(144 N.E.) above stated, was a little more than $348 | & Elevator Company bonds, $60,000 preferred per share. The further facts are that the Dempsters in 1914 refused to take $350 per share for their holdings to Munday and his associates, and refused absolutely to sell to the syndicate for less than $400 per share. We must therefore necessarily conclude from the evidence in the record that the Dempsters considered that the stock in the Rosehill Cemetery Company was worth $400 per share in 1914, and there is nothing in the record to indicate that it was worth less at any time after 1914. The evidence does show that the stock was worth much more than that by reason of the fact that the mausoleum turned out to be such a valuable asset to the cemetery. stock of the Huttig Manufacturing Company, and $71,000 of the certificates of deposit of the Bank of Smithboro. The witness on whom we rely for this information is Joseph O. Morris, who also testified that the Reynolds mortgage, when it was foreclosed, was insufficient to satisfy Reynolds' note by about $2,000 or $3,000. This testimony, so far as we are able to find, is undisputed, and the total securities so placed in the care fund not completely paid off in June, 1914, could not be, under Morris' testimony, more than $234,000. The circuit court only found the deficiency in the perpetual care fund to be made good by the Dempsters to be $131,575.86, and decreed in the final disposition of the litigation by the Dempsters against Munday, Huttig, and others, that the Dempsters should make good the above deficiency by applying future dividends of the Rosehill Cemetery Company, until the deficiency was discharged. We cannot make it out definitely from the record, but we assume that the above amount represents the entire amount that the court found was unsettled by the syndicate and not good enough security for the perpetual care fund. Assuming that this is the total amount of the "loot" or loss, or even that the $234,000 was an entire loss to the Rosehill Cemetery, it is very clear that under the management of the syndicate the stock of the company was worth more than it was in 1912, when it took hold of it, by reason of the gains to the cemetery by the building of the mausoleum and greenhouse under its management. We may further say here that the syndicate saved the Rosehill Cemetery a loss of several thousand dollars by disposing of $25,000 worth of bonds of the St. Louis & San Francisco, Kansas City, Mexico & Orient, bonds that were in the perpetual care fund as securities, as that railroad company, known as the Frisco road, went into the hands of a receiver within a very short time after the bonds were sold and its bonds became very greatly depreciated. There were also other bonds that the syndicate sold and by such sales similar losses were saved to the Rosehill Cemetery Company. The reason for selling the bonds was because of the fact they were adjudged by the syndicate to have become of doubtful value. The facts concerning the alleged looting of the treasury of the Rosehill Cemetery Company, by Munday and his associates, so far as we can gather them from the record, are in substance the following: Having elected the directors of the corporation, they were able to control the corporation and transact its business. They caused it to sell a large amount of its stocks, bonds, and other securities that were in the perpetual care fund, which at that time was more than $700,000. According to the statement of the receiver, the amount of securities so sold amounted to $221,500. Munday and his associates substituted other securities for those so sold, which were: $19,000 of the certificates of deposit of the Bank of Smithboro, $100,000 of the bonds of the Litchfield Mill & Elevator Company, $60,000 of the preferred stock of the Huttig Manufacturing Company, $20,000 of other bonds; and $22,500 in notes and mortgages of the wives of Morris and Reynolds. The cash realized from the proceeds of the sale of the bonds and stocks of the perpetual care fund was deposited in the trust and savings bank. As we understand the record, the trust and savings bank issued its certificates of deposit to the amount of $125,000 drawing 3 per cent. interest on their face, with an agreement on the side that 6 per cent. interest would be paid to the Rosehill Cemetery to secure the cash deposited in the bank. It appears, also, that Munday issued certificates of deposit amounting to $51,000 on the Bank of Smithboro to the Rosehill Cemetery Company. The record is not very clear as to just how many securities, from first to last, were thus The Cemetery Securities Company owed given the Rosehill Cemetery Company to se- the following notes in June, 1914, when the cure the perpetual care fund or cash belong- trust and savings bank closed, and which ing to that fund, but the evidence is clear as were made for part of the cash raised by to just how many of these securities so given the syndicate to apply on stocks purchased by Munday and the trust and savings bank by them: $100,000 to the National Bank; remained unpaid. When Munday's associ- $35,000 to the trust and savings bank; $20,ates turned the management of Rosehill 000 to the Broadway State Bank; $10,000 Cemetery over to the receiver appointed by to the Illinois State Bank; $20,000 to the the court, the Rosehill Cemetery Company Marquette Insurance Company; $50,000 to held the following of the above securities the trust and savings bank, borrowed by Hutthat were unpaid: $100,000 Litchfield Mill tig, Morris, and Reynolds; $60,000 to H. 144 N.E.