author: TRAPP, P. J.

text:
    Wolford Morris Sales, Inc., Plaintiff-Appellee, v. Jack H. Weiner and Organ Grinder, Inc., a Corporation, Defendants-Appellants.
    Gen. No. 10,698.
    Fourth District.
    September 26, 1966.
    Rehearing denied and opinion modified November 2, 1966.

      Londrigan & Londrigan, of Springfield (James T. Londrigan, of counsel), for appellants.
    Gillespie, Burke & Gillespie, of Springfield, for appellee.
   TRAPP, P. J.

The defendant Jack H. Weiner appeals from a judgment in the amount of $10,000 upon the verdict of the jury after remittitur. The defendant and counterclaimant, Organ Grinder, Inc., appeals from a judgment entered upon the verdict of the jury finding in favor of the plaintiff counterdefendant as to the counterclaim and a judgment entered upon the verdict of the jury in the amount of $6,702.68 upon plaintiff’s complaint.

Count I of the complaint alleges that on the 10th day of July, 1958, plaintiff, through its president Wolford Morris acting upon the request of the defendant Jack H. Weiner, loaned to the latter the sum of $10,000 by delivering to him a check; that Weiner promised to pay the sum upon demand and that he failed to do so despite demands made upon him. In Count II the complaint alleges that on the 25th day of April, 1960, the plaintiff and defendant Jack Weiner met and stated an account by which the sum of $10,000 was found to be due from Weiner, who promised to pay said sum but has not done so despite demands made.

Jack H. Weiner denies the allegations of the complaint.

As to the defendant Organ Grinder, Inc., hereinafter referred to as “Corporation,” the complaint alleges that from the 30th day of June, 1958, through June 10, 1959, plaintiff, at the request of defendant “Corporation,” sold and delivered certain kitchen equipment, supplies, merchandise, appliances and fixtures which “Corporation” agreed to pay for; that on the 26th day of April, 1960, the plaintiff and defendant “Corporation,” acting through and by Jack H. Weiner as an officer of “Corporation,” met together and accounted concerning the total amount of money due and owing from “Corporation” to the plaintiff, and at that time “Corporation” agreed to pay such amount but had refused to make such payments after demand made; that after allowing all credits due “Corporation,” it owes to the plaintiff the sum of $16,702.68, which remains unpaid.

The defendant Jack H. Weiner urges that the trial court erred in refusing to direct a verdict, in denying his motion to withdraw Count II of the complaint because of insufficient evidence under the provisions of c 110, § 68 (4), (Ill Rev Stats), and in refusing to enter a judgment n. o. v. In the alternative, defendant Weiner urges that a new trial should be granted this defendant Jack H. Weiner in that the verdict of the jury is against the manifest weight of the evidence, and that there is prejudicial error in the admission of the deposition of one Redfern. Each defendant alleges error in admitting plaintiff’s Exhibits #14 and #15, purporting to relate to an account stated, and in the giving or refusal of instructions as discussed hereinafter.

Upon the issue as to whether the verdict against Jack H. Weiner should be set aside, we find that the dealings originate, so far as specific or documentary evidence shows, in plaintiff’s Exhibit #5, dated June 26, 1958. This instrument, which was not abstracted, is in the form of an assignment to the Illinois National Bank of Springfield, Springfield, Illinois, of:

“The Following:
“Assignment of Contract on the ‘Organ Grinder Room’ signed by J. H. Weiner, in the amount of $70,000.00.”

This document bears the signature of J. H. Weiner as accepting the assignment made to the bank by Wolford A. Morris. Plaintiff’s Exhibit B, also omitted from the Abstract, is a copy of a letter dated June 27, 1958, addressed to Mr. J. H. Weiner, Ridgely Bank Building, Springfield, Illinois, quoted in part as follows:

“This letter is written to notify you that I have assigned to The Illinois National Bank of Springfield, of Springfield, Illinois, the sum of $70,000. owing by you to me on contract.”

which letter also authorized and directed Weiner to make payments by checks payable to both the assignee bank and Wolford A. Morris, and to send the checks directly to the bank until such time as notified that the assignment has been released. We find no dispute in the record concerning the authenticity or the applicability of these documents. This defendant testified that the assignment of the contract was accepted by him as an individual.

No specific contract, which would be the subject of assignment, has been put into evidence, but the testimony is that the execution of the assignment to the bank permitted plaintiff to finance equipment furnished in constructing the Organ Grinder Room. There is no controversy as to the fact that equipment was furnished.

With reference to the transactions alleged in Count I, Wolford Morris testified that shortly after the assignment he talked with Weiner in front of the hotel owned by defendant Weiner and adjacent to the Organ Grinder Room then being constructed, and that defendant told Morris that he needed money to pay contractors and suggested or requested that Morris borrow $10,000 against the assignment at the bank, and that defendant’s partner in the hotel, one Yates, would return to Springfield in two or three days and that defendant would pay back the $10,000. Morris testified that he would have to talk to the bank because the assignment was only to be used for purchasing equipment. Morris further testified that thereafter he obtained a loan from the bank on the assignment and gave to the bank the note of plaintiff company. He testified that thereafter he drew a check upon the company account payable to defendant. Plaintiff’s Exhibit 4P8 is a check in the sum of $10,000. Upon examination of the exhibit, it appears that the payee of the check is “Jack Weiner” in a form of printed script. Immediately above the name of the payee, in written script, there appear the further words, “Organ Grinder Room.” Upon the reverse side of the exhibit appears the legend “Organ Grinder, Inc. Stanley A. Weiner for deposit.” Morris testified that he delivered the check to the defendant, but that at the time of such delivery, the words “Organ Grinder Room” were not on the check. Dorothy Bailey, plaintiff’s bookkeeper, testified that she prepared the check and that the payee inserted by her was “Jack Weiner,” and that she did not insert the words “Organ Grinder Room.” Morris further testified that he delivered the check to Weiner in front of the Governor Hotel, but that nothing was said at that time and that he had no knowledge of the form of endorsement until this litigation. He further testified that he understood the check would be used to pay contractors working at the Governor Hotel and Organ Grinder Room, but did not know that the check would be deposited in the account of the defendant “Corporation.”

With respect to the transaction, defendant Weiner testified that three or four days before the money was borrowed he saw Morris and defendant’s brother, Irwin, in the Organ Grinder Room, that the brother said that $25,000 or $30,000 was due to contractors for the work then being done on the Organ Grinder Room, and suggested that Morris borrow $10,000 to pay off the contractors. Defendant testified that he suggested that there was the assignment at the bank, that there was nothing in the contract which limited plaintiff’s borrowing to pay for equipment and that it would be feasible to go to the bank and borrow $10,000 on the assignment so that the contractors could be paid. He further testified that at the time of the delivery he, the defendant, was talking with his son in the hotel, that Morris handed the check to him and that he, the defendant, in turn handed the check to his son and told him to deposit it in the “Organ Grinder account.” Defendant testifies that he did not add the words, “Organ Grinder Room” to the face of the check and that he did not know that the check was made to him individually, and that he did not make the endorsement for deposit.

Irwin Weiner, brother of Jack H. Weiner, testified in behalf of Weiner that in the early part of July, 1958, the contractors were asking for money and that he finally called Wolford Morris and asked him to borrow money at the bank against Organ Grinder, Inc. to pay the contractors. He testified that he was the one who told Morris to get the money because there was an assignment “from Organ Grinder he could borrow on.” He testified that he did not see the check or write anything on the face of the check.

Stanley Weiner, son of defendant Jack H. Weiner, testified that at about the time Morris handed the check to his father, the latter gave him the check and said: “Take this to the bank and put it in the Organ Grinder account,” that he did so, endorsing it for deposit in an account designated “Organ Grinder, Inc.” He testified that he did not add the words, “Organ Grinder Room” above the designation of payee on the check and he did not observe the face of the check.

