Court Opinion

ID: 7004594
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:48:10.49544+00
Date Added: 2024-06-11T16:09:57.510389
License: Public Domain

Mr. Justice Stein delivered the opinion of the court. First. Appellee’s title to the relief granted him rests upon the agreement of September 22, 1897, the seizure and prosecution of the tea and coffee business by appellant and the profits made by him therein. That business belonged to the company; and if, as counsel contend, no consideration moved to it for the execution of the agreement or if the same was invalid as to it for any other reason, then appellee’s case fails. The undisputed facts in this connection are that for some years before the summer of 1894, A. H. Blackall & Son, a partnership composed of A. H; and E. S. Blackall (father and son), carried on a tea and coffee business at 105 Madison street, Chicago. In the summer of 1894 the firm becoming involved made an assignment. The assignee managed the business for some months and sold it December 24, 1894. On that date the corporation A. H. Blackall & Son, organized a short time before “ to engage in the purchase and sale of teas, coffees and spices of all kinds and to engage in a general mercantile business,” acquired the furniture, put in a stock of goods and began business at the old stand. The stock of the corporation was held by A. H. Blackall, E. S. Blackall and Lillie M. Blackall, a daughter of A. H. and a sister of E. S. The three were the directors of the company, A. H. was its president, and Lillie M. its secretary and treasurer. All three participated actively in the management of the company’s business. The indebtedness of $5,386.65 mentioned in the agreement as being due appellee from the Blackalls and the company was for rents which A. H. and E. S. Blackall had been appointed by appellee to collect for him and ■which they or one of them had so collected and put into the company’s business. The Blackalls, its officers and directors, knew this and they knew also that the moneys so collected were used by the company in its business and to develop the same. The company therefore became liable for the moneys to appellee and there was a valid consideration for its entering into the written agreement, notwithstanding the fact that without appellee’s knowing, it the moneys were credited to E. S. Blackall on the company’s books, and that all sums paid him for services as manager or for any other purpose were charged up against his account. Appellee had no knowledge of the misappropriation of his rents and no control of the books or the way in which they were kept. The agreement signed by the company was in the nature of a chattel mortgage, and we know of no reason why, after it had appropriated and obtained the benefit of appellee’s money without his knowledge or consent, it did not have power and authority to do what plainly was its duty, to wit, agree to repay the money and give security for its repayment, even though no formal resolutions to that effect had been passed by its board of directors. All the directors and officers knew of the making of the agreement and consented thereto. The agreement, although neither acknowledged nor recorded, and although it gave the company the right to retain possession of the property and sell the stock in the usual course of business, was nevertheless good as between the parties to it, and as between them the provision as to after-acquired property was valid. As to third parties haying no prior lien, it was good after possession taken. Frank v. Mines, 50 Ill. 444; Barchard v. Cohn, 157 Ill. 579; Borden v. Croak, 131 Ill. 68; First Nat’l Bank v. Barse. Commission Co., 198 Ill. 232; Gifford v. Wilson, 18 Ill. App. 214. We are of the opinion that under the written agreement and the implications arising therefrom appellee was entitled to the possession and operation of the business for the purpose of appropriating the profits to the payment of his claim. But at any rate, the court correctly found that the written and the verbal agreements gave him an option either to sell the property (having seized the same) for the purpose of paying his debt, or to continue the business and apply the profits to his claim. So also the court found correctly from the evidence that by the verbal agreement of July 15, 1897, appellee had the right to carry on the business until his claim should be satisfied out of its profits. ■ Second. Assuming for the present that the mortgage to Gascoigne under which appellant took possession and dispossessed Bose Gifford who was holding possession for appellee, was valid, the question arises whether appellee’s possession was sufficient as against appellant. If it was not, the decree cannot be sustained. Instead of paying appellee all the profits of the business, (except $200 a month) as they had agreed to do, the Blackalls had paid him only $200 from September 22, 1896, to July 15, 1897, although the profits amounted to a very much larger sum. From time to time appellee had threatened to take possession. Finally, on the last named day, his patience was exhausted and he was about to put in charge a man of his own choosing when one of the Blackalls suggested that he select Miss Gifford, who had been in their employ as a bookkeeper for some five months