-13 W. Huttig direct; and $65,700 to the Rosehill else, other than the syndicate, the value of Cemetery-making a total of $360,000, $100,- the syndicate's investment in the Rosehill 000 of which was owed direct to Munday and Cemetery. The payment by the Dempsters which was discounted by him to the Na- of $350 per share for the Lansingh stock in tional Bank. As has already been shown, 1915, and the fact that they had refused to the Rosehill Cemetery was fully secured on accept that price for their shares in 1914, its indebtedness, and the Marquette Insur- and refused to sell for less than $400 per ance Company, the National Bank, and the share, is very significant evidence that the trust and savings bank were partially secur- Dempsters would have been glad to have ed, by 3521⁄2 shares of stock of the cemetery. gotten the syndicate's interest for all, and If the receiver had received $350 per share even more than, it had invested in October, (the amount paid by the Dempsters for the 1912. We do not believe, under the evidence, Lansingh interest), and if the same price that the syndicate would have been able to had been paid for the shares held by the realize very much more even from the DempRosehill Cemetery to secure its debt, the to- sters, than the amount invested by the syndi tal indebtedness would have been reduced to cate in October, 1912. The record furnishes $180,025, and $60,000 of this remainder is no evidence that the syndicate could have owing direct to H. W. Huttig, a member of sold it for very much more than the amount the syndicate. of its indebtedness to any other purchaser. We therefore conclude that Munday's and Huttig's interests in October, 1912, were worth all that they had invested in the cemetery stock, and they are the only ones of the syndicate who had invested any money up to that time. Munday and Huttig were to have their money invested before any of the other members were to receive anything. We have therefore valued the notes of the Cemetery Securities Company to the Nation First, we think the evidence shows that the receiver could have realized from the Dempsters as much as they paid for the Lansingh stock, $350 per share, which would have satisfied in full, as we have already shown, the entire indebtedness to the National Bank of the Cemetery Securities Company; second, the Cemetery Securities Company under the laws of Illinois, being a foreign corporation, could not lawfully hold stock in a resident corporation of Illinois. The master has found from the record that the total shares owned by the syndicate were worth, over and above all the debts it had incurred by the purchase of the stock, $561,417.87, and that the value of each member's stock in that company was one-fifth of that amount, or $112,283.57. The master's estimate is apparently a conservative estimate of the value of the shares, and would be supported by the record evidence if it were not for the further fact that Munday and his as-al Bank at full value, and for two reasons: sociates after 1912 were not financially able to finance and pay out their investment. In considering and determining the value of their shares on October 21, 1912, and in June, 1914, their financial condition at those times must be considered. The record evidence shows that Morris, Huttig, and Reynolds undertook to make disposition of their interests in the Rosehill Cemetery Company, and that they had on several occasions interested parties who desired to buy their interests, and who were financially able to do so, but [18] The ownership of the shares of stock were deterred from doing so by parties who of the Rosehill Cemetery Company was were apparently interested for others, and therefore in the syndicate, or in the individuin seeing to it that no such sales should be als who formed the Cemetery Securities made. Munday was then a bankrupt, and Company in the corporation. Munday inby reason of his inability after October, dorsed or discounted the note for $100,000 1912, to finance all of his interests, his in- given him by the Cemetery Securities Comterest in the Cemetery Securities Company | pany to the National Bank, and he was unand the interests of the syndicate were questionably liable to the National Bank on sacrificed by Munday's misfortune. But we that note and was solvent on October 21, are only interested in this discussion in pass- 1912, as we will hereafter find. ing upon their ability to sell their interests in the Rosehill Cemetery Company on or before October 21, 1912, and to pay their indebtedness up to October, 1912, which, as already stated, is $199,033.41. We have no hesitancy in saying that the record evidence is such that it is morally certain that the Dempsters at any time before October 21, 1912, would have paid the members of the syndicate for their interests every dollar