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with an intention of not again resuming a partnership existed, error of the court in ex. possession. 9 R. C. L. 852. The plaintifr cluding evidence on that point was harmless. having proved the prima facie title, it was

[Ed. Note.-For other cases, see Appeal and

Error, Cent. Dig. $ 4189; .Dec. Dig. incumbent upon the defendants, on a claim 1056(3).] of abandonment, to make it appear affirma

6. EXECUTORS AND ADMINISTRATORS 509(9) tively that such title had been abandoned PROCEEDINGS FOR SETTLEMENT OF ACby leaving the land with no intention of re COUNTS-TRIAL DE NOVO ON APPEAL, turning. Moon v. Rollins, 36 Cal. 333, 95

On appeal from the judgment of the probate Am. Dec. 181. The court erred in directing not sit as a court of errors, but tried the cause

court in such proceedings, the circuit court did the verdict.

de novo. The judgment is reversed, and the cause [Ed. Note. For other cases, see Executors remanded.

and Administrators, Cent. Dig. $ 2219; Dec. Reversed and remanded.

Dig. Om509(9).)


Judgment should not be reversed on account

of errors in the record which could not have BARNES v. EARLE et al. (No. 10709.)

affected the result. (Supreme Court of Illinois. Oct. 24, 1916. [Ed. Note.—For other cases, see Appeal and Rehearing Denied Dec. 7, 1916.) Error, Cent. Dig. § 4033; Dec. Dig. Om1027 ;


Error to Branch D, Appellate Court, First In proceedings to settle the final accounts District, on Appeal from Circuit Court, Cook of the administratrix of her husband's estate, creditors objecting, the husband having been County ; Adelor J. Petit, Judge. engaged in the real estate business, and she, Proceedings for the settlement of acupon his death, having sold it, charging herself counts of Vilena H. Barnes, as administrawith the appraised value of the office furniture, her son, whom she claimed had become a part trix of F. A. Barnes, wherein George Earle ner with his father after the death of the fa- and others, creditors of the estate, objected. ther's partner, and from whom, as surviving From a judgment of the circuit court statpartner, she claimed to have purchased the busi- ing an account for her in which she was ness, was not incompetent as a witness to prove that he had been a partner with his father, charged with an amount as the proceeds of since the statutory disqualification is not against her sale of her deceased husband's property the party suing or defending as administrator, and business, she appealed to the Appellate but against one suing or defending adversely to Court for the First District, which affirmed, the administrator.

[Ed. Note.--For other cases, see Witnesses, and to review the record brings certiorari Cent. Dig. & 571; Dec. Dig. Om 134.)

Affirmed. 2. WITNESSES Ow65 - DISQUALIFICATION Wentworth, Cavender & Kaiser, of Chicago, HUSBAND AND WIFE.

In proceedings to settle accounts by the (Daniel S. Wentworth, David B. Maloney, administratrix of her husband's estate, credi- and M. A. Natapson, all of Chicago, of countors objecting, the administratrix was compe- sel), for plaintiff in error. Adams & Wintent to testify to matters occurring after her nen, of Chicago, for defendants in error. husband's death, not being disqualified by any statutory provisions.

[Ed. Note.-For other cases, see Witnesses, CARTWRIGHT, J. The plaintiff in error, Cent. Dig. § 182; Dec. Dig. 65.]

Vilena H. Barnes, filed in the probate court 3. APPEAL AND ERROR Om 523(1)-RECOBD— of Cook county her final account as adminDEPOSITIONS PRACTICE IN EQUITY.

istratrix of the estate of her deceased husOn appeal from proceeding in the probate court to settle accounts by the administratrix, band, Francis A. Barnes, in which she a deposition could be considered by the Supreme charged herself with $166.55 as the proceeds Court, though not made part of the bill of ex- of a sale of the furniture and fixtures in ceptions, the proceedings being governed by the the office of F. A. Barnes & Co. The de rules of equity practice, while in equity depositions filed in the cause are part of the record fendants in error, George Earle and others, without any certificate of evidence.

creditors of the estate, objected to the ac[Ed. Note.-For other cases, see Appeal and count, and claimed that the plaintiff in erError, Cent. Dig. 88 2372, 2373; Dec. Dig. ror had sold the property and business of m523(1).]

her deceased husband for $1,550. The court 4. EVIDENCE 317(4)-HEARSAY.

