Court Opinion

ID: 8815830
Source: CourtListenerOpinion
Date Created: 2022-11-26 15:17:42.28392+00
Date Added: 2024-06-11T17:04:27.994346
License: Public Domain

Mr. Presiding Justice Thompson delivered the opinion of the court. The appellant contends that the money and notes received by the agent of the proposed corporations having been deposited in the First National Bank at Pittsfield and certificates of deposit issued for the money in the name of the corporations, and .forwarded to the office of defendants at St. Louis, the situs of the funds is in St. Louis, and that the Circuit Court of Pike County has no jurisdiction over the matters in controversy, or over the proposed corporations. The bill was filed by the complainants to set aside the contracts made by them for the purchase of stock in the proposed corporations, on the ground of fraud and misrepresentation made in the sale of such stock. The decree finds and the evidence sustains all the allegations of fraud contained in the bill. The moneys received for the sale of stock were all to remain in Illinois, in the possession of a local trustee, until the proposed corporations obtained licenses from the State of Missouri, authorizing them to do business. The issuing of certificates of deposit with the sending of such certificates, and the promissory notes made by some of the complainants to St. Louis, out of the State of Illinois, was-a fraud on the complainants and contrary to the agreement upon which the subscriptions were obtained. The proposed corporations only reached a preliminary stage in their organization, when fraud was discovered in their management. The fact that receivers were appointed in St. Louis will not justify the receipts from the subscriptions for stock in Illinois being sent or taken by the Missouri receivers to St. Louis in fraud of the agreement under which the subscriptions were made. The situs of the proceeds of the subscriptions for stock was by agreement under which the subscriptions were made, to be in Illinois until the proposed corporations were authorized to do business. The proposed corporations never having been authorized to- do business in Missouri, in equity the situs of the proceeds must be held to have remained in Illinois. The subscriptions of the complainants, residents of Illinois, having been obtained by fraud, the proceeds should not be permitted to be removed from Illinois, by a foreign receiver for the benefit of subscribers for stock in other states, when the Illinois subscribers are entitled to have their subscriptions canceled and their money refunded to them because of the fraud perpetrated on them by the promoters of said proposed corporations in procuring such subscriptions. It is further contended that the subscriptions for stock being in writing, parol evidence is not admissible to add to the terms of the written subscription. While that is the rule at law, it is not the rule in equity, where fraud is alleged. Grand Tower & C. G. R. Co. v. Walton, 150 Ill. 428; Race v. Weston, 86 Ill. 91. It is also contended that there is error in the appointment of Edward Doocy as receiver in Illinois. Doocy is the Master in Chancery in Pike County, and one of the complainants. A party to a suit or a master in chancery is not competent to act as receiver; the receiver should be an impartial and indifferent person. Benneson v. Bill, 62 Ill. 408; Watson v. Cudney, 144 Ill. App. 624. The appointment of Doocy was erroneous, but harmless to appellant, if the decree was otherwise harmless. The decree directs the receiver, appointed by the Circuit Court of Pike County, to receive and the First National Bank of Pittsfield and L. A. Chamberlain, trustee, to turn over to Edward Doocy, receiver, all moneys, notes and papers which they now have in their possession claimed by Matt G. Reynolds and D. Lacey Crawford, receivers, as part of the assets of said corporations. The bill was only filed to cancel the subscriptions made by complainants and to secure to complainants the moneys and notes so obtained from them by fraud. While the decree settling the rights of the parties as between complainants and defendants is substantially correct, there are some errors requiring a reversal of the decree. The record shows that there are some subscribers to the stock of said corporations, residing in Pike County, who have paid money or given notes on their subscriptions, who are not parties to this suit, and that there is more money on deposit in the bank at Pittsfield than complainants have paid on their subscriptions. The court should not have ordered the receiver to take possession of anything except the moneys paid and notes made by complainants, since the bill only asks relief concerning such moneys and notes. The decree also was erroneous in directing the receiver to fix and retain his own compensation as receiver and to fix and pay his solicitor’s fees and distribute the remaining moneys and notes amongst the complainants; the court thereby delegated to the receiver the duties of the court and made the receiver the judge of his own compensation and of the fees of his- solicitor. The decree is erroneous in the particulars indicated. The decree will be reversed and the cause remanded with directions to the court to appoint an impartial receiver to collect and receive the moneys paid and notes made by complainants, or any of them, and to refer the cause to a special master to take the evidence and report the same with his conclusions, and for the court to enter a final decree directing the return of the payments and notes made by complainants to them. Reversed in part and remanded with directions.