The City of Syracuse, 37 Barbour, 292, affirmed 36 N. Y. 54." To the same effect is Schumacher v. City of New York, 166 N. Y. 103, 59 N. E. 773, in which the court says: "Having provided gutters, culverts, and sewers for the surface drainage, it was bound to the use of reasonable diligence to discover and remedy refects therein. Barton v. City of Syracuse, 36 N. Y. 54; McCarthy v. City of Syracuse, 46 N. Y. 194; Hines v. City of Lockport, 50 N. Y. 236; Nims v. Mayor, etc., of Troy, 59 N. Y. 500; Mayor, etc, of N. Y. v. Furze, 3 Hill, 612." We have been pointed to no Ohio case from this court making a contrary holding, and the overwhelming weight of authority in other states affirms this rule. Among the important decisions which follow this doctrine are, Powers v. City of Council Bluffs, 50 Iowa, 197; Bates v. Inhabitants of Westborough, 151 Mass. 174, 23 N. E. 1070, 7 L. R. A. 156. A part of the syllabus in the latter case reads as follows: "A town is liable to a landowner for damages resulting from neglect to keep its sewers free from obstructions. * * * "A town discharged a system of sewers into a drain built by it on private land under a lease for a definite term. After the expiration of the term, the drain was permitted to remain, and received the drainage as before of which it was the necessary outlet, and through the neglect of the town became choked up, thereby flooding other land. The owner of this land thereupon brought an action for such flowage against the town, which thereafter under agreement with the lessor built and maintained a new and sufficient drain in the same place. Held, that the action could be maintained." In Vanderslice v. City of Philadelphia, 103 Pa. 102, the court holds that: "Where a municipality has undertaken to construct a sewer, it is its duty to construct it properly and to keep it in good condition and repair; failure to perform these duties will render the city liable in damages." Murphy v. City of Indianapolis, 158 Ind. 238, 63 N. E. 469, announces the same rule, as follows: and maintenance of sewers and drains act min"Municipal corporations in the construction isterially, and their negligence in that particular may be made the basis of an action." City of Chicago v. Seben, 165 Ill. 371, 46 N. E. 244, 56 Am. St. Rep. 245, holds in the fifth and sixth paragraphs of the syllabus: "5. The construction and regulation of sewers, built upon the adoption of a general plan, are ministerial duties, and a municipal corporation is responsible in actions for damages caused by its careless or unskillful manner of performing its work. "6. While the legal obligation of a municipal corporation organized under the general law to construct gutters and sewers is one which is voluntarily assumed, yet, having assumed the obligation and constructed a sewer, it must keep the same in repair, and is liable in damages for failure to do so." Holding as we do that the function of the city in the maintenance and upkeep of sewers is proprietary and not governmental, this decision presents no conflict with the case of Aldrich v. City of Youngstown, 106 Ohio St. 342, 140 N. E. 164, 27 A. L. R. 1497, and City of Akron v. Butler, 108 Ohio St. 122, 140 N. E. 324. This being the only question raised by the plaintiff in error, and the evidence amply sus taining the verdict, we find no error in the record and affirm the judgment. Judgment affirmed. MARSHALL, C. J., and MATTHIAS, DAY, and KINKADE, JJ., concur. JONES, J., concurs in judgment. (318 Ill. 105) (148 N.E.) due complainant. Answers were filed and a JOSEPH T. RYERSON & SON v. PEDEN. hearing was had in the superior court, SAME v. HANSEN. (Nos. 16573, 16574.) (Supreme Court of Illinois. June 18, 1925. Rehearing Denied Oct. 8, 1925.) 1. Bankruptcy 324-Amount of judgment allowing claim payable, with interest thereon, if assets are sufficient to pay all of bankrupt's debts. Allowance of claim in bankruptcy is rendition of judgment, amount of which, with interest thereon, constitutes bankrupt's debt. which is paid in entirety, if assets are sufficient to pay all his debts, though, for reasons of convenience and public policy, where they are insufficient, basis for distribution is amount of judgment without interest. 