafter made repeated inquiries concerning it and was assured his interests would be taken care of. His conduct was not inexcusable. The power to set aside a default and permit a defendant to have his day in court is based upon substantial principles of right and wrong and is to be exercised for the prevention of injury and the furtherance of justice. (31 Am. Jur. 279). The question in the instant case is whether defendant was reasonably justified under the circumstances in relying upon the promise or statements of his insurance agent. We think he was. His neglect to attend to the matter himself was not inexcusable.”

We consider the above language applicable to the instant case. It is true that the defendant did not make repeated inquiries as to whether the Insurance Company had arranged for a defense of the action against him, however, he did contact the office of the Insurance Company and not an insurance broker on the day the summons was served upon him. He did not ignore the summons. He received assurance that the Company would take care of the matter. He knew that the automobile was insured with Lumbermen’s Mutual Casualty Insurance Company and it would be reasonable for him to assume that the Insurance Company had been advised of the suit by H. R. Alexander, since the Company told him on April 13 that they had a record of the matter. We think that the conduct of John C. Alexander did not differ from that of any ordinary person under like circumstances. We do not think the unexplained failure of the Insurance Company to take care of the matter as they were required to do should be charged against John C. Alexander as inexcusable neglect. At least there would appear to be a reasonable doubt as to whether this defendant was guilty of inexcusable neglect. In such a case and where as here there has been no trial on the merits the court’s discretion is usually exercised in favor of granting the motion and permitting the defendant to answer. 31 Am. Juris., Par. 717.

Considering all of the circumstances as revealed by defendants’ affidavits and bearing in mind defaults are not encouraged and that the provisions of the Civil Practice Act should be construed liberally, we have reached the conclusion that in the exercise of sound discretion the Trial Court should have allowed the motion of the defendant John C. Alexander.

The judgments of the Circuit Court of Sangamon county are reversed and the cause is remanded with directions to vacate the default order and permit the defendants to answer.

Reversed and remanded with directions.


author: JUSTICE CROW

text:
    Beulah Sutton Dillon, and Joan Marie Dillon, Plaintiffs-Appellees, v. Maurice E. Nathan, d/b/a Arrow Liquor Store; Edward C. Dorr, and William Gernis, d/b/a Second Avenue Tap; Joseph Diverdi, and Sam Saladino, d/b/a 624 Tap; Rockford Mutual Benefit Association; and Keene and Davis, Inc., Defendants-Appellees. Robert Eager, d/b/a Eastman Hotel, and Auto-Owners (Mutual) Insurance Company, Intervening Petitioners and Subrogation and Lien Claimants-Appellants, v. Beulah Sutton Dillon and Joan Marie Dillon, and Maurice E. Nathan, d/b/a Arrow Liquor Store; Edward C. Dorr, and William Gernis, d/b/a Second Avenue Tap; Joseph Diverdi, and Sam Saladino, d/b/a 624 Tap; Rockford Mutual Benefit Association; and Keene and Davis, Inc., Plaintiffs and Defendants-Appellees.
    Gen. No. 10,909.
    Second District.
    May 17, 1956.
    Rehearing denied June 20, 1956.
    Released for publication June 21, 1956.

      Knight & Knight, of Rockford, for intervening petitioners and subrogation and lien claimants-appellants; William D. Knight, Jr., of Rockford, of counsel.
    Foltz, Haye & Keegan, and Arndt & Wallace, all of Rockford, for plaintiffs-appellees.
   JUSTICE CROW

delivered the opinion of the court.

