with an intention of not again resuming a partnership existed, error of the court in expossession. 9 R. C. L. 852. The plaintiff cluding evidence on that point was harmless. having proved the prima facie title, it was [Ed. Note.-For other cases, see Appeal and incumbent upon the defendants, on a claim 1056(3).] Error, Cent. Dig. 4189; Dec. Dig. of abandonment, to make it appear affirma- 6. EXECUTORS AND ADMINISTRATORS tively that such title had been abandoned by leaving the land with no intention of returning. Moon v. Rollins, 36 Cal. 333, 95 Am. Dec. 181. The court erred in directing the verdict. The judgment is reversed, and the cause remanded. Reversed and remanded. (275 Ill. 381) BARNES v. EARLE et al. (No. 10709.) (Supreme Court of Illinois. Oct. 24, 1916. Rehearing Denied Dec. 7, 1916.) 1. WITNESSES 134- DISQUALIFICATION SUIT BY OR AGAINST ADMINISTRATOR. In proceedings to settle the final accounts of the administratrix of her husband's estate, creditors objecting, the husband having been engaged in the real estate business, and she, upon his death, having sold it, charging herself with the appraised value of the office furniture, her son, whom she claimed had become a partner with his father after the death of the father's partner, and from whom, as surviving partner, she claimed to have purchased the business, was not incompetent as a witness to prove that he had been a partner with his father, since the statutory disqualification is not against the party suing or defending as administrator, but against one suing or defending adversely to the administrator. [Ed. Note. For other cases, see Witnesses, Cent. Dig. § 571; Dec. Dig. 134.] 2. WITNESSES 65-DISQUALIFICATION HUSBAND AND WIFE. In proceedings to settle accounts by the administratrix of her husband's estate, creditors objecting, the administratrix was competent to testify to matters occurring after her husband's death, not being disqualified by any statutory provisions. [Ed. Note. For other cases, see Witnesses, Cent. Dig. § 182; Dec. Dig. 65.] 3. APPEAL AND ERROR 523(1)-RECORD DEPOSITIONS-PRACTICE IN EQUITY. On appeal from proceeding in the probate court to settle accounts by the administratrix, a deposition could be considered by the Supreme Court, though not made part of the bill of exceptions, the proceedings being governed by the rules of equity practice, while in equity depositions filed in the cause are part of the record without any certificate of evidence. [Ed. Note.-For other cases, see Appeal and Error, Cent. Dig. §§ 2372, 2373; Dec. Dig. 523(1).] 4. EVIDENCE 317(4)-HEARSAY. In proceedings for the settlement of the accounts of an administratrix of her husband's estate, creditors objecting, her testimony as to what her son stated to her after his father's death relative to a partnership between them was not legitimate evidence, being hearsay. [Ed. Note.-For other cases, see Evidence, Cent. Dig. § 1177; Dec. Dig. 317(4).] 5. APPEAL AND ERROR 1056(3)-HARMLESS ERROR-EXCLUSION OF EVIDENCE. Where, in view of all the evidence admitted, and the legitimate evidence excluded, as to whether the son had been a partner with his father, the court could not have concluded that 509(9) PROCEEDINGS FOR SETTLEMENT OF ACCOUNTS TRIAL DE NOVO ON APPEAL. On appeal from the judgment of the probate not sit as a court of errors, but tried the cause court in such proceedings, the circuit court did de novo. [Ed. Note. For other cases, see Executors and Administrators, Cent. Dig. § 2219; Dec. Dig. 509(9).] 7. APPEAL AND ERROR 1027 FOR IMMATERIAL ERROR. REVERSAL Judgment should not be reversed on account of errors in the record which could not have affected the result. [Ed. Note. For other cases, see Appeal and Error, Cent. Dig. § 4033; Dec. Dig. 1027; Trial, Cent. Dig. § 124.] Error to Branch D, Appellate Court, First District, on Appeal from Circuit Court, Cook County; Adelor J. Petit, Judge. Proceedings for the settlement of accounts of Vilena H. Barnes, as administratrix of F. A. Barnes, wherein George Earle and others, creditors of the estate, objected. From a judgment of the circuit court stating an account for her in which she was charged with an amount as the proceeds of her sale of her deceased husband's property and business, she appealed to the Appellate Court for the First District, which affirmed, and to review the record brings certiorari. Affirmed. Wentworth, Cavender & Kaiser, of Chicago, (Daniel S. Wentworth, David B. Maloney, and M. A. Natanson, all of Chicago, of counsel), for plaintiff in error. Adams & Winnen, of Chicago, for defendants in error. CARTWRIGHT, J. The plaintiff in error, Vilena H. Barnes, filed in the probate court of Cook county her final account as administratrix of the estate of her deceased husband, Francis A. Barnes, in which she charged herself with $166.55 as the proceeds of a sale of the furniture and fixtures in the office of F. A. Barnes & Co. The defendants in error, George Earle and others, creditors of the estate, objected to the account, and claimed that the plaintiff in error had sold the property and business of her deceased husband for $1,550. The court ordered the plaintiff in error to file an amended final account, which she refused to do, and the court thereupon, against her objection, stated an account for her in which she was charged with $1,033.45 as the proceeds of the sale. She appealed to the circuit court, where there was a trial by the court, resulting in the same judgment as the one appealed from. From the judgment of the circuit court she appealed to the Appellate Court for the First District, where the judgment was affirmed, and this court 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 disqualified by any statutory provision. [1, 2] Francis A. Barnes and Samuel Parish were partners as real estate brokers in the city of Chicago, under the firm name of Barnes & Parish. Samuel Parish died in December, 1904, and Francis A. Barnes thereafter conducted the business under the name of F. A. Barnes & Co. On November 11, 1905, Barnes died, and the plaintiff in error was appointed administratrix of his estate, and immediately after, on November 25, 1905, she sold the office furniture, business and good will to G. H. Schneider & Co. for $1,550. The office furniture had been appraised at $166.55, and the plaintiff in error charged herself with that amount. She claimed that her son, Percy Barnes, became a partner with his father after the death of Samuel Parish; that on the death of his father the partnership property, business, and good will vested in him as surviving partner; that she purchased the business and good will of him for $350, and afterward sold the same, individually and in her own right, together with the furniture, for $1,550. To prove that Percy Barnes was a partner with his father the plaintiff in error offered his deposition taken in the cause. Objection was made that Percy Barnes was incompetent as a witness, and the court sustained the objection and suppressed the deposition. The plaintiff in error also offered herself as a witness, and a like objection was made that she was incompetent to testify. The court sustained the objection and refused to admit her testimony. The court erred in each of these rulings. If Percy Barnes had had any interest in the result of the proceeding, it would not have disqualified him, because the adverse party was not suing or defending as administratrix, and the statutory disqualification is not against the party suing or defending as administrator, but against the party suing or defending adversely to the administrator. Steele v. Clark, 77 Ill. 471; Illinois Central Railroad Co. v. Reardon, 157 Ill. 372, 41 N. E. 871; Bailey v. Robison, 244 Ill. 16, 91 N. E. 98, 42 L. R. A. (N. S.) 305. If Percy Barnes had come within the terms of the statute, he was neither a party to the proceeding nor directly interested in the event. The question whether his mother should be charged with all that she received from G. H. Schneider & Co. did not concern him. The estate was insolvent to the extent of more than $10,000, and he would not gain or lose by the event of the suit, and the judgment could not be given in evidence, either for or against him, in another suit. An offer was made to prove certain facts by the plaintiff in error, and it embraced some things which occurred in the lifetime of her husband concerning which she was incompetent. Schreffler v. Chase, 245 Ill. 395, 92 N. E. 272, 137 Am. St. Rep. 330. She was [3-5] If the rulings of the court in holding the witnesses incompetent and excluding their testimony was prejudicial to the plaintiff in error, they would require a reversal of the judgment, but if they were not prejudicial the judgment ought not to be reversed. Counsel for defendants in error say that the deposition of Percy Barnes cannot be considered because it has not been made a part of the bill of exceptions, and the court cannot know what it contains. This is a misapprehension of the law. No pleadings were required in the case. The proceeding was not in the course of the common law, and the account appealed from was stated by the probate court against the objection of the plaintiff in error. The proceeding was in the nature of a proceeding in equity and was governed by the rules of equity practice. Wadsworth