People v. Sterling

• Decision Date: 05 October 1934
• Docket Number: No. 22348.,22348.
• Citation: 192 N.E. 229,357 Ill. 354
• Parties: PEOPLE v. STERLING et al.
• Court: Illinois Supreme Court

357 Ill. 354

192 N.E. 229

PEOPLE

v.STERLING et al.

No. 22348.

Supreme Court of Illinois.

June 19, 1934.

Rehearing Denied Oct. 5, 1934.

Suit by the People of the State of Illinois against Fred E. Sterling and others. Decree of dismissal, and complainant appeals.

Affirmed.

Appeal from Circuit Court, Cook County; Hugo M. Friend, judge.

Otto Kerner, Atty. Gen. (Charles W. Hadley, of Wheaton, and George H. Kriete, of Chicago, of counsel), for the People.

Patrick J. Lucey, of Chicago, Welsh & Welsh, of Rockford, Werner W. Schroeder, of Chicago, and John H. Beckers, of Kankakee, for appellees.

SHAW, Justice.

The people of the state of Illinois, by the Attorney General, filed a bill in equity in the circuit court of Cook county against Fred E. Sterling, Len Small, Verne S. Curtis, and others therein named, as defendants, seeking an accounting for interest on state funds alleged to be due from Sterling, a former state treasurer, and for other relief hereinafter mentioned. The defendants filed special limited appearances for the purpose only of questioning the jurisdiction of the court, accompanied by a motion to dismiss for want of jurisdiction. This motion was allowed, and upon decree dismissing the bill for want of jurisdiction the cause is brought to this court by direct appeal; the state being a party.

The bill of complaint herein alleges the places of residence of the various defendants; none of them being in Sangamon county. It sets out that in November, 1921, the people, by Edward J. Brundage, who was then Attorney General of the state, filed a certain bill of complaint in the circuit court of Sangamon county against the identical defendants herein named, and sets forth in haec verba the allegations and prayer of that bill. That bill alleged, in substance, that the defendant Fred E. Sterling was treasurer of Illinois for two years from and after the second Monday in January, 1919, and that the defendants Len Small, Edward C. Curtis, and others were his bondsmen, and that he duly qualified and served as such state treasurer, receiving a salary of $10,000 per annum therefor, and not entitled to any other profit or income from said office. That bill further alleged that Small was the immediate predecessor in office of Sterling; having served from the first Monday in January, 1917, to the time Sterling took office. It sets forth and describes an alleged conspiracy between Small, Sterling, Edward C. Curtis, and Verne S. Curtis, whereby state funds were to be used for the purpose of earning interest for the private profit and advantage of the conspirators. The bill was, in substance, identical with that in the case of People v. Small, 319 Ill. 437, 150 N. E. 435, to which reference is hereby made for a fuller description of the allegations contained.

The bill in this case, after setting forth in full the bill in the previous case as above mentioned, proceeds to allege the issuance and service of summons in the prior suit, an order referring that case to a master in chancery, an order of January 7, 1929, in the circuit court of Sangamon county requiring the complainant to show cause why the suit should not be stricken from the docket, an order of February 2, 1929, discharging that rule, and a final order of that court on November 19, 1932, which was in the words following, omitting the heading and title, which are not material here: ‘This day comes Oscar E. Carlstrom, Attorney General of the State of Illinois, and enters his motion to dismissthis cause for want of equity. Also on this day comes Otto Kerner, Attorney General elect, and objects and protests to the dismissal of this cause. And the court having heard the motion to dismiss for want of equity, and being now fully advised, allows the said motion. And it is thereupon ordered by the court that this casue be and the same is hereby dismissed for want of equity, on motion of the Attorney General.’

