Court Opinion

ID: 8845761
Source: CourtListenerOpinion
Date Created: 2022-11-26 16:57:13.270276+00
Date Added: 2024-06-11T17:05:20.531340
License: Public Domain

Mr. Presiding Justice Gridley delivered the opinion of the court. On July 10, 1924, an action in assumpsit was commenced in the municipal court against the defendant, Tancl, to recover a balance claimed to be due for certain merchandise sold and delivered. After defendant had filed an affidavit of merits, in which he denied any indebtedness to the Casket Company, or to its assignee, Janisch, the cause was, on October 20, 1924, and upon plaintiff’s motion, referred to William H. Dellenback, as referee, “to take and state the account of the parties and return the same, with the objections, if any, to the court, pursuant to Section 68 of the Practice Act.” Considerable evidence, oral and documentary, was introduced before the referee, and his report, together with defendant’s objections and the transcript of the testimony and exhibits, was filed on February 17, 1926. By stipulation the original report, etc., are contained in the present record. Prior to their filing defendant by leave of court filed a claim of set-off. The referee found that there was a net balance owing from defendant of $1,222.51. There was a trial before the court without a jury upon the report and certain of defendant’s objections (treated as exceptions), resulting in the court’s allowing to defendant an additional credit of $100, and, on March 29, 1926, entering judgment against him for $1,122.51, and costs including $120.65 advanced by plaintiff for referee’s and stenographer’s fees. Defendant appealed. After the transcript of the record had here been filed, plaintiff moved that certain parts be stricken and that the judgment be affirmed. Written suggestions in support of the motion as well as counter suggestions were filed, and the motion was reserved to the hearing. Plaintiff’s contention, as we understand it, is that, inasmuch as the referee’s report, etc., are not bodily contained in the bill of exceptions, and as all of defendant’s assignments of error are based thereon, there is nothing for this court to consider and the judgment should be affirmed. We cannot agree with the contention and plaintiff’s motion is denied. Both in the draft judgment order and in the bill of exceptions, the report, etc., are referred to as being the sole basis of the finding and judgment. In the former it is recited that, the cause coming on to be heard upon the report of the referee and the exceptions of the defendant thereto, and the parties having waived a trial by jury and having submitted the same to the court “for decision upon the report of the referee and the exceptions of the defendant thereto,” and the court “having considered said report and the exceptions thereto,” it is ordered, etc. In the bill of exceptions it is recited that the cause came on for hearing upon the pleadings filed herein “and upon the report of the referee filed herein,” and that “upon the exceptions, or objections, of defendant to the report of the referee,” the court finds, etc. We think that the referee’s report, etc., under the statute, were parts of the record, forming with the pleadings the issues which were tried by the court, and that the report, etc., and the court’s finding and judgment based thereon, are properly before us for review. In defendant’s statement of set-off it is alleged in substance that in July, 1921, he made an oral agreement with the Casket Company to purchase 20 shares of its capital stock at $50 per share; that pursuant to this agreement he executed and delivered his note to the Casket Company for $1,000, which he afterwards paid, and the Casket Company received the benefit of the. proceeds of the note; that said stock never was issued to him nor was he ever given credit for said $1,000; that the Casket Company never considered him as a stockholder nor did he ever participate in its affairs as a stockholder; that his said agreement to purchase said stock was void and unenforceable, and thereafter was treated as such by the Casket Company, because, at the time he made such agreement to purchase the stock and delivered the note, (a) the Casket Company had failed to comply with the provisions of the Illinois Securities Law (Blue Sky Law), Cahill’s St. eh. 32, ft 254 et seq., in that it had not procured a license or permit to sell the stock or offer it for sale, and (b) the Casket Company was at the time insolvent and known to be such by its officers; that in February, 1923, he loaned $100 to the Casket Company which never was returned to him and for which he never was given credit (this $100. is the additional credit allowed by the court over the credits allowed by the referee as above mentioned); and that there is due from the Casket Company, or its assignee, Janisch, the sum of $1,100. The following facts in substance, sustained by the evidence, are disclosed from the findings of the referee: The Casket Company was an Illinois corporation, organized in 1920, for the purpose of manufacturing and dealing in undertakers’ supplies. Defendant, TancI, a Chicago undertaker, commenced purchasing merchandise from it prior to 1922, but the purchases here involved were made during the period from June, 1922, to March 3, 1924. Prior to December, 1922, W. H. Eudolph was the president and managing head of the Casket Company. He was succeeded in that office by one Christy and later by Fred Burkhard. The company was always in financial difficulties, and “was practically insolvent from the time of its organization up to the time of its dissolution, or at the time all of its assets, including the accounts, were sold to John Janisch,” beneficial plaintiff, on April 3, 1924. Plaintiff claimed that there was due from defendant for merchandise purchased during the period above mentioned the net sum of $1,441.76, but the credits it allowed to defendant did not include certain discounts to which he was entitled. Giving credit for these discounts plaintiff claimed on the hearing the net sum of $1,222.51, for which sum the referee recommended that judgment be entered against defendant. In July, 1921, defendant made an oral agreement with an agent of the Casket Company to subscribe for 20 shares of its capital stock at $50 per share, and gave to it his note for $1,000, which it discounted and the proceeds were used by it. Subsequently defendant paid the note, but he never received a certificate for the 20 shares. Being present at a stockholders’ meeting of the company in February, 1923, he was nominated for one of the directors, but, because of objection made that he was not a stockholder, he was not elected as a director. It appears from defendant’s testimony, corroborated by that of Rudolph, that, about a month after the Casket Company had received the money on the $1,000 note, defendant and Rudolph (acting as president and for the Casket Company) verbally agreed that defendant’s subscription for said 20 shares of stock be canceled, but that the money should remain with the company and defendant credited with the amount as against future purchases of merchandise, and that this agreement thereafter was acted upon by the company. Although the referee found in his report that Rudolph, as president, never received any express authority from the directors of the Casket Company to cancel defendant’s subscription for said 20 shares of stock, ■ or to make any agreement to credit defendant for the $1,000 paid therefor, we think that the evidence sufficiently discloses that said cancellation was made with the knowledge and acquiescence of the stockholders and directors and subsequently was acted upon by the company. Furthermore, it clearly appears that defendant’s original agreement to subscribe for the stock was void and unenforceable, because at the time it was made, as shown by a certificate of the secretary of State introduced in evidence, the Casket Company had not complied with the provisions of the Illinois Securities Law. (See sections 34, 36 and 37 of that law, Cahill’s St. 1925, ch. 32, fifí 287, 289 and 290.) And we think that the court erred in not allowing defendant an additional credit of $1,000 as against said balance of $1,122.51. Allowing this credit, there is a net balance remaining of $122.51. Defendant also claims that he should have been allowed on the account further credits of $64 (payment made in December, 1923) and $128.52 (payment made in January, 1924), but we think that it sufficiently appears from the testimony of the bookkeeper of the Casket Company, supplemented by documentary evidence, that defendant was credited with these payments by the Casket Company and by the referee in his statement of account. Our conclusion is that the judgment appealed from should be reversed and judgment entered here in favor of plaintiff and against defendant in the sum of $122.51. Inasmuch as it appears that in the trial court each party paid his own costs and each paid one-half of the referee’s and stenographer’s charges, we think it proper that neither party recover from the other any costs expended in the trial court, but as to the costs expended by the defendant (appellant) in this Appellate Court, the same shall be taxed against the plaintiff (appellee). Reversed with finding of facts and judgment here for $122.51. Fitch and Barnes, JJ., concur. Finding of facts. We find as facts in this case that defendant, Tanel, in compliance with an oral agreement with the Casket Company to subscribe for 20 shares of its capital stock, paid to it $1,000 for said stock; that he never received said stock and never participated in the affairs of the Casket Company as a stockholder; that by his subsequent oral agreement with the Casket Company his said subscription was canceled and said $1,000 was retained by the Casket Company to be credited to him on merchandise to be subsequently purchased of it; that thereafter he purchased merchandise of the Casket Company, but was never given credit by it, or by its assignee, Janisch, for said $1,000 or any part thereof; and that he (Tancl) is indebted to plaintiff only in the sum of $122.51.