Manning v. Mercantile Sec. Co.

• Court: Supreme Court of Illinois
• Writing for the Court: HAND
• Citation: 90 N.E. 238,242 Ill. 584
• Decision Date: 22 December 1909
• Parties: MANNING et al. v. MERCANTILE SECURITIES CO. et al.

242 Ill. 584
90 N.E. 238

MANNING et al.
v.
MERCANTILE SECURITIES CO. et al.

Supreme Court of Illinois.

Dec. 22, 1909.

Appeals from and Error to Circuit Court, Cook County; Julian W. Mack, Judge.

Action by Elbert N. Manning and others against the Mercantile Securities Company and others, in which John C. Fetzer was appointed receiver of defendant corporation and obtained an order requiring Thomas Rhodus and others, officers of the corporation, to turn over to him as receiver all books of account, papers, documents, etc., belonging to it. The officers, having failed to do so, were required to show cause why they should not be punished for contempt. Their answer alleging that the books, papers, etc., contained matter which might incriminate them, they having been previously indicted for fraudulent use of the mails, was held insufficient, and they were committed to jail for contempt from which order they appeal, and also bring error to review an order of the circuit court granting sequestration. Affirmed.

[242 Ill. 586]

[90 N.E. 239]

Joseph B. David and Benjamin C. Bachrach, for appellants and plaintiff's in error.

Weissenbach & Melvan and Kraus, Alschuler & Holden, for appellees and defendants in error.

HAND, J.

The several appeals of Birch F. Rhodus, Thomas Rhodus, and Edward T. Rhodus from a judgment entered by the circuit court of Cook county on September 24, 1908, finding the said Birch F. Rhodus, Thomas Rhodus, and Edward T. Rhodus guilty of contempt of court and committing them to the jail of Cook county not to exceed six months for the failure of said Birch F. Rhodus, Thomas Rhodus, and Edward T. Rhodus to comply with an order theretofore entered in a certain chancery suit then pending in the circuit court of Cook county wherein John C. Fetzer had been appointed receiver of the Mercantile Securities Company, requiring them, said Birch F. Rhodus, Thomas Rhodus, and Edward T. Rhodus, as officers of said corporation, to turn over to said John C. Fetzer, as such receiver, all the books of account, papers, documents, correspondence, stock books, stock register, check books, canceled checks, and other papers, of whatsoever kind and character, in their possession belonging to the Mercantile Securities Company, together with a writ of error sued out by Birch F. Rhodus, Thomas Rhodus, and Edward T. Rhodus to review the action of said circuit court in granting an order of sequestration, have been consolidated in this court.

The bill in the chancery suit in which John C. Fetzer had been appointed receiver of the Mercantile Securities Company was filed by Elbert N. Manning, Louis P. Hugel, Herbert N. Cheetham, and the Stadler Photographing Company against the Mercantile Securities Company, Birch [242 Ill. 587]F. Rhodus, Thomas Rhodus, Edward T. Rhodus, Minnie C. Scully, and eight corporations other than the Mercantile Securities Company, which corporations had been organized by said Birch F. Rhodus, Thomas Rhodus, and Edward T. Rhodus. The said Birch F. Rhodus was the president, Thomas Rhodus the vice president, Edward T. Rhodus the vice president and secretary, and Minnie C. Scully the treasurer of said Mercantile Securities Company, which corporation was organized under the laws of the state of Maine, the objects of which were stated in its charter to be the buying and selling of municipal bonds and other municipal securities, also stocks, bonds, mortgages, and commercial paper, and which corporation had a nominal capital stock of $2,500,000. It was averred in the bill that all of the said corporations, including the Mercantile Securities Company, were fraudulently organized by Birch F., Thomas, and Edward T. Rhodus, and that said Mercantile Securities Company had no other business than that of dealing in the fraudulent and worthless stocks of said corporations, and that its assets represented moneys received from the sales of stock to the public, and that the complainants were stockholders of said corporation; the object of the bill being to wind up the affairs of said Mercantile Securities Company.

It appears from the record that on the 18th day of September (the day upon which he was appointed receiver) John C. Fetzer made

[90 N.E. 240]

a demand upon the appellants to turn over to him, as such receiver, the books, etc., of the Mercantile Securities Company, and that said Birch F. Rhodus, Thomas Rhodus, and Edward T. Rhodus upon the advice of counsel refused to turn over to said receiver the books, etc., of said Mercantile Securities Company; that on the 19th day of September John C. Fetzer, as such receiver, applied to the circuit court in said chancery suit for a rule upon said Birch F. Rhodus, Thomas Rhodus, and Edward T. Rhodus to require them to turn over to him all [242 Ill. 588]books, etc., of the Mercantile Securities Company, whereupon the court entered an order that said Birch F. Rhodus, Thomas Rhodus, and Edward T. Rhodus turn over said books, etc., to said John C. Fetzer, as receiver, on or before the 22d day of September, or show cause on that day why they should not be attached for a contempt of court; that on September 23d the said Birch F. Rhodus, Thomas Rhodus, and Edward T. Rhodus filed a joint answer to the order which required them to turn over the said books, etc., or show cause, in which they averred, among other things, that on the 23d day of July, 1908, an indictment was returned by the grand jury into the District Court of the United States for the Northern Districk of Illinois against them charging them with having devised a scheme to defraud, and for the purpose of carrying said scheme into effect they had deposited in the post office at Chicago certain letters in violation of section 5480 of the Revised Statutes of the United States (U. S. Comp. St. 1901, p. 3696), and attached to their answer a copy of said indictment, and averred that from an inspection of the said indictment it would appear that the matters and things required by the court to be turned over and delivered by the said Birch F. Rhodus, Thomas Rhodus, and Edward T. Rhodus referred directly to and were a part of the matters and things charged in said indictment against them, and in which answer Birch F. Rhodus, Thomas Rhodus, and Edward T. Rhodus admitted they had in their possession the books, etc., of the Mercantile Securities Company, but averred that they had declined to turn over said books to said John C. Fetzer, as receiver, as the said books of account, papers, documents, correspondence, stock books, stock register, check books, canceled checks, and other papers ‘might tend to incriminate’ them, the said Birch F. Rhodus, Thomas Rhodus, and Edward T. Rhodus. The answer further averred that they were then under said indictment in the United States District Court, and that they availed themselves of their rights under sections[242 Ill. 589]6 and 10 of article 2 of the Constitution of this State and the fourteenth amendment to the Constitution of the United States, and further said that they should not be required to give evidence against themselves and should not be required to furnish evidence which could be used in any criminal proceeding against them, and averred that the Circuit Court was without power to order them to give or furnish evidence which might be used against them in any criminal proceeding. It also appears from the record that on September 24th, after a full hearing, the court held that said answer showed no good cause why...