Leathe v. Thomas

• Decision Date: 13 December 1905
• Citation: 218 Ill. 246,75 N.E. 810
• Parties: LEATHE v. THOMAS.
• Court: Illinois Supreme Court

218 Ill. 246

75 N.E. 810

LEATHE

v.THOMAS.

Supreme Court of Illinois.

June 23, 1905.

Rehearing denied December 13, 1905.

Error to Appellate Court, Fourth District.

Action by Samuel H. Leathe against Edward L. Thomas.From a judgment of the Appellate Court(109 Ill. App. 434) affirming a judgment for defendant, plaintiff brings error.Affirmed.

The plaintiff in error brought suit in the circuit court of St. Clair county against the defendant in error upon two judgments, aggregating the sum of $3,202.38, rendered in his favor by the circuit court of the city of St. Louis, state of Missouri, against the defendant in error.The defendant in error did not contest the validity of the judgments, but filed a set-off, and sought judgment against plaintiff in error.The case, by agreement, was referred to a referee to take proofs and report his conclusions as to the facts and the law.The referee filed a report, upon which the court, after overruling exceptions thereto, rendered judgment in favor of the defendant in error for $71,326.37, which judgment has been affirmed by the Appellate Court for the Fourth District, and the plaintiff in error has sued out a writ of error from this court.

The facts out of which the alleged set-off of defendant in error arose are, in brief, as follows:

The defendant in error, in connection with one William A. Adams, was engaged in constructing a railroad between Belleville and East St. Louis, the corporate name of which was the Belleville & St. Louis Railway Company.Adams died in 1891, at which time it was claimed he had invested in the enterprise $23,000, and the defendant in error $50,000.The defendant in error, upon the death of Adams, applied to the plaintiff in error for financial assistance to complete the road.After some preliminary negotiations, on January 24, 1893, an agreement in writing was entered into between the plaintiff in error, the defendant in error, Bart S. Adams, a son of William A. Adams, and the representative of the Adams estate, and Lucien M. Chipley, who had become interested in the construction of the road, which agreement was as follows:

‘St. Louis, January 24, 1893.It is agreed that we will transfer to Samuel H. Leathe $255,000 of the stock of the Belleville and St. Louis Railway Company and to Lucien M. Chipley $78,300 of said stock, said Samuel H. Leathe and Lucien M. Chipley to put up funds to carry on said enterprise and to negotiate and sell $500,000 five per cent. bonds of said company, the present bonds, $150,000, to be placed in the hands of Samuel H. Leathe to hold until other bonds are issued, he to advance the amount necessary to take up four bonds now held by Mrs. Johnson, $2,000, with interest, and Third National Bank, $750, with interest, in St. Louis.Same proportion of stock to be maintained in coal or other companies organized to carry out the project, as per letter of January 12, 1893, to S. H. Leathe by Edward L. Thomas.Edward L. Thomas to have $104,000 of stock, Bart S. Adams $50,000 and John T. Taylor $12,700, each party to receive back amounts advanced to the enterprise as soon as bonds are sold.Said Thomas and Adams to receive amounts as per statement rendered and said Leathe to receive amount to be advanced by him, and balance to go into the treasury of the railway company.First proceeds of bonds to be applied to payments of amounts advanced by said Leathe until satisfied.Edward L. Thomas.Bart S. Adams.Samuel H. Leathe.Lucien M. Chipley.Dated January 24, 1893.

‘In consideration of the above agreement, I agree to leave in the hands of Mr. Leathe all sums coming to me as a guarantee of the statements made in my letter of January 12, 1893, and as security, to hold until all matters are fully arranged and paid for which I am responsible, as per said letter and statement rendered.Edward L. Thomas.’

Immediately after the execution of said agreement, plaintiff in error commenced the construction of said road.In March, 1893, it was determined by the parties in interest to abandon the charter under which the defendant in error had commenced the construction of said road, and thereafter to operate under a charter authorizing the construction and operation of a railroad between Belleville and East St. Louis, known as the Belleville City Railway Company, granted prior to the adoption of the constitution of 1870, which was controlled by Charles W. Thomas, a brother of the defendant in error.On the 25th day of March, 1893, a meeting was held by the parties who owned and controlled the stock in the Belleville & St. Louis Railway Company and the Belleville City Railway Company, and the assets of the Belleville & St. Louis Railway Company were transferred to plaintiff in error by deed, which recited a consideration of $1 and ‘other valuable considerations to it from him moving,’ and the plaintiff in error immediately transferred to the Belleville City Railway Company said assets; and the capital stock of said Belleville City Railway Company was issued, share for share, to the parties who had before that time held the stock of the Belleville & St. Louis Railway Company.The railroad was completed, and on November 8, 1895, the Belleville City Railway Company and the Crown Coal & Tow Company, the stock of which was owned and controlled by the parties who owned and controlled the stock of the Belleville City Railway Company, were sold and transferred to Elbert H. Gary, who represented certain undisclosed principals, for the sum of $500,000, which amount was divided among the shareholders of said railway company and coal company in proportion to their holdings of stock in said corporations.

