(148 N.E.)

The court answered the first, second, fourth, and fifth in the affirmative, the third in the negative, and the sixth in the affirmative so far as the question was warranted by the facts set forth. In the opinion it is said, in reference to the condition that no action shall lie against the company unless brought by the assured himself to reimburse him for a loss actually sustained and paid by him in satisfaction of a judgment after trial of the issue:

ern Railway Co. v. Richards, 152 Ill. 59, 38, dated in the first instance in an action beN. E. 773, 30 L. R. A. 33. The defendant in tween the assured and the assurer, where the error was bound to defend the action with- latter has denied his liability under the polout interference by the assured unless and icy and refused to defend an action brought until it effected the settlement. By its fail- against the assured by the injured person? ure to do so it deprived the assured of the In the Dressed Beef Co. Case the assured remedy provided by the terms of paragraph was sued and settled with his employé. I and condition I. Had it defended success- There was no trial. In this case the assured fully, the assured would have been relieved was sued and notified the assurer, who failof all liability. Had its defense been unsuc-ed to defend, and the case went to trial and cessful, the assured would have been able to judgment. require the defendant in error to pay it the amount of the judgment to the extent of $5,000, with costs and interest. Having deprived the assured of this remedy, the defendant in error became liable to the assured for its value-that is, for the amount which the defendant in error would have been required to pay if it had performed its contract. This was the judgment of the Supreme Court of the United States in St. Louis Dressed Beef Co. v. Maryland Casualty Co., 201 U. S. 173, 26 S. Ct. 400, 50 L. Ed. 712, which was an action against the casualty company on a liability policy similar in all its provisions material to the case to the policy in this case. The facts in the case were also the same in substance, except that the assured compromised the suits brought against it and paid the damages without a trial or judgment. The Circuit Court of Appeals of the United States certified to the Supreme Court certain questions of law indispensable to the decision of the case upon which it desired the instruction of the Supreme Court. These questions, in short, were:

(1) Did the denial of all liability by the assurer, and its refusal to defend the suits, constitute such a breach of the contract on its part as released the assured from its agreement not to settle any claim except at its own cost, and from the provision that no action should lie against the assurer unless for loss actually sustained and paid by the assured after a trial of the issue?

(2) Were these provisions waived by the assurer's denial of liability under the policy and its failure and refusal to defend the suits against the assured?

(3) Did the compromise of the suits by the assured, after the assurer denied liability and refused to defend them, and the payment of damages by the assured pursuant to the compromise, prevent the assured from recovering against the assurer on the policy on account of the accident?

(4) Was the right of the assurer to insist on the condition of rendition of judgment after trial and its satisfaction by the assured dependent upon the assurer's defense of the action against the assured?

(5) Was the assurer's denial of liability a waiver of the condition respecting the rendition of judgment after trial and its satisfaction by the assured?

(6) Might the liability of the assured to the injured person, and its extent, be liqui

"That the only breach which that condition has in view is a refusal by the company to pay after the decision in a case of which it has taken charge, when, notwithstanding the judgment, it conceives itself to have a defense."

It is further said:

"To limit its [the defendant's] liability as if its only promise was to pay a loss paid upon a judgment is to neglect the meaning and purthe words of the promise. The promise in form pose of the reference to a judgment, and even is to indemnify against loss by certain kinds of liability. The judgment contemplated in the condition is a judgment in a suit defended by the defendant in case it elects not to settle. The substance of the promise is to pay a loss which the plaintiff shall have been compelled to pay, after such precautions and with such safeguards as the defendant may insist upon. saw fit to insist upon none."

