text:
    Joseph F. Elward, Appellant, v. Peabody Coal Company, et al., Appellees.
    Gen. No. 46,717.
    First District, First Division.
    March 5, 1956.
    Rehearing denied March 21, 1956.
    Released for publication March 21,1956.

      Edward S. Macie & Paul F. Elward, of Chicago, for plaintiff-appellant.
    Hopkins, Sutter, Halls, Owen & Mulroy, of Chicago, for Peabody Coal Company, Stuyvesant Peabody, 0. Gressens, Joseph Solari, Frank L. White, and John T. Rettaliata, defendants-appellees; Thomas E. Mulroy, William C. Childs, and George Kelm, of Chicago, of counsel.
   JUDGE BURKE

delivered the opinion of the court.

Joseph F. Elward, for himself and in a representative capacity, filed his second and amended supplemental complaint (hereinafter called the complaint) against Peabody Coal Company, an Illinois .corporation, and its seven directors for a declaratory decree that a stock option is invalid, injunctive relief and discovery. He appeals from an order dismissing the complaint on defendants’ motion that it is substantially insufficient in law.

The capital stock consists of 562,608 shares of prior preferred 5% cumulative $25 par, convertible into common stock at the holder’s option at the rate of 2% shares of common for each share of preferred, and 828,835% shares of common at $5 par value. Sufficient shares of common stock are reserved for conversion of the preferred stock. The by-laws provide for a board of directors of seven members and that a majority shall constitute a quorum for the transaction of business. In October, 1951, Otto Gressens, one of the defendants, became an employee of the corporation. In 1951 the charter of the corporation was amended to provide that any shares of common or preferred stock may, in the discretion of the board of directors, be issued and disposed of from time to time in such manner, to such persons or corporations and for such consideration as may be determined by the board, without first being offered to any class or classes of shareholders. At a special meeting of the directors held December 21, 1953, a resolution was adopted giving Stuyvesant Peabody and Gressens an option during a nine year period commencing December 21, 1954, to purchase common stock at $3 a share, Peabody’s option being for 20,000 and Gressens’ for 40,000 shares. At this special meeting five out of seven directors attended. Peabody and Gressens were two of the five directors voting for the resolution.

The next day Peabody wrote a letter directing the cancellation of his stock option. On the day of the special meeting an agreement was executed by the corporation and Gfressens, whereby in consideration of the sum of $1 paid by G-ressens as optionee to the corporation and the other good and valuable consideration, including the continued service of the optionee at least until December 21, 1954, the corporation granted to him an option to purchase on or before December 31, 1963, 40,000 shares of common stock at $3 a share. On the following day Gressens wrote the president of the corporation a letter stating that in consideration of and as a part of the option agreement he agreed to remain in the employ of the corporation for at least five years “under the salary arrangement suggested by you.” On the day the option was granted the market price of the common stock was $3 a share; on June 28, 1954, it was $3% a share and on December 31, 1954, it was $5% a share. The parties agree that in June, 1955, the market price was $8 a share.

On January 18, 1954, plaintiff wrote to defendants objecting to the option. On February 8, 1954, plaintiff requested the defendants to annul the option transaction. In May, 1954, plaintiff and the management of defendants sent separate letters to the shareholders soliciting proxies for the annual shareholders’ meeting to be held on June 28, 1954. In these communications the shareholders were informed about the option. The management statement said that inasmuch as the option price is $3 per share and the statute requires that the corporation must receive as consideration “not less than the par value of $5” that the company has three alternatives. At the annual shareholders’ meeting of June 28, 1954, a resolution was adopted approving, ratifying and confirming the option agreement. The vote was 920,404% shares in favor of the option and 313,761 shares against the option. The vote for the option was 66.15% of all the outstanding shares and 57.91% of the persons holding stock voted their shares in favor of the option.

The plaintiff asserts that the Business Corporation Act does not empower a corporation to issue a stock option; that this power is not granted in express terms or by implication; that a shareholder is entitled under the common law to preemptive rights; and that the Act should be construed strictly so as not to impair the preemptive rights of stockholders. The public policy of this state is found in the Constitution, the statutes and the decisions of the courts. Plaintiff cites cases pointing out the distinction between the power to sell and the power to give an option. The preemptive right of shareholders to share pro rata in any new issue of corporate stock so that their interest will not be diluted but continue proportionately, is part of the common law of this State. Eidman v. Bowman, 58 Ill. 444; Tennant v. Epstein, 271 Ill. App. 204. Section 24 of the Business Corporation Act (Par. 157.24, Ch. 32, Ill. Rev. Stat. 1955) reads: “The preemptive right of a shareholder to acquire additional shares of a corporation may he limited or denied to the extent provided in the articles of incorporation. Unless otherwise provided by its articles of incorporation, any corporation may issue and sell its shares to its employees or to the employees of any subsidiary corporation, without first offering the same to its shareholders, for such consideration and upon such terms and conditions as shall he approved by the holders of two-thirds of its shares entitled to vote with respect thereto, or by its hoard of directors pursuant to like approval of the shareholders.”

The first sentence of Section 24 provides that the charter of an Illinois corporation may limit or deny the preemptive right of a shareholder to acquire additional shares of stock. The second sentence of the section allows a corporation which does not have an express charter denial or limitation of preemptive rights, to issue and sell stock to its employees free of preemptive rights for such consideration and upon such terms and conditions as shall be approved by the holders of two-thirds of its shares entitled to vote with respect thereto or by its board of directors pursuant to like approval of the shareholders. Plaintiff inquires that, keeping in mind the doctrine that corporate powers are to be construed strictly and that no power is to be implied unless reasonably necessary to an express power, under what section or sections could the power to issue stock options be regarded as implied? Section 5 of the Business Corporation Act states that each corporation shall have power to make contracts and incur liabilities, to elect or appoint officers and agents of the corporation, to define their duties and fix their compensations, and to exercise all powers necessary or convenient to effect any or all of the purposes for which the corporation is formed. It cannot be doubted that Illinois corporations are empowered to enter into contracts relating to employment. The implied powers which a corporation has in order to carry into effect those expressly granted and to accomplish the purposes of its creation are not limited to such as are indispensable for these purposes, but comprise all that are necessary, in the sense of appropriate and suitable, including the right of reasonable choice of means to be employed. 13 Am. Jur., Corporations, Sec. 740. We are of the opinion that there is ample implied power in Sections 5 and 24 of the Business Corporation Act and in Article 9 of the amended charter to sustain the action of the defendant corporation in entering into a valid contract with an officer or employee for a stock option.

Having decided that under the Business Corporation Act a corporation has the right to impair the preemptive rights of shareholders by granting stock options to officers and employees and that the charter of the defendant corporation as amended authorized the directors to exercise that power, we turn to a consideration of plaintiff’s contention that the stock option granted violates provisions of the statute. We are of the opinion that in granting stock options a corporation is required to comply with the provisions of Section 24 of the Business Corporation Act and its charter. Plaintiff says that the stock option granted in the instant case violates that section in that it does not run to employees but to one employee. Section 1.03 of the Act governing the construction of statutes (Ch. 131, Ill. Rev. Stat. 1955) states that “the plural number may include the singular.” We think that an Illinois corporation may grant stock options to one or more persons.

Plaintiff maintains that the proper construction of Section 24 requires that to deny a shareholder’s preemptive right by issuing shares to its employees, there must be a determination to that effect and of the consideration therefor by the board of directors and an approval by two-thirds of the outstanding shares, and that satisfaction of one of these conditions is insufficient. Pursuant to the provisions of the first paragraph of Section 24, the corporate charter was amended to provide, among other things, that the board of directors could deny preemptive rights to the shareholders, and we have held that by implication these provisions authorize the making of contracts for stock options to officers and employees. The second paragraph of Section 24 would be operative if there were no denial of preemptive rights as set forth in Article 9 of the charter. The second paragraph of that section commences “Unless otherwise provided by its articles of incorporation” and then goes on to state that shares may be offered to employees “without first offering the same to its shareholders” upon the approval of two-thirds of the total shares. If preemptive rights have been completely denied to the shareholders under a charter provision pursuant to the authority provided by the first paragraph of Section 24, as in the case at bar, then no requirement exists that the stock be first offered to shareholders.

