Columbus Building & Loan Ass'n v. Kriete , 87 Ill. App. 51 ( 1900 )

Mr. Justice Windes,

after making the above statement, delivered the opinion of the court.

Defendants in error have moved to strike from the record the certificate of evidence for divers reasons which can not be here stated without needlessly extending this opinion. It seems sufficient to say that we have examined each and all the reasons assigned, are of opinion they are not well taken, and overrule the motion; and besides, the conclusion reached by the court would in no way be affected to the. detriment of defendants in error by overruling the motion.

The evidence, in our opinion, sustains all the findings of fact of the master and of the chancellor, except as to the finding that Joseph Kriete and the twenty-seven other petitioners in his class made deposits in and withdrawals from the association of the respective amounts stated in the master’s report and decree, as to which finding we are of the opinion it is not sustained by the evidence; but all these deposits are shown, by the clear weight of the evidence, to have been made with David Sachel, secretary of the association, individually, with the belief on the part of each of the petitioners that they were dealing with the association through the secretary. It is not shown that any of these deposits ever went into the treasury of the association, or that they were ever used by the association. In fact, the preponderance of the evidence is that the association received none of this money. Also except as to when the insolvency of the association occurred, and as to when the stock of Albert Truka and the nineteen other stockholders matured, and as to whether their stock was declared by the association to have matured prior to the insolvency of the association. As to these latter matters we are not prepared to say, after a careful and critical examination of the evidence, that the findings of the master and the court are manifestly against the evidence, and therefore as to these matters, which are not manifestly against the weight of the evidence, the finding of the master, the same being approved by the court, should not be disturbed by a court of review. Delaney v. Delaney, 175 Ill. 188; Biggerstaff v. Biggerstaff, 180 Ill. 407; Village of Itasca v. Schroeder, 182 Ill. 192.

As to the finding first above mentioned, that the deposits were made with the association by Joseph Kriete and the twentjr-seven other petitioners in his class, we are of opinion that it is immaterial, under the law as hereinafter stated, whether such deposits were made with the association, or whether the association received and appropriated the money or not, or whether the deposits were made with Sachel as an individual.

A reference to the statute concerning building associations, which was in force at the time when the deposits in question were made, to wit, in the year 1897, and prior thereto (Hurd’s Revised Stat. 1895, Chap. 32, Secs. 1 and 13), will show that it gives to the association no power whatever to receive deposits or to borrow money and contract to repay the same. In other words, for a building association to do what is practically a banking business by the receipt of deposits of money from and agreeing to pay interest thereon to persons who do not take stock in the association therefor, is wholly foreign to any power given to such an association by the statute, and is therefore ultra vires.

In the case of National Home Building Association v. Home Savings Bank, 181 Ill. 35, in which the question was to the power of a building association to acquire and hold real estate in which it had no interest, it was held that such power was wholly ultra vires. The court say:

“'A party dealing with a corporation having limited and delegated powers conferred by law, is chargeable with notice of them and their limitations, and can not plead ignorance in avoidance of the defense ” (citing cases).

And the court further say, with reference to the question of estoppel, which is in the case at bar so earnestly pressed by counsel for defendant in error:

“ The cases in this court where the corporation has been ■ held to be estopped have been where the act complained of was within the general scope of the corporate powers.” Citing and reviewing divers cases in the Supreme Court.

The court also say:

“ In this case the transaction was beyond the corporate powers and ultra vires in the strict and legitimate sense, and against public policy. It could not be ratified or become valid by acquiescence since there was no power to make it. Flora D. Bishopp, who dealt with the’corporation, was chargeable with notice of its powers and their limitation, and its inability to enter into the contract. She could not make the void contract valid by acting under it. Ho action can be maintained upon the unlawful contract, and in such cases, if the courts can afford any remedy, it can not be done by affirming or enforcing the contract, but in some other manner.”