and was competent to run the place, and that she should turn over the profits to appellee. To this he assented; whereupon she was informed of the agreement that had been reached and that she was to take and keep possession and control of the premises and business for appellee, collect and disburse all moneys, direct the management of the business and report to him. Accordingly, Miss Gifford assumed control of the business', reorganized the restaurant part of it, told the manager of the restaurant to report to her, took charge of the cash, paid bills, deposited in bank, and refused to let young Blackall check out any money, and reported all these matters to appellee and acted under his orders and directions. He himself visited the store every day until it was seized by appellant, consulted with Miss Gifford in her private office, looked over the accounts, and gave directions concerning the business. Of all these facts a clear preponderance of the evidence shows appellant to have had notice before his seizure, and he admits appellee told him he had a bill of sale; and although the signs were not changed and the same books of account were used and there was no outward indication of a change in the possession, yet we think that there was a sufficient change as against appellant who had actual notice of the facts. There is no magic in a sign. Its object is to give notice, and this appellant had. He had further notice when he made his seizure and was resisted by Miss Gifford. The question that is raised is not so much as to appellee’s actual possession, but as to the notoriety of it. In Best v. Fuller, 185 Ill. 43, cited by counsel for appellant, the court say (p. 51): “ Besides, the primary question is. was there in fact a change of possession?” And in Read v. Wilson, 22 Ill. 377, which was a contest between a mortgagee and an execution creditor, it was held that a transfer of possession had been accomplished although the signs of the mortgagors were permitted to remain and the mortgagors themselves assisted the mortgagee in selling the goods. Appellant’s intrusion upon the premises and his seizure of the business was unauthorized for another reason. The chattel mortgage under which he claims, runs from the company to “ James B. Gascoigne, trustee,” (without indicating for whom, if anybody, Gascoigne is trustee), recites an indebtedness to him of $4,500, and provides that if the company shall pay said Gascoigne, “ his executors, administrators or assigns, said sum of $4,500 on or before May 1, 1898, then this mortgage to be void.” The company was not indebted to Gascoigne in any sum whatever. He was an entire stranger to the transaction and had no interest in it. So far as appears he did not even know that the mortgage had been given. Under these circumstances the mortgage was null and void as against appellee. The word ll trustee,” inserted after the name of the mortgagee, was of no effect and mere deseriptio personal. The real object of the mortgage was, as has been stated, to secure appellant against his contingent liability for rent; but of this nothing appears on its face. It purports to secure the payment of the $4,500 due Gascoigne and nothing else. Considering the manner in which it was drawn, no one was under any obligation to call upon and inquire of Gascoigne what relation he sustained to the instrument or whom he was trustee for; but even had such inquiry been made, he could have given no information. The evidence strongly tends to show, and both the chancellor and the master found, that the sale under the mortgage to appellant and the sale to him by the company of the same property were parts of one transaction and pursuant to a fraudulent understanding that the sale, apparently absolute, should be conditional only, and that the Blackalls or the company should retain a secret interest in the property and finally have it back. One day after appellant took possession the company gave him a written consent to an immediate sale under the mortgage without notice, and on the same day one Buechel, undertaking to act for Gascoigne, (who took no part in the transaction,) executed a bill of sale to appellant under the mortgage in consideration of $2,000, and on the same day the company gave him a bill of sale for the same goods in consideration of $2,000, being something less than the sum which appellant claimed the company owed him. Both bills of sale were given pursuant to an understanding to that effect between appellant and the company. If there was an actual sale, which the proof leaves doubtful, it was in lump. It appears further that in connection with the execution of the bills of sale appellant told the three Blackalls that he “ would pull them through ” their difficulties; that he would protect them in their property rights; that afterwards the Blackalls applied to him to get the property back, and he said he could not do anything as long as the litigation was pending. At the last interview between them he claimed that the Blackalls were still owing him money on account of the old partnership of A. H. Blackall & Son and that he intended to get that debt before he turned back the property. A sign twenty-five feet long with the name of “ A. H. Blackall & Son” covering the whole of it remained over the door of the premises for more than three years after appellant took possession. Above the sign was one about one and one-half to two feet long, bearing the name "N. Martin, successor.” During all this time appellant continued to use wrapping paper and packages bearing the name of A. H. Blackall & Son. "We therefore concur in the finding of the court that the sale to appellant was conditional only and made with intent to defraud appellee and prevent him from collecting his claim, and that appellant obtained no title under either bill of sale. Third. It is contended that the bill contains no allegations forming a basis for that part of the decree which holds appellant accountable for the profits made by him out of the business, and that inasmuch as he made nearly all these proiitsafter the filing of the bill a supplemental bill should have been filed. Undoubtedly, proofs without allegations are as insufficient as allegations without proofs. But we think the allegations in this behalf are sufficient. In the original bill it is averred that appellant “ was then in possession carrying on the business;” that appellee “was wholly excluded from the possession or control of the property;” that appellant “and the Blackalls were proceeding to sell and dispose of the goods at 105 Madison street and to collect the debts and moneys.” In an amended and supplemental bill filed seven days after the original one it was charged that “ said E. S. and A. II. Blackall and said A. II. Blackall & Son, after the said Bose Gifford was dispossessed as aforesaid, together with said Bichólas Martin (appellant), took possession of said premises and proceeded to dispose of the goods, merchandise and chattels therein and to appropriate to their own use the proceeds thereof; ” that appellant and the Blackalls “ wrongfully conspired to take possession of the store, goods and property and convert the same to their own use and prevent Sexton from getting anything out of the same; that in pursuance of such purpose the mortgage was executed and possession taken by Martin;” that Martin had “removed from 105 Madison street four large sacks of coffee and taken into his possession and converted $124, the proceeds of said business.” It is true that the prayer of the bill asks for no specific relief against appellant with reference to the profits; but the general prayer would be sufficient if the allegations are. Pennsylvania Co. v. Bond, 99 Ill. App. 536, contains an extended review of the authorities relating to the necessity of filing supplemental bills, and it is there held that where no new facts have arisen since the filing of the bill except that the defendant afterwards continued to do what the bill alleged he was doing and about to do, a supplemental bill is unnecessary. That case governs the one at bar. The state of the record justifies the inference that both before the master and the chancellor, the learned counsel for appellant considered the pleadings sufficient to authorize an inquiry into the profits made by appellant. They made no objection to the inquiry or to the taking of testimony in.that regard at any stage of the proceedings, and the only exceptions to the master’s report finding the amount of the profits, were “ that the profits * * * amounted to $2,898.42” and that appellant’s claim for services in managing the business had been disallowed. The objection that the pleadings do not support the decree is made in this court for the first time. Fourth. It is also claimed that under the allegations of the bill appellant was a mere trespasser upon the rights of appellee, and that as to him appellee had a complete remedy at law by an action of assumpsit or trover. Appellee, being entitled to an accounting for the profits, had a right to proceed in equity; but even if that feature be disregarded, the objection founded upon the existence of a remedy at law came too late. “ This objection should be taken at the earliest opportunity.” Stout v. Cook, 41 Ill. 447, 448. It should be interposed before the filing of an answer. Magee v. Magee, 51 Ill. 500, 503; Kaufman v. Wiener, 169 Ill. 596. Appellant was served with summons July 28, 1897, and the summons was returnable at the August term of that year. He did not demur to the bill as he should have done in order to raise the objection in time. His answer filed December 29, 1897, is silent on the subject. He makes the objection for the first time in an amendment to his answer, filed January 6, 1898. Fifth. Appellant made a verbal lease of the premises to the company for one year from May 1,1897, the rent to be paid weekly. There was no agreement against subletting or assignment. This lease was in force at the time appellee took possession, and he was entitled to remain in possession as against appellant upon payment to him of the rent as it accrued. This results from the fact that the company gave appellee the right to occupy the premises, continue the business therein, and appropriate the profits' till he paid off his claim. The chancellor did not err in holding that appellant had no right to oust appellee from the premises during the year provided the rent were paid, and was liable to him for the profits made by appellant during the continuance of the verbal lease. The decree of the Superior Court is affirmed. Affirmed.