Plaintiff asserts that the stock option must fail because it is not upon terms and conditions approved by a qualified majority of the directors. At the meeting held on December 21, 1953, wherein the stock option was approved,' five of the seven directors attended. These five included Peabody and Gressens, who were the optionees and beneficiaries. The resolution was adopted by five votes. Peabody and Gressens were disqualified to vote on this benefaction to themselves. Without counting these two votes there were only three directors voting for the resolution. Plaintiff argues that of the three directors, two others could be fairly regarded as interested and dominating, leaving only one clearly disinterested director. We agree with plaintiff that under the allegations of the complaint there was never any affirmative action by a qualified majority of directors. Luthy v. Ream, 190 Ill. App. 315, 270 Ill. 170. Defendants answer that any defect which might have occurred in the action of the directors in adopting the resolution was “vitiated by the subsequent approval overwhelmingly voted by the shareholders,” citing Kerbs v. California Eastern Airways, Inc. (Del.), 90 A.2d 652; Federal Life Ins. Co. v. Griffin, 173 Ill. App. 5. The action of the board of directors in granting the stock option was approved by 66.15% of all outstanding shares at the annual stockholders’ meeting.

Plaintiff insists that the stock option is illegal for the reason that it provides for the issuance at a price of $3 of shares having a par value of $5, in violation of Section 17 of the Business Corporation Act [Ill. Rev. Stats. 1955, ch. 32, § 157.17], which requires that shares having a par value may be issued for such consideration, not less than the par value thereof, as shall he fixed from time to time by the board of directors. The par value of the common shares of the corporation is $5 per share. Plaintiff states that under the stock option the corporation agrees to sell 40,000 shares to G-ressens at his option up to December 31, 1963, at a price of $3 per share, and that this is a clear violation of the statute. Defendants say that the option is not illegal. They concede that under the statute stock may not be issued for consideration of less than the par value thereof, and that the corporation must receive consideration totaling in value $5 for each share of stock issued to Gressens under the option. Defendants say that the option agreement provides that “the corporation shall always receive, prior to the issuance of any share's, that amount of consideration legally required to make such shares fully paid and nonassessable.” Section 2 of the option agreement specifically provides that the purchase price of the shares of common stock shall be $3. This section further states that under “certain circumstances such purchase price per share is subject to adjustment as provided in Section 9.” Section 9 (a) provides that if prior to the expiration date of the option ending December 31,1963, “any of the events hereinafter shall occur, the stock purchasable under this agreement and the unit purchase price payable upon the exercise of the option granted herein shall be adjusted as provided in this Section 9.” The section then goes on in (b) to provide that in the event the corporation shall issue a stock dividend or a stock split-up, there shall be an adjustment of the “per share or per unit price of the securities which the optionee shall be thus entitled to receive.” The section further provides in (c) that in case the corporation shall be merged or consolidated that the optionee shall be entitled to receive the securities which he would have been entitled to receive had he exercised his option prior to the effective date of the merger or consolidation. The section provides in (d) that in the event of a dispute as to whether an increase or decrease of the per share or per unit price of securities is required under paragraphs (b) and (c), the decision of the independent public accountants who, at the time regularly audit the books of the corporation, shall be final and conclusive. Paragraph (c) of the section concludes with this sentence: “If appropriate, due adjustment shall be made in the per share or per unit price of the securities purchased, provided, however, that the corporation shall always receive, prior to the issuance of any shares, that amount of consideration legally required to make such shares fully paid and nonassessable.” In our opinion the option agreement, after fixing the “purchase price” of $3, requires that the “full purchase price of shares purchased shall be paid upon the exercise of the option.” The “full purchase price” means the purchase price at $3 a share. The concluding sentence of the paragraph that “under certain circumstances such purchase price per share is subject to adjustment, as provided in Section 9” relates to the adjustment to be made in the per share or per unit price under the contingencies provided for in Section 9, namely, adjustment for stock dividend, stock split-up, merger or consolidation. A careful reading of the option agreement convinces us that the corporation’s promise is unequivocal that the purchase price of the shares shall be $3. This construction of the agreement is consistent with the action of the board of directors at the meeting of December 21, 1953, wherein the chairman proposed that consideration be given to the matter of authorizing options to purchase the shares of common stock hereinbefore mentioned “at a price of $3 per share, the present market price of the company’s common shares on the New York Stock Exchange.” The resolution then adopted, authorized and directed the officers to enter into an option agreement with Gressens for 40,000 shares, and provides that the officers are authorized to make such changes in the form of agreements as are considered advisable by counsel, provided that the terms shall be “substantially the same as those provided for the instruments submitted to the meeting.” The option agreement bears the date of the meeting and was presumably signed immediately after the meeting. In the resolution the officers were authorized and directed to carry out the option agreements according to their terms and to file any reports and give any notices that may be necessary from time to time with the New York Stock Exchange or any governmental agencies. We agree with the plaintiff that it would be reasonable to expect that if there were any qualifications or conditions in the corporation’s promise to Gressens, such as the defendants now suggest, namely, that the promise included a provision that the corporation is always to receive “consideration totaling in value $5,” that somewhere in the agreement or in the minutes of the meeting there would be a reference to this qualification or condition.

Defendants invite attention to the following from the proxy statement of the management sent to the shareholders prior to the annual meeting of June 28, 1954: “The option price is $3 per share, which was the market price on the New York Stock Exchange on December 21, 1953, the day the option was granted, subject, however, to the requirement of Illinois law that the company must receive as consideration not less than the par value ($5) for any theretofore unissued shares. ... In the opinion of counsel for the Company, there is an obligation on the Company before delivery of shares under the option agreement not only to have received $3 per share from the optionee but also that the shares delivered be legally issued.” The statement sets forth three of the “alternatives available to the directors in order to fulfill the requirements of Illinois law” in this respect. Plaintiff argues that defendants’ position that they have three alternatives to avoid the statute is without merit because each of the alternatives recognizes that the present promise of the corporation is a mere “illusory promise” and therefore void and unenforceable.

The proxy solicitation letter continued: “One of the alternatives available to the directors in order to fulfill the requirement of Illinois law is to recognize at the time Mr. Gressens elects to exercise all or any part of the option that the Company has received services of Mr. Gressens not covered by his current salary equal in value to the spread between the $3 a share to be paid by him in cash and the $5 par value of those shares. If this were done, there would be a transfer of the aggregate amount of such spread from the Company’s surplus (income) account to its capital account.” The plan thus outlined depends upon an uncertain future event over which Gressens has no control and which may or may not happen. When and if Gressens decides to exercise his option the future board of directors is under no legal obligation to give him a bonus covering the “spread” between the $3 purchase price and the $5 par value price of the shares. The proxy solicitation letter suggested that a second alternative “could be the delivery of treasury shares, if available at the time of the exercise of all or any part of the option.” At no time since December 21, 1953, has the corporation had any treasury shares of common stock. The corporation is under no legal obligation to acquire shares of common stock to be held in its treasury. The proxy solicitation letter said that a “third alternative could be that the par value of the shares at the time of the exercise of all or any part of this option would be $3 or less per share or no par. The last alternative would require shareholders approval by amendment of the charter. If present circumstances continue, neither the second nor third alternative will be adopted.” This alternative recognizes that in order to make a valid contract to purchase the common stock at $3 a share, it would be necessary that the charter be amended to change the par value of the common stock to “$3 or less per share or no par value,” which would require approval by two-thirds of the shareholders. As the promise of the corporation and Gressens’ right to compel performance are conditional upon an uncertain future event which may never take place, it is obvious that there is now no binding promise. “The fundamental element of promise seems to be an expression of intention by the promisor that his future conduct shall be in accordance with his present expression, irrespective of what his will may be when the time for performance arrives.” Corbin on Contracts, Sec. 16. The suggested alternatives do not contemplate an intention by the corporation that its future actions with relation to the payment of the consideration for the shares of common stock shall be in accordance with its present expression, irrespective of what its decision may be when the time for performance arrives. We conclude that the proposed alternatives constitute an illusory promise that requires further legal action on the part of the board to implement, which action the board is legally free to take or not to take and that therefore the promise is unenforceable.