In proceedings for the settlement of the ordered the plaintiff in error to file an accounts of an administratrix of her husband's amended final account, which she refused to estate, creditors objecting, her testimony as to do, and the court thereupon, against her obwhat her son stated to her after his father's jection, stated an account for her in which death relative to a partnership between them was not legitimate evidence, being hearsay.

she was charged with $1,033.45 as the pro [Ed. Note.--For other cases, see Evidence, ceeds of the sale. She appealed to the cirCent. Dig. $ 1177; Dec. Di 317(4).] cuit court, where there was a trial by the 5. APPEAL_AND ERROR W 1050(3)–HARMLESS court, resulting in the same judgment as ERROR-EXCLUSION OF EVIDENCE,

the one appealed from. From the judgment Where, in view of all the evidence admitted, of the circuit court she appealed to the Apand the legitimate evidence excluded, as to whether the son had been a partner with his fa- pellate Court for the First District, where ther, the court could not have concluded that the judgment was affirmed, and this court

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granted a writ of certiorari to bring the competent to testify to matters occurring record here for review.

after the death of her husband, not being [1, 2] Francis A. Barnes and Samuel Par- disqualified by any statutory provision. ish were partners as real estate brokers in (3-5) If the rulings of the court in holding the city of Chicago, under the firm name of the witnesses incompetent and excluding their Barnes & Parish. Samuel Parish died in testimony was prejudicial to the plaintiff December, 1904, and Francis A. Barnes in error, they would require a reversal of thereafter conducted the business under the the judgment, but if they were not prejuname of F. A. Barnes & Co. On November dicial the judgment ought not to be reversed. 11, 1905, Barnes died, and the plaintiff in Counsel for defendants in error say that error was appointed administratris of his the deposition of Percy Barnes cannot be estate, and immediately after, on November considered because it has not been made a 25, 1905, she sold the office furniture, busi- part of the bill of exceptions, and the court ness and good will to G. H. Schneider & Co. cannot know what it contains. This is a for $1,550. The office furniture had been ap- misapprehension of the law. No pleadings praised at $166.55, and the plaintiff in error were required in the case. The proceeding charged herself with that amount. She was not in the course of the common law, claimed that her son, Percy Barnes, became and the account appealed from was stated a partner with his father after the death of by the probate court against the objection Samuel Parish; that on the death of his of the plaintiff in error. The proceeding father the partnership property, business, and was in the nature of a proceeding in equity good will vested in him as surviving part and was governed by the rules of equity ner; that she purchased the business and practice. Wadsworth v. Connell, 104 Ill. good will of him for $350, and afterward 369; Estate of Corrington, 124 Ill. 363, 16 sold the same, individually and in her own N. E. 252. In equity depositions filed in a right, together with the furniture, for $1,- cause are part of the record without any 550. To prove that Percy Barnes was a certificate of evidence. Ferris v. McClure, partner with his father the plaintiff in er- 40 Ill. 99; Bressler v. McCune, 56 Ill. 475 ;

