Court Opinion

ID: 6965382
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:52:52.931135+00
Date Added: 2024-06-11T16:08:35.523658
License: Public Domain

Mr. Justice Magruder delivered the opinion of the Court: It is claimed by the plaintiff in error, that the demurrer to the amended bill of review was improperly overruled, for several reasons. First, it is said that the amended bill of review does not show all the evidence, and other proceedings, upon which the decree sought to be reviewed is based. The amended bill sets out in full the original bill, the summons issued thereon, the returns of service endorsed upon the summons, the entry of appearance for the defendants, the orders of default and reference, the master’s report and depositions thereto attached, and' the final decree based upon said report. This is a sufficient compliance with the rule, as laid down in Story’s Equity Pleadings, and as followed by this Court in a number of cases, which is as follows: “In a bill of this nature, it is necessary to state the former bill, and the proceedings therein, the decree and the point in which the party exhibiting the bill of review conceives himself aggrieved by it.” (Story’s Eq. Pl., sec. 420; Aholtz v. Durfee, 122 Ill. 286.) Counsel complains, that certain exhibits, referred to by the master in his report made in the original cause, are not set forth in full in the report as it appears in the amended bill of review. The absence of these exhibits can not be regarded as a fatal defect on demurrer to the bill of review, because they are in the nature of evidence. It is well settled, that it is not necessary to state, as a part of the proceedings in the original cause, “the evidence on which the court found the facts on which it proceeded to render the decree.” (Turner v. Berry, 3 Gilm. 541; Aholtz v. Durfee, supra; Evans v. Clement, 14 Ill. 206.) As a general rule, the question, in bills of review, is not whether the facts found in the decree under review are in accordance with the evidence, but whether the court rendering such decree has correctly applied the law to the facts as found by it. (Ebert v. Gerding, 116 Ill. 216.) Second, it is objected, that the bill of review does not showperf ormance of the requirements of the original decree. The original decree directs the defendants therein to deliver up possession of the premises and the improvements thereon to the complainant, and to come to an accounting for the sinking fund and other property. It is said, that the present complainants have not, as they should have done, attempted or offered to comply with these terms of the decree. The general rule is, that the decree must be first obeyed and performed before a bill of review can be brought. (Story’s Eq. Pl., sec. 406; Griggs v. Gear, 3 Gilm. 2; Judson v. Stephens, 75 Ill. 255; Kuttner v. Haines, 135 id. 382.) But the performance of the decree is not necessary to the jurisdiction of the court; it is merely a personal right which the defendant may insist upon if he urges it upon the attention of the court at the proper time. If he desires to raise the objection of non-performance, he should move to strike the bill of review from the files, or to dismiss the suit, upon his first appearance. He can not go on and treat the bill as if it had been regularly filed by demurring to it, or answering it; for, by so doing, he admits that it is properly in court. (Forman v. Stickney, 77 Ill. 575; Griggs v. Gear, supra.) In the present case, the defendant made no motion to dismiss the bill of review upon his first appearance, but answered and demurred to the bill, and also demurred to it after it was amended. The objection of non-performance comes too late, and is not properly raised on demurrer. Third, it is charged that there has been laches in the filing of the bill. We do not think that this charge can be sustained under the facts of the present case. The decree sought to be reviewed was entered on February 9,1889, and the present bill was filed on April 4, 1889. The bill is of a double character; a bill of review for errors apparent upon the face of the decree; and an original bill in the nature of a bill of review to impeach the decree for fraud. Viewed in either aspect it has been filed in time. It is a general rule, that a bill of review for errors apparent upon the face of the record will be entertained, if brought within the time allowed by the statute for the suing out of a writ of error, which, in this State, is five years. (Sloan v. Sloan, 102 Ill. 581; Story’s Eq. Pl., sec. 410; see, also, McConnel v. Gibson, 12 Ill. 128; Boyden v. Reed, 55 id. 458; Harris v. Cornell, 80 id. 54; Howe v. South Park Comrs. 119 id. 101.) Fourth, it is assigned as error that the court below, upon overruling the demurrer to the bill, did not grant leave to answer over. The correct practice, on overruling a demurrer to the bill, is not to render a decree, but to make an order requiring the defendant to answer, and if he does not do so, to take the bill as confessed. We have held, however, that the question whether a defendant should be ruled to answer, was one of discretion, and would not be reviewed in this court. (Miller v. Davidson, 3 Gilm. 518; Roach v. Chapin, 27 Ill. 194; Wangelin v. Goe, 50 id. 459.) In the Wangelin case it was said, that there was no irregularity in proceeding to a decree upon overruling the demurrer to the bill, if the record showed that the defendant elected to abide by the demurrer. Such was the case here. Without attempting to discuss or analyze all the motions and rulings, and counter-motions and counter-rulings, in the record, it sufficiently appears that the defendant was allowed, at his own request, to withdraw such portions of his answer as were an answer to the amended bill, and to have the other portions stand as a demurrer to said bill, upon condition that, in case the demurrer should be overruled, no answer would be permitted; and that Bruschke accepted the condition, and thereby elected to stand by his demurrer. For the reasons hereinafter stated the decree sought to be reviewed was erroneous for errors appearing upon its face; and where such is the case, that is to say, where a demurrer to a bill of review, grounded upon error, is overruled, the decree may be reversed without any further hearing. (Cooke v. Bamfield, 3 Swanst. 607; 2 Dan. Ch. Pr., 4th ed., page 1583.) Having disposed of these preliminary objections, we come now to the question of the validity of the original decree. We think that the decree was defective, because the old society or corporation, the Der Nord Chicago Schuetzen Yerein, was not a party defendant to the bill in the proceeding in which the decree was rendered. According- to the English practice, the substance of the pleadings was recited in the decree; and'so, in bills of review for errors apparent on the face of the decree, the decree is understood to include not only the final judgment of the court, but the pleadings also; and, in passing upon any such errors in bills of this character, the court will look through the pleadings and prior proceedings. (Ebert v. Gerding, 116 Ill. 216.) Here, the original bill was filed by Bruschke, a stockholder in the Der Nord Chicago Schuetzen Yerein, a corporation “not for pecuniary profit,” against certain persons alleged to have been directors and officers of said corporation, and also against the North Chicago Sharp Shooters’ Association, a corporation for pecuniary profit. In the original bill thus filed, Bruschke attacks and seeks to set aside a sale and transfer of the property and assets of the Yerein, the old corporation, by its officers and other stockholders besides himself, to the SharpShooters’ Association, a new corporation formed by said officers and other stockholders. He alleges, that the rest of the members of the old society besides himself had abandoned it and joined the new society; that, by reason of such abandonment and sale, the right and title of the other members had become forfeited ; that he was himself the only surviving member of the Yerein, and was “in fact the corporation of the whole society, and sole owner of its property and franchises;” that no steps had been taken to wind up the Yerein. The decree finds Bruschke to be entitled to all the property of the Yerein, and vacates the sale and conveyances of the property by the officers of the old society to the new society, and directs that all the property, belonging to the Yerein, be delivered up to Bruschke. By asserting that the old corporation had never been wound up, the bill admitted its continued existence, and, upon the vacation of a sale of its property, it would seem to be the natural result that the title to such property should be re-vested in it, the old corporation, and not in one of its stockholders. At any rate, the old corporation ought to have been made a party to the proceeding and given a chance to be heard upon the question whether its property should be re-transferred to itself, or not. We are satisfied, upon an examination of the bill and summons, and all the other proceedings, that the Verein, the old corporation, was not a defendant to the bill, nor was its appearance entered in the cause. Its name is not mentioned in the summons issued upon the filing of the bill, nor in the returns thereon made by the sheriff. The bill recites in its opening paragraph, that it is brought against the North Chicago Sharp Shooters’ Association alone. None of its phraseology can be construed to include, as defendants, others than said association and certain named officials of the Verein. Originally the rule was that, where the directors or officers of a corporation fraudulently misappropriated the corporate property in any manner, or committed any other breach of their fiduciary obligations towards the corporation, the corporation itself "was the proper party to bring a suit as plaintiff against the wrong-doers. In order to prevent injustice, however, equity permits a stockholder, either individually or on behalf of himself and other stockholders similarly situated, to maintain a suit in such cases against the wrong-doing directors or officers, where it appears, and is averred, that the corporation itself either actually or virtually refuses to begin the suit, or where the alleged facts show that the wrong-doing defendants constitute a majority of the managing body, or where there is disclosed by the plaintiff’s pleading a state of things, which renders it reasonably certain that a suit by the corporation would be impossible, and a demand therefor unavailing. But where such a suit is begun by a stockolder or' stockholders, the corporation is a necessary party, because the action is for the benefit of the corporation, and the final relief when obtained belongs to the corporation. (1 Morawetz on Priv. Corp., 2d ed., secs. 257, 239, 241; 3 Pom. Eq. Jur., secs. 1094, 1095, and notes; Greaves v. Gouge, 69 N. Y. 154; Chicago Hansom Cab Co. v. Yerkes, 141 Ill. 320; Chetlain v. Republic Life Ins. Co., 86 id. 220.) The rule is thus stated by Morawetz (sec. 257) : “It is manifest that, in a suit brought by a shareholder to protect his equitable interest in the affairs of a corporation, the corporation is itself an indispensable party. The legal title to the corporate property and rights is vested in the corporation; and each stockholder is beneficially interested only as a member of the company.” In Greaves v. Gouge, supra, the Supreme Court of New York said: “There is no doubt that a stockholder has a remedy * * * for the misapplication or waste of corporate funds and property by an officer of a corporation; but the weight of authority is in favor of the doctrine, that an action for injuries caused by such misconduct must be brought in the name of the corporation, unless such corporation or its officers, upon being applied to for such a purpose by a stockholder, refuse to bring such action. In that contingency, and then only, can a stockholder bring an action for the benefit of himself and others similarly situated, and in such an action the corporation must necessarily be made a party defendant.” (City of Chicago v. Cameron, 120 Ill. 447.) If it could be maintained, that the original bill makes the Yerein a party defendant, yet, as.there was no service of process upon it, it could only have been in court by virtue of a solicitor’s written entry of “appearance of the defendants in the above cause.” The bill of review alleges, that the solicitor, so entering the appearance of the defendants, had no authority to appear for the Yerein, and did not intend to do so; and the demurrer to the bill of review admits the truth of this allegation. Where an attorney entering the appearance of a defendant does so without authority, the judgment or decree based upon such act is void, and may be collaterally attacked. (Griggs v. Gear, 3 Gilm. 2; Thompson v. Emmert, 15 Ill. 415; White v. Jones, 38 id. 159.) We deem it unnecessary to notice any of the other grounds, upon which it is claimed that the decree, sought to be reviewed, should be set aside. Being void as against the Der Nord Chicago Schuetzen Verein for want of jurisdiction over that corporation, it was properly vacated by the court below. The decree of the Circuit Court is accordingly affirmed. t-, , ° Decree affirmed.