Defendants urge that it is premature to entertain the question of a consideration for the issuance of the stock, pointing out that Section 18 of the Business Corporation Act [Ill. Rev. Stats. 1955, ch. 32, § 157.18] provides that the judgment of the board of directors or shareholders, as the case may be, as to the value of the consideration received for shares shall be conclusive. No part of the option has as yet been exercised. The defendants say that if and when Grressens exercises the option the directors will then determine how the agreement may be performed so that the shares issued to him will be fully paid and nonassessable, and that it is impossible to know now the circumstances which will confront the directors at the time the option is exercised. They suggest that if at that time plaintiff has reason to believe that “actual fraud” entered into the judgment of the directors in determining the value of the consideration, then he would have a remedy. We are of the opinion that plaintiff is entitled to a declaratory decree as to whether the stock option agreement is illegal. Section 57.1 of the Civil Practice Act (Par. 57.1, Ch. 110, Ill. Rev. Stat. 1955) provides that no action or proceeding in any court of record shall be open to objection on the ground that a merely declaratory decree, judgment or order is sought thereby, and the court may, in cases of actual controversy, make binding declarations of rights having the force of final judgments, whether or not any consequential relief is or could be claimed, including the determination, at the instance of anyone interested in the controversy, of the construction of any deed, will, contract or other written instrument, and a declaration of the rights of the parties interested, but the foregoing enumeration shall not exclude other cases of actual controversy. As there is an actual controversy involving the construction and validity of the stock option agreement, the complaint is properly brought. Exchange National Bank of Chicago v. County of Cook, 6 Ill.2d 419.

Defendants say that consideration may not be given on this appeal to plaintiff’s theory that the option agreement is void as containing mere “illusory promises” because no such theory was raised below. The complaint alleged and discussed the three alternatives suggested in the management proxy statement and set out the basis for the contentions advanced by him in this court. These allegations sufficiently informed the defendants that plaintiff claimed that the transaction was in violation of the statute, and that the three alternatives suggested had no validity.

Defendants state that it is elementary that a contract supported by a consideration will not fail merely because one of several promises therein may be subject to a condition. In an option agreement there is the consideration for the granting of the option and the consideration for the purchase of the stock, namely, the purchase price, without which the option could not be consummated. Gottlieb v. Heyden Chemical Corp. (Del.), 99 A.2d 507; 17 C. J. S. Contracts, Sec. 100, page 450. It is unnecessary at this time to consider the adequacy of the consideration for the option because the contract must fail for the reason that the corporation could not contract to sell $5 stock for $3. Defendants cite Armstrong Paint & Varnish Works v. Continental Can Co., 301 Ill. 102, for the proposition that while consideration is essential to the validity of a contract, mutuality of obligation is not. We do not regard this authority as having any bearing on the power of the corporation to contract to grant a stock option to sell $5 stock for $3. There is no disagreement with the defendants’ proposition that contracts will, wherever possible, be construed to be,.lawful. They say that it will be presumed that the parties intended to make the option subject to the requirements of Illinois law that stock may not be issued for the consideration of less than par value. In the instant case this presumption cannot be invoked because the option agreement specifically provides that the purchase price will be $3 per share. We agree with the statement of defendants on the general proposition that the courts will not substitute their judgment for that of the directors on the issue of consideration. Holthusen v. Edward G. Budd Mfg. Co., 53 F. Supp. 488 (E. D. Penn.); Kaufman v. Shoenberg (Del.), 91 A.2d 786. The directors, however, cannot grant stock options to sell the stock for a consideration of less than the par value.

As hereinbefore stated, a substantial majority of the shareholders approved the granting of the stock option. Defendants insist that where shareholders have approved an option it will not be set aside except for fraud. Where a stock option is granted under the authority of the first paragraph of Section 24 of the Business Corporation Act and a provision such as Article 9 of the amended charter, it is unnecessary to obtain approval of the shareholders. Defendants cite Eliasberg v. Standard Oil Co., 12 N. J. 467, 97 A.2d 437; Kerbs v. California Eastern Airways (Del.), 90 A.2d 652; Federal Life Ins. Co. v. Griffin, 173 Ill. App. 5, to support their argument that where shareholders have approved an option it will not be set aside except for fraud. However, in Voorhees v. Mason, 148 Ill. App. 647, a suit brought by a dissenting shareholder to compel restitution by directors who had voted stock to themselves as compensation for services in promoting the company, in answer to the contention that the acts of the directors had been ratified by the shareholders the court said (655):

“Officers of a corporation occupy the position of trustees for the stockholders with respect to the business and property of the corporation, and cannot have or acquire any pecuniary interest in conflict with their duties as such trustees. Hooker v. Midland Steel Co., 215 Ill. 444. The voting of the stock by the directors to themselves as compensation for services in promoting the company after the work was done, was voting back pay to themselves and is illegal. ‘It is the same as giving away the assets of the company.’ Cook on Stock and Stockholders, sec. 657; Brown v. DeYoung, 167 Ill. 549. The acts of the directors in illegally voting stock to themselves could not be ratified by a majority of the stockholders as against a dissenting stockholder or one who had no knowledge of such fraudulent action.”

In this case the Appellate Court required an accounting to the plaintiff for his pro rata part of the assets diverted. On appeal, 245 Ill. 256, the Supreme Court held that the accounting should be to the corporation for the full amount of the assets diverted and reversed on that point only, approving the rest of the Appellate Court holding. See also Farwell v. The Pyle-National Elec. Headlight Co., 289 Ill. 157; Ingebretsen v. Lenc, 308 Ill. App. 510. The Griffin case is not authority for the proposition that the shareholders can ratify an illegal act of the board of directors. On the trial of a case on its merits a chancellor may consider many factors, including the important one that the action of the board of directors has been approved by the stockholders in determining whether the action of the board of directors in a given situation should be sustained. It is manifest, however, that the shareholders cannot approve the action of the board of directors of a corporation agreeing to sell $5 par value stock at $3.

In Holthusen v. Edward G. Budd Mfg. Co., 52 F. Supp. 125, the district judge said (129):

“There can be no doubt that the granting of bonuses to employees may have a legitimate and valid function in a business whether conducted by a corporation or any other legal entity. It is likewise true that the board of directors of the corporation should have wide discretion in determining the amount of bonuses to be granted to its employees and the terms and conditions upon which they may be granted. But the amount of a bonus and the terms and conditions on which it is to he computed must have some reasonable relation to the services to be rendered.”

In a case of the same title reported in 53 F. Supp. 488, the same district judge said (490):

“The burden is on a minority stockholder of a corporation who seeks to have the courts intervene in corporate management and restrain action approved by the board of directors, to establish that such action transcends the point where the will of the majority may properly be imposed on the minority. Unless this be so, the floodgates would be opened to a surge of litigation by which the courts would be called upon to review the action of corporate directors with respect to all contracts of employment and an unlimited number of other matters.”

In Clamitz v. Thatcher Mfg. Co., 158 F.2d 687, Second Circuit, the court said (692):

“Of course the directors were fiduciaries who were bound to act at all times fairly and honestly for the best interest of the corporation and could not take advantage of their position as ‘insiders’ for their own personal gain. They had to see to it that the corporation should have the benefit of their best judgment and act solely and always in good faith to promote its welfare. Pollitz v. Wabash R. Co. 207 N. Y. 113, 100 N. E. 721. Incentive compensation must bear a reasonable relation to the value of the services it is made to obtain. Such reasonable relationship is in the first instance an affair of business to be handled in the light of all the relevant circumstances in the exercise of the unbiased judgment of those in charge of the business itself. . . . Whether these defendants exercised their own sound judgment collectively as directors in granting the options is a matter of fact to be determined like any other fact from the evidence in the case.”

In Gottlieb v. Heyden Chemical Corp. (Del.), 99 A.2d 507, the chancellor in answer to the argument that the optionees were adequately compensated before they received the stock options, said (510):

“Once again, within reason, it is a matter of business judgment and plaintiffs have not sustained the burden of showing that such judgment was exercised unlawfully.”

It is unnecessary to discuss other points argued in the briefs. For the reasons stated the decree of the Superior Court of Cook County is reversed and the cause is remanded with directions to overrule defendants’ motion to strike and dismiss the complaint, and for further proceedings not inconsistent with the views expressed herein.

Decree reversed and cause remanded with directions.

