Mumford v. Tolman

• Decision Date: 15 June 1895
• Citation: Mumford v. Tolman, 157 Ill. 258, 41 N.E. 617 (Ill. 1895)
• Parties: MUMFORD v. TOLMAN.
• Court: Illinois Supreme Court

157 Ill. 258

41 N.E. 617

MUMFORD

v.TOLMAN.¹

Supreme Court of Illinois.

June 15, 1895.²

Appeal from appellate court, First district.

Confession of judgment by Daniel H. Tolman against William R. Mumford. Defendant moved to vacate the judgment. The motion was overruled, and this order was affirmed by the appellate court. 54 Ill. App. 471. Defendant appeals. Affirmed.Weigley, Bulkley, Gray & Eastman, for appellant.

Moses, Pam & Kennedy, for appellee.

The facts in this case, as stated by the appellate court, are as follows: ‘On January 29, 1894, there was entered in the circuit court of Cook county a judgment by confession for $8,612.96 and costs in favor of appellee against appellant. The cognovit and judgment included $395 attorney's fees. The note upon which judgment was entered was given for 100 shares of the Chicago Trust & Savings Bank stock, in this language: ‘Chicago, Oct. 1st, 1892. On demand after date, for value received, I promise to pay to the order of myself, eighty-five hundred dollars, with interest at the rate of seven per cent. per annum.’ Attached to the note was the statement that the maker of the note had deposited with the legal holder thereof, as collateral security, a certificate for 100 shares of the Chicago Trust & Savings Bank stock, etc. Also power of attorney to confess judgment. The note was indorsed, ‘W. R. Mumford.’ On the same date the judgment was entered the defendant moved to set it aside, and for leave to plead. The court granted leave to the defendant to file affidavits in support of his motion. Thereupon he presented his own affidavit, setting forth that on November 1, 1886, and prior thereto, Daniel H. Tolman was, and had been, the president, manager, and owner of the majority of the stock of the Chicago Trust & Savings Bank, and conducted its business in his own way; that November 1, 1886, he induced affiant to purchase 100 shares of the capital stock of the bank at the price of $13,000, and persuaded him to give said note, with the stock purchased as collateral security; that at this time he, Mumford, was a stockholder of the bank and also a director; that this note was reduced between the time it was given and June 21, 1889, to $10,000, and on that date was renewed for that amount; that between said date and October 1, 1892, it had been reduced to $8,000, and was renewed for that amount, and $600 had since been paid; showing that since November 1, 1886, the date of the original note, he, Mumford, had paid Tolman $5,100 and all accrued interest on said note. It was further alleged in his affidavit that at the time Mumford made the purchase of the stock and gave the original note Tolman represented to him that the bank was increasing its business and profits very rapidly, and that by reason of the earning capacity of the stock it was then worth $130 per share, and in a short time would be worth $200 per share; that he told Tolman that he did not have any more money to invest, no matter how valuable the stock might be; that thereupon Tolman, to induce him to take the stock, guarantied he should not lose anything on account of the purchase; that he (Tolman) would carry the note along until it should be paid by dividends out of the stock, and that he (Mumford) should never be called upon to pay the indebtedness except out of the dividends; that it was by reason of this assertion and the guaranty of Tolman that he was induced to purchase the stock. He further stated in his affidavit that Tolman, by his fraudulent actings and doings in the management of the Chicago Trust & Savings Bank to his own personal interest, and by means of the conversion to his own use of the funds, property, and money of the bank, has rendered the stock practically worthless; that in September, 1893, he decided to have the bank wind up its affairs, and ever since that time it has been so engaged, and in November, 1893, he told the stockholders he did not think they would get much for their stock; that this state of affairs was brought about by the mismanagement, misappropriation, and conversion of the funds of the bank by Tolman, and upon a just and true accounting between himself and the bank it would be found that he is indebted to it for moneys and property misappropriated, and liabilities incurred on account of his fraud and mismanagement, upwards of the sum of $500,000, for which a bill in chancery is now pending; that the status of the chancery suit had been established by order of court, entered by agreement of all parties, and Tolman had given bond to pay the bank and Mumford as intervening petitioner any sum that may be found due them on a final decree; that an accounting, not only between the bank and Tolman, but between Mumford as intervening petitioner and Tolman and said bank, is involved in that proceeding, and that the alleged controversy here is but part and parcel of that accounting. All the allegations of this affidavit were denied in a counter affidavit filed by Tolman. It also appears from the record that on October 27, 1888, the directors of the Chicago Trust & Savings Bank applied $26,000 of the earnings of the bank towards the unpaid subscriptions of...