There is a pervading ambiguity throughout the testimony offered as to the designation of the “Organ Grinder Room” and Organ Grinder, Inc. The so-called contract was on the “Organ Grinder Room” as the contract of the defendant Jack H. Weiner. In referring to the transactions in this period the witnesses rarely used the term “Organ Grinder, Inc.”, and the documentary references in billings of the plaintiff and in the testimony of defendant’s witnesses is to the “Organ Grinder” or the “Organ Grinder Room.” In view of the nature of the initial contractual designation, it would not seem unreasonable for plaintiff to set up its accounts as the “Organ Grinder Room,” and there is no conclusive reason for saying, as has been argued by defendant “Corporation,” that the several billings as to the latter necessarily impeaches the claim of the plaintiff. During this period of time, the status of “Organ Grinder, Inc.” is never satisfactorily shown in the record. It may roughly be summarized that defendant Jack H. Weiner, during 1957, contemplated a coffee shop in connection with the Governor Hotel in which he was a principal owner. This seemed to evolve into a proposed bar and dining room and ultimately became the project designated the “Organ Grinder Room.” It appears that in early 1958 there was conversation leading to the creation of a corporation, and there is evidence that Wolford Morris was to be accepted as a shareholder. The defendant Weiner was not considered to be a shareholder in the corporation at this time, although he owned the premises where the “Organ Grinder Room” was being constructed, and no lease of the premises is in evidence. The testimony of James Martin, an attorney, is that the corporation was chartered in the early part of 1958. The evidence is that no shares had been issued as late as 1961, and that probably no shares were issued until 1963, by which time the defendant Jack H. Weiner had contributed substantial sums to the corporation, and had become a shareholder.

The other evidence as to the nature of the transaction comes from the evidence of one Redfern who, at the time in question, handled the assignment contract in behalf of the Illinois National Bank. While there are objections to the admissibility of the testimony of Redfern as hearsay, we find that it was in response to the questions of Weiner’s counsel that Redfern testified that at the time the plaintiff, through its president Wolford Morris borrowed the $10,000 in issue, Morris stated that it was a short-term personal loan to the defendant Jack H. Weiner.

Under the evidence noted, we must conclude that the trial court did not err in refusing to direct a verdict in favor of the defendant upon Count I, or in refusing to grant a judgment n. o. v., for it has long been held that the single question presented under such motions is whether there is any evidence which, standing alone and taken with all its intendments most favorable to the plaintiff and which fairly tends to support the cause of action so that the jury might reasonably have found for the plaintiff. Sommese v. Maling Bros., Inc., 65 Ill App2d 223, 213 NE2d 153; Perkins v. Chicago Transit Authority, 60 Ill App2d 431, 208 NE2d 867.

We also conclude that it cannot be said that the verdict of the jury is against the manifest weight of the evidence. In addition to the testimony noted, we find from the testimony of Irwin Weiner that as to the construction of the proposed “Organ Grinder Room,” the bank had refused to give him credit and had required the defendant Jack H. Weiner to enter into the contract. It appears from the testimony of the defendant that he, himself, had suggested that plaintiff borrow the money upon the assignment of the contract at a date approximately two weeks after the assignment of what he, himself, described as a personal contract. There is nothing in the record which demonstrates that the so-called contract assigned by Jack H. Weiner was ever transferred by assignment or otherwise to Organ Grinder, Inc., and as noted, there is no evidence that Organ Grinder, Inc. had a lease or other contract interest in the “Organ Grinder Room.”

There has been a contention that the deposit of the check to the account of Organ Grinder, Inc. constituted a novation. The essential elements of a novation include a previous valid obligation and the agreement of all parties to a new contract which extinguishes the former contract. Black’s Law Dictionary, 1944. We find no evidence supporting the required elements.

The defendant Weiner asserts error in refusing defendant’s instruction #10 upon defendant’s theory that the money in issue had been repaid, but defendant himself, however, as well as his accountant Cain, had testified to a total amount found due to plaintiff which included this amount, and under such evidence the denial of the instruction is not reversible error.

As to the defendant, Jack H. Weiner, this jury returned a general verdict. Where several causes of action are charged and a general verdict is returned, such will be sustained if there are one or more good counts or causes of action to support it. Finding no reversible error as to Count I, we, therefore, do not review error alleged as to Count II. Hylak v. Marcal, Inc., 335 Ill App 48, 80 NE2d 411.

The status of Organ Grinder, Inc. in this appeal is not clear. The record discloses a notice to creditors in bankruptcy which set forth that the corporation was adjudged bankrupt on its petition filed September 27, 1965, i. e., following the filing of its notice of appeal. The record does not disclose whether a trustee in bankruptcy was ever appointed and there has been no motion to add any party.

Upon the issue as to whether or not there was an account stated between the plaintiff and Organ Grinder, Inc., we find that on or about April 25, 1960, plaintiff, by Wolford Morris, and its attorney, James Martin, Jack H. Weiner, now president of the corporation, Irwin Weiner and John Cain, their accountant, met to review the state of the accounts of the parties. Cain testified that there had been a number of meetings or discussions as to this matter and that he had examined the books and records of the plaintiff in behalf of the defendant, and had submitted a statement or work paper summarizing his examination, and that the meeting on this date was to review and determine the amounts owed. Jack H. Weiner and Irwin Weiner each testified that prior to this meeting they were of the impression that some $6,000 or $7,000 was owed for equipment. Cain, in behalf of the defendant, testified that his examination of the accounts disclosed that approximately $17,000 was owed to plaintiff (which sum included the $10,000 heretofore discussed). James Martin, attorney for plaintiff, testified that as the result of their review and discussion, the balance demonstrated to be due upon the several transactions was $17,715.87. Plaintiff’s Exhibit #12 designated charges and reconciliation of charges prepared as of June 15,1959, by the accountant Cain, discloses that the balance due for equipment and appliances was $8,137.11.

The following day Martin, in behalf of plaintiff, wrote a letter, designated in the evidence as plaintiff’s Exhibit #14, addressed to the defendant, Jack Weiner. In substance, the letter indicated that it was to confirm the agreement reached at the conference concerning the balance due on the Organ Grinder, Inc. account which had been determined and agreed to be $7,715.87, after a credit to the balance shown on Cain’s account. This letter noted that the defendant Jack H. Weiner acknowledged liability and that there had been agreement for the execution of a corporate note for the total which would be guaranteed by Jack H. Weiner, Irwin Weiner and Stanley Weiner, individually. The enclosed note was not signed and the record does not disclose that there was a reply to this letter in behalf of the defendant. Thereafter, on May 13, 1960, Martin, in behalf of the plaintiff, again wrote to the defendant Jack H. Weiner, referring to the agreement to execute a note to be guaranteed above. This letter is designated plaintiff’s Exhibit #15. There was also reference to other matters discussed, including the fact that plaintiff would help with regard to the disposition of several items of equipment, called attention to the fact that the account had not been settled as agreed, and that he, as attorney, had been instructed to file suit.

Defendant contends that it was error to admit such letters into evidence as they were self-serving statements, while plaintiff urges that such letters were admissible as a statement of account and an agreement to pay, as well as evidence of a demand.

It appears that many forms of an account stated could be described as self-serving statements. The nature of an account stated has been summarized in Pure Torpedo Corp. v. Nation, 327 Ill App 28, 63 NE2d 600, where an action was brought on an account stated and the defendant counterclaimed, alleging negligence which caused extensive damages. Defendant denied that he made an unqualified promise to pay, contending that he had only promised to pay upon settlement of damages. This opinion reviews, at length, the nature and meaning of an account stated and the law relevant to such. In brief, relevant items set forth, include: An account stated is an agreement between parties who have had previous transactions of a monetary character that the items of account are true and that the balance is correct; that the meeting of the minds of the parties upon the correctness of an account stated is usually the result of a statement of account by one party and agreement thereto by the other, but the form of agreement or assent is immaterial and such may be implied from the conduct of the parties and the circumstances of the case; that an account rendered by one and retained by the other beyond a reasonable time without objection constitutes a recognition of the correctness of the account and establishes an account stated so that it is conclusive unless impeached for fraud or mistake.

The opinion notes that the parties had given no consideration to the alleged claims for damages in stating the account and said:

“The balance agreed to be due has to do only with the items considered, and the items not considered may be the subject of setoff or counterclaim.”

We note that the present case actually proceeded upon this course.

In Associated Furniture Manufacturers v. Leader House Furniture Co., 224 Ill App 597, it is stated that an account stated is a final adjustment of items in accounting and that when the fact of an account stated is disputed, it is a question for the jury to determine whether an account is stated. It is also held to be a jury question as to whether or not the accuracy of an account stated was accepted by failure to object to the account.

