Chicago Edison Co. v. Fay

• Decision Date: 23 November 1896
• Parties: CHICAGO EDISON CO. v. FAY.
• Court: Illinois Supreme Court

164 Ill. 323

45 N.E. 534

CHICAGO EDISON CO.

v.FAY.

Supreme Court of Illinois.

Nov. 23, 1896.

Appeal from appellate court, First district.

Action by Charles Norman Fay against the Chicago Edison Company. There was a judgment for plaintiff, which was affirmed in the appellate court (62 Ill. App. 55), and defendant appeals. Affirmed.

Uhlmann & Hacker, for appellant.

Williams, Holt & Wheeler, for appellee.

CARTER, J.

This was a bill in equity, filed by appellee, Fay, against the appellant corporation, to compel it to issue to him [164 Ill. 324]200 shares of its capital stock, in lieu of two certificates of such stock, of 100 shares each, belonging to him, which, upon forged assignments, and without his authority, had been surrendered up to the company, and canceled, and new certificates in lieu thereof issued to the assignees, who were innocent purchasers or pledgees. In the latter part of June, 1894, appellee, being about to go to the seashore for the summer, left his office and some of his business affairs in Chicago in the hands of one Anderson, his private secretary and man of affairs, and gave Anderson a power of attorney to draw checks, bills of exchange, and drafts, and make orders and overdrafts upon the Northern Trust Company of Chicago, and to indorse checks, drafts, bills of exchange, notes, and orders for deposit in said trust company, for appellee and in his name. In pursuance of arrangements made by appellee before his departure (he not having theretofore received the stock from appellant), Anderson afterwards, on behalf of appellee, paid the last installment due appellant for the stock, and appellant thereupon issued the 200 shares to Fay, and delivered the same to Anderson for him. Fay had had previous dealings with Slaughter & Co., who were brokers and bankers, and who, in the course of such dealings, became acquainted with Anderson, as Fay's private secretary and man of affairs. On September 12th, and during Fay's absence, Anderson called up Slaughter & Co. by telephone, saying, in substance, that Fay wished to sell 100 shares of the Edison stock, and had placed the limit at $125 per share. Slaughter & Co. answered that it could not be sold at that figure. Anderson replied that he would wire Fay, and, on reply, would let them know. The next day, Anderson telephoned Slaughter & Co. to sell the stock at the market, whereupon they sold 50 shares, at $123, and gave Anderson a check payable to Fay for $6,137.50, the amount of the sales less their commission; Anderson having in the meantime forged Fay's name to the assignment of one certificate of 100 shares of the stock, and received for it two certificates, of 50 shares each, properly transferred on the books of the corporation, one in the name of the purchaser, and one in their own name. Slaughter & Co. not being able to sell said last-named 50 shares at the same figure, Anderson obtained a loan thereon from them, ostensibly for Fay, of $6,000, and received the same is a check payable to Fay's order, which he indorsed, and deposited as before. About two weeks later, Anderson again inquired by telephone whether or not the 50 shares had been sold, and was informed they had not been; that the price had fallen to $120. Anderson replied that he did not think Fay wanted to sell at that price, but said Fay needed more money; and it was arranged that he should send over to them the other certificate of 100 shares, and they would make a loan of $8,000 upon it. Anderson forged Fay's signature to the assignment of this certificate, as to the first, and sent it over, and received from Slaughter & Co. a check to Fay for $8,000, upon which he indorsed Fay's name, and deposited it to Fay's credit, as before. October 4th, Anderson obtained a further loan in the same manner from Slaughter & Co., informing them at the time that Fay would not need any more. Four days later, upon directions by telephone from Anderson, Slaughter & Co. sold 25 shares, at $120, and credited the amount upon the loans. Statements of these transactions-one the usual monthly statement on October 1st, and the other on the sale of the 25 shares-were mailed to Fay, at his office, but he received only the last one. Slaughter & Co. surrendered the second certificate to appellant. It was canceled, and two certificates-one for 25 shares, to the purchaser, and the other for 75 shares, to themselves-were issued, and the transfer made upon the books of the corporation, as in the first instance. Slaughter & Co. did not know of the power of attorney given by Fay to Anderson. Fay returned to Chicago about October 7th, and, on receiving the notice from Slaughter & Co. of the sale of the 25 shares, called on them October 10th for an explanation, and was informed of Anderson's transaction, and was informed them he had no stock for sale. Fay, on the same day, checked up his account at the bank, and, having ascertained Anderson's defalcations, revoked his power of attorney. Fay had drawn some checks on his account for expenses during the summer, but Anderson had from time to time checked out nearly all the deposits, taking in all, for his own benefit, $950 more than the total amount of the money received from Slaughter & Co. Before any of the money was received from Slaughter & Co. and deposited by Anderson, he had withdrawn and stolen a large sum from Fay's balance in bank, and the first check from Slaughter & Co. went in to make it up; and it is claimed by appellant that it thus appears that the money of Slaughter & Co. went to make up Fay's balance, and was in part checked out and used to pay Fay's bills, and that Fay had knowledge thereof before the filing of his bill, and that, as he did not refund it to Slaughter & Co., he must be held to have ratified Anderson's transfers of the stock, and so lost his right to have such stock restored or other certificates of stock issued to him by appellant. Fay obtained his first knowledge of Anderson's criminal acts on October 10th, when he had the interview with Slaughter & Co., and checked up his account at the bank. This account then showed a balance in his favor of $134.84. It showed deposits corresponding in amounts and dates with the checks received from Slaughter & Co., but did not show whence they came. Other facts not important to a decision of the case were shown, to the effect that Anderson was fully trusted by Fay, and was therefore relied upon as trustworthy by Slaughter & Co., and that Fay did need to borrow money in his absence, and had left securities...