The plaintiffs, Beulah Sutton Dillon, individually, and Joan Marie Dillon, individually, brought suit October 22,1954 under the Dram Shop Act (Ch. 43, Ill. Rev. Stats., 1953, par. 135) against certain defendant tavern operators for loss of means of support as a result of the fatal shooting on July 17, 1954 of James Dillon, husband and father, respectively, of the two plaintiffs, by one Carl Swenson, an intoxicated person, who allegedly was sold or given alcoholic liquor by the defendants, thereby rendering him intoxicated. All of the defendants answered the complaint. For the present purposes, the essential facts, as to which there seems to be no controversy, may be considered to be as follows: At the time of James Dillon’s death, he was employed as a night clerk at the Eastman Hotel, Rockford, which was owned and operated by Robert Eager. Robert Eager carried workmen’s compensation insurance covering his employees in the operation of the hotel with Auto Owners (Mutual) Insurance Company. James Dillon, by reason of his employment and the circumstances of his injury was covered by the Workmen’s Compensation Act. His death arose out of and in the course of his employment by a pistol wound inflicted by Carl Swenson, the intoxicated person. Carl Swenson was not an employee of the Eastman Hotel or Auto Owners (Mutual) Insurance Company. The death of James Dillon was not proximately caused by any negligence of the employer, Robert Eager, or of any of his employees.

Prior to the filing of the Dram Shop suit, Robert Eager, d/b/a Eastman Hotel, entered into a lump sum settlement contract, through his foregoing workman’s compensation insurer, providing for a lump sum settlement with Beulah Dillon only, the widow of James Dillon, which contract was approved by the Industrial Commission. Joan Dillon, the daughter of James Dillon, and one of the plaintiffs in the later Dram Shop suit, was not listed in the compensation case as a dependent of James Dillon, her father, or mentioned in the workmen’s compensation lump sum settlement contract. By that settlement Robert Eager, d/b/a Eastman Hotel, or his compensation insurance carrier, paid Beulah Dillon only, the widow, $6375 workmen’s com.r pensation on September 3, 1954. It does not appear that there are any pending administration proceedings on the estate of the deceased employee, and, in any event, it does not appear that Beulah Dillon (or Joan Dillon) is the personal representative thereof.

Thereafter, following the institution of the Dram Shop suit, Robert Eager, d/b/a Eastman Hotel, and Auto Owners (Mutual) Insurance Company, sought leave to intervene as parties plaintiff in the Dram Shop suit, claiming a right to be subrogated to the extent of the $6375 workmen’s compensation payment, and sought to impress a lien to that extent upon any judgment entered in that suit in favor of the plaintiffs. The appellants’ procedure took the form of a Motion on April 18,1955 to join in the suit and that all orders be made for their protection so that no release or settlement in the action or satisfaction of judgment be valid without their consent, and a Notice of Lien and Subrogation Interest of April 19, 1955 claiming a lien on any amounts recovered by the plaintiffs to the extent of the workmen’s compensation paid. Subsequently, in the Dram Shop suit a series of judgments, agreed upon by the plaintiffs and defendants, were entered June 20, 1955 totalling $3,000 in favor of the plaintiff Beulah Dillon, and $3,000 in favor of the plaintiff Joan Dillon. The Court thereafter, on August 19, 1955, denied the Motion to Intervene of Robert Eager, d/b/a Eastman Hotel and Auto Owners (Mutual) Insurance Company, found that they had no right of subrogation, no right to a lien on the judgments in favor of the plaintiffs, and no right to intervene, and denied the motion to impress a lien on the judgments in favor of the plaintiffs. It is from this order that Robert Eager, d/b/a Eastman Hotel, and Auto Owners (Mutual) Insurance Company appeal. A subsequent order directed the Clerk to hold the money meanwhile paid on the judgments, pending the present appeal. The appellants here ask that the order of August 19, 1955, be reversed, their motion to intervene be granted, that they be found to have a right of subrogation and lien interest in the judgments of June 20,1955, and that the Clerk be directed to pay the $6,000 to the appellants.

The appellants, Robert Eager, d/b/a Eastman Hotel and Auto Owners (Mutual) Insurance Company, the employer and his workmen’s compensation insurer, claim the right to intervene in the Dram Shop suit of the widow and child of the employee, to be subrogated, and to have a lien on the judgments therein in favor of the plaintiffs by reason of the provisions of Ch. 48, Ill. Rev. Stats., 1953, par. 138.5.

Ch. 48, Ill. Rev. Stats., 1953, par. 138.5, being Section 5 of the Workmen’s Compensation Act of 1951, as amended in 1953, provides, so far as material:

“Sec. 5. (a) . . .