In argument defendant contends that in his behalf, the accountant, John Cain, denied the accuracy of the account. Such letter is not in evidence, but a quotation of a sentence apparently from such letter is contained in plaintiff’s Exhibit #15. Since defendant has argued such point, we feel it fair to note that it does not appear that the Cain letter raised any question as to the accuracy of the account, but that he was “against any further action on this account” until such time as matters of claim contained in the counterclaim of the defendant, “Organ Grinder, Inc.” hereinafter discussed, were settled.

In support of his contention that the letters admitted as exhibits were self-serving statements and hence improperly admitted, defendant has cited certain authorities. It appears that these authorities do not refer to documents of the nature of an account stated, and, more specifically, do not purport to be related to transactions or agreements between the parties concerning the matter at issue. In Kirkpatrick v. United Federation of Postal Clerks Benefit Ass’n, 52 Ill App2d 457, 202 NE2d 136, letters relating to a claim for disability were held inadmissible where the party had set forth his medical history and treatment, related the statements made by physicians at a hospital treating him, and indicated that he was married and had a family. The case was reversed for the admission of these letters, and also the admission of incompetent lay opinion concerning the disability.

In Village of Morton Grove v. Gelchsheimer, 16 Ill2d 453, 158 NE2d 70, it was held improper to admit a summary or statement described as a written synopsis of oral testimony which included computations as to matters which were hearsay insofar as the individual preparing the synopsis was concerned.

In The Anglo-Calif. Trust Co. v. Essanay Film Co., 324 Ill 249, 155 NE 26, it was held error to permit the defendant to introduce certain book accounts and records of expenses to support a plea of setoff for legal expenses. While the opinion refers to the statements rendered by the attorneys to the defendant as hearsay, a more specific reason for the ruling seems to be that there was no showing that the expenses claimed as were setoff were reasonable, necessary or solely for the purpose of the litigation supporting the plea of setoff. Similarly, in Home Life Ins. Co. v. Franklin, 303 Ill App 146, 24 NE2d 874, the series of letters held inadmissible did not relate to a mutual transaction between the parties, but constituted a statement of claims made by one party. In Cooke Co. v. Miller Brewing Co., 316 Ill 46, 146 NE 459, it was held that certain letters were inadmissible wherein plaintiff was claiming performance of the contract. It did not purport to deal with matters actually transacted between the parties. This opinion seems to distinguish letters which deal with the construction of a disputed contract and are admissible from letters which claim performance of the contract in issue and are not admissible.

We believe that, under the authorities cited and the evidence in this case, the question of whether or not there was an account stated between the parties and a promise to pay made by the defendant were properly submitted to the jury.

With regard to the counterclaim of Organ Grinder, Inc., it is contended that the theory is of a breach of contract characterized as negligence in planning the construction and setting up the business, and it is also the theory that there was an implied warranty that the appliances and equipment would be good and sufficient for the purposes for which bought. As to the alleged negligent construction by the defendant, the brief contains no citations of authority and there is no argument presented with regard to the design and construction. Such items must, therefore, be deemed waived. Sny Island Levee Drain. District v. Meyer, 27 Ill2d 530, 190 NE2d 356; City of Chicago v. Porter, 26 Ill App2d 323, 168 NE2d 468; Appellate Court Rule 7, c 110, § 201-7 (Ill Rev Stats, 1965).

It is argued in behalf of Organ Grinder, Inc. that its counterclaim is based upon a contract to furnish “goods” good and sufficient for the purpose for which bought, and that there was a sale of defective merchandise.

The counterclaim contained an allegation:

“That the plaintiff also assured defendant that all personal property, merchandise, equipment, fixtures, appliances, bar equipment, cooling equipment, ice-machine, exhaust fans, carpeting, kitchen equipment and all incidental items pertaining to said business would be of good quality, servicable (sic) operational and free of defects; that defendant relied upon such assurances, thereby impliedly warranting that the goods and materials furnished were fit for the purposes required.”

The underlined portion of the quoted allegation was made by handwritten interlineation upon motion during the course of the trial. Considering the specific nature of the allegation prior to the interlineation, the amendment added can only be considered a conclusion of law, analogous to general allegations as to the duties of a party. Darling v. Charleston Community Memorial Hospital, 50 Ill App2d 253, 200 NE2d 149.

With this view of the nature of the pleadings, defendant’s contention that matters of express warranty were not in issue cannot be sustained, and hence we do not believe there was reversible error in giving plaintiff’s instructions with reference to express warranty, and in denying defendant “Corporation’s” instructions relating to implied warranty where the buyer relies upon the seller’s skill and judgment. As to counterclaim-ant’s instruction purporting to cite the elements of damage upon an implied warranty as to equipment and appliances furnished, no authority has been cited and our research reflects that the elements attempted to be stated are not correct. Defendant and counterclaimant also assert that there was error to modify certain of its instructions by interlineation. No authority is cited and we have found none which hold that the fact that the instruction has been interlined by the court makes the giving of the instruction reversible error.

Counterclaimant contends that the court erred in its refusal to admit certain exhibits into evidence: refused Exhibit #6 is a statement for the cost of moving fixtures when the kitchen was enlarged; refused Exhibit #24 is for appliances purchased approximately two and one-half years following the completion of the work; and refused Exhibits #22 and #23 are statements from the plaintiff corporation but no argument is made to show their relevance, and we find no reversible error in the court’s action with regard to such exhibits.

Upon petition for rehearing, defendant Jack Weiner urges that this court failed to consider his arguments upon the contention that the trial court erred in denying his motion to withdraw Count II of the complaint at the close of all of the evidence, and admitting into evidence plaintiff’s Exhibits #14 and #15. That count and such exhibits concern the issue of an account stated between the plaintiff and Jack Weiner. It is urged that there is no evidence which supports the allegations of the count or plaintiff’s instruction #12 upon the issue.

The Abstract discloses that the defendant Jack Weiner and his accountant testified that they met with plaintiff and his attorney to review the accounts of the several parties. The accountant testified that they met several times for such purpose and that he prepared certain work papers upon the accounts which are in evidence. Each of the questioned exhibits refers to a meeting at which the account was purportedly determined. We cannot agree that there is no evidence upon the issue of an account stated as to Jack Weiner.

The sufficiency of the evidence to go to the jury upon the issue, and the admissibility of the exhibits in question, have been discussed at length in the opinion as it relates to the defendant corporation. We conclude that the trial court did not err in denying the motion to withdraw Count II, or in giving plaintiff’s instruction #12.

The several judgments of the trial court are affirmed.

CRAVEN and SPIVEY, JJ., concur.


source: Caselaw Access Project

author: MR. PRESIDING JUSTICE MORAN

license: Public Domain

text:
    Equitable Life Assurance Society of the United States, Plaintiff-Appellee, v. Mauro L. Scali, et al., Defendants-Appellants.
    Gen. No. 65-82.
    Second District.
    September 27, 1966.
    Rehearing denied November 17, 1966.

      ABRAHAMSON, J., dissenting.
    Donald T. Morrison, of Waukegan, for appellants.
    Russell & Bridewell, of Chicago, for appellee.
   MR. PRESIDING JUSTICE MORAN

delivered the opinion of the court.

This is an appeal from a mortgage foreclosure decree entered in favor of the plaintiff mortgagee, Equitable Life Assurance Society. The defendant mortgagors, Mauro L. Scali and his wife, Joanna, defended the action on the ground, among others, that the mortgage loan was usurious. Their appeal from the adverse ruling of the lower court presents a case of first impression in this State.

In 1957, the defendants purchased a home in Deerfield, Illinois, for $34,000 and obtained $25,000 of the purchase money by borrowing that amount from the plaintiff. The loan was secured by a twenty-five year mortgage at five percent interest. At the time of the loan, plaintiff had appraised the market value of the property at $38,500. The amount of the loan was, therefore, roughly two-thirds the market value of the property.

As a condition of the loan, the plaintiff also required Scali to take out an Equitable life insurance policy in the amount of $25,000, and to assign the policy to Equitable as collateral security for the loan. At the time of the loan, Scali already had life insurance policies in force with the Northwestern Mutual Life Insurance Company in the face amount of $58,500. It appears that the “family income” provisions of these Northwestern Mutual policies brought their total value to approximately $75,-000. These Northwestern Mutual policies were permanent insurance and not term insurance.