FRIEND, P. J. and NIEMEYER, J., concur.


source: Caselaw Access Project

author: JUDGE ROBSON.

license: Public Domain

text:
    Mary Kett, Appellee, v. Retirement Board of Firemen’s Annuity and Benefit Fund of Chicago, Appellant.
    Gen. No. 46,672. (Abstract of Decision.)
    First District, Second Division.
    December 6, 1955.
    Released for publication March 6, 1956.

      John J. Mortimer, Corporation Counsel of the City of Chicago, and George F. Mulligan, Assistant Corporation Counsel, for appellant;
    no appearance for appellee.
   Opinion by

JUDGE ROBSON.

Not to be published in full.


author: JUDGE [WARTZ.

text:
    Carl F. Wilson, Appellant, v. William G. Milota, Bailiff, and LaSalle National Bank, as Trustee Under Trust No. 7286, Appellees.
    Gen. No. 46,666. (Abstract of Decision.)
    First District, Second Division.
    December 6, 1955.
    Released for publication March 6, 1956.
    Allen H. Meyer, for appellant;
    Lewis W. Sehlifkin, and Charles A. Green-stein, for appellee.
   Opinion by

JUDGE [WARTZ.

Not to be published in full.


author: JUDGE CARROLL.

text:
    Kaywin Kennedy, Executor of Last Will and Testament of Sara M. Hart, Deceased, et al., Plaintiffs, v. Susan Tate et al., Defendants. Corn Belt Bank of Bloomington, and Robert Allen Hart, Defendants-Appellees, v. Esther Jo Hawks Stephenson et al., Defendants-Appellants.
    Gen. No. 10,034. (Abstract of Decision.)
    Third District.
    February 14, 1956.
    Rehearing denied March 15, 1956.
    Released for publication March 15, 1956.
    L. C. Sieberns, for defendants-appellants;
    Dunn and Dunn, for Robert Allen Hart, appellee.
   Opinion by

JUDGE CARROLL.

Not to be published in full.


author: JUDGE REYNOLDS.

text:
    John M. Hatteberg and Gibson City Community Unit School District No. 1 of Ford, McLean and Champaign Counties, Illinois, Plaintiffs-Appellants, v. County Board of School Trustees of Ford County, Illinois et al., Defendants-Appellees.
    Gen. No. 10,049. (Abstract of Decision.)
    Third District.
    February 23, 1956.
    Released for publication March 12, 1956.
    Charles E. Carnahan, for appellants;
    D. C. Hummel, for Paxton Community School Dist. No. 2, and Melvin-Sibley Community School Dist. No. 4, defendants-appellees;
    Arthur R. Benz, for County Board of School Trustees of Ford county, defendant-appellee.
   Opinion by

JUDGE REYNOLDS.

Not to be published in full.


author: PRESIDING JUSTICE BARDENS

text:
    Earl Penrod, Plaintiff-Appellee, v. W. A. Smith, Defendant-Appellant.
    Term No. 55-O-2.
    Fourth District.
    February 1, 1956.
    Rehearing denied February 28, 1956.
    Released for publication March 26, 1956.

      August L. Fowler, of Marion, and Chas. J. Huffman, of Vienna, for defendant-appellant.
    R "W. Harris, and David A. Warford, "both of Marion, for plaintiff-appellee.
   PRESIDING JUSTICE BARDENS

delivered the opinion of the court.

Plaintiff filed a chancery action in the Circuit Court of Johnson County for dissolution of an alleged partnership with defendant and for an accounting as to the partnership losses. A jury found in an advisory verdict that a partnership did exist and awarded damages to plaintiff for defendant’s share of partnership losses. The decree adopted the jury’s findings. Defendant brings this appeal contending that the decree below is against the manifest weight of the evidence, that the alleged partnership existed for an illegal purpose, and that various errors occurred in the course of the trial which would require a reversal.

In 1952 plaintiff opened an account with a brokerage firm to trade in commodities, and for several months plaintiff traded in this account, buying commodities on margin. Defendant at said time, and for many years prior thereto, had maintained a trading account at the same brokerage house. In August 1952, a trading authority was signed by plaintiff which authorized and directed the broker to accept orders for the purchase and sale of grain or other commodities when given by the defendant, and directed the broker to enter such transactions in plaintiff’s account. The authority further stated: “I hereby certify that Wm. A. Smith (the defendant) will not directly or indirectly receive any remuneration for acting as my agent.” Thereafter, various commodities were bought and sold through said account with the result that in May, 1953, when the account was closed out, there was a loss of $17,761.86. Some of these transactions were made by plaintiff and some by defendant. However, all deposits in said account were made by plaintiff.

To support his allegation of the existence of a partnership, plaintiff testified substantially as follows: That in April or May of 1952 defendant told plaintiff that he was making a lot of money in the market and suggested that he be allowed to go in with plaintiff as a partner in plaintiff’s trading account; that it was subsequently agreed between them that they would be partners in plaintiff’s account, and that plaintiff would furnish all the margin and the profit or loss from trading in said account would be shared equally by them; that thereafter defendant often discussed with plaintiff transactions to be made in the account and did, in fact, trade in plaintiff’s account; that after heavy losses had occurred and the account was closed out in June 1953, that plaintiff and another witness went out to defendant’s home to discuss the matter; that the defendant then stated that he would try to pay plaintiff his share of the losses when he regained his health. Several such conversations were corroborated by other witnesses.

Defendant denied the portions of plaintiff’s testimony bearing on the partnership issue and stated that the arrangement was designed solely to give plaintiff the benefit of 'his experience in the commodity market; that it was never intended to be a partnership. On defendant’s behalf, the manager of the brokerage office testified that he heard no discussion of a partnership and that on their books they carried it as an individual account in the plaintiff’s name; that all calls for margin were made to plaintiff; that the trading agreement signed by the parties was a form agreement required by the broker before defendant could be permitted to trade in plaintiff’s account. The accountant who prepared plaintiff’s income tax returns for 1952 and 1953 testified when called by defendant that he prepared no partnership tax returns for plaintiff and defendant. This is the substance of the evidence on the issue of partnership.

Defendant’s position that his trading on plaintiff’s account was a gratuitous service and not the act of a partner rests on inferences to be drawn from the trading agreement and the failure to file a partnership income tax return, since the oral testimony clearly preponderates in favor of plaintiff. While, it is true, the only writing relative to the arrangement refers to defendant as an “agent,” we do not find this agreement to be inconsistent with a partnership which is basically a mutual agency arrangement. But, assuming a non-partnership relationship is described, it must be noted that the agreement was one furnished by the broker for his protection in honoring defendant’s orders on plaintiff’s account and was not necessarily intended by the parties to characterize their legal arrangement. In the analogous joint bank account cases in which the parties sign a contract on a signature card describing themselves as joint tenants, the Supreme Court has recently made clear that such agreements do not in themselves establish the true relationship intended by the parties. In re Estate of Schneider, 6 Ill.2d 180, 127 N.E.2d 445. In the same fashion, the failure to file a partnership income tax return is simply a circumstance to be considered with all the evidence. We conclude, therefore, that the Chancellor’s finding of the existence of a partnership was not against the manifest weight of the evidence.

In connection with the partnership issue, defendant contends the Chancellor erred in refusing to admit into evidence plaintiff’s individual income tax returns for the years involved. From defendant’s offer of proof it appears that plaintiff’s individual returns would have shown that the loss in the trading account was treated as an individual loss for tax purposes. However, without regard to the correctness of such ruling, it is apparent that such evidence could not weigh heavily in defendant’s favor, for defendant having rejected any partnership arrangement, the loss was, in fact, plaintiff’s individual loss until the issue was resolved in court. Therefore, we do not feel such evidence, if admitted, would shift the weight of the evidence in defendant’s favor on the partnership issue.

Defendant urges also that even if a partnership be deemed to have existed, that the entire arrangement was illegal under Section 328, Chapter 38, Ill. Rev. Stat. [Jones Ill. Stats. Ann. 37.258] which provides as follows:

“Whoever contracts to have or give himself or another the option to sell or buy, at a future time, any grain, or other commodity . . . where it is at the time of the making of such contract intended hy both parties thereto that the option, whenever exercised, or the contract resulting therefrom, shall be settled, not' by the receipt or delivery of such property, but by the payment only of differences in prices thereof . . . shall be fined . . . ; and all contracts made in violation of this Section shall be considered gambling contracts, and shall be void.”

Our courts have held that to void a contract under this provision it must be proven that both parties to the transaction intended or understood that settlement would be made on differences in price rather than hy delivery or receipt of the commodity. Riordon v. McCabe, 341 Ill. 506, 512, 173 N. E. 660; Salzman v. Boeing, 311 Ill. App. 83, 35 N.E.2d 536. The burden of showing transactions were gambling in nature is upon the party making such claim. Pelouze v. Slaughter, 241 Ill. 215, 89 N. E. 259; Grubey v. National Bank of Illinois, 133 Ill. 79, 24 N. E. 575. This contention, involving intent, requires an issue to be made because the illegality cannot otherwise be determined. Defendant did not raise the issue of illegality in his pleadings, nor does it appear it was raised in any other manner before the lower court. It is not, therefore, properly before this court. Wise v. Potomac Nat. Bank, 393 Ill. 357, 65 N.E.2d 767; Bowman v. Pettersen, 410 Ill. 519, 102 N.E.2d 787; Dirksmeyer v. Barnes, 2 Ill.App.2d 496, 119 N.E.2d 813.

We have considered the other alleged errors raised by defendant and find in them no grounds for reversing the decree below.

Decree affirmed.

CULBERTSON and SCHEINEMAN, JJ., concur.


author: PRESIDING JUSTICE McCORMICK

text:
    Daniel Eizerman, Appellee, v. Abe Behn, Milton Behn, and Robert Behn, Individually and as Partners Doing Business as Chicago Used and New Laundry Equipment Company, Appellants.
    Gen. No. 46,438.
    First District, Second Division.
    February 21, 1956.
    Released for publication April 3, 1956.

      Irving G. Zazove, of Chicago, for appellants; Edward Wolfe, of Chicago, of counsel.
    Louis G. Davidson, of Chicago, for appellee; Louis P. Miller, and Charles D. Snewind, both of Chicago, of counsel.
   PRESIDING JUSTICE McCORMICK

delivered the opinion of the court.

This is an appeal by the defendants from a judgment entered in the Superior Court of Cook County for the plaintiff in the sum of $70,000. The action was brought by plaintiff to recover damages for personal injuries, and was tried before a jury. Motions for judgment notwithstanding the verdict and for new trial were denied by the trial court.

The defendants contend that the court erred in denying their motion made at the close of all the evidence for a directed verdict and in not entering judgment in their favor notwithstanding the verdict; that the verdict is against the manifest weight of the evidence; that the trial court erred in its rulings on the admission of evidence and in its failure to sustain various motions of the defendants for a mistrial, and that the defendants were denied a fair trial due to the conduct of counsel for the plaintiff.

The case grew out of an occurrence at the place of business of the defendants, who were engaged in the business of buying, selling, repairing and reconditioning secondhand commercial laundry equipment, as well as selling new laundry machinery. The plaintiff, together with a partner, was engaged in the laundry business, and on the day of the accident was at the defendants’ place of business inspecting a used washing machine, the purchase of which he and his partner were considering.

Numerous photographs as well as oral testimony in the record describe the washing machine in question. It was, as appears from the evidence, a three-door, all metal machine weighing approximately three tons. Its outer metal cylinder was designated as the “shell,” and was equipped with three sliding doors. This outer shell is stationary. Inside the outer shell is an inner cylinder which rotates. Between this cylinder and the outer shell there is only about an inch or two of space. The machine is equipped with a purely mechanical, manual brake.

If the machine was connected and wired according to the original design, the current would pass from a wall switch to a magneto box on the back of the machine. From the magneto box the current would be carried to a control box located on the extreme right of the washing machine, and from there it would then pass through a conduit to a motor located on the top of the machine.

In order to start the machine when so connected, if the machine was in good condition, the doors of the shell must be closed in order to complete the electrical circuit through the control box. The doors are equipped with a “locking bar” so that the door to the extreme left must be closed before the center door can be closed, and the center door must be closed before the door to the extreme right can be closed. On the extreme right of the right shell door and near its top is a finger-like “cam.” This cam operates in connection with a hollow peg-like structure or casting which projects from the left face of the control box. A button protrudes from the end of this peg or casting and is held in its protruding position by a spring in the center of the hollow peg. The hollow peg and button are designated as the “door switch.” When the right door of the shell is closed, the cam on the door presses against and holds the door switch button in, and thus completes one of the circuits through the control box.

Attached to the manual hand brake by means of a metal spoke is a semi-circular, eccentric moon-shaped metal casting called the “brake cam.” On the right face of the control box is a hollow finger-like metal tube extending outward. This hollow tube is equipped with a button supported by a spring. When the hand brake is in a “down” position, this button is depressed by the eccentric moon-shaped casting of the hand brake and the circuit is opened. When the brake is moved upwards and in a “released” position, the moon-shaped cam releases the button and a second circuit is completed within the control box.

The third circuit which is necessary to complete in order to start the machine is designated as the “starter,” “manual,” and “inching switch.” It is a button on the left face of the control box, which is held in an outward position by a spring within the control box. The switch is operated manually, and the switch button must be pushed and held in place before the cylinders can be turned by electric power. Once the machine is started it is no longer necessary to hold this button depressed.

In order that articles to be laundered may be put into, or removed from, the compartments of the cylinder, the apertures of the shell and the cylinder must coincide. This is accomplished by slowly moving or “inching” the inner cylinder by electric power or by hand. If the machine was connected in the way described, it could only be done electrically when the shell doors were opened by placing and holding both the button of the door switch and the “inching” button in the “in” position, and at the same time compressing the two levers of the brake, by the manipulation of which the apertures of the shell and cylinder may be brought into apposition. Such procedure is called “spotting the cylinder.” The inner cylinder may also be “inched” by hand.

The plaintiff’s theory of the accident is that at the time of the injury there was no magneto box on the machine and the motor of the machine was connected by a cable directly to the electrical inlet of the defendants and was started by pulling a wall switch located some distance from the machine. If the machine was so connected, turning on the electrical power would immediately cause the cylinder to rotate.

The defendants’ theory is that at the time when the machine was received by them there was no magneto control box attached to it and that they had at some time prior to the occurrence attached such a box, and wired the control box so that the rotation of the cylinder was started or stopped by engaging or releasing the brake, which was operated by moving the manual brake handle up or down.

On the day of the occurrence the plaintiff, together with his partner, was being shown the machine by the defendants, and plaintiff’s testimony was that the hand brake was loosened and they pushed the cylinder around by hand; that the defendants then attached an electric cable directly to the motor of the machine, took it to the back of the shop and the machine was started; that after it had run for a short period defendant Abe Behn told one of his employees to go back and pull the switch, which he did, and the machine then stopped; that the plaintiff had put his hand into the machine to feel for loose rivets and that while he was so engaged someone pulled the switch in the rear of the shop and the cylinder started rotating and crushed his arm. The defendant Abe Behn called “pull the switch.” The switch was pulled and the machine was stopped, and wrenches were used to remove plaintiff’s arm from the machine.

The testimony of the defendants’ witnesses is to the effect that the electric cable was connected to the machine through the magneto control box before the plaintiff came to the defendants’ place of business; that when the machine was so connected the electrical contact which would start the machine could be made with the brake handle; that the machine, while the defendants were there, was so started, and that after it was stopped the plaintiff reached into the machine with his right hand looking for loose rivets and at that time, with his arm in the machine, he reached up with his left hand and moved the brake handle, starting the machine which caught his arm between the shell and cylinder of the machine.

There is evidence in the record that the plaintiff was right-handed. The plaintiff introduced evidence that the button which should have protruded out of the hollow tube of the door switch was compressed and held back by corrosion so that it was inoperative; that the spring which held out the button of the starting switch was broken and the button was either missing or had dropped back so that it could not perform any function, and that therefore the machine would be started with the doors open and by one-handed operation. On the other hand, testimony on behalf of the defendants was that these buttons would not at any time, even when the machine was new, affect the use of the brake handle alone in starting or stopping the machine.

The evidence with respect to the occurrence of the accident is sharply conflicting and cannot be reconciled.

The defendants urge that there was a variance between the allegations of the plaintiff’s complaint and the evidence offered.

In the complaint the plaintiff charged that the defendants “carelessly and negligently failed to exercise ordinary care in the operation, management and control of the said washing machine” and “carelessly and negligently started the said machine in operation without warning the plaintiff of their intention to do so”; and these charges are followed by charges of specific negligent acts on the part of the defendants. Here there is an allegation of general negligence which standing alone would be sufficient to support the verdict without any allegation setting out the particular acts upon which the general charge of negligence is predicated. Chicago City Ry. Co. v. Jennings, 157 Ill. 274; Church v. Adler, 350 Ill. App. 471. Counsel objected to evidence offered by the plaintiff to the effect that if the machine was properly wired it was necessary, before the machine could be started, to close the doors of the shell and the cylinder, on the ground that the condition of the machine was not important to the lawsuit and was not an issue under the pleadings and was a variance. Such proof was competent under the general charge of negligence. The rule is not changed by also charging specific negligence. In any case, the defendants in their motion for a new trial did not specifically point out the particular variance, nor indicate where the complaint failed to conform to the proof, so that the plaintiff would have the opportunity of amending his declaration to meet the objection. By reason of such omission the defendants cannot now complain of the ruling of the trial court. Pickett v. Kuchan, 323 Ill. 138. The plaintiff states in his brief that under his theory of the case the defendants were guilty of actionable negligence in connecting the power directly to the motor, in causing the machine to be started without notice to the plaintiff when they knew he was examining the machine, and in permitting the source to be unguarded so that the machine could be so started, and states that even if the jury had believed the contention of the defendants that they rewired the control box so that the cylinder could be set in motion solely by the use of the brake, the defendants still were guilty of actionable negligence because the rewiring would eliminate the “two-handed operation” and permit the cylinder to be moved by electrical power by the use of the brake handle alone when the shell doors were open. The defendants contend that such contention was not made in the trial court and the plaintiff’s theory here is not the theory on which he proceeded in the trial court. We do not agree with defendants’ contention. Under the pleadings, and particularly under the issue joined on the allegation of general negligence, the evidence in the record would permit the jury properly to draw such an inference, and upon examining the argument made by counsel to the jury and the instructions given by the court, it would appear that this theory was properly before the jury in the trial of the case.

The defendants argue that the court erred in failing to direct a verdict for the defendants at the close of all the evidence, and they also argue that the verdict was against the manifest weight of the evidence.

The evidence in the record is voluminous. The trial occupied approximately eighteen days, and the abstract in the case contains 878 pages. The evidence was in sharp conflict, and it would serve no good purpose here, and would extend this opinion to an unconscionable length, to further detail the testimony. We have examined the testimony carefully and in our opinion there is sufficient evidence in the record to support the verdict of the jury. The jury apparently believed the witnesses of the plaintiff. This court cannot substitute its judgment for that of the jury in passing on the weight and credibility of conflicting evidence. People v. Bond, 281 Ill. 490; City of Monticello v. LeCrone, 414 Ill. 550. Questions of negligence, due care and proximate cause are ordinarily questions of fact for the jury to decide. Ney v. Yellow Cab Co., 2 Ill.2d 74. In Roller v. Kurtz, 6 Ill.2d 618, the Supreme Court said:

“Where the evidence is conflicting, the witnesses on opposite sides having testified to opposite conclusions, it is the peculiar province of the jury to determine which set of witnesses was right and which was wrong. A decree approving the conclusion of the jury under such a state of the evidence will not be disturbed on appeal. (Sterling v. Dubin, 6 Ill.2d 64; Mitchell v. Van Scoyk, 1 Ill.2d 160.) As we observed in Carney v. Sheedy, 295 Ill. 78, the rule is that ‘where there is a contrariety of evidence and the testimony by fair and reasonable intendment will authorize the verdict, even though it may be against the apparent weight of the evidence, a reviewing court will not set it aside.’ The reason for such rule is found in the advantages possessed by the trial judge and jury, who see the witnesses and hear their testimony. The jury may and should take into consideration the demeanor of the witnesses and many other factors determining the weight and credibility to be given the testimony. The opportunity to observe and consider such matters is not available to a court of review, which only reads a transcript of the testimony.”

The verdict was not against the manifest weight of the evidence and the trial court did not err in overruling defendants’ motion for a directed verdict at the close of all the evidence, and properly overruled their motion for a new trial.

The defendants at the commencement of the trial made a motion asking the court to permit the defendants to set up the machine in a corridor on the main floor of the County Building, and in support of their motion they explained to the court that the machine was so large and heavy that it could not be moved by an elevator to the courtroom. The defendants also moved to have the jury view the machine in operation, and also to present before the jury some motion pictures which were taken of the machine some four years after the accident showing the machine in action being operated by certain agents of the defendants. The court overruled all of these motions.

The defendants here argue that the jury should have been permitted to have had an opportunity to observe the machine while it was in operation, either by a view of the machine or by seeing motion pictures thereof during the. trial, in order that the defendants might show that the machine could be started and stopped by the use of the hand brake alone. The principal issue in the case was as to whether or not at the time of the accident the electric cable carrying current to the machine was connected through the magneto control box or directly to the motor. It was admitted that if the cable was connected directly to the motor the machine could only be started and stopped through the wall switch. The defendants contend that if the jury saw the machine being operated it would be seen that it could be started and stopped by the use of the brake handle alone. There is no dispute that the machine could be so wired that the electrical impulse to operate it could be transmitted by the manipulation of the brake handle, and it is the defendants’ contention that at the time of the accident it was so wired. The plaintiff contends that at the time of the accident the magneto box was not on the machine and consequently it could not be operated in the manner that the defendants’ witnesses say it was and that the machine at the time of the trial and at the time the motion pictures were taken was not in the same condition that it was at the "time of the accident. On this question the evidence is irreconcilably conflicting. The plaintiff also contends that if the machine were properly wired and all the buttons and switches incorporated therein were operating, the use of the brake handle alone would have no effect in setti lg in action the electric motor which motivated the machine.

Twenty-nine photographs of the machine were introduced in evidence and many pages of the record are devoted to testimony giving a detailed description of it. On both sides there is expert evidence concerning and detailing its operation. The same rules which are applicable to a view of the machine are equally applicable to the exhibition of the motion pictures of it under the conditions of the instant case. It is a matter within the sound discretion of the trial judge and the exercise of that discretion will not be interfered with in the absence of a clear showing of abuse. Zipkie v. City of Chicago, 117 Ill. App. 418; City of Springfield v. McCarthy, 79 Ill. App. 388; Metropolitan West Side Elevator Co. v. Goll, 100 Ill. App. 323; City of Chicago v. McShane, 102 Ill. App. 239. It is impossible to see in what respect the jury’s observation of the machine in action would aid them in their determination of the issues before them. The principal issue in the case was not whether the machine could be run by the hand brake alone, but was whether or not at the time of the accident the machine was so wired and connected that it could be so operated. All that a view of the machine or exhibition of the motion pictures would show was that at that time the machine was so wired and connected that it could be motivated by the brake handle. Under the circumstances the pictures would be of no value for clarification or for demonstrative purposes. The court did not abuse its discretion in overruling the motions and offers of the defendants.

The defendants’ counsel, during his cross-examination of one Platz, a witness for the plaintiff, in an endeavor to lay a foundation for impeachment, questioned him with reference to certain contradictory statements made by him in a deposition taken prior to the trial. The witness admitted that to certain of the questions he had made the answers in the transcript, but that he was mistaken as to certain of the things about which he testified, and as to certain others of the questions and answers he stated that he did not remember as to whether or not he made the recorded answers. Defendants’ counsel then asked the witness questions with reference to the latter’s conversation prior to the trial with the counsel for the plaintiff concerning the mistakes in the deposition, and to all of those questions the court sustained plaintiff’s objections. There is no question that when a witness has admitted that some of the answers which he made on a prior occasion were contradictory of his testimony on the stand opposing counsel has the right to ask the witness to explain the discrepancy, and he is allowed considerable leeway in such cross-examination. However, the extent of such cross-examination rests in the sound discretion of the court and will not be disturbed unless it is abused and the party so cross-examining shows that he was thereby prejudiced. People v. Moran, 378 Ill. 461. The questions here asked were improper in form, and it does not appear that the defendants were prejudiced by the ruling. An examination of the witness as to what discussions he had with the attorney for the plaintiff with reference to his testimonial mistakes would not be proper.

During the trial, one of defendants’ witnesses, Louis Sheffey, who at the time of the occurrence was defendants’ employee, testified that the electric power was not connected to the motor directly, bnt through the magneto control box and that he had connected it thereto shortly before noon on the day of the accident; that he had seen the plaintiff pull the brake handle causing the machine to start. On cross-examination the plaintiff laid a proper foundation for the introduction of prior contradictory statements alleged to have been made by the witness. The plaintiff then on rebuttal called a witness who testified to certain conversations with Sheffey, the first occurring in front of the washing machine after the injured plaintiff had been taken away, the other at the hospital where the plaintiff was. In these conversations Sheffey said that he was sorry that he put on the switch (referring to the wall switch), but that he did not know anything was hooked up to it; that he put it on because he was working on an air compressor; that he didn’t realize that a man was going to have his hand injured.

Counsel for the defendants objected to the admission of both conversations and here contends that the evidence adduced from the impeaching witness might have been used by the jury to prove the liability of the defendants and that the admission of these statements which could be used as substantive evidence was improper because they were not part of the res gestae and were beyond the scope of the defendants’ agent’s authority. Counsel for the plaintiff at the time when objections were made clearly indicated to the court that he was asking for the introduction of these statements solely for the purpose of impeachment.

The statements of plaintiff’s witness as to the conversation admitted in evidence certainly flatly contradicted the testimony of the witness Sheffey given on the stand, and consequently were properly admissible for impeachment. People v. Perri, 381 Ill. 244. It is a well settled rule of law that evidence which is competent for one purpose does not become incompetent because the jury might improperly consider it in some other capacity for which it could not properly be admitted. The opponent of the evidence may, if he so wishes, ask for an instruction confining the evidence to its legitimate sphere; and if he fails to so act, he is deemed to have waived any objection he may have. Wigmore on Evidence, 3rd Ed., vol. I, pp. 301-302; Jamison v. People, 145 Ill. 357, 379; Chicago R. I. & P. Ry. Co. v. Clark, 108 Ill. 113, 117. Here the evidence could be properly used for the purpose of impeachment. It could not be properly used as substantive evidence to establish liability of the defendants. Counsel asked for no instruction limiting the inferences which could be drawn from it by the jury. The trial court ruled properly.

Counsel for the defendants alleged that plaintiff’s counsel during the time he was examining a witness was purportedly reading notes, and demanded that counsel for the plaintiff take the stand and bring his notes with him, stating that he had a “right to have him tell this jury what he was writing and what he was reading from, if he was reading from anything.” The court refused to order counsel to the stand, and the defendants here urge that the court was in error since it has been held that there is no rule of law which expressly excludes attorneys from appearing and testifying.

At the time in question, counsel for plaintiff was cross-examining the witness with reference to certain alleged contradictory statements made by him out of court which were, as far as anything appears'in the record, oral. In order to lay a foundation for impeachment it was proper for counsel to ask the witness as to whether or not he had made the statement. The briefs filed herein disclose no case, nor do we know of any, which would justify the calling of counsel for a party to the witness stand to testify concerning the contents of a note which he used in cross-examining the witness. The analogous question of the requirement of an attorney to disclose Ms “work product” in discovery interrogatories was raised in Hickman v. Taylor, 329 U. S. 495. In that case the attorney was asked to produce statements given to him by certain witnesses, and the district court held that the statements must be produced. The Circuit Court of Appeals (153 F.2d 212) reversed the district court, holding that the work product of an attorney was privileged. The Supreme Court (329 U. S. 495) sustained the Circuit Court of Appeals, but held that the statements of a witness to an attorney in preparation for litigation are not privileged under the attorney-client privilege, nor are they subject to discovery as a matter of right without a showing of good cause by the interested party, as provided for by the Federal Rules, and that as to the oral statements made to the attorney, no showing of good cause could be made which would, on discovery procedure, require a disclosure of such statements. The Supreme Court said:

“Historically, a lawyer is an officer of the court and is bound to work for the advancement of justice while faithfully protecting the rightful interests of Ms client. In performing Ms various duties, however, it is essential that a lawyer work with a certain degree of privacy, free from unnecessary intrusion by opposing parties and their counsel. Proper preparation of a client’s case demands that he assemble information, sift what he considers to be the relevant from the irrelevant facts, prepare his legal theories and plan his strategy without undue and needless interference. That is the historical and necessary way in which lawyers act within the framework of our system of jurisprudence to promote justice and to protect their clients’ interests. This work is reflected, of course, in interviews, statements, memoranda, correspondence, briefs, mental impressions, personal beliefs, and countless other tangible and intangible ways — aptly though roughly termed by the Circuit Court of Appeals in this case as the ‘work product of the lawyer.’ Were such materials open to opposing counsel on mere demand, much of what is now- put down in writing would remain unwritten. An attorney’s thoughts, heretofore inviolate, would not be his own. . . . The effect on the legal profession would be demoralizing. And the interests of the clients and the cause of justice would be poorly served.”

Rule 17 of the Illinois Supreme Court [Ill. Rev. Stats., 1953, ch. 110, § 259.17], which was in effect at the time when this suit was tried, provided that memoranda, reports or documents made by or for a party in preparation for trial or any privileged communications between any party or his agent and the attorney for the party were not subject to discovery procedure. Rule 19 — 5 in effect January 1, 1956 [Ill. Rev. Stats., 1955, ch. 110, § 101:19 — 5] restates the rule and adds that such matters are privileged against discovery. There is no provision in the rules for exceptions on good cause shown comparable to the Federal rule. This rule is broader than the rule laid down in Hickman v. Taylor, supra. See Walker v. Struthers, 273 Ill. 387; Chapman v. Gulf, M. & O. R. Co., 337 Ill. App. 611. Even under the narrower rule as laid down in the Hickman case there could under the circumstances be no requirement to have the document in question produced in a discovery proceeding, and much less on demand in the trial of the case.

In the case before us the defendants went much further and sought to have counsel for the plaintiff take the stand and testify with reference to a memorandum which was a part of his “work product.” The defendants had no right to demand that the plaintiff submit to them a memorandum such as this either through a discovery deposition or during the trial, and to seriously contend that an attorney should be compelled by the court to take the stand and testify not only as to the contents of the memorandum but as to what he was doing with it raises an extraordinary and heretofore unheard of proposition. In support of their contention, the defendants cite United States Brewing Co. v. Buddy, 203 Ill. 306, in which case the plaintiff called the attorney to the stand and asked him as to whether or not in a conversation with one Jansen he had not offered to pay Jansen, if the latter would make a statement favorable to the defendant. The attorney denied that he had made such an offer. He made an objection to the question, but no ruling was made thereon. The attorney then made a detailed statement of the conversation between himself and Jansen, which had taken place in the presence of one Lebbin. The plaintiff then called Jansen and Lebbin to the stand, and over objection they both testified that the attorney had offered to pay the witness Jansen for the statement. The court held that the testimony of Jansen and Lebbin should have been admitted because they were not being offered for the purpose of contradicting the attorney who was the witness of the plaintiff and consequently vouched for by him, but they were used solely to testify to a different version of the conversation as narrated by the attorney. This case of course has no application to the matter before us. The court in the instant case was correct in its ruling.

After the cross-examination of Sheffey, the defendants on redirect examination offered in evidence a written statement taken from him at the office of the defendants’ counsel a week prior to the trial of the case, which statement supported the testimony which he gave on direct examination. The court refused to admit- the statement and counsel here contends that- in so doing the trial court erred. This objection is so frivolous that it scarcely merits attention. The rule is well established in Hlinois that where a witness has been impeached by showing that he made statements out of court which contradicted his testimony on the stand, evidence of other previous statements which agree with the witness’ testimony are not competent. Reavely v. Harris, 239 Ill. 526; Chicago City Ry. Co. v. Matthieson, 212 Ill. 292. The only exception to this rule is that where the attack by inconsistent statements may be interpreted as a plan to give false testimony or- to show that the primary witness is biased or has some other motive to falsify, proof of his consistent statements made prior to the time the plan or contrivance was concocted and when the event was recent and his memory fresh should be received in support of his testimony. Waller v. People, 209 Ill. 284. In any case such evidence is only properly offered after the contradictory statement has been received in evidence. None of these conditions existed here and the court’s ruling was proper.

Defendants argue that the court erred in admitting evidence on the part of the plaintiff that the machine in question was delivered to the defendants on the day of the accident by the Chicago State Hospital, and that the question as to the date of the delivery of the machine was not properly an issue to be considered by the jury. However, one of the defendants, called as an adverse witness, had testified that the machine had been delivered a long time prior to the date of the accident, and subsequently there was testimony on the part of the defendants that the magneto control box was not on the machine at the time when it was received but was subsequently attached and the machine was rewired. Such evidence was clearly competent, and in any case the defendants on - cross-examination brought out that the machine was delivered on August 12, 1949, the date of the accident, so that even if there had originally been any error in the admission of the evidence it was cured by the cross-examination of the defendants. Porter v. Terminal Railroad Ass’n of St. Louis, 327 Ill. App. 645.

Counsel for defendants made numerous other objections to the rulings of the court on the introduction of evidence. We have carefully examined them and find no error.

The defendants also urge that the court erred in refusing to sustain their motion for a mistrial because one of the witnesses for the plaintiff, his partner, while testifying and describing the injuries to the plaintiff wiped his eye as though he were crying. The court properly denied the motion of the defendants. Blachek v. City Ice & Fuel Co., 311 Ill. App. 1. Nor did the court err in refusing to allow the other motions of the defendants for a mistrial.

Defendants here also contend that the counsel for the plaintiff was guilty of prejudicial misconduct during the course of the trial and in his argument to the jury.

The trial abounded in instances of side remarks of counsel which were not of a character which would be proper in the trial of a lawsuit. Counsel for the defendants in his argument to the jury went outside the record in appealing for sympathy for his clients, and laid great stress upon their poverty and the impossibility of their paying a large judgment. That such remarks were improper is something which is known to the most inexperienced trial lawyer. Counsel for the defendants is not inexperienced. Nor can we by any stretch of the imagination assume that he did not know what he was deliberately doing. Counsel for the plaintiff responded to this argument, calling attention to the possibility of a discharge in bankruptcy or requirement of a remittitur.

In support of their contention, the defendants call the attention of this court to the fact that in two cases recently decided in this court we reversed and remanded because of counsel’s misconduct (Vujovich v. Chicago Transit Authority, 6 Ill.App.2d 115; Baratta v. Chicago, R I. & P. R Co., 7 Ill.App.2d 17). In each case the misconduct on which the court reversed was that of counsel for defendants in the case before us. In the latter case, in criticizing* counsel for the plaintiff (counsel for the defendants here), the court said that throughout the trial he “indulged in prejudicial and inflammatory remarks addressed to defense counsel, to the court, to witnesses, and to the jury. . . . Defendant’s counsel and the court were incessantly interrupted. . . . Throughout the trial abusive and sarcastic remarks were directed to defendant’s counsel.” The same conduct on the part of counsel for defendants appears in the record before us. The remarks of counsel for the plaintiff in response to the constant onsets made by his opponent were mild, and the jury were properly and fully cautioned in the instructions. Counsel for the defendants also cites in support of his contention Crutchfield v. Meyer, 414 Ill. 210, in which case he was counsel for the appellant. In that case the court, concerning misconduct of counsel, said:

“A reading of the record reveals a decided lack of propriety in the conduct of the trial of this case in respect to argument of counsel. Counsel for both plaintiff and defendants were guilty of improper remarks in addressing the jury in final argument. We are in agreement with the Appellate Court that a party can have no just ground for complaint on account of remarks improper in themselves which are necessitated by like remarks on the other side. (Crutchfield v. Meyer, 347 Ill. App. 315.)”

These cases would seem to indicate a pattern in the trial of a lawsuit on the part of counsel for the defendants. A trial properly conducted is a dignified procedure. Counsel in the case are officers of the court and owe a duty to the court, to opposing counsel, to the cause of justice and to themselves. Often in the heat and fervor of a sharply contested trial these standards are forgotten. Too often they are not only forgotten hut completely disregarded and dragged in the mire. Objections properly made are addressed to the court and counsel is entitled to state his reasons for his objections, but an inflammatory statement accompanying each objection, apparently made solely for the purpose of prejudicing the jury, is improper. Abuse of opposing counsel and of the court has no proper place in a trial. All of these matters rest within the control of the trial court, and the trial court has the power and duty to preserve decorum. The trial court can and should institute contempt proceedings against recalcitrant counsel and impose either a fine or jail sentence. In Walsh v. Chicago Rys. Co., 303 Ill. 339, the court says:

“Whether or not an objection should be sustained to remarks made in argument by an attorney in the trial of the case and whether his objectionable remarks should be held to be error may depend upon the preceding argument of opposing counsel.”

See also Kenna v. C. H. & S. E. R. R. Co., 284 Ill. 301; Plambeck v. Chicago Railways Co., 294 Ill. 302; Reinmueller v. Chicago Motor Coach Co., 341 Ill. App. 178.

If a reviewing court would reverse under circumstances such as are here presented to us, it might encourage counsel with a weak case to attempt to so obfuscate the record that the trial court would be compelled to withdraw a juror or risk reversal. This certainly would not be in furtherance of justice. Counsel in the case before us apparently followed the same provocative pattern used in previous trials. The purpose of a trial is to attempt under the rules of law to elicit facts for the consideration of the jury from which they may arrive at as close an approximation of the truth as is humanly possible. The test laid down in Crutchfield v. Meyer, supra, is: “The questions to be determined are, therefore, whether the improper argument was of such a character as was likely to prejudice the defeated party, and if so, was the verdict so clearly right that a new trial ought not to be granted because of such prejudicial argument.” In its opinion reversing the case the court found that the jury was improperly instructed. In West Chicago St. R. Co. v. Annis, 165 Ill. 475, the court said:

“It is ... a matter resting in the sound discretion of the trial judge to say when, under all the circumstances of the case, and in view of the counter remarks which may be made and the temper and character of the jury, whether a new trial should be granted or not, and unless it satisfactorily appears from the record that the trial court has abused its discretion in this regard courts of review cannot interfere.”

In Mrdalj v. Public Service Co., 308 Ill. App. 424, the court said:

“‘. . . However, it should be borne in mind that it is the presumption of law that jurors are intelligent, honest, fearless and just. Courts are not justified in assuming that the mind of the jury is of such plastic and unreliable material as to at any unjustified word of debate neglect the instructions, abandon the evidence and disregard their oaths.’ ”

See also County of Jackson v. Wayman, 369 Ill. 123.

In this case, considering the whole record, the defendants were not deprived of a fair trial and the verdict reached by the jury on the evidence presented to them was a proper verdict. The trial court did not err in its ruling.

Counsel argues that the damages awarded to the plaintiff are excessive. The plaintiff, who was a man 48 years of age at the time of the accident and prior thereto was in good health, lost an arm which was amputated about 3% inches from' the shoulder. Because of the nature of the amputation it was the opinion of a physician that ■ he would be unable to be fitted with a properly functioning artificial arm. There was evidence in the record as to a present and prospective loss of earnings on the part of the plaintiff, in addition to the medical and hospital expenses. The testimony shows that plaintiff endured severe pain and suffering. In Holsman v. Darling State Street Corp., 6 Ill.App.2d 517, we said:

“We have repeatedly held that damages awarded to a plaintiff in a personal injury case will not be set aside unless so palpably excessive as to indicate passion or prejudice on the part of the jury. Garner v. Burns Mid-Town, Inc., 346 Ill. App. 162; Levanti v. Dorris, 343 Ill. App. 355; Gorczynski v. Nugent, 335 Ill. App. 63; Hannigan v. Elgin, J. & E. Ry. Co., 337 Ill. App. 538; Liby v. Town Club, 5 Ill.App.2d 559.”

Here there is nothing in the record to indicate passion or prejudice on the part of the jury and the verdict under the circumstances in this case should not have been, and will not be by this court, disturbed on this ground.

In Dodds v. Chicago Transit Authority, 9 Ill.App.2d 388, filed this day, we again call attention to the rule frequently stated by this court that matters will not be here considered which have not been raised in the lower court in the motion for a new trial and that we will not consider any ruling of the trial court in giving or refusing instructions unless the instructions involved are specifically pointed out in the motion for a new trial. In the case now before us we have considered or referred only to matters properly so raised.

We find no reversible error in the record. The judgment of the Superior Court of Cook County is affirmed.

Affirmed.

BOB SON and SCHWABTZ, JJ., concur.