Crouch v. First Nat. Bank of Chicago

• Decision Date: 15 May 1895
• Citation: 156 Ill. 342,40 N.E. 974
• Parties: CROUCH v. FIRST NAT. BANK OF CHICAGO.
• Court: Illinois Supreme Court

156 Ill. 342

40 N.E. 974

CROUCH

v.FIRST NAT. BANK OF CHICAGO.¹

Supreme Court of Illinois.

May 15, 1895.

Appeal from appellate court, First district.

Bill by Chester C. corbin, in behalf of himself and all other creditors of the limited partnership of Bois, Fay & Conkey, against William A. Bois, Benjamin B. Fay, Lucius W. Conkey, Julius K. Graves, the First National Bank of Chicago, and others. Robert B. Crouch and others were afterwards made additional complainants. The First National Bank demurred to the bill. The demurrer was sustained, and the decree sustaining the demurrer was affirmed by the appellate court Complainant Corbin appeals. Reversed.

Baker, J., dissenting.

William J. Manning, for appellant.

Flower, Smith & Musgrave, for appellee.

WILKIN, C. J.

This is an appeal from a judgment of the appellate court of the First district affirming a decree of the circuit court of Cook county sustaining a demurrer to a bill in chancery. The bill was filed by appellant Chester B. Corbin, in behalf of himself and all other creditors of the limited partnership of Bois, Fay & Conkey, against William A. Bois, Benjamin B. Fay, Lucius W. Conkey, Julius K. Graves, the First National Bank of Chicago, and others. It alleges that the complainant purchased of the limited partnership of Bois, Fay & Conkey, on November 15, 1882, their two promissory notes, dated October 30, 1882, due in 90 days and 4 months from date, one for $1,734.21, and the other for $2,016.92, both payable to the order of the makers, and indorsed by the firm name. It then sets up the organization on March 30, 1882, of a limited partnership by Bois, Fay, and Conkey, with Julius K. Graves as a special partner, contributing to the partnership the sum of $50,000, to continue to March 30, 1887; setting out the certificate of partnership, acknowledgment, filing and recording the same, in conformity with sections 4-6, c. 84, Rev. St. (2 Starr & C. Ann. St. p. 1565); also the filing of an affidavit by Benjamin B. Fay, one of the general partners, required by section 7 of the same chapter, the affidavit being copied at length. It further alleges publication of the terms of the limited partnership, and that: ‘Having, in all things, complied with the provisions of the limited partnership act, William A. Bois, Benjamin B. Fay, and Lucius W. Conkey, and Julius K. Graves as a special partner, constituted a limited partnership, under the firm name of Bois, Fay & Conkey,’ and thereupon, on March 30, 1882, commenced in the city of Chicago the business of dealing in groceries at wholesale, which it continued to carry on under its firm name until in the month of January, 1883. That during that time it contracted debts and incurred obligations amounting to much less than its liabilities, and being insufficient to pay more than 50 cents on the dollar thereof. That during said month of January, and for several months prior, it had great difficulty in meeting its debts; and to pay the same as they matured, and conceal the actual condition of its affairs and its insolvency, it borrowed and secured large sums of money by loans, and discounts of its commercial paper. That on or about December 2, 1882, said Bois, Fay, Conkey, and Graves, well knowing said limited partnership was insolvent, and with the intent to hinder, delay, and defraud such of the creditors of said limited partnership as they did not intendto prefer, and in contemplation of insolvency, and with intent to prefer certain of their creditors, and with the intent to evade the provisions of the said act under which said limited partnership was organized, pretended to dissolve said limited partnership; and for that purpose they caused to be filed on or about December 20, 1882, a paper purporting to be a dissolution of said partnership, but that said paper writing was ineffectual for the purpose of effecting any dissolution of said limited partnership, and was a mere device contrived by said Bois, Fay, Conkey, and Graves to evade the provisions of said limited partnership act, and give color of authority and validity to the acts of said Fay and Conkey in the execution of judgment notes, and confessions of judgments thereafter to be entered against them. That after said pretended dissolution said Fay and Conkey pretended to carry on said business, and assumed to own all the assets of said limited partnership. That said Bois and Graves pretended to release and convey their interest in the limited partnership assets to said Fay and Conkey, but that such release or conveyance thus executed was wholly inoperative, and fraudulent and void as against the complainant and other creditors of said limited partnership, and made with the intent to hinder, delay, and defraud such creditors. That, under said act of the general assembly of Illinois under which said limited partnership was formed, all the assets of the said