Scali testified that he inquired of the Equitable agent as to whether he could assign his Northwestern policies to Equitable as collateral security for the loan, in lieu of purchasing an additional life insurance policy from Equitable. He was informed that this could not be done, and that Equitable would accept only a new or already existing Equitable policy. This testimony was not contradicted by the plaintiff, and the record is clear that, at the time of the loan in question, every mortgage loan made by Equitable had to be secured by one of its own insurance policies on the life of the borrower, regardless of what other life insurance the borrower might already have had or have been willing to acquire in lieu of an Equitable policy. Subsequent to the Scali loan, Equitable changed its policy in this respect. Moreover, the Equitable policy had to be one of ordinary life insurance, and not term insurance, which would have been less costly to the insured.

The defendants were required to make monthly payments of $195.73. Of this amount, $146.25 was for the principal and interest on the mortgage loan, and $49.48 was for the life insurance premium. The payments on the mortgage and the insurance policy were inseparable, and it was provided that any default in payment on the insurance premiums would be considered a default on the mortgage, and the entire loan would become due.

Beginning in the latter part of 1958, Scali encountered problems with his employment and the monthly payments to Equitable were often delinquent. This situation continued for several years, and finally this foreclosure action was filed by Equitable in 1964.

In their answer to the complaint, the Scabs raised the affirmative defense of usury, pleading that the insurance premium was an additional charge exacted for the loan, and that when the insurance premium was added to the stipulated five percent interest, the total charge for the loan exceeded the seven percent maximum permitted by statute. It was their theory that, because of the usurious nature of the transaction, all interest on the loan was forfeited and, pursuant to Ill Rev Stats ch 74, § 6, defendants were entitled to a setoff against the remaining amount due on the principal, of all interest and insurance premiums paid, together with reasonable attorneys’ fees and court costs.

It was stipulated that the monthly payment on a $25,000 loan for twenty-five years at seven percent interest — the legal maximum — was $176.70. As previously noted, the combined payment of the Scabs was $195.73.

One normally thinks of “usury” as the simple practice of charging a greater amount of “interest,” clearly labeled as such, than the law allows. Since the “interest” in this case was only five percent, whereas the law allows seven percent, it is apparent at the outset that we are not dealing with the typical usury case, and, as we have indicated, there is no reported decision in this State which deals with the question presented.

We start with the fact that, by the terms of the statute itself, “usury” is by no means limited to the charging of excessive “interest.” Sec 5 of ch 74, Ill Rev Stats, provides that:

“No person or corporation shall directly or indirectly accept or receive, in money, goods, discounts or thing in action, or in any other way, any greater sum or greater value for the loan, forbearance or discount of any money, goods or thing in action, than is expressly authorized by this Act or other laws of this State. . . .” (Emphasis added.)

The basic law concerning usury seems relatively uniform throughout the country, and it is clear that under certain circumstances the requirement of insurance in connection with a loan can, in some instances, render the entire transaction usurious. The cases from other jurisdictions are collected in a comprehensive annotation at 91 ALR2d 1344, entitled “Usury: requiring borrower to pay for insurance as condition of loan.”

The general rule in other jurisdictions is that “. . . the requirement by a lender, whether an insurance company or otherwise, that the borrower should as a condition for obtaining the loan take out, and pay premiums on, a policy of insurance, and assign it to the lender as additional security for the loan, . . . does not, though making the cost of the loan exceed the highest legal interest, necessarily constitute usury where there is no showing that the requirement is intended to be, or is exacted as, a mere shift or device to cover usury,” 91 ALR2d at 1348. We have added the emphasis in the foregoing quotation to demonstrate how any statement of the general rule — and the quoted statement puts it about as well as any we have seen — simply begs the question. The cases have been decided on their particular facts, and this is the only way they can be decided. In some factual situations, there has been no difficulty in detecting the usury involved, since the insurance requirement has been a mere sham. For instance, there are cases where the borrower has been charged for insurance the lender was supposed to obtain for him, but no insurance was obtained. The “premium” simply went into the lender’s pocket, where, commingled with the “interest” he was already getting, it caused all contents of the pocket to be regarded as usurious. There are other cases where the insurance was actually obtained, but the premium charged was patently in excess of the actual cost of the insurance. Here again, the courts have concluded that this kind of transaction is usurious. There is another class of cases which has a more direct bearing on the matter before us. These are the cases which hold that a transaction can be rendered usurious by a requirement that the borrower take out insurance which is excessive in amount or is otherwise unnecessary. In Strickler v. State Auto Finance Co., 220 Ark 565, 249 SW2d 307 (1952), it was held to be usurious to charge the borrower premiums on life and health insurance, in addition to the full legal interest rate, since it appeared that the loan was adequately secured by a mortgage on the borrower’s household furniture, which could have been insured for a small premium, and that the borrower did not want the life and health insurance policies. In Moore v. Union Mut. Life Ins. Co., Fed Case No. 9777 (CC Neb 1876), it was held to be usurious under Nebraska law to require an $80,000 life insurance policy in connection with a loan of $20,000. In Miller v. Life Ins. Co., 118 NC 612, 24 SE 484 (1896), the court held that it was usurious for the life insurance company lender to require the borrower to take out a life insurance policy with it in the full amount of the loan when the company was already charging the maximum legal rate of interest on the loan and the loan was secured by a trust deed on real estate worth approximately twice the amount of the loan. See also Wilson v. Whitworth, 197 Ark 675, 125 SW2d 112 (1939).

From the foregoing cases, and our own reflection on the matter, we deduce a principle which we think is applicable to the present case. In determining whether the insurance requirement is usurious or not, the test is whether the insurance is reasonably necessary to secure the loan. This would not be the only test, of course, but it is the one which is relevant to the instant case. In a case where the lender is not also the insurer, or is not in any way benefiting from the insurance premiums, then the lender would not be “accepting” or “receiving” any additional value by reason of the premiums, and probably could not be charged with usury. However, where the lender requiring the insurance is itself the insurer, or agent for the insurer, there is no doubt that the lender is receiving something of value for the loan — namely, the profit involved in the insurance transaction — in addition to the interest charged. Where the insurance is not reasonably necessary to secure the loan, and the total of interest and the insurance premium exceeds the legal rate of interest, usury is what we have.

The plaintiff cites many cases in support of the general rule that an insurance requirement does not necessarily render a loan transaction usurious. The cases it cites, however, did not involve situations where the borrower was required to take out insurance which was not in fact necessary to secure the loan.

The plaintiff also argues that the insurance premiums were not payments made for the loan, but were, rather, payments made for $25,000 worth of life insurance, and that there was, therefore, adequate consideration for the premiums quite aside from the mortgage loan. The memorandum opinion of the trial court is based largely upon his acceptance of this argument. However, the fallacy of this argument is that, once you accept it, there is no limit to its persuasiveness, or the amount of insuranee compared to the amount of the loan as found in the Moore case, supra. If the premium were a reasonable and customary one for that amount of insurance, then the borrower would be receiving what he pays for in the way of insurance. Would this make the transaction proper? If plaintiff’s argument is correct, apparently it would. However, we think that no court would have any difficulty in finding that such a scheme was a transparent device to make life insurance profits in addition to the legal interest rate. We think there is some merit to plaintiff’s argument, but it relates to a different point altogether. If the question is not whether the insurance is necessary, but whether the premium is excessive, then it is important to know whether the borrower paid for more insurance than he received. But where the contention is made that the insurance simply was not necessary to secure the loan, no matter what the premium, it is no answer to say that the borrower got the insurance he paid for.

The defendants in the instant case do, in fact, claim that they were paying an excessive premium, primarily because they were required to take out ordinary life insurance rather than the cheaper term insurance. They also complain that certain conditions of the policy were unduly onerous, such as the requirement that cash reserves be applied only to payment of the mortgage indebtedness. We think these matters are debatable at best, and, if defendants’ argument were limited to these, we would not be inclined to reverse the determination of the trial court.

