Beidler v. Crane

• Decision Date: 31 October 1890
• Citation: 135 Ill. 92,25 N.E. 655
• Parties: BEIDLER v. CRANE et al.
• Court: Illinois Supreme Court

135 Ill. 92

25 N.E. 655

BEIDLER

v.CRANE et al.¹

Supreme Court of Illinois.

Oct. 31, 1890.

Appeal from appellate court, first district.

SHOPE, J., dissenting.

G. W. Stanford, for appellant.

H. T. Helm, Lynn Helm, and John Lyle King, for appellees.

BAKER, J.

The appellees, Charles S. Crane, John Lyle King, Henry E. Seelye, and Joseph Pfishing, severally recovered judgments against Albert C. Ellithorpe, for the respective sums of $7,932.30, $2,033.67, $824.62, and $200, besides costs, and the executions issued upon such judgments were returned ‘No property found.’ They thereupon prosecuted in the circuit court of Cook county their several creditors' bills against said Ellithorpe, the appellant, Henry Beidler, the Ellithorpe Safety Air-Cushion Company, and the Ellithorpe Air-Brake Company, for the purpose of subjecting to the payment of their respective judgments certain shares of stock in the two corporations mentioned that stood in the name of the appellant, Beidler. The causes were heard together, and a single decree was entered. The decree found that the assignments made by Ellithorpe to Beidler of various letters patent, which had been issued to him (said Ellithorpe) by the United States patent-office for air-cushions, and for air-brakes, to be used in the construction and operation of elevators in buildings, and the assignments made by Beidler of certain of said patents to the Ellithorpe Safety Air-Cushion Company, and of certain other of said patents to the Ellithorpe Air-Brake Company, each of which said patents was estimated as capital in the particular company to which it was so assigned, and shares of capital stock in said respective corporations issued therefor to said Beidler, as against appellees, who were creditors of said Albert C. Ellithorpe, were fraudulent and void, and subjected the shares of stock into which the patents had been converted, and which were held by Beidler, to the payment of the judgments above mentioned. From the decree thus rendered, Beidler appealed to the appellate court of the first district, and there was there a judgment of affirmance, and from that judgment he took this second appeal.

The contentions of appellees, as made by their bills of complaint, were that the various assignments of the letters patent were made by and through the procurement of Ellithorpe, with the intent to hinder, delay, and defraud them, and prevent them from enforcing the payment of their debts, and with the intent and for the purpose of a secret trust for the benefit of said Ellithorpe, of all of which intents Beidler had knowledge, and that he (Beidler) intentionally participated and aided in the effectuation of such designs. The contention of the appellant, Beidler, as shown by his answers and in his own testimony, was that the sales and assignments made by Ellithorpe to him of the patents were absolute, and for a valuable and sufficient consideration, and that he in turn sold and assigned them to the corporations named, and that neither he nor the corporations, nor either of them, held either the patents of the stock for the use or benefit of Ellithorpe; and that the latter had no interest whatever in the stock of either corporation. Appellant and Ellithorpe were old and intimate friends, and their wives were cousins. The former was a man of large pecuniary means, while the latter was, and for many years had been, hopelessly and notoriously insolvent, and numerous executions against him had been returned nulla bona. Ellithorpe was a man of considerable inventive genius, and had conceived the idea of constructing at the bottom of the elevator shaft an air-tight receptacle, into which the elevator cab would fit, so that, as it entered, a cushion of air should be formed, and gradually arrest the falll of the cab; and subsequently conceived the further idea of an air-brake, by means of which, in case of an accident, the rapid fall of an elevator cab could be arrested prior to the time it should reach the air-cushion at the bottom. It appears from the evidence that, commencing in 1877, and continuing for a number of years thereafter, appellant furnished to Ellithorpe numerous and considerable sums of money, which were used by the latter in providing the means of subsistence for himself and family while he was engaged in developing his inventions, and in the payment of the expenses incurred in his experiments, and in procuring his patents, and in creating a public demand for his devices. No entries were made of these advances in any books of account, but the evidence shows that on each occasion of a borrowing, or shortly thereafter, a promissory note, due one day after date, was given for the sum furnished. In August, 1879, the air-cushion patent was obtained, and, in February, 1880, it was assigned to appellant; and the air-brake patent was issued October 11, 1881, and assigned to him October 13, 1881. Both of these assignments were for the whole interest in the respective patents, and they were duly recorded in the patent-office at Washington. It is manifest from the proofs that, at the times when the patents were assigned, they were not sold to appellant, but were, at most, merely pledged to him as security for the moneys which he had advanced. In fact, that the assignments, though absolute in form, were only by way of security for then existing indebtedness, and for future advances, is virtually conceded by both Beidler and Ellithorpe in their testimony, and by counsel in their briefs and arguments. It is suggested, however, that, by a subsequent arrangement, the transfer of the patents became absolute, by the surrender to Ellithorpe on the part of appellant of $45,000 or more in notes of the former. There is no satisfactory evidence of such an agreement. There was no purchase price agreed upon for the patents, or either of them, and there was no valuation placed upon them, or either of them, by both or either of the parties. As we have already stated, Ellithorpe was insolvent, and there were numerous judgments against him, and for large amounts, and there is no testimony proving, or even tending to show, that $45,000 was a fair and reasonable valuation to place upon the patents. Besides this, there are serious conflicts between the testimony of the two parties in regard to the supposed arrangement, not the least of which are that, while one of them states that it was in settlement of all advances to the date it was made, the other testifies that it did not extinguish all of the indebtedness existing at such date; and that, while Ellithorpe testifies that the settlement and surrender of the vouchers was in January, 1882, appellant places such surrender in the spring of 1885, and after the filing of the creditors' bill now under consideration. We cannot, under the evidence, hold otherwise than that appellant not only was, at the times of the assignments of the patents, but still continues to be, the mere mortgagee or pledgee of such patents, and never was, and is not now, the absolute owner thereof.

A conveyance of property which is...