offered his deposition taken in the Moss v. McCall, 75 Ill. 190; Heacock v. HosCause. Objection was made that Percy mer, 109 Ill. 245; Ryan v. Sanford, 133 Ill. Barnes was incompetent as a witness, and 291, 24 N. E. 428. In his deposition Percy the court sustained the objection and sup- Barnes testified that after the death of Sampressed the deposition. The plaintiff in er- uel Parish he and his father made a verbal ror also offered herself as a witness, and a agreement that he should be a partner in like objection was made that she was in the firm, that he should have so much for competent to testify. The court sustained expenses and have an accounting on the first the objection and refused to admit her tes of the following year, when the business was timony. The court erred in each of these to be reorganized, and that the proceeds rulings. If Percy Barnes had had any in- were to be divided equally; but he also testerest in the result of the proceeding, ittified that the bank account was carried unwould not have disqualified him, because the der the name of F. A. Barnes & Co., that his adverse party was not suing or defending as father signed the checks, that no announceadministratrix, and the statutory disqualifi- ments were sent out stating that he was a cation is not against the party suing or de partner, and that his name was not placed fending as administrator, but against the on the stationery. A witness testified that party suing or defending adversely to the Francis A. Barnes, about three months beadministrator. Steele v. Clark, 77 Ill. 471; fore his death, told him that it was his inIllinois Central Railroad Co. v. Reardon, tention, as soon as the business shaped it157 Il. 372, 41 N. E. 871; Bailey v. Robison, self so that he could, that Percy Barnes and 244 Ill. 16, 91 N. E. 98, 42 L. R. A. (N. S.) the witness were to have a working interest, 305. If Percy Barnes had come within the so that in case anything should happen to terms of the statute, he was neither a party him the business would be carried on. In to the proceeding nor directly interested in offering the plaintiff in error as a witness the event. The question whether his mother her attorney stated what he proposed to should be charged with all that she received prove by her, and the only things occurring from G. H. Schneider & Co. did not concern after the death of Francis A. Barnes conhim. The estate was insolvent to the extent cerning which she was competent to testify of more than $10,000, and he would not were that Percy Barnes did not live at home, gain or lose by the event of the suit, and and that as soon as she saw him after the the judgment could not be given in evidence, death of her husband he claimed that he either for or against him, in another suit. was going ahead with the business as his surAn offer was made to prove certain facts by viving partner, What Percy Barnes said the plaintiff in error, and it embraced some was not legitimate evidence, and the sale to things which occurred in the lifetime of her G. H. Schneider & Co. was made only two husband concerning which she was incom- weeks after his father's death. Considering petent. Schreffler v. Chase, 245 Ill. 395, 92 all the evidence admitted and the legitimate N. E. 272, 137 Am. St. Rep. 330. She was evidence excluded, we do not see how the

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court could have concluded that there was a transfer of stock shall be valid till such provipartnership between Percy Barnes and his sions have been complied with. father, and the errors of the court were Loan Associations, Cent. Dig. & 12; Dec. Dig.

[Ed. Note.-For other cases, see Building and therefore not prejudicial.

Om 10.) [6] The probate court evidently concluded

2. CORPORATIONS O 428(10)-NOTICE-NOTICE that there was a partnership from the fact TO DIRECTOR. of giving credit for the amount paid Percy Notice to a director when acting solely in Barnes and the judgment of that court must his own private interest is not notice to the have been based on some other ground. But


[Ed. Note.-For other cases, see Corporathe view of the case taken by the probate tions, Cent. Dig. 8 1759; Dec. Dig. Ow428(10).] court is of no importance. On appeal from

3. BUILDING AND LOAN ASSOCIATIONS the probate court the circuit court did not

23(1)-NEGLIGENCE OF SECRETARY. sit as a court of errors, but tried the cause Negligence of a building association's secde novo. Kasting v. Kasting, 47 Ill. 438. retary, in matters as to which it owes a duty, The appeal brought up the whole matter for

is its negligence. trial, but at the trial the attorney for the Loan Associations, Cent. Dig. $8 27, 31; Dec.

[Ed. Note.-For other cases, see Building and plaintiff in error, in a statement made to Dig. Om 23(1).] the court, asserted her claim that the estate 4. BUILDING AND LOAN ASSOCIATIONS 10 had no interest in the $1,033.45, and he ACTION BY PLEDGEE OF STOCK-LACHES. asked for an order reversing the order of Mere delay of 15 months in bringing suit the probate court and excusing her from ac- is not laches which will bar right of the pledgee counting to the estate for said sum of $1,- sociation to maintain suit against the associa

of a certificate stock in a building and loan as033.45. The plaintiff in error did not com- tion for negligently, in violation of its duty as plain in the circuit court of the allowance trustee, paying the surrender value of the stock to her of $350 paid to Percy Barnes, and if, der of the certificate, though in the meantime

to the record owner, without requiring surrenas a matter of fact, the conclusion of the such owner became bankrupt, the pledgee havprobate court was illogical or inconsistent, ing notified the association of the pledge, as the circuit court was not concerned in that soon as he knew of the payment, and it having

had the right to proceed at once against such question. That court was trying the case

owner on learning that he had collected money de novo, and the judgment of that court to which he was not entitled and for which it only is now under review.

was liable to the pledgee. [7] The judgment ought not to be reversed

(Ed. Note.- For other cases, see Building and on account of the errors in the record, which Loan Associations, Cent. Dig. $ 12; Dec. Dig.