“However, in any action now pending or hereafter begun to enforce a common law or statutory right to recover damages for negligently causing the injury or death of any employee it shall not be necessary to allege in the complaint that either the employee or the employer or both were not governed by the provisions of this Act or of any similar Act in force in this or any other State.

“(b) Where the injury or death for which compensation is payable under this Act was not proximately caused by the negligence of the employer or his employees and was caused under circumstances creating a legal liability for damages on the part of some person other than the employer to pay damages, then legal proceedings may be taken against such other person to recover damages notwithstanding such employer’s payment of or liability to pay compensation under this Act. In such case, however, if the action against such other person is brought by the injured employee or his personal representative and judgment is obtained and paid, or settlement is made with such other person, either with or without suit, then from the amount received by such employee or personal representative there shall be paid to the employer the amount of compensation paid or to be paid by him to such employee or personal representative including amounts paid or to be paid pursuant to the provisons of paragraph (a) of Secton 8 of this Act.

“If the injured employee or his personal representative shall agree to receive compensation from the employer or accept from the employer any payment on account of such compensation, or to institute proceedings to recover the same, the said employer may have or claim a lien upon any award, judgment or fund out of which such employee might be compensated from such third party.

“In such actions brought by the employee or his personal representative, he shall forthwith notify his employer by personal service or registered mail, of such fact and of the name of the court in which such suit is brought, filing proof thereof in such action. The employer may, at any time thereafter join in said action upon his motion so that all orders of court after hearing and judgment shall be made for his protection. No release or settlement of claim for damages by reason of such injury or death, and no satisfaction of judgment in such proceedings, shall be valid without the written consent of both employer and employee or his personal representative, except in the case of the employers, such consent shall not be required where said employer has been fully indemnified or protected by Court Order.

“In the event the said employee or his personal representative shall fail to institute a proceeding against such third person at any time prior to 3 months before said action would be barred at law said employer may in his own name, or in the name of the employee, or Ms personal representative, commence a proceeding against such other person for the recovery of damages on account of such injury or death to the employee, and out of any amount recovered the employer shall pay over to the injured employee or his personal representative all sums collected from such other person by judgment or otherwise in excess of the amount of such compensation paid or to be paid under this Act, including amounts paid or to be paid pursuant to the provisions of paragraph (a) of Section 8 of the Act, and costs, attorney’s fees and reasonable expenses as may be incurred by such employer in making such collection or in enforcing such liability.”

Referring particularly to the provisions of subparagraph (b) of that section, the present Dram Shop suit of the widow and cMld of the employee, in which the employer and his workmen’s compensation insurer seeks to intervene, to be subrogated, and to impress a lien on the plaintiffs’ judgments is not an action “brought by the injured employee or his personal representative” in which a judgment has been obtained and paid or settlement made, within the language thereof. No amount has been or will be “received by such employee or personal representative” in this suit, within the language thereof, from which could be paid to the employer the amount of compensation paid by him. The “injured employee or his personal representative” have not here agreed to receive compensation from the employer or accepted from the employer any payment on account thereof or instituted proceedings to recover the same, and there is no “award, judgment or fund out of which such employee might be compensated from such third party” upon which the employer can possibly “have or claim a lien,” within the language thereof. This not being an action “brought by the employee or his personal representative,” the plaintiffs are not thereby required to notify the employer thereof; the employer is not entitled to join therein upon his motion; and the written consent of the employer is not necessary to a valid release or settlement of claim or satisfaction of judgment herein, the claim or claims of the plaintiffs herein not being a “claim for damages by reason of such injury or death” as referred to in the statute, and this present suit not coming under the terminology “such proceedings” as used in the statute.