Defendants also raise questions as to whether this tie-in between the mortgage loan and the insurance violates the federal antitrust laws, but we need not determine such question in order to decide this case. Instead, we believe the crux of the case is the relatively clear-cut question of whether this life insurance policy was reasonably necessary to secure the mortgage loan. This was a loan of $25,000. It was secured, first of all, by real estate which, according to plaintiff’s own appraisal, was worth $38,500 at the time of the loan. We do not by any means think that this is dispositive of the question of whether life insurance is proper as additional security. Real estate values have a way of fluctuating; property can depreciate; foreclosure proceedings are expensive and time consuming. The weight of authority is to the effect that, in a proper case, insurance on the life of the borrower can properly be required in addition to the security provided by the real estate, and we are not inclined to depart from that view in this case. However, this does not mean to say that the security afforded by the real estate is to be disregarded, either. It has relevance in connection with the additional fact that Scali already had life insurance policies with another company in the face value of about $58,500 which he was prepared to assign to Equitable as additional security for the loan. Try as we may, we cannot see why real estate valued at $38,500, together with life insurance policies with a value of at least $58,500, for a total value of $97,000, should not be sufficient security for a loan of $25,000. Put another way, we do not think that in order properly to secure this loan, it was reasonably necessary for Equitable to sell Scali another insurance policy in any amount, let alone one in the amount of $25,000. We conclude from the evidence that Equitable was at least as interested in selling life insurance as it was in making this mortgage loan, and that the purpose of requiring Scali to buy the policy was not to provide necessary security for the loan but was, rather, to make a profit on the life insurance in addition to the interest on the loan.

Usury is a proper defense in a mortgage foreclosure case, Eldred v. Williamson, 33 Ill App2d 10, 178 NE2d 414 (First Dist 1961). It is an affirmative defense, and the Scalis had the burden of proving it. In terms of the specific situation here, they had the burden of proving that their Northwestern Mutual policies, alone or together with the mortgage on the real estate, were ample security for the $25,000 loan. We think they met this burden. The value of the real estate was uncontradicted, and, as indicated, was based upon the plaintiff’s own appraisal. Scali testified that he had the Northwestern policies with a face value of $58,500, and that they were in force. Plaintiff does not argue on this appeal that there Was anything wrong with these Northwestern policies. Its point, rather, is that their existence was irrelevant. We think, however, that when the Scalis proved the existence of the policies they were proving something relevant, and that it then became incumbent upon the plaintiff to go forward and show that there was some reason why these Northwestern policies, together with the real estate, did not provide sufficient security for its loan. It is pertinent to note at this point that the Northwestern policies were in fact assigned to a bank as additional security for a second mortgage on the property sometime after the defendants obtained their loan from Equitable.

The plaintiff argues in its brief that there were sound business reasons for requiring its own policy rather than a policy of another company, but this argument is not based upon any evidence in the record.

Defendants claim that they were entitled to a jury trial on their usury defense, but, in view of the decision we have reached, it will be unnecessary to pass upon this issue.

We believe that the defendants have proved their defense of usury, and that they are entitled to relief in accordance with Ill Rev Stats, ch 74, § 6. The case is reversed and remanded for further proceedings consistent with these views, which will include the taking of evidence as to defendants’ reasonable attorneys’ fees.

Reversed and remanded.

DAVIS, J., concurs.

ABRAHAMSON, J., dissents.


text:
    Harold E. Bathe, Plaintiff-Appellant, v. Carl Stamper, et al., John A. Beck, Inc., a Corporation, and John A. Flynn, Funeral Directors Services Association of Greater Chicago, an Illinois Corporation, Not for Profit, and Raymond K. Theis, Hugh L. Kenney, Individually, and as President and Secretary, Respectively, of Said Funeral Directors Services Association of Greater Chicago, Illinois Funeral Directors Association, an Illinois Corporation, Not for Profit, John C. Watson, Acting Director of the Department of Registration and Education of the State of Illinois, Defendants-Appellees.
    Gen. No. 10,734.
    Fourth District.
    September 26, 1966.
    Rehearing denied and opinion modified October 28, 1966.

      Dunn, Dunn, Brady, Goebel, Ulbrich & Hayes, of Bloomington (William M. Goebel, of counsel), for appellant.
    Thomson, Thomson, Mirza & Watson, of Bloomington, Wood & Wood, of Springfield, Albert J. Meserow, and William G. Clark, Attorney General of the State of Illinois, of Chicago (M. Brooks Byers, Richard A. Michael, and Philip J. Rock, of counsel), for appellees.
   TRAPP, P. J.

Harold Bathe, plaintiff, appeals from a decree of the Circuit Court of the Eleventh Judicial District, McLean County, Illinois, dismissing his complaint for declaratory judgment and injunctive relief against two groups of defendants and the Director of the Department of Registration and Education of the State of Illinois.

This cause was first directly appealed to the Supreme Court of Illinois, and was transferred to this court under the following memorandum order:

“Appellant contends that the validity of certain statutory provisions is involved in this appeal. From the order of the trial court it appears that the court dismissed appellant’s complaint on the grounds that no actual controversy existed and that appellant lacked standing to challenge the validity of said provisions. The alleged constitutional issue is not directly involved and on the Court’s own motion the cause is transferred to the Appellate Court for the Fourth District.”

The complaint charges that Carl Stamper and other licensed funeral directors in McLean County, who are labelled Group I Defendants, filed a suit in the Circuit Court of McLean County, Illinois, alleging that plaintiff is in fact engaged in the practice of funeral directing, without being licensed as required by chapter 111%, §§ 73.1 to 73.30 (Ill Rev Stats), and praying an injunction against such practice. The suit against plaintiff also sought to state an action in quo warranto against another party to the suit, East Lawn Memorial Gardens, Inc., alleging it was soliciting the furnishing of funeral and embalming services, and otherwise exceeding its charter powers.

The complaint, here, charges Funeral Directors Services Association of Greater Chicago, Illinois Funeral Directors Association and others labelled Group II Defendants, with fostering and financially assisting in the foregoing litigation against plaintiff, and with commencing a proceeding against one Marian Ward before the Department of Registration and Education of the State of Illinois, to revoke the license of said Ward, complaining inter alia, that said Ward employed the plaintiff to perform the services of a registered funeral director, when, in fact, plaintiff was not a licensed funeral director or embalmer.

The plaintiff, here, charges that Art I and Art III of an Act in relation to the regulation of persons engaged in the practice of funeral directing and embalming, chapter 111%, §§ 73.1-73.10a and §§ 73.21-73.30, each inclusive (Ill Rev Stats), are unconstitutional and void, and that said statute is the basis of the foregoing suit against plaintiff and of the license revocation proceeding.

He further charges Group I defendants and Group III defendants with an unlawful conspiracy to deprive plaintiff of his business, but such issue is not discussed under points and authorities in his brief, nor considered in his argument.

Plaintiff, in this case, states the fact to be that plaintiff incorporated East Lawn Memorial Gardens, Inc., a memorial garden type cemetery which sells burial spaces and “related merchandise.” The complaint states that plaintiff built a building through a corporation owned by plaintiff named Memorial Chapels, Inc., and leased said building to Marian Ward, an Illinois licensed funeral director, and that said Marian Ward operated a funeral home in said building, called East Lawn Memorial Chapel, until the operation became unsuccessful due to the unlawful course of conduct of Group I and Group II defendants.

The complaint, as noted, states that the suit of Group I Defendants against him charges that he is individually conducting the business of funeral director, and that the complaint before the Department of Registration and Education so charges him. It does not state whether plaintiff is, in fact, conducting, or, in fact, seeks to conduct the business of funeral directing himself.

The complaint does not state that plaintiff has sought a license as a funeral director, but does state that the statute requires as a prerequisite to licensing, the completion of one year in a professional school or college teaching the practice of funeral directing, that there was only one school in Illinois, to-wit: Worsham College of Mortuary Science, which taught such curriculum, that he applied to said school and was arbitrarily refused admission. The complaint alleges that he could clearly never obtain a license because the licensing process is under the arbitrary and monopolistic control of licensed funeral directors and embalmers. It is alleged that Art I and Art III of the Funeral Directors Licensing Act establishes a monopolistic economic hierarchy of existing licensed funeral directors.

The trial court held, inter alia, that plaintiff lacked sufficient interest to maintain the complaint, that plaintiff is not affected by the provisions of Art I, §§ 73.1 to 73.10a, and Art III, §§73.21 to 73.30 of chapter 111% (Ill Rev Stats), that no actual controversy exists between plaintiff and defendants upon which a declaratory judgment might be rendered, and that the said statute is constitutional. The court dismissed the complaint.

First, it should be noted that as to the charges that certain defendants are engaged in a conspiracy to destroy plaintiff’s business, such a combination could exist or fail to exist irrespective of the constitutional status of the statute. The question regarding the statute is whether it is inherently defective, not whether persons could use it unlawfully to their advantage, or the disadvantage of others.

Second, it can fairly be said that the Supreme Court of Illinois has given sufficient consideration to the Illinois Funeral Directors Act to say that it is not completely invalid on its face. In Gholson v. Engle, 9 Ill2d 454 at p 459, 138 NE2d 508, the court said that without question the activities of funeral directors and embalmers are subject to regulation. The court also found in that case (p 462) that the provision there held invalid, that of requiring an embalmer’s license of a funeral director, was not so integrated with the rest of the act as to make the whole act unconstitutional as a result of the particular defect.

The Supreme Court, in Gholson v. Engle, also held that the plaintiff was foreclosed from questioning two other portions of the Act, that is the requirement of apprenticeship for an embalmer, and the provisions regarding the examination for a certificate because on the one hand plaintiff did not seek an embalmer’s license, and on the other did not take the examination.

Here, plaintiff complains of apprentice and examination requirements, as well as other requirements of the Act licensing funeral directors and embalmers without stating that plaintiff seeks a license, or that plaintiff is doing the things covered by the Act without a license. Under the ruling in Gholson v. Engle, we feel compelled to hold that plaintiff has not alleged a status which entitles him to challenge the Act in this suit. (See p 461.)

Plaintiff cites and relies upon Schroeder v. Binks, 415 Ill 192, 113 NE2d 169, as authority for his position, but that suit was brought under the provisions of chapter 102, §§11 through 16 (Ill Rev Stats, 1951), by which citizens and taxpayers were authorized to bring action to enjoin the expenditure of public funds in the administration of an unconstitutional law. Plaintiff’s action here is not under such statute or of such a nature.

Whether, in other litigation mentioned in the pleadings in this suit, plaintiff is so charged with violation of a statute that he may there question the validity of various sections, or all of the statute in question is not before us. The holding of that portion of Gholson v. Engle, 9 Ill2d 454, on p 461, 138 NE2d 508, on which we rely, is that to test the statute by complaint of its effect upon him as an individual, as distinguished from the special status of a taxpayer afforded by chapter 102, §§ 11, 12 (Ill Rev Stats), plaintiff would have to seek the status, which, by implication, but not direct allegation, he asserts is denied to him. Similar principles to those relied on here are announced in People v. Illinois Protestant Children’s Home, 33 Ill2d 60, 210 NE2d 217, and People v. Reiner, 6 Ill2d 337 at p 341, 129 NE2d 159.

We think the trial court should have dismissed the suit for lack of standing of the plaintiff, but should not have also passed upon the constitutionality of the Act in question. We do not interpret Gholson v. Engle, 9 Ill2d 454, 138 NE2d 508, as a pronouncement upon all aspects of the statute, for it is quite obvious that the Supreme Court stated that the suit failed to reach certain questions sought to be presented.

Here, the determination of the constitutionality of the statute was not necessary to the disposition of this case, and it is the rule that the court will determine the constitutionality of an act only to the extent required by the case before it and will not undertake to formulate a rule broader than that necessitated by the precise questions to be decided. People v. Illinois Protestant Children’s Home, 33 Ill2d 60, 210 NE2d 217.

Upon consideration of plaintiff’s Petition for Rehearing, in addition to the matters discussed in this opinion, we note that this proceeding for declaratory judgment essentially arises by reason of the fact of certain litigation pending against the plaintiff, or his asserted interests. The statute authorizing proceedings for declaratory judgment is not designed to aid the disposition of pending cases. See chapter 110, § 57.1, Ill Rev Stats, History and Practice Notes.

Again, the granting of relief through declaratory judgment is a matter of discretion in the trial court, and dismissal of the proceedings upon motion is an appropriate method of declining to grant declaratory relief. State Farm Mut. Automobile Ins. Co. v. Morris, 29 Ill App2d 451, 173 NE2d 590; Salem Nat. Bank v. City of Salem, 47 Ill App2d 279, 198 NE2d 137. We can find no abuse of discretion on the part of the trial court.

We are not required to pass upon the other questions raised regarding the use of the remedy of declaratory judgment.

The order of the trial court is affirmed upon the issue that plaintiff lacked capacity to proceed by interlocutory judgment and have injunctive relief. The finding of the court that Art I and Art III, chapter lll1/^ (Ill Rev Stats) are constitutional is unnecessary to the disposition of the case and is deemed surplusage.

Affirmed.

SMITH and CRAVEN, JJ., concur.


author: MR. PRESIDING JUSTICE BRYANT

text:
    Sofia Wiegel, Executor of the Estate of Fred Wiegel, Deceased, Plaintiff, v. One LaSalle Company, a Corporation, Defendant. One LaSalle Company, a Corporation, Third Party Plaintiff-Appellee, Cross-Appellant, v. Otis Elevator Company, a Corporation, Third Party Defendant-Appellant, Cross-Appellee.
    Gen. No. 50,726.
    First District, Second Division.
    September 27, 1966.
    Rehearing denied November 3, 1966.

      Andrew J. Farrell, of Chicago, for third party defendant-appellant.
    Richard C. Bleloch, of Chicago, for third party plaintiff-appellee.
   MR. PRESIDING JUSTICE BRYANT

delivered the opinion of the court.

This is an appeal from a judgment of the Circuit Court of Cook County. The pertinent facts are as follows: Third party defendant, Otis Elevator Company, hereinafter referred to as Otis, was modernizing and renovating the elevators in the One LaSalle Building pursuant to a contract with One LaSalle Company and L. J. Sheridan and Company, agents. On December 4th, 1959, Fred Wiegel, an employee of Otis, sustained injuries while working on the modernization of the elevators in the One LaSalle Building. He died a short time later. His mother, Sofia Wiegel, as executor of deceased’s estate brought an action for wrongful death against One La Salle Company, and obtained judgment in the sum of $30,000. Before the original trial plaintiff Wiegel moved for severance of the original action and the third party action involving One LaSalle Company and Otis. The trial court granted this motion, and after the entering of judgment in the original action, trial was had upon the third party action, resulting in a directed verdict and a judgment for $30,000 for One LaSalle Company against Otis. The trial court, however, refused to grant One LaSalle’s prayer for attorney’s fees and expenses incurred in defending the original action.

Third party defendant-appellant, Otis, claims that the letter of July 29, 1959, signed and accepted by L. R. Humbert, Assistant Secretary, was not properly a part of the contract, in that the contents of this letter are ambiguous, lacking in consideration, and not clearly expressive of an intention on the part of Otis to indemnify One LaSalle Company. One LaSalle, however, contends that the letter is a binding supplement to the contract, in that it was signed and assented to by Otis, and that the letter was admitted by Otis to be a part of the contract by both oral and written admissions made at the original trial. One LaSalle further claims that any argument that Otis puts forth regarding the lack of consideration or of mutuality is lost because of the binding effect of the above admissions.

Otis is bound by the admissions of its attorney. Prior to the beginning of the trial on the third party action in a pretrial conference, the court reviewed all the pleadings and noted that the third party did not deny the existence of the contract with its subsequent modification and did not claim the modification of the contract was void for want of consideration. In fact, the court specifically inquired as to whether or not the modification agreement was valid and a part of the original contract, and Otis answered that question by saying that Otis alleges that it (the letter) was part of the contract.

The pleadings that the trial court was inquiring into were the Amended Third Party Complaint and Amended Answer. In its amended complaint One LaSalle alleged that Otis agreed to hold harmless One LaSalle and its agent, L. J. Sheridan and Company, for any and all loss or injury connected with the work performed under the contract with Otis, on the theory that the letter of July 29, 1959, was a valid part of One LaSalle’s contract with Otis. Otis in its amended answer, paragraph five, count 1, admits the validity of the contract including the modification. “The third party defendant denies the conclusion that Otis obligated itself both for its negligence and that of One LaSalle, but admits that the contract referred to in Count 1 of the amended third party complaint did contain the first six provisions quoted in such paragraph. The last quotation in that paragraph was taken out of a letter dated July 29, 1959 whereas the other provisions quoted appear in the original contract dated November 20,1958 . . .”

The trial court correctly refused Otis’ offer to amend its amended answer and so to deny the admissions they had already made. Otis is correct when it states that parties may not by their admissions of law bind the court to adopt their point of view. Where Otis is in error is that there is no question of law that Otis may take advantage of to negate the admissions made by its attorney. Otis, itself, by its theory of the case raises questions of fact regarding the validity of the supplemental agreement when it states that the letter is ambiguous and does not contain language that entitled One LaSalle to indemnification. Finally, the discretion of the trial court in considering whether to allow an amendment is broad and will not be upset absent some clear showing of abuse. Had the third party defendant made some showing that there was ambiguity in his statement or answer or that the statement or answer on its face permitted conflicting inferences, then the contention of Otis would have more validity. Reilly v. Peterson Furniture Co., 314 Ill App 461, 40 NE2d 780. However, nothing could be plainer or less open to question than the amended answer and the oral statement of counsel for Otis.