10.) in our judgment could not have affected the result, and accordingly the judgment is af Error to Appellate Court, Fourth District, firmed.

on Appeal from Circuit Court, Marion CounJudgment affirmed.

ty; Thomas M. Jett, Judge.

Suit by M. O. Allmon and others against the Salem Building & Loan Association and

another. Decree of circuit court for com(275 Ill. 336) ALLMON et al. V. SALEM BUILDING &

plainants was reversed by the Appellate LOAN ASS'N et al. (No. 10267.)

Court (194 Ill. App. 224), and complainants

bring error. Reversed, and decree of circuit (Supreme Court of Illinois.

Oct. 24, 1916. court afirmed.
Rehearing Denied Dec. 6, 1916.)

Frank F. Nobleman and June C. Smith, 1. BUILDING AND LOAN ASSOCIATIONS 10 both of Centralia, for plaintiffs in error.


Kagy & Vandervort, of Salem, for defendA building and loan association by paying ants in error. the surrender value of stock to the record owner without requiring surrender of the certifi

DUNCAN, J. On and prior to January 28, cates is chargeable with negligence, and with notice that it would have obtained but for 1904, John C. Stonecipher became the record such negligence, rendering it liable for the val- owner of 36 shares of the capital stock of the ue thereof to one to whom the record owner | Salem Building & Loan Association of the had pledged the certificate as security, such owner baving become bankrupt; the purpose of par value of $100 each at maturity, or apHurd's Rev. St. 1915–16, c. 77, § 52, providing proximately ten years from date, ten shares that while the share of a stockholder in any of which were executed and delivered by said corporation may be taken on execution, yet association May 12, 1896, six shares thereof where it has been sold or pledged in good faith for value, and the certificate has been deliver- March 18, 1898, ten shares thereof December. ed, such share shall not be liable on execution 31, 1898, and ten of such shares October 5, against the vendor or pledgor, being to make 1899. On August 12, 1904, and on September shares of stock as nearly negotiable as possible; 10, 1906, respectively, said Stonecipher exand the association's by-laws requiring it to demand a surrender of the certificate before ecuted and delivered to H. L. Allmon, for transferring its stock on its books, and to in- money borrowed of the latter, two notes of dorse the transfer on the certificate; and this, $2,000 each, both due one year after date though the association's constitution provides transfers of stock shall be made in the presence with 6 per cent. interest from date, and to se of its secretary and on its books, and that no cure the payment of said two notes, on said