invested in Rosehill Cemetery stock, and have taken their contract off their hands at their contract price. The Chicago Dempsters knew better than any one Division 8. Bills receivable considered under this division are notes of the following parties in the following named amounts: Jesse Briegel, $10,035; William S. Freeman, $5,492.63; Joseph O. Morris, $3,079.45; and Frederick L. Reynolds, $3,512.25. The master allowed all of these claims in full, and the main ground for this allowance as to the claims of Briegel, Morris, and Reynolds, was his finding that the interest of each one of those parties in the Rosehill Cemetery was worth the sum of $112,283.57. He found that Free (144 N.E.) man was solvent on October 21, 1912, and nevertheless paid out of the deposit balance the claims against him collectible. The Ap- of the Cemetery Securities Company in the pellate Court allowed nothing for the debts bank, and on the same day it also paid $25,of Briegel and Morris. Two members of the 000 of its own debts to the bank of $180,000 Appellate Court allowed $1,000 on the claim which it had owed since November 20, 1912, of Freeman, and $500 on the claim of Rey- and thereby reduced its indebtedness to nolds. The third member of that court $155,000. The indebtedness of the Cemefound all four of the claims to be worthless. tery Securities Company did not at any time We find the notes of Briegel and Freeman thereafter increase to the amount of $180,to be of full face value, the notes of Rey-000, and the claim of the receiver cannot be nolds to be of the value of $650, and the sustained. It is unnecessary in the view we notes of Morris to be uncollectible or worth- take of it to go into the question of the solless. Our aggregate value for all the notes vency or insolvency of Freeman as disclosed in this division is $16,177.63. by his evidence. The testimony of Briegel is to the effect that he only owed, in addition to the above notes, about $21,000 or $22,000; that he owned personal property, consisting of furniture, rugs, paintings, and jewelry, of the value of $10,000, and had about $2,000 or $3,000 in cash on October 21, 1912. He also claimed to be the owner of $10,000 worth of bank stock in a Texas bank. The above note of $10,035, according to his testimony, was secured by the bank stock which Munday bought for him and which was placed in the National Bank as collateral for the note. The record evidence corroborates Briegel to the effect that the $10,000 borrowed by him from the National Bank paid for the Texas bank stock, and that he was either entitled to the bank stock, which should be included in his assets, or that the note must be regarded as an accommodation for Munday and charged as a Munday liability. The receiver states that it was evident that this note was merely an accommodation note executed by Briegel for Munday's benefit, for which Briegel never received any consideration, and that Munday subsequently sold the stock but did not pay Briegel's note. Briegel's note was surrendered to him and the indebtedness was transferred to the account of the Commercial Bond & Investment Company, one of the corporations of Munday and Huttig. That corporation never paid the note and was at the time of the transfer insolvent, as we have already found. We have allowed this note in full as an indebtedness of Munday and have charged the same to him as a liability. We agree with the Appellate Court that nothing can be allowed on the debt of Joseph O. Morris. From his own testimony, he owed between $90,000 and $100,000, and was that much short in his ability to pay his debts, except for a few credits and other matters that were due him or things that he had "that were lying around loose." He gives no testimony that would indicate that there was any certainty of realizing anything out of his property or credits to pay on his indebtedness. He had a good law practice that apparently netted him, above expenses, about $15,000 a year. He had been owing a great deal more in prior years, and had greatly reduced his debts. His testimony impresses us with the idea that he is truthful and honest and disposed to pay all that he owes. He has never gone into bankruptcy or attempted to evade his debts. Outside of his interest in the Cemetery Securities Company and his law practice, he has no assurance of being able to pay his debts. In short, his ability to pay out depends upon his health and his law practice, as we have already found that his interest in the Cemetery Securities Company, which is now all canceled, will amount to nothing at the highest price that it could ever have been sold for, after all the debts of the syndicate and the Cemetery Securities Company are discharged. The evidence in the record shows that $500 was paid on the note of Frederick L. Reynolds on February 3, 1913. His note was renewed for $3,000 on April 9, 1913, and the interest was paid on it to June, 1914. There The sum of $1,000 was actually paid by were 34 shares of Bear River Paper & Bag William S. Freeman on his note to the Na- Company stock and $4,000 of 6 per cent. tional Bank, as found by the master and the bonds of the same company put up as col Appellate Court, on the due date of the note lateral with this note. The evidence disby debiting his deposit account with that closes that that company went into the sum, he having over $1,300 on deposit on hands of a receiver in October, 1912, and aftthat date. The remainder of this debt was er its affairs were wound up there would be paid March 25, 1913, by the Cemetery Se- a $200 dividend, only, which the receiver curities Company by a check on its deposit may realize out of the collateral, and that account in the trust and savings bank, and the note was taken up by Freeman. The receiver claims that this was a mere substitution of one worthless debt for another, and that the Cemetery Securities Company was not good for the amount. The note was it will probably be three years and a half after June, 1914, until this amount is collected from the receiver of the Bear River Paper & Bag Company. Reducing this payment to present value as of the date the interest was paid up on this note, the credit will extinguish only $150 more of the debt. [thus assigned, and we are unauthorized to We have therefore allowed $650 as the full allow any claim so assigned unless the proof value of this note. We further find that the shows that the note was collectible or colevidence in the record sustains the Appellate lected and resulted to the benefit of 'the Court in finding that Reynolds was insol- creditors. vent on October 21, 1912. His only real expectancy of being financially able to pay this debt was from his interest in the Rosehill Cemetery Company, which we have already found to be of no further value to him. Division 9. [19] Under this division, which the Appellate Court refers to as "Bills receivable transferred to subsidiary banks," the Appellate Court simply makes the statement that the bills receivable belonging in this division were considered under the previous divisions and that no further reference to them need be made. The banks known as the subsidiary banks were organized by Munday and others after the trust and savings bank had begun business, and were the Illinois State Bank of Chicago, the Ashland Twelfth State Bank, the Broadway State Bank, the State Bank of Calumet, the A. H. Hill & Company State Bank, and the International Trust & Savings Bank. The trust and savings bank furnished the capital and surplus of all these banks, or a large part thereof, and gave to each bank cash and also worthless notes to make up the amount of cash it was to furnish. It also appears that from time to time after these subsidiary banks were organized the trust and savings bank would transfer to them worthless claims, in some instances indorsed in the regular way, while in other instances this paper was indorsed without recourse. There are quite a number of these transactions discussed by the receiver, but his principal cause of complaint is the allowance by the master of some of these worthless claims that were thus indorsed to these banks as good claims, the claims being charged to the deposit accounts of the subsidiary banks. We have no need to further discuss these subsidiary banks, or the dealings of the trust and savings bank with them, as we have allowed no claim simply because of the fact that it was transferred to a subsidiary bank without recourse, or otherwise, and charged to its deposit account. The record indicates the transfer backwards and forwards of a great number of these worthless claims on the part of the trust and savings bank and its subsidiary banks, and we have refused for that reason to allow any notes or claims of the National Bank which were transferred to subsidiary banks that were of themselves worthless, unless those claims were collected or partially collected after they went into the hands of the subsidiary banks. Several of these banks have filed claims against the trust and savings bank for worthless paper Division 10. The bills receivable considered under this division are those exchanged for paper of Sidney Long & Co., and are bills receivable of the following named parties in the following amounts: J. W. Crawford, $2,229.57; Charles E. Erbstein, $3,211.20; InterOcean Paving & Construction Company, $2,308.05; Kessel Bros., $495.92; Morrison Publishing Company, $2,018.67; and W. H. Smith, $2,018.67. The master allowed all six of the claims in full except that of the Morrison Publishing Company, on which he allowed the sum of $1,486.55. Two members of the Appellate Court made the following allowances: J. W. Crawford, $329.97; Charles E. Erbstein, $475.25; InterOcean Paving & Construction Company, $1,033.63; Kessel Bros., $372.20; Morrison Publishing Company, $296; and W. H. Smith, $313.76-the allowance in every case being 14.8 per cent. of the amount of the notes, except the note of Kessel Bros., on which there was a payment of $350, and an allowance of 14.8 per cent. of the remainder, making a total allowance for that note of $372.20. The other member of the Appellate Court found all the notes to be worthless. We have allowed the same amount on every one of the notes as allowed by the two members of the Appellate Court, making an aggregate allowance of $2,820.81 for this division. As to the Crawford note, the evidence in the record does sustain