limited partnership were secured and pledged to the payment of the debts ratably, and that it was the duty of said Bois, Fay, Conkey, and Graves, when they first had knowledge of the insolvency of said limited partnership, or at the time of their pretended dissolution thereof, to have some competent trustee appinted to take possession and charge of the assets of said partnership, and convert the same into money, and distribute it ratably among the creditors of said limited partnership. That on January 22, 1883, in pursuance of said fraudulent scheme and contrivance, said Benjamin B. Fay and Lucius W. Conkey executed their judgment notes, payable on demand, with warrants of attorney annexed, as follows: One judgment note to the First National Bank of Chicago, $40,000; one to said Julius K. Graves, special partner, for $17,500; one to John H. Lull, for $2,500; one to George E. Johnson, for $5,000; one to J. W. Doane & Co., for $15,000; another to John W. Doane & Co., for $9,853.18; and one to Mary Murison, for $1,500. That on said January 22, 1883, there were entered in and by the superior court of Cook county judgments against Benjamin B. Fay and Lucius W. Conkey upon each of said notes, in pursuance of the warrants of attorney thereto annexed, together with costs and 5 per cent. attorney fees, as follows: One judgment in favor of the First National Bank of Chicago, for $42,000; one judgment in favor of Julius K. Graves, special partner, for $18,375; one in favor of John H. Lull, for $2,625; one in favor of George E. Johnson, for $5,250; one in favor of J. W. Doane & Co., for $15,750; one in favor of J. W. Doane & Co., for $10,345.83; one in favor of Mary Murison, for $1,620. That on January 22, 1883, in the further pursuance of said fraudulent scheme and contrivance, said Benjamin B. Fay and Lucius W. Conkey executed other judgment notes, payable on demand, with warrants of attorney annexed: One to Julius K. Graves, for $27,000; one to the Commercial National Bank of Dubuque, Iowa, for $14,250; one to Dubuque County Bank, for $11,900; one to Importers' & Traders' National Bank, for $16,000; one to Merchants' National Bank of Ohio, for $4,298.17; one to J. L. Dobbins, for $840; one to Alvin F. Shumway, for $6,990; one to Addison B. Robinson, for $1,100; one to Bay State Sugar-Refining Company, for $10,000; one to the First National Bank of Westborough, Mass., for $11,000; one to Hiram A. Sheldon, for $5,500; one to Martha J. Fay, for $3,700; one to D. C. Adams, for $1,770.64; one to Necedah Lumber Company, for $1,350; and one to Walter Potter, for $4,300. And that on the same day there was entered in and by the circuit court of the United States for the Northern district of Illinois, at Chicago, judgments against said Benjamin B. Fay and Lucius W. Conkey upon each of said last-named notes, in pursuance of said warrants of attorney thereto annexed, with costs and 5 per cent. attorney's fees, as follows: In favor of Julius K. Graves, for $28,350; of the Commercial National Bank of Dubuque, for $14,962.50; the Dubuque County Bank of Dubuque, for $12,495; the Importers' & Traders' National Bank, for $16,800; the Merchants' National Bank of Ohio, for $4,508.97; J. L. Dobbins, for $882; Alvin F. Shumway, for $7,339.50; Addison B. Robinson, for $1,155; the Bay State Sugar-Refining Company, for $10,500; First National Bank of Westborough, Mass., for $12,600; Hiram A. Sheldon, for $5,775; Martha F. Fay, for $3,885; D. C. Adams, for $1,859.14; Necedah Lumber Company, for $1,417.50; Walter Potter, for $4,515. That on the same day the attorneys for said Bois, Fay, Conkey, and Graves, being also attorneys of record for all the plaintiffs in said judgments entered in the superior court of Cook county, caused execution to be issued upon each of said judgments against the goods, chattels, lands, and tenements of said Benjamin B. Fay and Lucius W. Conkey, and directed to the sheriff of Cook county; and said sheriff, by the direction of said attorneys, levied said executions upon the stock of merchandise belonging to said limited partnership, of the value of about $75,00. That said levy and seizure of said limited partnership property was made in further pursuance of said fraudulent scheme on the part of said Bois, Fay, Conkey, and Graves, and with their consent and connivance, and with the intent to delay, hinder, and defraud the creditors of said limited partnership, and with the intent to give a preference to each of the parties in whose favor said judgments were entered. That said sheriff sold said assets for about $54,000, and that he has the proceeds of such sales in his possession. That, immediately after said judgments were entered in the circuit court of the United States for the Northern district of Illinois, the attorneys of said Bois, Fay, Conkey, and Graves, being the attorneys of record for said Commercial National Bank and said Importers' & Traders' National Bank in the judgments by confession entered in their favor, caused executions to be issued on each of said judgments, and delivered to the...