2. Corporations 273-Interest recoverable from stockholders of bankrupt corporation on amount of judgment allowing claims in bankruptcy. Under Hurd's Rev. St. 1917, c. 32, § 25, in force when liability arose, creditors of bankrupt corporation could recover interest from stockholders, not exceeding their maximum statutory liability, on amount of judgment allowing claim in bankruptcy, at rate fixed by Smith-Hurd Rev. St. 1923, c. 74, § 3. Error to Appellate Court, First District, on Error to Superior Court, Cook County; Denis E. Sullivan, Judge. Suit by Joseph T. Ryerson & Son against Thomas J. Peden, Andrew H. Hansen, and others. Decree for plaintiff by superior court reversed, and cause remanded, with directions by Appellate Court on appeals by named defendants, and plaintiff brings separate writs of certiorari. Reversed, and decree of superior court affirmed. Eric Winters, of Chicago, for plaintiff Thomas J. Peden and Roy C. Merrick, both of Chicago, for defendant in error. which resulted in a finding for defendants in property may be enforced directly by credi- After the case had been remanded to the superior court of Cook county, the cause came on for final hearing upon the report of the master in chancery, who had taken the proofs and made his findings thereon and exceptions thereto, and a decree was entered finding that on or about April 3, 1913, the Illinois Architectural Iron Works ceased doing business leaving debts unpaid, and a petition was filed in the United States District Court for the Northern District of Illinois, to have it adjudged a bankrupt; that said petition was granted, and Daniel P. Trude was electined trustee of the bankrupt's estate; that the complainant was a creditor of the defendant corporation and filed a claim against it for $7,222.44, which claim was allowed on July 15, 1914; that on July 20, 1914, a dividend was paid to complainant of $1,444.49, and on November 27, 1914, a final dividend of $975.03; that the estate of the bankrupt was exhausted, and nothing has been paid since upon the indebtedness; that there was due and owing to the complainant on March 17, 1919 (the date of the making of the report by the master in chancery), a balance of $4,802.92, with interest at the rate of 5 per cent. per annum from July 15, 1914, to March 17, 1919, amounting to $1,115.08, making the total amount due and owing to the complainant by the corporation on March 17, 1919, $5,918, upon which amount the complainant is entitled to interest at 5 per cent. from March 17, 1919, to date, said interest being $1,209 33, the total amount of principal and interest at the date of the decree being $7,127.33; that the master in chancery is entitled to a fee of $500, for which the defendant stockholders HEARD, J. Plaintiff in error (hereinafter called the complainant), a creditor of the South Chicago Architectural Iron Works, afterwards reorganized as the Illinois Architectural Iron Works, filed its bill in equity in the superior court of Cook county against said company and all its stockholders, including the defendants in error Thomas J. Peden and Andrew H. Hansen, charging the insolvency and bankruptcy of the company, and that the company ceased doing business leaving debts unpaid; that the stockholders of the company, while acting as directors, had accepted from themselves, in full payment of their subscriptions for stock, property which was of far less value than the par value of the stock for which they had subscribed, and therefore, under the provisions of the Illinois Corporation Act, the company and its stockholders were liable for the debt For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes 148 N.E.-54 are liable, and which was paid to him on March 17, 1919, one-half by the complainant and the other one-half by the defendants, and that the complainant is entitled to recover from the defendants $250 so paid by it, and interest at the rate of 5 per cent. per annum thereon from the date of the master's report to date, said interest being $53, making the total amount due $303; that the total of the amount so due and owing to the complainant is $7,430.33; that each of the defendant stockholders Thomas J. Peden, Leah E. Peden, Christine Hansen, Andrew H. Hansen, F. W. Garbe, and Albert Rentner is liable for his and her pro rata share of such amount and the costs of this proceeding, to the extent of the unpaid portion of the stock held by each of them; and that an assessment of 31% per cent. should be made against said stockholders upon the amount of their liability. The pro rata assessment of Thomas J. Peden was fixed by the decree at $995.83, and the assessment of Andrew H. Hansen at $2.987.50, which assessments those defendants were ordered to pay, with interest thereon from the time of the decree at 5 per cent. per annum. From this decree Peden and Hansen severally appealed to the Appellate Court for the First District, which court held that the complainant was not entitled to recover interest prior to the rendition of the decree, and reversed the decree, and remanded the cause to the superior court, with directions to enter a decree fixing the amount due the complainant at $4,802.42 and the sum of $250 (the amount of master's fees advanced by the complainant), making a total principal sum of $5,052.42, together with interest thereon at 5 per cent. per annum from May 7, 1923, the date of the entry of the decree. The two