After recital of these proceedings and decree in the former suit in Sangamon county, the bill proceeds to allege that the allegations in the prior bill were true; that Oscar E. Carlstrom, who caused the entry of the order dismissing the former suit without equity, was the same Oscar E. Carlstrom who was elected Attorney General at the November, 1924, election, at which Sterling was elected Lieutenant Governor and Small elected Governor of Illinois, and that he had made political promises to the effect that he would dismiss the above-mentioned interest suit and others then pending against Small and other state treasurers, if elected. The bill then alleges and sets forth in full a decree of the circuit court of Sangamon county entered on December 31, 1914, finding, in substance, that Small, Sterling, Curtis, and others had conspired to secure a private profit from the use of state funds and by the means therein set forth, which are also fully described in People v. Small, supra, to which reference is made. The opinion of this court in the Small Case is set forth in full, and the bill then proceeds to allege the redocketing of that case, the reference to the master for an accounting, that it was made to appear before the master that the situations under Small and Sterling were identical, and that Carlstrom had knowledge of all of these facts, and that the dealings were a mere cloak or device to divert from the people of the state of Illinois interest and discount derived from the use of the people's funds; that Carlstrom participated, as Attorney General, in these proceedings, togetherwith three of his assistants, and had available at all times full information and knowledge of the sums, alleged to be as large as a million dollars. claimed to have accrued during the Sterling administration and to have been wrongfully diverted to Sterling, Small, and Curtis. It then alleges the existence of a fiduciary relation between Carlstrom and the people of the state of Illinois, and his duty to make full and complete inquiry concerning the rights of the people to the funds involved in the proceedings against Sterling and others, and to not make any disposition of said suit without fully informing himself in connection therewith. It is alleged that he failed to make such inquiries and that he disregarded such facts as were known to him, and fraudulently failed to protect the people in their rights in the suits against Sterling and others, in total disregard of his duty and in fraud of the people of the state of Illinois. The bill alleges that the present Attorney General, Otto Kerner, prior to his induction into office, but after his election, appeared in court and protested against the dismissal of the above-mentioned suit and the entry of the decree for want of equity, but that his protests were disregarded by Carlstrom and by the court. Other facts are alleged and the conclusion asserted that the order of the circuit court of Sangamon county entered on the 19th of November, 1932, dismissing the bill against Sterling for want of equity, was obtained by fraud and should be set aside, and that a full account should be taken and found by the court upon a full hearing as to the amount due to the people by reason of the wrongful diversion of interest and discount as set forth in the present and prior bills.

The prayer of the bill is that the defendants, and each of them, be required to answer, but not under oath, the answer under oath being waived; that the order and decree of the circuit court of Sangamon county entered on the 19th day of November, 1932, in the cause of the People, etc., v. Fred E. Sterling et al., dismissing said cause for want of equity, be held ‘fraudulent and void, vacated and set aside in so far as same may be claimed by defendants to be res adjudicata or an estoppel or bar to the relief in this bill of complaint prayed’; that Fred E. Sterling, Verne S. Curtis, Etha G. Curtis, administratrix of the estate of Edward C. Curtis, deceased, may be required to account, etc.; and with a prayer for further relief against the various bondsmen. The bill is signed by the people of the state of Illinois, by Otto Kerner, Attorney General.

The defendants came into court, and, after filing limited appearances for the purpose of questioning the jurisdiction, filed their motions to dismiss for want of jurisdiction.

Briefly summarized, the appellant contends that the bill in this case is neither a bill of review nor a bill in the nature of a bill of review; that it is merely a bill for an accounting, and that it does not seek to modify or set aside the decree of the circuit court of Sangamon county but merely prays that the defendants, who are alleged to be parties to the fraud, be prevented from obtaining any benefits thereunder, on the ground that fraud vitiates all things. The appellees contend, and the circuit court apparently held, that this is a bill in the nature of a bill of review, and that it cannot be brought in any other county or any other court than that which entered the decree sought to be reviewed. This is the only issue before us.

A motion to dismiss a bill upon the ground that there is no equity apparent upon the face of the bill or that the court has no jurisdiction is treated as a general demurrer, admitting all the facts well pleaded. Vieley v. Thompson, 44 Ill. 9;Hickey v. Stone, 60 Ill. 458;Emerson v. Western Union Railroad Co., 75 Ill. 176;Grimes v. Grimes, 143 Ill. 550, 32 N. E. 847. We are therefore to determine whether or not the circuit court of Cook county had jurisdiction, assuming all things well pleaded in the bill to be true.

In this bill, as compared with the original bill in Sangamon county, there is an identity of parties, of cause of action, of subject-matter, and of relief prayed. We must therefore at the beginning of our inquiry determine whether or not it is true, as appellant contends, that fraud vitiates every transaction into which it enters, even to the extent of so far invalidating a decree of a court of competent...