Otis further contends that the agreement embodied in the letter of July 29, 1959, is void for lack of consideration and want of mutuality. Otis, having admitted the validity of the contract in its amended answer which we have just held to be binding, is bound by that admission and by this determination. For that reason, and for the reason that Otis failed to plead or prove lack of consideration, the defense of lack of consideration or want of mutuality is of no avail. Otis also failed to plead or prove that the One LaSalle Building referred to in the letter of July 29, 1959 was not a legal entity. Third party defendant knew who the real parties in interest were and was not led astray by this minor discrepancy. Otis is not to be heard to raise the issue of inability to sue at this late date.

Finally, Otis alleges that the granting of Plaintiff, Sofia Wiegel’s motion to sever the third party action from the original cause of action was error on the part of the trial court. Otis cites in its behalf the case of Palmer v. Mitchell, 57 Ill App2d 160, 206 NE2d 776. That case is not in point. The trial court in the Palmer case was reversed for having granted severance for the reason that if the allegations of the third party plaintiff were true the third party defendant would have been liable to the third party plaintiff in that case because of a violation of the Structural Work Act. That is not this case. The issue at stake in the third party action in the present case is not that of which party was negligent, but rather the issue of the interpretation of the contract between Otis and One LaSalle. Otis also cites chapter 110, § 25 Ill Revised Statutes, 1965, which provides for third party actions. The severance of the third party action is governed not by this section but by chapter 110, § 51 Ill Revised Statutes, 1965. This is a matter of convenience and an issue in which the trial court is to be accorded a broad discretion in determining whether to grant severance. Blachek v. City Ice & Fuel Co., 311 Ill App 1, 35 NE2d 416. The errors that Otis attributes to the counsel of One LaSalle in the trying of the original case are mere suppositions and fail to make out a clear case of prejudice to the rights of Otis. To reverse this case on the issue of severance would defeat both the policy of reaching for judicial economy and the policy of vesting a large discretion in the trial judge in the conduct of cases before him.

The trial court refused to allow third party plaintiff, One LaSalle Company, attorney’s fees or expenses incurred in the defense of the wrongful death action. There was no error here, as there is nothing in the contract regarding attorney’s fees and expenses. The cases which One LaSalle cites to assert its right to attorney’s fees are not in point as the contracts in those cases provided specifically for indemnification for the costs of litigation. General Acc. Fire & Life Assur. Corp. Ltd. v. Smith & Oby Co., 272 F2d 581; Lesmark v. Pryce, 334 F2d 942.

For the above reasons the judgment of the Circuit Court of Cook County is affirmed.

Affirmed.

LYONS and BURKE, JJ., concur.


author: CRAVEN, J.

text:
    People of the State of Illinois, Plaintiff-Appellee, v. Larry Earl Spaulding, Defendant-Appellant.
    Gen. No. M-10,770.
    Fourth District.
    September 30, 1966.

      Donald B. Mackay, Public Defender, of Bloomington, and Robert E. Williams, Assistant Public Defender, for appellant.
    Hugh A. Henry, Jr., State’s Attorney, of Bloomington, for appellee.
   CRAVEN, J.

The defendant was charged with criminal damage to property, entered a plea of guilty and filed a petition for probation. A probation report was filed, a probation hearing held and the petition for probation denied. The defendant was sentenced to one year in the State Penal Farm. No hearing in aggravation and mitigation was held.

On the day following the sentencing and while the defendant was still in custody of the sheriff of McLean County, a motion to vacate the sentence and for a hearing in aggravation and mitigation was filed, argued and denied.

The sole question presented to this court is the necessity for the hearing in aggravation and mitigation. There,is no contention that there was a waiver of such hearing in the sense of an express waiver. It is contended, however, that participation in the probation hearing was tantamount to a waiver of a hearing in mitigation and aggravation.

Paragraph 1-7 (g) of ch 38, Ill Rev Stats 1965, provides:

“For the purpose of determining sentence to be imposed, the court shall, after conviction, consider the evidence, if any, received upon the trial and shall also hear and receive evidence, if any, as to the moral character, life, family, occupation and criminal record of the offender and may consider such evidence in aggravation or mitigation of the offense.”

In People v. Evrard, 55 Ill App2d 270, 204 NE2d 777 (5th Dist 1965), the court held that a hearing in aggravation and mitigation was required even though the information obtained in the hearing “may” be considered or used by the court in imposing sentence.

In People v. Smith, 62 Ill App2d 73, 210 NE2d 574 (1st Dist 1965), the court indicated that a hearing in mitigation obtaining the sociological information enumerated in section 1-7 (g) was not mandatory absent a request for hearing, but because of the procedural circumstances of that case determined that a presentence investigation request was the equivalent to a request for hearing in mitigation and aggravation. Implicit in this ruling is the necessity of determining that the defendant is entitled to a hearing in mitigation and aggravation. (See also proposed Supreme Court Rule 461 — tentative final draft May 20,1966.)

It has been held that the hearing in mitigation and aggravation may be waived — People v. Mitchell, 67 Ill App2d 124, 214 NE2d 129 (5th Dist 1966). Doubt has been expressed, however, by other writers as to the right of waiver. 1 Callaghan’s Ill Crim L at 47.

It is clear to us that paragraph 1-7 (g) contemplates that a hearing in aggravation and mitigation is an essential part of the sentencing process. While it may be waived, it was not expressly waived in this case. Participation in a probation hearing is not a waiver of a hearing in mitigation and aggravation, for these involve separate areas of inquiry.

It follows that the sentence here imposed must be vacated and the cause remanded to the circuit court of McLean County for further proceedings in accordance with the views herein expressed.

Sentence vacated and cause remanded.

TRAPP, P. J. and SMITH, J., concur.


author: JUSTICE BURKE.

text:
    People of the State of Illinois, Plaintiff-Appellee, v. Maurice Blewett (Impleaded), Defendant-Appellant.
    Gen. No. 50,199.
    First District, Second Division.
    September 27, 1966.
    Rehearing denied October 19, 1966.

      James M. Trapp, of Chicago, for appellant; Daniel P. Ward, State’s Attorney of Cook County, of Chicago (Elmer C. Kissane and Matthew J. Moran, Assistant State’s Attorneys, of counsel), for appellee.
   Opinion by

JUSTICE BURKE.

Not to be published in full.


text:
    People of the State of Illinois, Plaintiff-Appellee, v. Samuel Cain, Defendant-Appellant.
    Gen. No. 50,377.
    First District, Second Division.
    September 27, 1966.
    Rehearing denied October 19, 1966.
    Gerald W. Getty, Public Defender of Cook County, of Chicago (Marshall A. Patner, Frederick F. Cohn and James J. Doherty, Assistant Public Defenders, of counsel), for appellant; Daniel P. Ward, State’s Attorney of Cook County, of Chicago (Elmer C. Kissane, Joel M. Flaum and Robert J. Beranek, Assistant State’s Attorneys, of counsel), for appellee.
   Opinion by

JUSTICE BURKE.

Not to be published in full.


author: MR. PRESIDING JUSTICE BRYANT LYONS, J.,

text:
    Raymond G. Jacobs, et al. and Riviera Lanes, Inc., a Corporation, Plaintiffs-Appellees, v. Gust Regas, et al., Defendants, Gust Regas, et al., Defendants-Appellants.
    Gen. No. 51,108.
    First District, Second Division.
    September 27, 1966.
    Rehearing denied October 18, 1966.

      LYONS, J., dissenting.
    L. Louis Karton, of Chicago, for appellants.
    Guerine & Guerine, of Melrose Park (Guy C. Guerine, of counsel), for appellees.
   MR. PRESIDING JUSTICE BRYANT

delivered the opinion of the court.

This is an interlocutory appeal from an order entered in the Circuit Court of Cook County, December 29, 1965, granting the issuance of a temporary injunction against defendants, restraining them from exercising authority as officers and directors of Riviera Lanes, Inc., from holding a stockholders’ meeting, and from voting the stock previously owned by Otto and Walter Goldammer.