causes are now before this court upon separate writs of certiorari. The Appellate Court held that interest could be allowed only from the time when the stockholders' liability was determined, and that this liability was not determined until the final decree, and this holding is assigned as error. The complainant claims, on the other hand, that the superior court was right in allowing interest from the date when its claim was allowed in the bankruptcy court. [1] Section 3 of chapter 74 of our statutes provides that "Judgments recovered before any court or magistrate shall draw interest at the rate of five (5) per centum per annum from the date of the same until satisfied. When judgment is entered upon any award, report or verdict, interest shall be computed at the rate aforesaid, from the time when made or rendered to the time of rendering judgment upon the same, and made a part of the judgment." Smith's Stat. 1923, p. 1224. The holding of the Appellate Court is based upon a supposed rule that in bankruptcy a claim draws no interest after it is allowed. This, however, is not a correct statement of the rule. The rule with reference to the allowance of interest in insolvency and bankruptcy cases, and the reasons for the rule, are well stated in American Iron & Steel Mfg. Co. v Seaboard Air Line Railway Co., 233 U. S. 261, 34 S. Ct. 502, 58 L. Ed. 949, as follows: erty. "And it is true, as held in Tredegar Co. v. Seaboard Air Line R. Co., 105 C. C. A. 501, 183 F. 290, that as a general rule, after property of an insolvent is in custodia legis, interest thereafter accruing is not allowed on debts payable out of the fund realized by a sale of the proplost their interest-bearing quality during that period, but is a necessary and enforced rule of distribution, due to the fact that in case of receiverships the assets are generally insufficient to pay debts in full. If all claims were of equal dignity and all bore the same rate of interest, from the date of the receivership to the date of final distribution, it would be immaterial whether the dividend was calculated on the basis of the principal alone or of principal and interest combined. But some of the debts might carry a high rate and some a low rate, and hence inequality would result in the payment of interest which accrued during the delay incident to collecting and distributing the funds. As this delay was the act of the law, no one should that and like reasons, in case funds are not thereby gain an advantage or suffer a loss. For sufficient to pay claims of equal dignity, the distribution is made only on the basis of the principal of the debt. But that rule did not prevent the running of interest during the receivership; and if, as a result of good fortune or good management, the estate proved sufficient to discharge the claims in full, interest as well as principal should be paid. Even in bankruptcy, and in the face of the argument that the debtor's liability on the debt and its incidents terminated at the date of adjudication, and as a fixed liability was transferred to the fund, it has been held, in the rare instances where the assets ultimately proved sufficient for the purpose, that creditors were entitled to interest accruing after adjudication. 2 Bl. Com. 488. Cf. Johnson v. Norris, L. R. A. 1915B, 884, 111 C. C. A. 291, 190 F. 460 (5). The principle is not limited to cases of technical bankruptcy, where the assets ultimately prove sufficient to pay all debts in full, but principal as well as interest, accruing during a receivership, is paid on debts of the highest dignity, even though what remains is not sufficient to pay claims of a lower rank in full. Central Trust Co. v. Condon, 14 C. C. A. 314, 31 U. S. App. 387, 67 F. 84; Richmond & I. Constr. Co. v. Richmond, N. I. & B. R. Co., 34 L. R. A. 625, 15 C. C. A. 289, 31 U. S. App. 704, 68 F. 116; First Nat. Bank v. Ewing, 43 C. C. A. 150, 103 F. 190." But that is not because the claims had In Johnson v. Norris, 190 F. 459, 111 C. C. A. 291, L. R. A. 1915B, 884, it was held that, where there is a surplus of a voluntary bankrupt's estate after the payment of all proven claims and interest thereon to the date of the filing of the petition, such surplus should be applied, first, to the payment of the interest accruing on the claims subsequently to the filing of the petition, and the remainder only returned to the bankrupt. (148 N.E.) In Re Osborn's Sons & Co., 177 F. 184, 100 C. C. A. 392, 29 L. R. A. (N. S.) 887, it was held that allowed claims in bankruptcy are to be treated as judgments and bear interest from maturity, although the contracts do not provide therefor. In L. R. A. 1915B, 884, and 29 L. R. A. (N. S. 887) the rule is stated that, where the bankrupt's estate is sufficient, interest will be paid on all allowed claims from the date of the