We are of opinion that this ruling of the Supreme Court is conclusive against the right of the petitioners, Joseph Kriete and the twenty-seven others in his class, to recover for their deposits, even if made with the association as found by the master and the court, because the association ivas absolutely without power to make any such contracts, and of this petitioners are chargeable with notice. And if we are correct in saying that the evidence shows that none of these twenty-eight petitioners’ money ever came to the possession and was never used by the association, then there is no basis for them to recover, even upon the theory of counsel for defendant in error, that the association, having the power for some purposes to become-indebted for money borrowed, would be estopped from setting up the defense of ultra vires.

Ho point is made by plaintiff in error that the findings of the master, as to the nature of the business transacted between any of the petitioners and the association, or with the secretary, Sachel, nor as to the amounts of the several balances found to be due the several petitioners, respectively, but the only claim made is that the evidence does not support such findings as to the petitioners, Albert Truba and the nineteen other stockholders in his class, as to the maturity of their stock, whether it was declared matured prior to the insolvency of the association, and as to when that insolvency occurred. The evidence bearing on these matters is so voluminous that we can not undertake in an opinion to set out even the substance of it, and we might be content with merely stating our conclusion as above, were it not, in our opinion, important to call attention specifically to a portion of the evidence in the record and the position assumed by counsel for plaintiff in error.

It appears from the account books of the association, which are in evidence, that at all times up to and long after Truka and the nineteen other petitioners in his class made their last payments upon stock purchased by them, that the association had a large cash surplus which was amply sufficient, with the other assets of the association, to make it solvent, and also that while the association thus appears by its books to have been solvent, the same books show that the stock of these petitioners matured and was paid up in full. This evidence of payment is overcome by proof on behalf of petitioners, but the evidence as to the maturity of the stock is not. Counsel for the association do not in their brief contend that the association did not recognize these twenty petitioners as holding matured stock, but only that they did not make strict and technical proof of the actual maturity of their stock.

The fact of the insolvency of the association does not appear to have been shown until about the time of the filing of the bill in this case, which was long after the maturity of the stock of these twenty petitioners, as shown by the proof in the case. The solvency of the association was thus prima facie established, and it will be presumed to continue until such time as insolvency was shown. The books of the association, as between it and its stockholders, are evidence against the association as admissions. Jones on Evidence, Secs. 272 and 530, and cases cited; Holden v. Hoyt, 134 Mass. 181, 184.

It was, then, in view of this jprimafaoie proof, incumbent upon the association to show that it became insolvent before the maturity of the stock of these twenty petitioners, and before it was declared by the association to have matured, in order to maintain its defense. On this record it seems that could only be done by showing when the secretary, Saohel, appropriated to his own use and embezzled the large cash surplus which was shown by its books to have been on hand. When this appropriation or embezzlement took place does not appear, in fact, counsel for the association in their brief concede it was not proved, and we therefore say that the finding of the master and the court that the maturity of the stock of these twenty petitioners took place prior to the insolvency of the association, and was so declared by the association, is not manifestly against the evidence. And in this connection it should also be noted that the passbooks issued to most of these petitioners by the association, as well as the account books of the association, show that these twenty petitioners were treated as holders of matured stock; and the other evidence shows that all of the payments of money made by them or each of them were made to the secretary of the association, who was, under its by-laws, the person authorized to receive this money. Under such circumstances, payments made to the secretary were payments made to the association. Prairie State L. Ass’n v. Nubling, 170 Ill. 245.

The finding and decree of the court that these twenty petitioners were entitled to priority over the other stockholders in the association whose stock had not matured, was, in our opinion, correct. Endlich on Building Associations, Sec. 486; 7 Thompson on Corporations, Sec. 8736; Young v. Stevenson, 180 Ill. 608-14; Rickert v. Suddard, 80 Ill. App. 204.

The decree of the Superior Court, in so far as it gives a first and prior lien to the petitioners, Joseph Kriete and the twenty-seven others in his class, is reversed, with directions to dismiss each of these twenty-eight petitions for want of equity, and the decree as to Albert Truka and the nineteen other petitioners in his class, is affirmed. The costs of this appeal shall be paid from any funds of the association in the receiver’s hands.

Reversed in part and affirmed in part, with directions.