The gravamen of plaintiffs’ complaint is that defendants violated an agreement between plaintiffs and defendants whereby Gust and Spiros Regas agreed to purchase, on behalf of the corporation, the Goldammer stock and interest in- a trust which holds title to the corporate real estate. Upon completion of a loan with the Melrose Park National Bank, defendants were to be reimbursed for the money they had spent to buy out the Goldammers, and the defendants in turn were to have turned over the stock to the corporation for cancellation. Instead, it is alleged, that defendant Gust Regas, without authority received the proceeds of the loan and disbursed same to the shareholders in the proportion to their holdings in the corporation and kept the Goldammer stock for himself and his brother, for the purpose of obtaining control of the corporation and to oust plaintiffs from their positions as officers, directors and employees.

In an application for a temporary injunction it is unnecessary for the plaintiff to make out a case that would entitle him at all events to an injunction at the final hearing. Plaintiff was required only to establish by a clear preponderance of the evidence that ultimate success is probable. Initially this is a decision for the sound discretion of the Chancellor. His exercise of that discretion will not be overturned, absent a clear showing of abuse. With all due respect for the Chancellor who spent two days hearing this matter, this is a case where the Chancellor erred in granting a temporary injunction.

The plaintiffs failed to prove the existence of the agreement on which their prayer for a temporary injunction rested. There are no corporate minutes of the alleged transaction. Not one of the plaintiffs proved any official action of the corporation that would have bound the corporation to buy this stock. Nor is there a shred of evidence as to how the stockholders of the corporation were going to get the proceeds of a loan made by the Trust, when holders of beneficial interests in the Trust and stockholders in the corporation were not wholly identical parties.

Plaintiffs relied on the testimony of Mr. Wobith, Vice-President of the Melrose Park National Bank, that the loan from the bank was to be used to pay off a first mortgage and to reimburse Gust Regas for money spent to obtain the Goldammer stock for the corporation. This testimony is controverted by the fact that at the time of the alleged agreement there was no Goldammer interest to buy. That interest had already been sold to Louis Carras, son-in-law of Spiros Regas, and the stock had been transferred on the corporate books and the new certificates evidencing ownership of the shares signed by Raymond G. Jacobs in his capacity as an officer of the corporation, one of the plaintiffs in this action.

As plaintiffs-appellees state the proposition, a trial court has the power and discretion to issue a temporary injunction when there is an emergency, or danger of irreparable damages for the purpose of preserving the status quo. The issuance of the injunction in this case did not preserve the status quo, but rather disturbed the status quo. The sale of the Goldammer stock in August was a completed transaction.

Plaintiffs likewise failed to prove either the existence of an emergency or the threat of irreparable damage. Plaintiffs delayed fifteen months from the sale of the Goldammers’ stock and eight months from the filing of the complaint before moving a second time for a temporary injunction. In Centennial Laundry v. West Side Organization, 34 Ill2d 257, 215 NE2d 443 (1966) the Illinois Supreme Court noted that a delay of only some three and one-half months raised a question as to plaintiff’s need for immediate relief via a temporary injunction. Here the wait was much longer and with less excuse than in the above case.

Nor did plaintiffs show any danger of irreparable damage such as would entitle them to a temporary injunction. In fact, plaintiffs failed to show that defendants acquired the power to threaten plaintiffs’ position by the acquisition of the Goldammer interest. Such power was acquired only with the subsequent purchase of the stock of Walter Koziol. The only threat alleged in the complaint is that the defendants Gust and Spiros Regas threatened to use the Goldammer shares for the purpose of electing officers and directors, and to raise the number of directors from four to five so as to deprive plaintiffs of their positions as directors, officers and employees. The fact that the plaintiffs apprehend that some wrong or illegal act will be done is not sufficient to cause the issuance of a temporary injunction. Biggs v. City of Chicago, 348 Ill App 551, 109 NE2d 378; Union Drain. Dist. v. Manteno Limestone Co., 341 Ill App 353, 93 NE2d 500.

Finally, plaintiffs’ claim of fraud is not well taken. It is not the law that a majority shareholder is a fiduciary. And, in fact, defendants were not controlling shareholders until they bought the Koziol stock.

Secondly, there could be no reliance on the defendants as Raymond G. Jacobs knew that the Goldammer stock had been sold in August, 1964, to Louis Carras, and that the proceeds of the new loan were for the retirement of the amount due on the first mortgage with the balance to be distributed by the Trustee to the holders of the beneficial interests in the trust. The corporation is a separate entity from the trust, and while the membership in the two entities was overlapping it was not wholly so. For this reason the stockholders of the corporation could not receive or be entitled to receive, as stockholders, any part of the proceeds of the new loan. The Trustee of the land trust acted accordingly when it distributed the proceeds to the beneficiaries of the trust.

For these reasons the order granting the temporary injunction is reversed.

Order reversed.

BURKE, J., concurs.

LYONS, J.,

dissenting:

I cannot concur in the result reached by the majority. The Chancellor saw and heard nine witnesses and examined forty-six exhibits over a period of two days and this court should not substitute its judgment as to the issues of fact decided by him.

I disagree with the majority that plaintiffs failed to prove the existence of an agreement. The fact that there were no corporate minutes of the alleged transaction should not be detrimental to plaintiffs’ cause of action in that the corporate records were within the complete control of defendants. The majority’s assertion that plaintiffs failed to prove official action by the corporation binding the corporation to buy stock is likewise in error in that notice of a meeting was sent out in July and the purpose of said meeting, set out in the notice, was to discuss the sale and retirement of the Goldammer stock. The testimony of Mr. Wobith, a disinterested witness, unequivocally shows that one of the purposes of the loan from the bank was to obtain money to retire the Goldammer stock. The majority is in error in stating that because there was no Goldammer interest to buy, the impact of Wobith’s testimony was diminished. It is true that the interest was sold to Louis Carras, but Carras held the stock only one day and then transferred it to his father-in-law, Spiros Regas, one of the defendants.

I likewise disagree with the majority that plaintiffs failed to prove (1) that the issuance of an injunction would preserve the status quo and (2) that an emergency or threat of irreparable damage existed. First of all, the issuance of an injunction would insure that the number of directors remain unchanged and that the existing officers remain in their positions. Secondly, an emergency was shown to exist in that the transfer of the Goldammer stock would shift complete control of the corporation to defendants. Plaintiffs acted immediately upon receiving notice of a meeting, whereby stock in the corporation was to be transferred. Finally, a threat of irreparable damage was shown to be imminent in that defendants threatened to use the Goldammer shares for the purpose of electing officers and directors and to raise the number of directors from four to five so as to deprive the plaintiffs of their position as directors, officers and employers.

I disagree with the majority’s position that plaintiffs had to establish the elements of fraud in order to obtain a temporary injunction. Plaintiffs only had to establish that an agreement existed between the parties, and that defendants were engaged in a conspiracy in an attempt to breach that agreement. The Chancellor found that an agreement existed and that the breach of said agreement would result in irreparable harm to plaintiffs. He further found evidence of a conspiracy among defendants. It was not an abuse of the Chancellor’s discretion for him to issue a temporary injunction.


text:
    People of the State of Illinois, Plaintiff-Appellee, v. William A. Thompson, Defendant-Appellant.
    Gen. No. 50,411.
    First District, Second Division.
    September 27, 1966.
    Gerald W. Getty, Public Defender of Cook
    County, of Chicago (Marshall A. Patner, Frederick F. Cohn and James J. Doherty, Assistant Public Defenders, of counsel), for appellant; Daniel P. Ward, State’s Attorney of Cook County, of Chicago (Elmer C. Kissane and Kenneth L. Gillis, Assistant State’s Attorneys, of counsel), for appellee.
   Opinion by

JUSTICE BURKE.

Not to be published in full.


author: JUSTICE SCHWARTZ.

text:
    People of the State of Illinois, Plaintiff-Appellee, v. Herbert L. Wright, et al., Defendants-Appellants.
    Gen. No. 50,415.
    First District, Third Division.
    September 29, 1966.
    Richard L. Handel and Wexman, Handel and Kipnis, of Chicago (Ronald L. Barnard, of counsel), for appellants; Daniel P. Ward, State’s Attorney of Cook County, of Chicago (Elmer C. Kissane and Albert J. Armonda, Assistant State’s Attorneys, of counsel), for appellee.
   Opinion by

JUSTICE SCHWARTZ.

Not to be published in full.