v. Connell, 104 Ill. 369; Estate of Corrington, 124 Ill. 363, 16 N. E. 252. In equity depositions filed in a cause are part of the record without any certificate of evidence. Ferris v. McClure, 40 Ill. 99; Bressler v. McCune, 56 Ill. 475; Moss v. McCall, 75 Ill. 190; Heacock v. Hosmer, 109 Ill. 245; Ryan v. Sanford, 133 Ill. 291, 24 N. E. 428. In his deposition Percy Barnes testified that after the death of Samuel Parish he and his father made a verbal agreement that he should be a partner in the firm, that he should have so much for expenses and have an accounting on the first of the following year, when the business was to be reorganized, and that the proceeds were to be divided equally; but he also testified that the bank account was carried under the name of F. A. Barnes & Co., that his father signed the checks, that no announcements were sent out stating that he was a partner, and that his name was not placed on the stationery. A witness testified that Francis A. Barnes, about three months before his death, told him that it was his intention, as soon as the business shaped itself so that he could, that Percy Barnes and the witness were to have a working interest, so that in case anything should happen to him the business would be carried on. In offering the plaintiff in error as a witness her attorney stated what he proposed to prove by her, and the only things occurring after the death of Francis A. Barnes concerning which she was competent to testify were that Percy Barnes did not live at home, and that as soon as she saw him after the death of her husband he claimed that he was going ahead with the business as his surviving partner. What Percy Barnes said was not legitimate evidence, and the sale to G. H. Schneider & Co. was made only two weeks after his father's death. Considering all the evidence admitted and the legitimate evidence excluded, we do not see how the court could have concluded that there was a partnership between Percy Barnes and his father, and the errors of the court were therefore not prejudicial. [6] The probate court evidently concluded that there was a partnership from the fact of giving credit for the amount paid Percy Barnes and the judgment of that court must have been based on some other ground. But the view of the case taken by the probate court is of no importance. On appeal from the probate court the circuit court did not sit as a court of errors, but tried the cause de novo. Kasting v. Kasting, 47 Ill. 438. The appeal brought up the whole matter for trial, but at the trial the attorney for the plaintiff in error, in a statement made to the court, asserted her claim that the estate had no interest in the $1,033.45, and he asked for an order reversing the order of the probate court and excusing her from accounting to the estate for said sum of $1,033.45. The plaintiff in error did not complain in the circuit court of the allowance to her of $350 paid to Percy Barnes, and if, as a matter of fact, the conclusion of the probate court was illogical or inconsistent, the circuit court was not concerned in that question. That court was trying the case de novo, and the judgment of that court only is now under review. [7] The judgment ought not to be reversed on account of the errors in the record, which in our judgment could not have affected the result, and accordingly the judgment is affirmed. Judgment affirmed. (275 Ill. 336) ALLMON et al. v. SALEM BUILDING & (Supreme Court of Illinois. Oct. 24, 1916. 10 1. BUILDING AND LOAN ASSOCIATIONS transfer of stock shall be valid till such provisions have been complied with. Loan Associations, Cent. Dig. § 12; Dec. Dig. [Ed. Note.-For other cases, see Building and 10.] 2. CORPORATIONS 428(10)-NOTICE-NOTICE Notice to a director when acting solely in his own private interest is not notice to the corporation. [Ed. Note.-For other cases, see Corporations, Cent. Dig. § 1759; Dec. Dig. 428(10).] 3. BUILDING AND LOAN ASSOCIATIONS Negligence of a building association's secretary, in matters as to which it owes a duty, is its negligence. Loan Associations, Cent. Dig. §§ 27, 31; Dec. [Ed. Note.-For other cases, see Building_and Dig. 23(1).] 4. BUILDING AND LOAN ASSOCIATIONS ACTION BY PLEDGEE OF STOCK-LACHES. 10 Mere delay of 15 months in bringing suit is not laches which will bar right of the pledgee of a certificate stock in a building and loan association to maintain suit against the association for negligently, in violation of its duty as trustee, paying the surrender value of the stock der of the certificate, though in the meantime to the record owner, without requiring surrensuch owner became bankrupt, the pledgee having notified the association of the pledge, as soon as he knew of the payment, and it having had the right to proceed at once against such owner on learning that he had collected money to which he was not entitled and for which it was liable to the pledgee. [Ed. Note.