last date said Stonecipher delivered to said | a bank of his own. Stonecipher was a diAllmon the said certificates for the 36 shares rector in said association until shortly before of said capital stock, indorsed by said Stone he became a bankrupt, and at the times he cipher in blank. Allmon died intesta je Feb- collected the money on said certificates he ruary 7, 1908, leaving him surviving Mattie had $25,000 worth of unincumbered real esB. Allmon, bis widow, and M. 0. Allmon, tate in his own name, and was then regarded Nellie H. White, Ida May Pullen, and Tina as an honest and successful business man in V. Cole, plaintiffs in error, as his children and around Salem and as financially able to and only heirs at law, all adults. The widow pay all his debts. The constitution of said and heirs settled the estate of said deceased association provided that transfers of stock by agreement and without administration, therein may be made on payment of 25 cents and agreed that said children and heirs were to it for each share transferred, and that all to be the owners of said promissory notes transfers shall be made in the presence of and the said 36 shares of stock which were the secretary, who shall record them in a found among the assets of the deceased, and book purchased and kept by him for that pursaid widow, by her indorsement thereon, pose alone, and that they shall also be insignified her transfer to them of all her in- dorsed on the certificates transferred. In terest therein, and all the debts of said de- each case the transferee shall be entitled to ceased were paid. M. 0. Allmon, as a fourth all the privileges of the original holder, but owner and as agent of his sisters aforesaid, no transfer shall be valid and complete until collected the interest on these notes of John the foregoing provisions have been complied C. Stonecipher in 1908 and up to and includ- with. ing 1911, and his father had collected the in Plaintiffs in error brought this suit in equiterest thereon for the previous years. With-ty on April 15, 1913, in the circuit court of out the knowledge of M. O. Allmon or bis Marion county against said association and sisters John C. Stonecipher applied for and William A. Mills, trustee in bankruptcy of collected, after their maturity, from said the estate of John C. Stonecipher, bankrupt, building and loan association the amounts to coinpel the association to issue to them due on said certificates on June 18, 1908, certificates of stock in said association of January 28, 1909, and May 15, 1909, and said the par value of $3,600, or to pay them the certificates were paid by said association said notes and interest thereon, and for without requiring the production of said cer- other and further relief in equity. Answers tificates, or, so far as appears from the evi- were filed to the bill by the defendants in dence, without actual knowledge or inquiry error, and on a hearing the court, on the as to where said certificates were or as to foregoing facts, found the issues for plaintheir owners. Shortly after the certificates tiffs in error and decreed that the Salem were paid to Stonecipher, M. O. Allmon called Building & Loan Association pay to them, on John W. Larimer, secretary of said as- within 40 days, $3,600, and that upon paysociation, and inquired of him if Stonecipher ment thereof they surrender to the associaheld said stock in the association, and also tion said certificates of stock. On appeal the informed him that he and his sisters held Appellate Court for the Fourth District rethem as collateral security, and was informed versed the decree of the circuit court and reby Larimer that Stonecipher had collected manded the cause, with directions to dismiss all the money on said certificates and some the bill for want of equity. The record was interest, amounting in all to $3,634.45. This brought to this court for review by a writ of was the first actual knowledge the association certiorari. had of plaintiffs in error's interest in said Two principal questions, only, arise on this certificates. Shortly before or after the last record for our decision: (1) Did the Salem interest was collected on said notes, Decem- Building & Loan Association become liable to ber 12, 1911, Allmon again called on Larimer, plaintiffs in error, as pledgees of the stock as secretary of said association, and obtained in question, by paying to Stonecipher the the dates of the several payments to Stone-withdrawal value of said stock without takcipher of said certificates and wrote the date ing the precaution to require the stock certifion each certificate on which it was paid. cates to be surrendered for cancellation? and Stonecipher was adjudged a bankrupt in Feb (2) are plaintiffs in error barred by laches ruary, 1913. M. O. Allmon considered Stone- for failure to promptly bring their suit cipher up to the first of the year 1912 finan- against said association? cially responsible and that the notes were col [1-3] It is well known that in commercial lectible directly from him, and he (Allmon) transactions with banks and business men had at one time carried stock in the said certificates of stock are very often pledged association, and since his father's death was as security for loans by merely assigning and aware of the fact that certificates of stock delivering the certificates of stock and withtherein mature in approximately ten years. out any thought or intention of the assignees He was a director for the Salem State Bank becoming owners of the stock other than such for the same time, and Stonecipher was a qualified ownership for security. It is not stockholder and vice president of the same usual or customary in such cases for the bank for a part of that time and then started stock to be transferred on the books of the

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company to a pledgee. Moreover, section 52 mand the surrender of such certificate before of chapter 77 of Hurd's Statutes, entitled transferring it on its books, and would there"Judgments,” provides:

by do the owner of the stock an injury equal“The share or interest of a stockholder in ly if not more serious, and there can be no any corporation may be taken on execution, and doubt of its liability for such injury. In the sold as hereinafter provided; but in all cases, instant case does not appear that the where such share or interest has been sold or pledged in good faith for a valuable considera- building and loan association demanded the tion, and the certificate thereof bas been deliv- surrender of the certificates of stock in quesered upon such sale or pledge, such shares ortion or made any inquiry concerning their interest shall not be liable to be taken on exe whereabouts. It might be inferred that it re cution against the vendor, or pledgor, except for the excess of the value thereof over and lied on the provisions of its by-laws in reabove the sum for which the same may have gard to the transfer of its stock to protect been pledged and the certificate thereof deliv- it against the interests of any other than the ered."

record owner of the stock, and made no inThis court held in Rice v. Gilbert, 173 Ill. quiry of Stonecipher as to the persons who 348, 50 N. E. 1087, that the meaning and pur- had them and no demand for their return pose of that section were to give more com- and cancellation. The argument made by its mercial freedom to transfers of the stock for attorneys here is that it was not required to purposes of collateral security than existed make such inquiry or demand, and that before and to make shares of stock as nearly plaintiffs in error lost all right to maintain negotiable as possible. It was further held their action by not giving it notice of their that as between the parties to such a pledge, rights and having the stock transferred on and as to all other parties as owners with the books of the company before the stock actual or constructive notice thereof, such was cashed. But the said statute does not pledge was valid and binding although the require that a pledgee of stock so pledged transfer of the title to the pledgee is not shall notify the corporation that he has re made on the books of the corporation. As ceived it in pledge. The stock in this case between the corporation and the pledgee in was taken as a pledge to secure the loan and such a transfer the full legal title does not without any thought upon the part of either pass to the pledgee, and is not intended to the pledgor or pledgee that the latter should so pass, in the sense that the corporation have the stock transferred on the books ot must recognize the pledgee as the owner of the association. The most that it is possible the stock having legal rights as a member of to say in such a case is that is was the duty the corporation. But a corporation is by law of the plaintiffs in error to have the corporathe custodian of the shares of its stock and tion make a memorandum on its books that clothed with power sufficient to protect the they held the stock in pledge as collateral rights of every one interested therein from security. It was taken for security, only, for unauthorized transfers, and, like every other the loan so far as the record shows, and the trustee, it is bound to execute the trust with statute was undoubtedly intended to protect proper diligence and care, and is responsible pledgees in such cases not only against judg. for an injury sustained by its negligence or ment creditors but against all other persons misconduct in making transfers or cancella- claiming rights in such stock so pledged who tions of such stock. Where certificates are were chargeable with actual or constructive outstanding representing shares of stock, it is notice of their rights. We think that it was the duty of the corporation to resist any trans- gross negligence in the secretary of the associfer of such shares on its books without the ation to pay the withdrawal value of the production and surrender of the certificates. stock to Stonecipher without requiring him to A violation of this duty renders the cor- produce the certificates of stock for cancellaporation liable to the real owner of the shares tion or to make any inquiry concerning the for their conversion, and it is so liable to same. If Stonecipher had put up any sort of bona fide holders for value of the old certifi- plea or excuse for not producing them and cates. 10 Cyc. 614, 618; Hall v. Rose Hill without disclosing the fact that they were & Evanston Road Co., 70 Ill. 673. Equity pledged, it could and should have demanded will compel a corporation, under proper cir- some sort of indemnity for the repayment of cumstances, to transfer on its books shares the same in case a better owner turned up, beof stock to the owner of the equitable title fore cashing them. Inquiry of Stonecipher and issue to him certificates for the same. as to their whereabouts and a requirement 10 Cyc. 605.

that he produce them would undoubtedly The defendant in error building and loan have led to actual knowledge of the fact that association is by its by-laws required to de- they were pledged to plaintiffs in error. We mand a surrender of the certificate of stock think it is therefore not only chargeable with before transferring its stock on its books and negligence but also with notice that it would to indorse such a transfer on the certificate. have obtained but for such negligence, and A failure on its part to demand the surrender that it rendered itself liable and is liable to of the certificate of stock for cancellation be plaintiffs in error for the value of the stock fore cashing it for a person claiming to be withdrawn and cashed by Stonecipher unless an owner, who was not such, would render they have been guilty of such laches as would

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