In the year 1893the defendant in error brought suit against the Belleville & St. Louis Railway Company to recover for moneys advanced by him for the use of said company prior to the death of Adams.The plaintiff in error was notified of the commencement of said suit, and that he could defend in the name of the company if he saw fit.He employed counsel, and in the name of the company defended against the claim of the defendant in error.He also filed a bill in chancery, in the name of himself, the Belleville & St. Louis Railway Company, and the Belleville City Railway Company, to enjoin the prosecution of said suit.The cases were tried together before the court, without a jury.The bill was dismissed for want of equity, and on December 21, 1893, judgment for $53,022.23 was rendered against the company in favor of defendant in error.Thereafter suit was brought in the circuit court of St. Clair county by the defendant in error, in the name of the Belleville City Railway Company, for the use of Edward L. Thomas, against plaintiff in error, to recover the amount of said indebtedness, on the ground that, at the time of the transfer of the assets of the Belleville & St. Louis Railway Company to plaintiff in error, he agreed to pay the debts of said company, including its debt to defendant in error.The case was removed to the United States Circuit Court for the Southern District of Illinois, where, upon a trial before the court without a jury, a judgment was rendered in favor of the plaintiff in error, which judgment was affirmed by the United States Circuit Court of Appeals.87 Fed. 103,28 C. C. A. 279.The claim sought to be offset in this suit, and upon which judgment was rendered in favor of the defendant in error, is the indebtedness of the Belleville & St. Louis Railway Company to defendant in error, and which it is claimed was, in part, the ‘other valuable considerations to it from him moving,’ specified in the deed from the Belleville & St. Louis Railway Company to the plaintiff in error, and which claim, it is said, the plaintiff in error assumed and agreed to pay.

The basis of computation of the referee, and the amount for which he recommended judgment in favor of the defendant in error, were as follows, as appears from his report:

+-----------------------------------------------------------+
                ¦Defendant's judgment, December 21,              ¦          ¦
                +------------------------------------------------+----------¦
                ¦1893                                 ¦$53,022 23¦          ¦
                +-------------------------------------+----------+----------¦
                ¦Interest to January 11, 1902, 8 years¦          ¦          ¦
                +-------------------------------------+----------+----------¦
                ¦and 20 days, 5 per cent.             ¦21,356 17 ¦          ¦
                +-------------------------------------+----------+----------¦
                ¦                                     ¦          ¦$74,378 40¦
                +-----------------------------------------------------------+
                

+---------------------------------------------------------+
                ¦Deduct Plaintiff's Judgments.                            ¦
                +---------------------------------------------------------¦
                ¦Judgment March 5, 1896              ¦$2,278 63¦          ¦
                +------------------------------------+---------+----------¦
                ¦Interest on $337.27, 8 per cent, 5  ¦         ¦          ¦
                +------------------------------------+---------+----------¦
                ¦years, 10 months, 6 days            ¦157 83   ¦          ¦
                +------------------------------------+---------+----------¦
                ¦I, 41.36                            ¦681 40   ¦          ¦
                +------------------------------------+---------+----------¦
                ¦Judgment January 5, 1897            ¦923 75   ¦          ¦
                +------------------------------------+---------+----------¦
                ¦Interest, 6 per cent., 5 years and 6¦         ¦          ¦
                +------------------------------------+---------+----------¦
                ¦days                                ¦278 04   ¦          ¦
                +------------------------------------+---------+----------¦
                ¦                                    ¦         ¦4,319 65  ¦
                +------------------------------------+---------+----------¦
                ¦Balance                             ¦         ¦$70,058 75¦
                +---------------------------------------------------------+
                

To this amount was added interest on the amount found due February 14, 1902, to June 30,...