It

This was also the judgment of the Court of Appeals of the state of New York. In re Empire Surety Co., 214 N. Y. 553, 108 N. E. 825. The question arose there in an insolvency proceeding against the surety company as to its liability upon a policy similar to the one in question in this case. It was held that these policies not only afforded insurance against loss, but also carried with them the obligation of the company to defend suits brought against the assured, and that a failure to defend such suits constituted a breach of the contracts, which released the assured from the agreement not to settle claims without the consent of the company, and was a waiver of the condition that the company should only be liable after the assured had paid the judgment rendered against him. It was said:

"When an accident against the consequences of which the assured is insured has happened and suit has been commenced against the assured, the insurer, under the terms of the policy, incurred the obligation of assuming the defense of such a suit. When the insurer vio

lated the contract and refused to defend the | begun, and alleged that it informed the suit or went into liquidation, thus making it im- Hurst Company that the accident was not possible for it to undertake the defense of such covered by the policy, and that the Hurst suit, it incurred a liability which was not con- Company knew that the accident was not covtingent. Where the insurer has failed to per- ered by the policy, and accepted this stateform its contract and the accident against the consequences of which the assured is insured ment, and employed attorneys of its own has happened, the liability of the insurer is to defend the suit. certain. In such a case the liability ceased to be contingent although the amount of the liability may have been unliquidated. The insurer having failed to perform its obligation, the amount of the liability would not become fixed until the loss which the assured sustained was determined, but the liability of the insurer would be certain and not contingent from the moment that it failed to perform its obligation to defend the suit brought against the assured."

[5] The Hurst Company had a cause of action against the defendant in error for its refusal to defend the suit brought against it by the complainant, the measure of damages in which was the amount recovered against the Hurst Company by the complainant to the extent of $5,000, together with interest on that amount from the date of the judgment, and costs. The complainant had a right to have the indebtedness which gave rise to this cause of action applied to the payment of his judgment, not because of any privity between the complainant and defendant in error, but because of the right of any judgment creditor, under such circumstances, to have the property of his judgment debtor applied to the payment of his debts.

The Appellate Court erred in reversing the decree of the superior court, and its judgment will be reversed, and the decree of the superior court affirmed.

Judgment of Appellate Court reversed. Decree of superior court affirmed.

Subsequently, on petition for rehearing, the following additional opinion was filed:

PER CURIAM. The defendant in error has filed a petition for a rehearing on the ground that the bill did not allege a breach by the defendant in error of its contract with the Hurst Company to defend the suit of the plaintiff in error against the Hurst Company. The bill alleged the occurrence of the accident, notice to the defendant in error of the accident and of the plaintiff in error's claim, the bringing of the suit by plaintiff in error against the Hurst Company, negotiation of the defendant in error with him, and its offer of $100 to settle with him, and further alleged that the defendant in error helped the Hurst Company in the defense by procuring and furnishing evidence. The answer admits that the defendant in error had knowledge of the plaintiff in error's suit against the Hurst Company soon after it was

[6] The bill contained no allegation that the defendant in error refused to defend the suit, but the answer supplied the missing allegation by its averment that the defendant in error told the Hurst Company that the accident was not covered by the policy, and the Hurst Company employed its own lawyers to defend the suit. While the bill was no doubt subject to demurrer, the answer supplied its deficiency, and on the whole record it stands admitted in the pleadings that the defendant in error refused to defend this suit. The parties have assumed that this was the state of the record and have argued the cause on this basis. The plaintiff in error's first proposition, as stated in his brief, was:

"When the Globe notified Hurst Company that the accident was not covered by the policy and refused to defend the suit, the Globe not only then presently broke insuring agreement 2, but repudiated its contract, thereby committing an anticipatory breach of the entire policy, and excused Hurst Company from any further performance of conditions on its part."

The point was presented at length in the argument, with the citation of a number of authorities. The defendant in error made no contention that the pleadings presented no such issue. In its brief it said:

"No contention is made at bar that the Globe Indemnity Company took any part in the defense of the suit in the circuit court of Cook county in which John Kinnan recovered his judgment for personal injuries."

Again it said:

"Moreover, if the Globe refused to defend a suit, or refused to investigate an accident reported to it, that was a matter solely between the defendant in error and its assured. The obligation did not run to the benefit of any third party, such as Kinnan. No one but the assured could complain, if the obligation was not carried out."

[7] The question of the liability of the de fendant in error for refusing to defend was recognized by both sides as presented by the record; no suggestion was made of any question of pleading, but this question was submitted on the merits without objection. The objection, even if it had been a valid one, cannot be made for the first time on a petition for rehearing. Rehearing denied.

III.)