the findings of the master that the National Bank had a mortgage of Crawford and wife on real estate of the value of from $3,500 to $4,000, but this note and mortgage was subject to a lien of two other notes and mortgages of the face value of $1,450. The evidence clearly discloses that, had the bank sought to foreclose this mortgage, the litigation would have been contested, and that whatever decree might have been gotten would have been subject to the other two notes, with interest. There is nothing like certainty or reasonable probability that the bank or the receiver could have realized anything by the litigation, over and above costs and expenses, on a public sale of the property. The record discloses that this note and the other five notes above described were eliminated from the bank on January 2, 1914, by including them in two notes given by Sidney Long & Co. for $10,000 and $25,000, respectively, and that, including these two notes, Sidney Long & Co. owed the bank when it was closed $58,580. The receiver collected on all of this indebtedness $8.712.92. There is no proof in the record except the forego (144 N.E.) H. E. Overstreet ing, and we hold that the master was not 9. Fred Overhew Division 11. The third member of the Appellate Court agreed with the other two members on Nos. 3, 5, 8, 10, 11, and 12 of the above-named 12 items, and found the remainder thereof to be worthless. As to the claim of Cameron & Co., whose debt was $5,373.74, the payment made by them was $500, and the allowance by the master and two members of the Appellate Court was $495. The other member of the Appellate Court allowed nothing. There was a payment of $500 made on this note as found by the master and two members of the Appellate Court, and the claim should be allowed in the sum of $497.40 Under this division 26 items are con- after reducing it to present value. The sidered and designated as items not con- claim of Gertrude P. Meyers in this division sidered in the previous divisions. There is for $1,987.84, but the note was not due on were 10 of them that were found to be October 21, 1912, and consequently the deworthless by both the master and the Ap- posit balance of $241.24 on that date could pellate Court, and those 10 claims were on not be set off against the note. The bank the following parties in the following did credit her deposit balance of $46.22 Deamounts: Edmund Bilyou, $300; Builders' cember 28, 1912, at which latter date the Bond Company, $8,000; F. A. Bridge, $13,- note was due. The master allowed $241.24 540.54; Howard D. Casey & Co., $2,000; on this claim by applying the deposit of OcConkling & Co., $1,200; J. F. Conant, $1,015; tober 21, 1912, as a set-off, which was error. Consumers' Battery Company, $1,000; C. S. The Appellate Court allowed nothing. We Hearn, $600; M. S. Kaplan, $4,640.15; and have allowed the note for the amount of her Russell-Kelly Company, $2,500-all aggre-deposit balance on December 28, 1912, less gating $34,795.69. The evidence in the rec-interest to reduce it to present value, or ord supports the master and the Appellate $45.70. The claim of J. M. Lavin has been Court, and we find them to be worthless. There are 12 other items considered in this division upon which there were only partial payments made, and on which the master and two members of the Appellate Court allowed the claims for the amount of the payments made without deducting interest or reducing the payment to present value for the time between October 21, 1912, and the date of payment. We concur with the master and the Appellate Court that the payments were made as found by them, and that the payments represent the only values in the claims. We have, however, reduced the payments to present values, and we find the present value in each case to be the value of the claim. The following are the names of those twelve parties, followed by the amount of the debt they owed, the amount of the payments made by them on their debt, and the amounts we have allowed on the same: fully discussed under division 3, where we allowed it in the sum of $1,140, and it is not necessary to further discuss it here except to state that we allow nothing for it under this division. We allow the William Webb note in full for $1,987.67, for the reason that William Lorimer, Sr., was also responsible for this note and was solvent, in accordance with our finding under division 4. Lorimer directed Webb to borrow the money to buy run-down horses to put on Lorimer's farm, and they were to share equally the profits in the sale of the horses after they had recuperated and were sold at a profit. Lorimer was liable for this debt, and both the Appellate Court and master charged him with the note as his liability in discussing Lorimer's account, but, under this division, the master refused to allow this note in full, although he found Lorimer to be solvent, and only allowed $22.82, the amount of Webb's deposit on October 21, 1912. The Appellate Court has allowed nothing on this 1 Augustinian Society $21,296 41 $3,000 00 $2,650 00 claim. The total amount that we have al 2. Peter Bartzen & Son 1,414 00 lowed for this division is $9,917.10. 150 00 404 86 75.00 100 00 345 00 72.00 |