-For other cases, see Building and Loan Associations, Cent. Dig. § 12; Dec. Dig. ~~10.] Error to Appellate Court, Fourth District, on Appeal from Circuit Court, Marion County; Thomas M. Jett, Judge. Suit by M. O. Allmon and others against the Salem Building & Loan Association and another. Decree of circuit court for complainants was reversed by the Appellate Court (194 Ill. App. 224), and complainants bring error. Reversed, and decree of circuit court affirmed. Frank F. Nobleman and June C. Smith, both of Centralia, for plaintiffs in error. Kagy & Vandervort, of Salem, for defendants in error. A building and loan association by paying the surrender value of stock to the record owner without requiring surrender of the certifiDUNCAN, 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 having 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 shares of stock as nearly negotiable as possible; and the association's by-laws requiring it to demand a surrender of the certificate before transferring its stock on its books, and to indorse the transfer on the certificate; and this, though the association's constitution provides transfers of stock shall be made in the presence of its secretary and on its books, and that no 1899. On August 12, 1904, and on September 10, 1906, respectively, said Stonecipher executed and delivered to H. L. Allmon, for money borrowed of the latter, two notes of $2,000 each, both due one year after date with 6 per cent. interest from date, and to se 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 e Feb- collected the money on said certificates he ruary 7, 1908, leaving him surviving Mattie had $25,000 worth of unincumbered real esB. Allmon, his widow, and M. O. 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. O. 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 his 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 compel 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 on each certificate on which it was paid. Stonecipher was adjudged a bankrupt in February, 1913. M. O. Allmon considered Stonecipher up to the first of the year 1912 financially responsible and that the notes were collectible directly from him, and he (Allmon) had at one time carried stock in the said association, and since his father's death was aware of the fact that certificates of stock therein mature in approximately ten years. He was a director for the Salem State Bank for the same time, and Stonecipher was a stockholder and vice president of the same bank for a part of that time and then started ing the precaution to require the stock certificates to be surrendered for cancellation? and (2) are plaintiffs in error barred by laches for failure to promptly bring their suit against said association? [1-3] It is well known that in commercial transactions with banks and business men certificates of stock are very often pledged as security for loans by merely assigning and delivering the certificates of stock and without any thought or intention of the assignees becoming owners of the stock other than such qualified ownership for security. It is not usual or customary in such cases for the stock to be transferred on the books of the 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 equally if not more serious, and there can be no doubt of its liability for such injury. In the instant case it does not appear that the building and loan association demanded the "The share or interest of a stockholder in any corporation may be taken on execution, and sold as hereinafter provided; but in all cases, where such share or interest has been sold or pledged in good faith for a valuable consideration, and the certificate thereof has been deliv-surrender of the certificates of stock in quesered upon such sale or pledge, such shares or interest shall not be liable to be taken on execution against the vendor, or pledgor, except for the excess of the value thereof over and above the sum for which the same may have been pledged and the certificate thereof deliv-it against the interests of any other than the ered." This court held in Rice v. Gilbert, 173 Ill. 348, 50 N. E. 1087, that the meaning and purpose of that section were to give more commercial freedom to transfers of the stock for purposes of collateral security than existed before and to make shares of stock as nearly negotiable as possible. It was further held that as between the parties to such a pledge, and as to all other parties as owners with actual or constructive notice thereof, such pledge was valid and binding although the transfer of the title to the pledgee is not made on the books of the corporation. As between the corporation and the pledgee in such a transfer the full legal title does not pass to the pledgee, and is not intended to so pass, in the sense that the corporation must recognize the pledgee as the owner of the stock having legal rights as a member of the corporation. But a corporation is by law the custodian of the shares of its stock and clothed with power sufficient to protect the rights of every one interested therein from unauthorized transfers, and, like every other trustee, it is bound to execute the trust with proper diligence and care, and is responsible for an injury sustained by its negligence or misconduct in making transfers or cancellations of such stock. Where certificates are outstanding representing shares of stock, it is the duty of the corporation to resist any transfer of such shares on its books without the production and surrender of the certificates. A violation of this duty renders the corporation liable to the real owner of the shares for their conversion, and it is so liable to bona fide holders for value of the old certificates. 10 Cyc. 614, 618; Hall v. Rose Hill & Evanston Road Co., 70 Ill. 673. Equity will compel a corporation, under proper circumstances, to transfer on its books shares of stock to the owner of the equitable title and issue to him certificates for the same. 10 Cyc. 605. The defendant in error building and loan association is by its by-laws required to demand a surrender of the certificate of stock before transferring its stock on its books and to indorse such a transfer on the certificate. A failure on its part to demand the surrender of the certificate of stock for cancellation before cashing it for a person claiming to be an owner, who was not such, would render it no less negligent than its failure to de tion or made any inquiry concerning their whereabouts. It might be inferred that it relied on the provisions of its by-laws in regard to the transfer of its stock to protect record owner of the stock, and made no inquiry of Stonecipher as to the persons who had them and no demand for their return and cancellation. The argument made by its attorneys here is that it was not required to make such inquiry or demand, and that plaintiffs in error lost all right to maintain their action by not giving it notice of their rights and having the stock transferred on the books of the company before the stock was cashed. But the said statute does not require that a pledgee of stock so pledged shall notify the corporation that he has received it in pledge. The stock in this case was taken as a pledge to secure the loan and without any thought upon the part of either the pledgor or pledgee that the latter should have the stock transferred on the books of the association. The most that it is possible to say in such a case is that is was the duty of the plaintiffs in error to have the corporation make a memorandum on its books that they held the stock in pledge as collateral security. It was taken for security, only, for the loan so far as the record shows, and the statute was undoubtedly intended to protect pledgees in such cases not only against judgment creditors but against all other persons claiming rights in such stock so pledged who were chargeable with actual or constructive notice of their rights. We think that it was gross negligence in the secretary of the association to pay the withdrawal value of the stock to Stonecipher without requiring him to produce the certificates of stock for cancellation or to make any inquiry concerning the same. If Stonecipher had put up any sort of plea or excuse for not producing them and without disclosing the fact that they were pledged, it could and should have demanded some sort of indemnity for the repayment of the same in case a better owner turned up, before cashing them. Inquiry of Stonecipher as to their whereabouts and a requirement that he produce them would undoubtedly have led to actual knowledge of the fact that they were pledged to plaintiffs in error. We think it is therefore not only chargeable with negligence but also with notice that it would have obtained but for such negligence, and that it rendered itself liable and is liable to plaintiffs in error for the value of the stock withdrawn and cashed by Stonecipher unless they have been guilty of such laches as would make it inequitable to allow them to recover |