(317 Ill. 241)
PONTIUS v. CONRAD et al.
(Supreme Court of Illinois.

(148 N.E.)

(No. 16594.) April 24, 1925. Rehearing Denied June 9, 1925.)

1. Wills 449-Testator presumed to have intended by will to dispose of all his property. A testator is presumed to have intended by his will to dispose of all his property and leave no part of it intestate.

2. Wills 449-Courts adopt any reasonable construction of will, rather than hold testator intended to die intestate.

Courts will adopt any reasonable construction of will, rather than hold that testator intended to die intestate as to any of his property.

3. Wills 435-Courts cannot guess at provision testator would probably have made and read it into will.

If testator has overlooked condition which he would perhaps have provided for if it had occurred by him, court cannot guess at what provision he would probably have made, and by construction read it as part of will, on presumption that he would naturally have made provision if he had thought of it.

4. Wills 440-Intention to be sought is that expressed by words used in will.

Intention to be sought in construing will is not that which by inference may be presumed to have existed in his mind, but that which by words used in will he has expressed.

5. Wills 452-Presumption is against construction which will disinherit heir. Presumption prevailing in interpretation of wills is against construction which will disinherit heir.

6. Wills

10. Descent and distribution 17-Remainder after widow's death held not devised in contingency which happened,

Where will gave life estate to widow, and legacy to granddaughter, and provided that, should granddaughter die before majority, her legacy should be divided with the residue of the estate, among testator's children, remainder after widow's life estate was not devised, but descended to testator's heirs including his grandchild, where she did not die before reaching majority.

Appeal from Superior Court, Cook County; Charles M. Foell, Judge.

Bill by Paulina Pontius against Wilhel-
mina Conrad and others. Decree for defend-
Reversed
ants, and complainant appeals.
and remanded, with directions.

Edward B. Zahn, of Chicago, for appellant.
John E. Foster, of Chicago, for appellees.

DUNN, J. August Bercher died on October 26, 1908, leaving his wife, Maria Anna Bercher, surviving him. His heirs were his three daughters, two sons, and a granddaughter, Paulina Pontius. He executed a will a few weeks before his death, which was admitted to probate, by which, in addition to directing the payment of his debts and funeral expenses and the erection of a monument and naming an executor, the only disposition made of his property is contained in the second and third paragraphs:

"Second-After the payment of such funeral expenses and debts, I give, devise and bequeath unto my beloved wife, Maria Anna Bercher, all my estate, real, personal or mixed of which I shall die seized and possessed, or to which I shall be entitled at the time of decease; to

452-Intention to disinherit heirs have and to hold the same during her natural must be indicated clearly.

When testator intends to disinherit heirs he must indicate that intention clearly, either by express words or by necessary implication, and intention cannot rest on conjecture.

7. Wills 452-Heir not disinherited except by express devise or clear implication.

The heir is not to be disinherited except by express devise, or implication so inevitable that an intention to the contrary cannot be supposed.

8. Wills 478-Devises by implication must be so strong that contrary intention cannot be presumed.

To create devises by implication, implication must be so strong that contrary intention cannot be presumed to have existed, and so necessary as to leave no hesitation in mind and permit no other inference.

life.

"Third-I direct that five hundred dollars ($500) be paid by my executor hereinafter named to Paulina Pontius, the only surviving child of my deceased daughter, Paulina Pontius, when she shall have attained legal age and after the death of my wife. Should my said granddaughter, Paulina Pontius, die before attaining legal age, the said five hundred dollars ($500) shall revert to and be equally divided with the rest and residue of my then estate among all of my following children: Wilhelmina Conrad, Aloisius Bercher, Maria Baumer, Katharina Kohler, and John Bercher, share and share

alike."

The testator owned two pieces of real estate in Cook county, which he had owned for many years. At the time of his death he was 65 years old, his wife was 62, and his granddaughter was 3.

His widow died on

9. Wills 478-Gift by implication not in- December 18, 1913, and his granddaughter arrived at the age of 18 years on May 14, ferred from silence. Soon after, she filed a bill in the su1923. perior court of Cook county for the construction of her grandfather's will and an

A gift by implication cannot be inferred from silence on the subject, but must be based on some expression in will.