The phraseology “personal representative” as used in that subparagraph (b) with respect to suits against third parties, amounts received therein, and workmen’s compensation payments received, which the appellants argue means and includes a widow or child of a deceased employee, has, we believe, instead, its ordinary, commonly accepted meaning and connotation, and means simply the administrator, or executor, or party in like official capacity, of a deceased employee, or the conservator or guardian of an incompetent or minor employee, there being nothing in the context or surrounding circumstances to indicate a contrary intention. See: Johnson v. Van Epps (1884) 110 Ill. 551. Elsewhere in the Workmen’s Compensation Act the terminology “personal representative” or “legal representative” is used in various places in connection with and as clearly distinct from widow, children, beneficiaries, heirs, or next of kin, and as clearly meaning the official representative of a deceased or incompetent or minor employee: Ch. 48, Ill. Bev. Stats., 1953, pars. 138.1 (b) 1, 138.6 (b), 138.7 (i), 138.9, 138.19 (j), 138.23. There is no reason to believe “personal representative” as used in par. 138.5 means anything different from what it means elsewhere in the Act or anything other than, as it usually does, the administrator, executor, or party in like official capacity, of a deceased employee, or the conservator or guardian of an incompetent or minor employee. The appellants have referred us to no authority, and we know of none, to the effect that that phraseology here has some meaning other than its usual, ordinary meaning.

The purpose and object of this par. 138.5 of the Workmen’s Compensation Act, so far as now material, is made particularly clear by the opening sentence of subparagraph (b) which reads: “Where the injury or death for which compensation is payable under this Act was not proximately caused by the negligence of the employer or his employees and was caused under circumstances creating a legal liability for damages on the part of some person other than the employer to pay damages, then legal proceedings may be taken against such other person to recover damages notwithstanding such employer’s payment of or liability to pay compensation under this Act.”, and by the second paragraph of the preceding subparagraph (a) which reads: “However, in any action now pending or hereafter begun to enforce a common law or statutory right to recover damages for negligently causing the injury or death of any employee it shall not be necessary to allege in the complaint that either the employee or the employer or both were not governed by the provisions of this Act or of any similar Act in force in this or any other State.”, and by the last paragraph of subparagraph (b) which reads, in part, “In the event the said employee or his personal representative shall fail to institute a proceeding against such third person at any time prior to 3 months before said action would be barred at law said employer may in his own name or in the name of the employee, or his personal representative, commence a proceeding against such other person for the recovery of damages on account of such injury or death to the employee, . . The meaning, purpose, object, and proper interpretation of paragraph 138.5, must be derived from the whole paragraph, in the light of its history and the prior judicial construction of analogous portions of the Workmen’s Compensation Act formerly in effect, and not just from the phraseology “was caused under circumstances creating a legal liability for damages on the part of some person other than the employer to pay damages” in subparagraph (b), as the appellants seek to do.

Paragraph 138.5, so far as now material, was intended to provide for the case where' the injury or death of an employee for which workmen’s compensation is, in any event, payable by the employer was not proximately caused by the negligence of the employer or his employees, but was caused by the negligence of some third party creating a legal liability for damages on the part of that third party, for which an action would lie either by the employee or his personal representative to enforce a common-law or statutory right, under the wrongful death statute, to recover damages for so negligently causing the injury or death of the employee, and to permit legal proceedings to be taken against such third party to recover such damages for such injury or death, notwithstanding the employer’s payment of or liability to pay workmen’s compensation, and, further, to permit in those cases a method of indemnification of or repayment to the employer out of any such recovery of the compensation he had paid or become liable for, with concomitant rights in the employer in those cases to a lien on any award, judgment, or fund, and to join in that kind of action, to consent or not consent to releases or settlements of that kind of claim, and to himself commence that kind of proceeding if, under certain circumstances, it was not otherwise instituted. A third party’s liability in a case under the Dram Shop Act does not rest on any theory of negligence at all.

So understood as to its purposes and objects, the remaining provisions of par. 138.5, and particularly of subparagraph (b) thereof, are logical, cohesive, comparatively simple, and relatively easy to apply in the types of cases to which it was intended to be applied, namely, suits either at common law or under the wrongful death statute by the employee or his personal representative for damages on account of his injuries or death negligently caused by the third party, and the indemnification of or repayment to or recoupment by the nonnegligent employer therein of the compensation he’d paid or become liable for. Those provisions, on the other hand, are anomalous, incongruous, inapposite, and inappropriate when attempted to be applied to a case of the type of the case at bar.

Subparagraph (b) of par. 138.5 is substantially similar to a part of Section 29 of the former Workmen’s Compensation Act (Ch. 48, Ill. Rev. Stats., 1949, par. 166), formerly in effect, in substance, with some amendments, since 1913. The judicial construction, interpretation and observations in cases arising under Section 29 of the former Act are equally applicable and. apposite to the consideration of the corresponding provisions of subparagraph (b) of par. 138.5: Angerstein, Ill. Work. Comp., Vol. 2, pp. 45-46, 70. Subparagraph (b) of par. 138.5 relates to the rights of the employee and the employer in cases where the employee is injured in the course of his employment solely by the negligent act of a third party: Angerstein, supra, Vol. 2, p. 28. The legislative objective, as judicially construed in cases arising under Section 29 of the former Act, was to afford a remedy for reimbursement of a nonnegligent employer who has been compelled to pay compensation to an employee or his dependent as a direct result of the negligence of a third party: Angerstein, supra, Vol. 2, pp. 46, 70, 71. It is essential in order that there be an action against the third party that there be a legal liability for damages; the complaint must state a good common-law cause of action and the proof must establish a good common-law or statutory right of recovery of damages for negligence or wrongful death; the negligence of the third party must be the proximate cause of the injury or death: Angerstein, supra, Vol. 2, pp. 57, 58, 59, 81.

Under the former Section 29, the predecessor of the present subparagraph (b) of par. 138.5, the common-law right of action for the injury of an employee against the third party whose neglect caused the injury is preserved for the indemnification of the employer for workmen’s compensation paid or allowed where the injury arose out of and in the course of the employment, and for the benefit of the employee: Gones v. Fisher (1919) 286 Ill. 606. The purpose of Section 29 was to require the indemnification of the employer who has not been negligent, out of the recovery against the third party whose negligence caused the injury; wherever an action lay against the third party an ordinary action on the case for negligence was the proper form of action, — the action was merely a common-law action for negligent injury: O’Brien v. Chicago City Ry. Co. (1922) 305 Ill. 244; Keeran v. Peoria, B. & C. Traction Co. (1917) 277 Ill. 413; Melohn v. Ganley (1951) 344 Ill. App. 316. The section provided for an action against the third party negligently causing the injury or death of the employee, — the cause of action was not a new cause of action created by Section 29 but was the employee’s or his personal representative’s cause of action existing independently thereof: Schlitz Brewing Co., Joseph v. Chicago Rys. Co. (1923) 307 Ill. 322. It was the intention thereof to subrogate the employer to the rights of the employee or his personal representative in cases where workmen’s compensation had been paid but the injury or death was caused by the negligence of some third person: Baker & Conrad, Inc. v. Chicago Heights Const. Co. (1936) 364 Ill. 386. Its purpose was to require the indemnification of the non-negligent employer who is without fault out of the money recovered from a negligent third person who caused the injury or death of the employee: Huntoon v. Pritchard (1939) 371 Ill. 36; F. K. Ketler Co. v. Industrial Commission (1946) 392 Ill. 564. The section dealt with negligence actions against third persons by employees or employers: Grasse v. Dealer’s Transport Co. (1952) 412 Ill. 179; Geneva Const. Co. v. Martin Transfer & Storage Co. (1954) 4 Ill.2d 273.

The appellants have referred us to no case, and we know of none, and Angerstein, supra, refers to none where either Section 29 of the former Act, or par. 138.5, of the present Act, have been held applicable to and applied to a cause of action, action, suit, or proceeding against a third party under the Dram Shop Act, .and the attempted indemnification or recoupment thereby of a nonnegligent employer, or where either has been held applicable to and applied to anything other than a common-law or statutory negligence cause of action, action, suit, or proceeding by the employee or his personal representative (or the employer or his workmen’s compensation insurer) against a third party for damages for negligently causing the injury or death of the employee, and, in turn, the indemnification or recoupment of a nonnegligent employer.

The Dram Shop Act, Ch. 43, Ill. Rev. Stats. 1953, par. 135, under which the present suit is brought, provides, so far as material:

“Sec. 14. Every husband, wife, child, parent, guardian, employer or other person, who shall be injured, in person or property, or means of support, by any intoxicated person, or in consequence of the intoxication, habitual or otherwise of any person, shall have a right of action in his or her own name, severally or jointly, against any person or persons who shall, by selling or giving alcoholic liquor, have caused the intoxication, in whole or in part, of such person; . .

A cause of action thereunder is not a common-law action; it is not based upon and does not depend upon negligence at all; it is entirely statutory in character: Schroder v. Crawford (1880) 94 Ill. 357; Douglas v. Athens Market Corp. (1943) 320 Ill. App. 40, First Dist.; Thompson v. Wogan (1941) 309 Ill. App. 413, First Dist. The basic purposes and objectives of the Dram Shop Act and the Wrongful Death Act are essentially different, they are based on different powers of the state, and thé rights created under each statute do not rest upon the same basis: Hewlett v. Doglio (1949) 402 Ill. 311. The causes of action under the Dram Shop Act lie severally, separately, distinctly, and individually in each respective husband, wife, child, parent, guardian, employer, or other person who shall be injured in the manner there referred to, subject to the separate financial maximum limit on each, and each has a right of action in his or her own name which is in nowise dependent on the others or aided, hindered, or controlled by the others: Stecher v. People for Hse of Morton (1905) 217 Ill. 348; Childers v. Modglin (1954) 2 Ill.App.2d 292, Fourth Dist.; Glasco v. Fakes (1908) 143 Ill. App. 378. The plaintiff Beulah Dillon, individually, has her cause of action thereunder, in her own name, as the surviving wife of the deceased employee, for her injuries in person, or property, or means of support. That cause of action lies in her individually. It is not a cause of action of the deceased employee or of the personal representative of his estate for negligently causing the injury or death of the employee. It is entirely distinct from whatever, if any, statutory cause of action there may be in the personal representative for wrongful death of the deceased employee. Whatever recovery she individually receives on this present cause of action in this present suit is necessarily hers individually. It does not belong to the employee or his estate; nothing will be herein received by the employee or his personal representative; and the employee or his personal representative will be in no way compensated herein from the defendants third parties. And the same applies, of course, to the plaintiff Joan Dillon, individually, and her cause of action herein in her name, as the surviving child of the deceased employee.

The amount of workmen’s compensation here paid, $6375, was not paid to the employee, deceased, or to his personal representative. It was paid to Beulah Dillon, the widow, pursuant to and in discharge of the statutory obligation of the employer and his insurer under the Workmen’s Compensation Act, existing independently of whether the employer and insurer have any right of indemnification or recoupment from anyone else, she evidently being the person who formed the basis for determining the amount of compensation to be paid by the employer: Ch. 48, Ill. Rev. Stats., 1953, par. 138.7 (a) and (e). Neither the injured employee or his personal representative agreed to receive compensation, or accepted any payment thereof on account, or instituted any proceedings to recover such.

The statute, Ch. 48, Ill. Rev. Stats., 1953, par. 138.5, upon which the appellants rely, is, therefore, not here applicable, gives them no right to intervene in this Dram Shop suit, gives them no right to be subrogated, and gives them no lien on the judgments herein in favor of the plaintiffs.

A considerable part of the brief of the appellants is, in addition, devoted to urging that they, as the employer of the deceased employee, and his workmen’s compensation insurer, have been injured in their property by the intoxicated person, or in consequence of that person’s intoxication, because of the required workmen’s compensation payment made by them to the employee’s widow, and that they hence have right of action in their own names against the defendants who allegedly sold or gave alcoholic liquor to that person and thereby caused such intoxication, pursuant to the Dram Shop Act, Ch. 43, Ill. Rev. Stats., 1953, par. 135, and many of the authorities they cite are cited as being in support of that theory. That theory and contention, if we understand it correctly, is entirely separate from and disassociated from the particular provision of the Workmen’s Compensation Act otherwise here under consideration, Ch. 48, Ill. Rev. Stats., 1953, par. 138.5. That argument presents a question on facts which are not in this case. This is not a suit by the employer or his compensation insurer against these defendants under the Dram Shop Act and we are not called upon to determine whether there is or is not such a right of action in the appellants thereunder as they urge. This is a suit by the widow and child of the employee against these defendants under that Act for their alleged injury in their means of support. Even if the appellants’ theory in this respect were correct and there were a right of action in the appellants under the same Act against these same defendants for which they could maintain a separate suit themselves, which we do not determine one way or the other, that would seem to have no bearing whatever upon the separate rights of action of the widow and child, would not destroy such separate rights, and would not, because thereof, give the appellants a “common law right of subrogation and right of lien” in and to the judgments here recovered by the widow and child on their separate rights of action. The appellants’ conclusion from their theory in this respect is “the employer and insurance company now rightly, both legally and equitably, have a common law right of subrogation and right of lien” in and to the plaintiff’s judgments herein, and that conclusion, we believe, is a non sequitur, even, assuming the theory to be correct, which question, as we say, is not here presented or determined.

The appellants refer to a number of Illinois cases. Some of them we have already commented on,—F. K. Ketler Co. v. Industrial Commission, supra; Huntoon v. Pritchard, supra; Baker & Conrad Inc. v. Chicago Heights Const. Co., supra; Melohn v. Ganley, supra; Gones v. Fisher, supra; O’Brien v. Chicago City Ry. Co., supra. They and, generally speaking, all the other cases so referred to by the appellants involve, in varying forms, and with sometimes different specific phases or points particularly presented, common-law or statutory negligence actions or causes of action by the employee or his personal representative (or the employer or his workmen’s compensation insurer) against a third party for damages arising because of the alleged negligent injury or death of the employee, and the application, inter alia, of Section 29 of the former Act to the particular situation presented. None of them (with one exception)' have anything to do with a suit or cause of action by anyone against a third party under the Dram Shop Act. And none of them have anything to do with any claimed common-law subrogation principles or rights of the employer or his insurer. Nordland v. Poor Sisters of St. Francis Seraph of Perpetual Devotion (1955) 4 Ill.App.2d 48, was not a suit or action against a third party; it was a suit by the employee against the employer; it has no bearing here. Manthei v. Heimerdinger (1947) 332 Ill. App. 335, was a suit under the Dram Shop Act; it did not involve any employer-employee relationships .or the Workmen’s Compensation Act; and it has nothing to do with the present case. We do not believe any of the cases so referred to support the appellants’-view-here.

In Grasse v. Dealer’s Transport Co. (1952) 412 Ill. 179, another case cited by the appellants, the plaintiff employee sued a third party for damages for personal injuries allegedly caused by the defendant’s negligence; the plaintiff, his employer, and the defendant third party were all under the Workmen’s Compensation Act; the first paragraph of Section 29 of the then Workmen’s Compensation Act provided that under such circumstances the right of the employee to recover damages was transferred to the employer and the employer might sue therefor in an amount not exceeding the workmen’s compensation payable; the Court held that that part of Section 29 was unconstitutional and that the plaintiff employee could so sue in his own name. In a dictum the Court observed that the effect of its determination was to relegate the parties to such rights as they may have had prior to the enactment of the unconstitutional provision; that their rights, under those circumstances, would be governed by common-law subrogation principles; the nonnegligent employer who had paid compensation would be subrogated to the employee’s rights against the third party; and the employee would be required to reimburse the employer for the compensation from the sum recovered from the third party.

In Geneva Const. Co. v. Martin Transfer & Storage Co. (1954) 4 Ill.2d 273, also referred to by the appellants, the Court held, inter alia, that, under the status of the law after the first paragraph of Section 29 of the then Workmen’s Compensation Act had been determined to be unconstitutional in Grasse v. Dealer’s Transport Co., supra, and before the later 1953 changes therein (which is the form of the statute now applicable in the case at bar), a nonnegligent employer could recover from a negligent third party, who was also under the compensation act, the workmen’s compensation paid to the employee injured by the third party’s negligence, upon common-law subrogation principles; the Court said the remedy of common-law subrogation in workmen’s compensation cases is largely academic because most states have statutory provisions giving the employer or his insurer recourse against the negligent third party wrongdoer, and that the 1953 amendments to the Act, Ch. 48, Ill. Rev. Stats., 1953, par. 138.5 (the statute now applicable to the case at bar), now provide a mode or statutory subrogation for employers.

If the appellants here are relying upon some claimed common-law right of subrogation, of lien, and of intervention, separate from and independent of their claims under the statute, Ch. 48, Ill. Rev. Stats., 1953, par. 138.5, which matter is not made clear in their briefs, such is a claim or theory evidently not presented to and urged in the trial 'court, and they may not try their case on one theory in that court and, to that extent, upon a distinct and wholly different theory in the Appellate Court: Davis v. Illinois Collieries Co. (1908) 232 Ill. 284; Illinois Cent. R. Co. v. Heisner (1901) 192 Ill. 571. Beyond that, the dictum in Grasse v. Dealer’s Transport Co., supra, and the holding in Geneva Const. Co. v. Martin Transfer & Storage Co., supra, do not, we believe, support such common-law claim or theory here in any event; the present causes of action here involved are not common-law or statutory negligence causes of action and they are not causes of action of the employee or his personal representative, as were involved and to which the employer was said to be subrogated in those cases; the present compensation act, Ch. 48, Ill. Rev. Stats., 1953, par. 138.5, being presumed to be constitutional, not having been determined to be otherwise, and no constitutional question being here presented, now provides what may be referred to as a mode of statutory subrogation, in effect, for employers in cases where the injury or death is not proximately caused by the negligence of the employer or his employees and is caused under circumstances creating a legal liability for damages on the part of a third party, — a mode of statutory subrogation which did not exist in Grasse v. Dealer’s Transport Co., and Geneva Const. Co. v. Martin Transfer & Storage Co., and that statute presumptively is complete and controls, the legislature having thereby spoken on the subject of third party liability and the rights of an employer to so-called subrogation, to repayment of any compensation out of any amount received from a third party, to a lien upon anything received from such third party, to joining in suits against such third party, to consenting to releases or settlements of claims against such third party, and to bringing suits against such third party when the suit had not been brought otherwise by someone else. If the legislature had intended to provide for indemnification of or recoupment by a nonnegligent employer in some other instances or modes than it has provided for it could readily have said so. Generally the express mention of one or more things or modes of action in a statute impliedly excludes other things or modes of action: Blakeslee’s Storage Warehouses, Inc. v. City of Chicago (1938) 369 Ill. 480; Great Northern Refining Co. v. D. K. Jeffris Lumber Co. (1923) 308 Ill. 342. Whatever so-called subrogation rights, lien rights, or intervention rights an employer claims in the premises must now be founded on that statute, and if it does not cover the case at hand, as it does not here, there are no such rights.

The appellants say that since Joan Dillon, the daughter of the employee, and one of the plaintiffs herein, was not listed as a dependent in the workmen’s compensation proceeding, it constituted a gross fraud on the appellants to enter the judgments herein for $3000 in her favor without the written approval of the appellants, and such are not binding on them. No authority is cited for that, no further reason therefor or explanation thereof is given other than the general statement of the proposition, and we do not understand the logic thereof. It does not appear whether Joan Dillon was or was not legally a dependent of the' employee under the compensation act, and should or should not have been classed in the compensation proceeding, but if she was such a dependent thereunder and should have been so classed the failure to do so apparently could not have hurt the appellants but rather have benefited them, as evidently the compensation award could have been greater than it was had she been so included. How that makes the judgments in this cause in her favor a gross fraud on the appellants, we do not perceive.

The order of August 19, 1955 will, therefore, be affirmed.

Affirmed.

DOVE, P. J. and EOVALDI, J., concur.