adjudication, but that, when the assets are insufficient to satisfy the principal of claims asserted, interest will not be allowed in the settlement of the bankrupt's estate; the basis of the rule in each case being the reasons given in American Iron & Steel Mfg. Co. v. Seaboard Air Line Railway Co., supra. poration is for its contracts, debts, and engagements to a certain limit, a creditor has, as against a stockholder, the same right to recover interest which, according to the nature of the contract or debt, would exist against the corporation itself as it would were the action against the corporation, not, however, in excess of the stockholder's maximum liability, as fixed by the statute. The authorities cited as the basis of this rule are Richmond v. Irons, 121 U. S. 27, 7 S. Ct. 788, 30 L. Ed. 864; Chemical Nat. Bank v. Armstrong, 59 F. 372, 8 C. C. A. 155, 65 F. 573, 13 C. C. A. 47, 28 L. R. A. 231; In re Warren, 52 Mich. 557, 18 N. W. 356; Zang v. Wyant. 25 Colo. 551, 56 P. 565, 71 Am. St. Rep. 145; Wheeler v. Millar, 90 N. Y. 353; Haslett v. Wotherspoon, 1 Strob. Eq. (S. C.) 209; Cum Co., 64 N. J. Eq. 521, 54 A. 452; Grund v. Tucker, 5 Kan. 70; Wells Fargo & Co. v. Enright, 127 Cal. 669, 60 P. 439, 49 L. R. A. 647; Knowles v. Sandercock, 107 Cal. 629, 40 P. 1047. From a résumé of the authorities, it is evident that the allowance of a claim in a bank-berland Lumber Co. v. Clinton Hill Lumber ruptcy case is the rendition of a judgment, and that after the rendition of such judgment the bankrupt's debt consists of the amount of the judgment and interest thereon, and that in the distribution of assets, for reasons of convenience and public policy, where the assets are not sufficient to pay all the debts of the bankrupt, the basis for distribution is not the amount of the debt, but is the amount of the judgment, without interest, and that, where the assets are sufficient, then the entire debt-i. e., principal and interest -is paid. [2] The question involved in this suit has never been before this court. Defendants cite Parmalee v. Price, 208 Ill. 544, 70 N. E. 725, and Munger v. Jacobson, 99 Ill. 349, as authorities upon this proposition. Neither of those cases has any application to the question here involved. Munger v. Jacobson held that interest was not recoverable in an action against a stockholder to enforce his liability to creditors of the corporation for double the amount of his stock, where the debts of the corporation exceeded the total of the assets and all the stock liabilities, so that the whole of the defendant's liability was needed for the payment of the debt. The question there involved was whether interest was recoverable on the amount of the stockholders' liability, and not whether interest on the amount of the claim allowed in the bankruptcy case was a part of the debt of the corporation. In Parmalee v. Price it was held that when a stock subscription is paid by fraudulently overvaluing property, the right of action in favor of a creditor of a corporation against a stockholder accrues whenever the corporation ceases doing business leaving debts unpaid, and that the creditor might enforce such right of action in equity without a judgment at law. In that case no question of interest was involved. In Flynn v. American Banking & Trust Co., 104 Me. 141, 69 A 771, 19 L. R. A. (N. S.) 428, 129 Am. St. Rep. 378, the rule is laid down that, where the statutory liability of the stockholders of a cor The in The rule as thus laid down was the rule adopted by the superior court as the basis of its decision in the case before it. By the decree the liability of Thomas J. Peden was fixed at $3,186.66, and the liability of Andrew H. Hansen was fixed at $9,560. No interest was allowed upon these amounts. terest which was allowed was upon the judgment of the United States District Court for the Northern District of Illinois, in favor of the complainant against the corporationi. e., upon the indebtedness of the corporation to the complainant from the time of the the master's report, and upon the amount rendition of such judgment to the date of found due by the report of the master in chancery from the date of the filing of such when the liability in question arose and when report. The statute in force, at the time the master's report was made, provided: accordance with the rules of law applicable [tion, which affects only parties to particular thereto, the judgments of the Appellate Court controversy, and finally settles that controversy. are reversed, and the decree of the superior court is affirmed. Judgments of Appellate Court reversed. Decree of superior court affirmed. (316 Ill. 64) WYMAN v. HAGEMAN et al. (No. 16255.) (Supreme Court of Illinois. June 18, 1925. Petition for Rehearing Stricken Oct. 8, 1925.) 