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes 148 N.E.-2

ac

1

counting of the rents and profits, making the | be equally divided, with the rest of the esother heirs defendants. They demurred to tate, among the five children. The rest of the estate not having been previously referred to was not affected by the will, but by operation of law would, in case of Paulina's death before attaining legal age, go to the children equally. The testator's heirs were his five children and this granddaughter, the appellant, who would all inherit equally. The effect of the legacy of $500 to Paulina was to give her that much greater share in the estate, and the object of the subsequent provision was to declare that, if Paulina did not live to receive the legacy, it was to be divided among the remaining heirs, who would receive the rest of the estate. This sentence by its terms was to have no effect unless Paulina died before attaining legal age, and she did not. Therefore neither the legacy nor the rest and residue of the estate was affected.

(148 N.E.)

tention of the testator, except in the event of the death of the appellant before attaining her majority, and we cannot supply such intention. The intention sought is not that which by inference may be presumed to have existed in the mind of the testator, but that which by the words used in the will, he has expressed. Engelthaler v. Engelthaler, 196 Ill. 230, 63 N. E. 669; Williams v. Williams, 189 Ill. 500, 59 N. E. 966; Bingel v. Volz, 142 Ill. 214, 31 N. E. 13, 16 L. R. A. 321, 34 Am. St. Rep. 64.

[5-9] Another presumption which prevails in the interpretation of wills is against a construction which will have the result to disinherit the heir. The heirs of a testator are favored by the policy of the law and cannot be disinherited upon mere conjecture. When the testator intends to disinherit them he must indicate that intention clearly, either by express words or by necessary implication. The intention must be manifest and rest on something more certain than conjecture. The heir is not to be disinherited except by express devise, or by implication so inevitable that an intention to the contrary cannot be supposed. Devises by implication have been recognized where a necessary implication of devise arises from the provisions of the will, but probabilities as to the testator's intention cannot be weighed. The implication must be so strong that an intention contrary to that imputed to the testator cannot be pre

sumed to have existed in his mind. The implication must be so necessary as to leave no hesitation in the mind and permit no other inference. Connor v. Gardner, 230 Ill. 258, 82 N. E. 640, 15 L. R. A. (N. S.) 73. A gift by implication cannot be inferred from silence on the subject, but must be based upon some expression in the will. Bond v. Moore, 236 Ill. 576, 86 N. E. 386, 19 L. R. A. (N. S.) 540; Martin v. Martin, 273 Ill. 595, 113 N. E. 150.

[10] At the testator's death the remainder after the life estate devised to his widow, not having been devised by the will, descended to his heirs, including the appellant. The event had not occurred upon which the gift of the residue to the children was based. It never did occur. The will gave the legacy to the granddaughter, but indicated no intention that it should be in full of her share of the estate. It was payable only after the death of the widow, and, if she was not living to receive it, the will provided that it should be divided among the other heirs, but there is no intimation in the will that if she should receive it she should receive no other part of the estate.

The demurrer should have been overruled. The decree is reversed, and the cause remanded, with directions to overrule the demurrer.

Reversed and remanded, with directions.

(317 Ill. 348)

AUSTIN v. PARKER et al. (No. 16262.)

(Supreme Court of Illinois. April 24, 1925. Rehearing Denied June 10, 1925.)

1. Trusts 210-Trustee cannot create lien on trust estate by his contract, without express authority in trust instrument.

Trustee cannot create a lien on the trust estate in favor of a creditor, or charge the trust estate, even by his contract, without express authority in the instrument creating the trust.

2. Trusts 236-Trust estate property not available to reimburse trustee for expenses or losses incurred, in absence of exercise of good faith and common prudence.

Property of trust estate cannot be used to curred, unless he has used good faith and comreimburse trustees for expenses or losses inmon prudence.

7. Trusts 254-Trustee, binding himself for benefit of estate, is liable in action at law, and bill of equity will not lie against trust estate. A trustee, who binds himself for the benefit of the estate, is liable in an action at law, and a bill of equity will not lie agaist the trust estate, since the right of action is against the trustee personally.

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes