Chicago Title & Trust Co. v. Cent. Trust Co. of Illinois
| Decision Date | 12 June 1924 |
| Docket Number | Nos. 14702,14703.,s. 14702 |
| Citation | 312 Ill. 396,144 N.E. 165 |
| Court | Illinois Supreme Court |
| Parties | CHICAGO TITLE & TRUST CO. v. CENTRAL TRUST CO. OF ILLINOIS (two cases). |
OPINION TEXT STARTS HERE
Suit by John F. Golden and others, wherein William C. Niblack, receiver of the La Salle Street Trust & Savings Bank, and the Central Trust Company of Illinois, filed cross-bills. During the pendency of the suit the receiver died, and the Chicago Title & Trust Company was appointed in his stead. From a decree of the Appellate Court dismissing its cross-bill, the Central Trust Company appeals, and from a decree of the Appellate Court (224 Ill. App. 474), modifying and affirming a decree of the circuit court, the Chicago Title & Trust Company appeals.
Appeal of the Central Trust Company dismissed, and decrees of circuit and Appellate Courts reversed and decree entered.Appeal from Second Branch, Appellate Court, First District; on Appeal from Circuit Court, Cook County; Jesse Holdom, Judge.
Hiram T. Gilbert, of Chicago, for Chicago Title & Trust Co.
Albert Fink, of Chicago, for Central Trust Co. of Illinois.
Some of the questions involved in this appeal have heretofore been considered by this court in the case of Golden v. Cervenka, 278 Ill. 409, 116 N. E. 273. A sufficient statement of the pleadings of the parties on the present appeal and the history of the litigation are to be found in the former decision of this court. As in that case stated the original bill of John F. Golden and the Importers' & Manufacturers' Company, as amended and supplemented, was a bill to enjoin the prosecution of the suits against the stockholders of the La Salle Street Trust & Savings Bank (hereafter referred to in this opinion as the trust and savings bnak), brought by one Cervenka, and the institution or prosecution of other suits of like character to ascertain the creditors of the bank and its liabilities, as well as its stockholders and the extent of their liabilities to the creditors, for a decree for the amount of the stockholders' liability and the distribution of such amount among the creditors of the bank and for the appointment of a receiver to collect such amount from the stockholders. The receiver, William C. Niblack, appointed by the court under the bill previously filed by the state auditor, after filing his answer filed a cross-bill containing the same allegations and asking the same relief as was asked in the original bill, a part of the relief asked being a decree against the Central Trust Company because of certain of its acts in connection with the organization of the trust and savings bank. This cross-bill was answered by the Central Trust Company, as well as the original bill.
On the hearing as the case then stood in the circuit court a decree was rendered against the Central Trust Company for $1,487,854.16 and against the stockholders for an amount equal to the par value of the respective shares of stock held by them. That decree was reversed by this court. For the reasons stated in the case cited aforesaid, this court held that the act of the Central Trust Company in allowing the auditor to count $1,250,000 of its money as the money of the trust and savings bank and as its cash capital and surplus upon which to start its business as a bank, and thereby inducing the auditor to issue its certificate of authorization to the trust and savings bank to conduct its banking business, estopped the Central Trust Company, as against all persons giving credit to the trust and savings bank, to deny that that money was the money of the trust and savings bank and for the purposes of the bank in the due course and transaction of its business as a bank. In other words, the sum of money aforesaid was a trust fund for the benefit of the creditors in satisfaction of all their losses by reason of the acts of the Central Trust Company aforesaid and their subsequent withdrawal of that money from the trust and savings bank. A number of authorities were cited by this court in that case sustaining the court in that holding, and that decision is not only the law of that case but is also the law of the case now in hand.
We further decided in that case that if the entire assets or resources of the La Salle Street National Bank (herein referred to as the National Bank), assigned and turned over to the trust and savings bank as assets and as capital and surplus, were equal to the amount in value at which they were carried on the books of the National Bank, then the capital stock and surplus of the National Bank would not be impaired, but if the capital stock and surplus of the National Bank were impaired at that time the Central Trust Company was liable to the creditors of the trust and savings bank to make good the deficiency, and also for the interest on such deficiency from the time of demand upon it or from the time the receiver, Niblack filed his cross-bill, which was September 24, 1915, and that the receiver could maintain that suit for the creditors. It was also decided in the same suit that the stockholders of the trust and savings bank were also liable to the creditors of the bank under the original bill brought in the former suit but that their liability was different from and had no relation to the liability of the Central Trust Company to receiver Niblack for the creditors, and that the issues in the two suits, the one against the Central Trust Company and the other against the stockholders, should be separated for the purposes of trial and upon remandment by this court should be referred to different masters in chancery for the reasons stated in our former decision.
We also held in that decision that the Central Trust Company was only bound to account to the receiver for the benefit of the creditors of the trust and savings bank and that there was no liability on its part to the stockholders; that the trust and savings bank, by the action of the Central Trust Company and the stockholders and officers of the trust and savings bank, was only provided with a capital stock and surplus by the assets of the National Bank assigned to it, and that, if those assets fell short of $1,250,000 in value (the amount with which the trust and savings bank was to begin its business as capital and surplus), the creditors, by the receiver have the right, to the extent of the deficiency, to complain of the Central Trust Company and of the stockholders and to require them to make good the deficiency. We also said in that case:
‘Where or not this amount [the capital and surplus] had been impaired depends upon the collectibility of the loans which constituted a large part of the resources of the bank.’
The word ‘loans' in that sentence, as used by this court, means all bills receivable and bonds and securities held by the bank, and it is important in this consideration to have an accurate understanding of the holdings of this court and the law of the case as set forth in our former decision.
We have gone into the details of our former decision because of the fact that, in the consideration of the case now before us, many of the same points that were decided in this case are reargued and the correctness of the holdings are thereby challenged. We are satisfied with our rulings in that case as above explained, and do not deem it necessary to further consider them. Most of the propositions of law contended for by the parties to this suit are discussed in the beginning parts of their briefs and arguments. Some of them we may have occasion to consider in connection with the items of account to which they are applied, but we make the distinct point here that the law of the case not in hand, so far as announced in our former decision, is still the law of the case, and our former decision must be taken as a complete answer to all arguments against its correctness.
After the cause was remanded to the circuit court of Cook county by our former decision, the Central Trust Company on October 19, 1917, filed a cross-bill and on April 29, 1918, its amended cross-bill, making the stockholders and others parties defendant thereto, in which it made claim that--
‘in equity the stockholders of the trust and savings bank ought to make good its capital and surplus and askingthat they be required to pay whatever amount the trust company should be held liable for and to thus exonerate it in the premises, and that if prior to such payment on the part of the stockholders any part of such liability should be satisfied by the trust company, the stockholders be required to reimburse the trust company therefor.’
On April 29, 1918, the circuit court entered an order striking the cross-bill from the files on motion of William C. Niblack, as receiver, on the ground that it did not state a case which entitled the Central Trust Company to any relief in the court of equity and that it could not be helped by further amendment. From the order of the circuit court the Central Trust Company prosecuted an appeal to the Appellate Court for the First District, and that court on January 28, 1920, affirmed the decree of the circuit court. It does not appear from this record that any attempt was made by the Central Trust Company, by appeal or by petition for certiorari, to have reviewed the decision of the Appellate Court affirming the order of the circuit court aforesaid, except that the trust company has filed a separate transcript of the record in this court containing the proceedings of the circuit court of Cook county with reference to the filing of the cross-bill, the motion and order of the circuit court dismissing the same, and the record and opinion of the Appellate Court affirming the order of the circuit court, etc., together with an assignment of errors, setting forth in the assignment certain reasons why it claims the Appellate Court erred in affirming the order of the circuit court.
It is clear from the foregoing that this court has no...
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