1. Records 9(1)-Proceeding for registration of land title is chancery proceeding. Proceeding for registration of land title is a chancery proceeding, and, except as otherwise provided by statute, is governed by rules of chancery practice, in view of Smith-Hurd Rev. St. 1923, c. 30, §§ 59, 69. 2. Records 9(5)-In proceedings for registration of land title, court has power under statute to order restoration of lost deed, which is basis of title or interest of one of parties to proceeding. Under Smith-Hurd Rev. St. 1923, c. 30, §§ 59, 69, in proceeding for registration of land title, court has jurisdiction, in addition to general powers of court of chancery, to order restoration of lost deed, which is basis of title or interest of one of parties to proceeding, and may direct master in chancery to execute deed on certificate of purchase at a foreclosure sale, even after expiration of five years from expiration of period of redemption. 3. Judgment 480-Final order or decree by court having jurisdiction of parties and subject-matter in controversy, not appealed from, cannot thereafter be collaterally attacked. Final order or decree by court having jurisdiction of parties and subject-matter in controversy, not appealed from, cannot thereafter be collaterally attacked. 4. Judgment 501-Where judgment collaterally attacked, gross irregularity or manifest error in proceedings are immaterial; "jurisdiction of subject-matter." If court had jurisdiction, it is immaterial, on collateral attack on judgment, how grossly irregular or manifestly erroneous its proceedings may have been; "jurisdiction of subjectmatter" being the power to adjudge concerning the general question involved. [Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Jurisdiction of the Subject-Matter.] [Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, Final Decision.] 6. Lost instruments 10-"Issue" of deed imports delivery, as well as execution and filing. "Issue" of deed by master in chancery means something more than mere writing out of deed and placing it among files, but imports as well such a delivery as would give it validity. [Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Issue.] 7. Lost instruments 3-Right to have title to real estate appear properly on record is substantial property right, in protection of which equity will entertain suit to restore lost deed. Right to have title to real estate appear properly on record is substantial property right guaranteed by law, such that equity will entertain suit of grantee to decree restoration of lost deed, where such relief is necessary for protection of rights in respect to land granted, and will restore deed, though no other relief is demanded, providing others' rights are not violated. 8. Lost instruments 2-New deed made by master in chancery to restore one lost relates back, and gives effect and validity to lost deed. When lost master's deed, issued as provided by Smith-Hurd Rev. St. 1923, c. 77, §§ 31, 32, is restored by making of new deed by master in chancery under order of court, new deed relates back to time of making of lost deed, and gives effect and validity to such lost deed. 9. Appeal and error 81-Judgmext 480 Decree ordering restoration of lost deed on cross-petition in proceedings for registration of land title held final and appealable, and not subject to collateral attack. In proceedings for registration of land title, wherein cross-petition was filed, praying that lost deed previously issued on master's certificate of purchase at foreclosure sale be restored, held, decree granting such petition was, as to the collateral issue raised by the crosspetition, final and appealable, and not subject to collateral attack on ground that more than five years had elapsed after expiration of period of redemption, and that issuance of deed to purchaser at foreclosure sale was unwarranted. 10. Evidence 383 (3)-Recitals in papers required by law to be issued are prima facie evidence of facts recited therein. Recitals in papers required by law to be issued are prima facie evidence of facts recited therein. 5. Appeal and error 81-"Final decision," from which appeal lies, may include final de-1. Mortgages 596, 597-Right to redeem termination of a collateral matter, distinct from general subject of litigation. from foreclosure sale may be lost through failure to assert within reasonable time. "Final decision,” from which an appeal will lie, is not limited to decision or decree which determines all issues presented by pleadings, but includes a final determination of a collateral matter, distinct from general subject of litiga- Dunn, C. J., dissenting. Right to redeem from foreclosure sale may be lost, if not asserted within a reasonable time, and before rights of third parties have intervened and improvements been made. For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes |