Court Opinion

ID: 6971355
Source: CourtListenerOpinion
Date Created: 2022-07-24 02:03:01.05633+00
Date Added: 2024-06-11T16:08:48.681054
License: Public Domain

Mr. Justice Ricks delivered the opinion of the court: This case and the case of Anderson v. Chicago Trust and Savings Bank, 195 Ill. 341, are, as far as we are able to determine from a careful review of the record, alike in all substantial features, and grow out of the same fraudulent conduct and combinations between Tolman and the appellant bank and the Midland Company that are shown in the cases of Murray v.Tolman, 162 Ill. 417, and Tolman v. Coleman, 104 Ill. App. 70. That the organization, of the Midland Company was an unmitigated fraud, for the purpose of enabling Tolman and the appellant bank to profit by usury under the pretense of guaranteeing commercial paper, is too well settled by the former opinions of this court above referred to, to require further comment, and that appellee’s testate was one of the victims of that fraudulent combination cannot be doubted from the evidence contained in this record; but we cannot overlook the fact that at the time of the filing of the original bill in this case, which was verified, appellee’s testate knew and declared that said Midland Company was organized and being used for fraudulent purposes, and at the same time insisted that he was the owner of stock in said company, of which appellants, or some of them, had possession and which he called his stock, and prayed that appellants should be required to surrender the same up to him and be restrained and enjoined “from selling, assigning, forfeiting, canceling or otherwise disposing of his certificate of the, capital stock in the Midland Company.” It is true that in 1894, by what is termed his engrossed bill, the complainant enlarged upon the charges of fraud made in the original bill, and then, in effect, for the first time asked that the transaction be rescinded‘because thereof and offered to leave appellants in possession of said stock. But at that time it did not occur to the complainant to allege that he did not know, at the time of filing" his original bill, that said Midland Company was a fraudulent organization, and, in fact, he could not have well so alleged, as in his original bill he had alleged that said Midland Company was a fraudulent organization, and was but an adjunct to and a part of the bank, and under the control and management of Tolman for the benefit of Tolman and the bank. In fact, the only new thing" that he did allege by his amended bill that can be said to have been material, was the fact that the stock of the Midland Company was valueless at the time it was sold to him and that the representations as to its value were false and fraudulent. Although this same allegation was not contained in the original bill, that bill did contain the allegations that the company had never transacted any business which by its charter it was authorized to transact, and that it was not intended by Tolman that it ever should transact such business; that it had never transacted any business other than guaranteeing commercial paper, and that such guaranties were only a pretense and a cloak used by Tolman and the bank for exacting illegal and usurious interest; that the moneys paid to Tolman by complainant as compensation or illegal interest for the purpose of obtaining and renewing loans from said bank, which Tolman pretended were for the benefit of said company for guaranteeing paper, were in fact paid at the request of the bank. If, then, the company had never done any business which it was authorized to do, and if all the business it had ever done was to aid the bank in collecting illegal interest, and these facts were known to the complainant when he filed his original bill, or he was so informed and believed, he must have known then that the stock of a corporation so conducting business was worthless. He must have known that the stock of any corporation not owning property,—as it was not pretended that this corporation did own any,—but depending upon the conduct of business for its value, and doing no business it was authorized to do, but being engaged only in a fraudulent scheme to aid a bank in collecting illegal interest, had no value and could have none; and with such knowledge or information he insisted that he was the owner of the stock of said company, and that such stock was in the possession of appellants, or some of them, and that he was entitled to have the certificate for such stock restored to him and desired to have appellants enjoined from canceling or assigning the same. It would seem that the mere statement, afterwards added, that the stock was worthless, would not be sufficient to relieve appellee’s testate from the position of one who, with knowledge of the fraud, had elected to assert ownership to the property thus irapose'd on him. The last amendment of the bill, of September 15, 1900, was upon the suggestion of the master, contained in his report, that the bill lacked an allegation upon the point of the time of knowledge of the fraud, and when the allegation is looked to, we find that it is in such general language,—the language being, “immediately and within five years next preceding” the filing' of the amended and supplemental bill,—that little weight can be attached to it, and so far as we have been able to determine from the record there is no evidence whatever to support such amendment. The case seems to us to be upon all-fours with the Anderson case and to be controlled by it. In the latter case we held that the attempt to rescind the purchase of the stock must be treated as first made at the time of the amendment of the bill, in 1894, which was the same time the bill in question was amended, and the view was there expressed that the amendment could not be carried back to the time of the filing of the original bill. That view seems applicable to the case at bar. We find that appellee’s testate paid $222.63 to Tolman under the pretense of the latter that such sum was a guaranty fee of the Midland Company, and we think a decree should be rendered allowing appellee to offset that sum against the note and interest which he owes and is held by appellants, and that that is the limit of the relief that can be granted him under the facts as shown-by this record. Appellants urge that the costs of the court below should be apportioned, but we do not think sufficient appears in the record to justify us in entering such order. The.judgment of the Appellate Court and the decree of the circuit court of Cook .county are, and each is, reversed, and the cause is remanded to the circuit court of Cook county with directions to enter a decree in conformity with the views herein expressed. Reversed and remanded, toith directions.