Ward v. Johnson

• Citation: 95 Ill. 215,1880 WL 10031
• Parties: S. D. WARD, Receiver,v.S. J. JOHNSON et al.
• Decision Date: 18 May 1880
• Court: Supreme Court of Illinois

95 Ill. 215

1880 WL 10031 (Ill.)

S. D. WARD, Receiver,

v.S. J. JOHNSON et al.

Supreme Court of Illinois.

Filed at Ottawa May 18, 1880.

OPINION TEXT STARTS HERE

APPEAL from the Appellate Court for the First District.

George Chandler, as trustee for certain certificate holders, filed his bill in chancery in the circuit court of Cook county, against Samuel D. Ward, receiver of “The Merchants, Farmers and Mechanics' Savings Bank,” to enjoin him from taking notes, mortgages, and securities, and mingling them with the general assets of the bank.

On the 16th of November, 1877, Chandler came into court and resigned his trusteeship, and thereupon Ward was appointed his successor in trust, and, as such trustee, was ordered to keep all the moneys and securities, delivered to him by Chandler, entirely separate and distinct from all other assets and moneys in his hands, as receiver of said savings bank, and hold the same as a special and distinct fund for the payment of said certificates of investment, until there shall be a final adjudication as to whether said moneys and securities are to be applied specially to the payment of said certificates, or are to be treated as general assets of the bank, etc.

It was further ordered that the cause proceed against Ward in the name of S. J. Johnson, one of the investment certificate holders, who had joined in the bill filed by Chandler against Ward, and on behalf of all the other certificate holders.

Ward filed an answer and cross-bill, and subsequently leave was given, and an amended and supplemental bill was filed by Johnson and others, in behalf of all the investment certificate holders, against Ward.

The deed of trust recites the investment certificates. The deed is as follows:

“INVESTMENT DEPARTMENT.

THE MERCHANTS, FARMERS AND MECHANICS' SAVINGS BANK, AND GEORGE CHANDLER, TRUSTEE.

Trust deed and declaration of trust:

This indenture, made and entered into this 23d day of December, A. D. 1873, by and between the Merchants, Farmers and Mechanics' Savings Bank of the city of Chicago, in the county of Cook, and State of Illinois, a corporation existing and doing business under and by virtue of an act of the General Assembly of the State of Illinois, party of the first part, and George Chandler, of the said city of Chicago, party of the second part, witnesseth:

That the said party of the first part, in consideration of $1 to it in hand paid, has this day sold, transferred and set over, and does hereby sell, transfer and set over to the said party of the second part, all and singular the promissory notes secured by deeds of trust, conveying real estate situated in said city of Chicago, mentioned and described in the schedule hereto attached and made a part hereof; the said promissory notes being at this date held and owned by said party of the first part, the principal sums of said promissory notes amounting, in the aggregate, to the sum of one hundred thousand dollars ($100,000); and also all the interest of the said party of the first part in and to the deeds of trust held by it as security for the payment of said promissory notes, said notes having been executed to said party of the first part as evidences of indebtedness to it, for the several sums of money therein mentioned, loaned by it to the makers thereof, and bearing interest at the rate of ten per cent per annum, payable semi-annually, and all being secured by deeds of trust, which are first liens upon improved real estate in said city of Chicago, greatly exceeding in value the several amounts of said notes--

In trust, nevertheless, and for the following purposes, to-wit:

Whereas, the said Merchants, Farmers and Mechanics' Savings Bank has, by a vote of its directors, adopted and organized an investment department as a part or branch of its business, for the purpose of furnishing to persons desiring to avail themselves of its benefits a higher rate of interest than is paid by savings banks upon savings deposits, and at the same time furnishing to such persons real estate or other security for the money to be invested by them, in the following manner, that is to say:

The savings bank will receive in its said investment department all sums of money delivered to it for investment, of one hundred dollars ($100) and upward, and issue to the owners or investors thereof an investment certificate or certificates for the amount thereof, redeemable and convertible as hereinafter provided, upon presentation by the bearer to the trustee herein named; which said certificates shall bear interest at the rate which may be specified upon their face, which interest shall be payable quarterly; and the first series, entitled ‘Series A,’ of said certificates, shall bear interest at the rate of seven and thirty-hundredths (7 30/100) per cent per annum, and shall be substantially in form as follows, to-wit: Interest two cents per day, payable on the 1st days of February, March, August and November.

Series A. A, No. Investment certificates. Issued by the Merchants, Farmers and Mechanics' Savings Bank, under the provisions of its charter:

CHICAGO, Illinois.

This is to certify that the Merchants, Farmers and Mechanics' Savings Bank of Chicago, Illinois, has received into its investment department $100, for which it has issued this investment certificate, and it guarantees payment to the bearer hereof interest, from date, upon said sum, at the rate of 7 3/10 per cent per annum, payable quarterly on 1st days of February, May, August and November, upon presentation of this certificate to the trustee by whom it is countersigned. This certificate is exchangeable or redeemable upon its presentation by the holder to said trustee, together with like certificates, in sums amounting, in the aggregate, to $500 or more, by the transfer to the holder of a note or notes, or obligations, secured by deeds of trust, constituting first liens upon improved real estate in the city of Chicago, and State of Illinois, and described in the following mentioned deed and declaration of trust, or by payment by the trustee in current funds, at his option; and when the holder of this certificate desires redemption in currency, he may file the same with the trustee, who shall give him a proper receipt therefor, and pay the amount due thereon, in the order of presentation, out of the funds then in his hands, or which may next come to his hands from the collection of the notes and securities pledged for the redemption hereof; and when such holder is notified by the trustee that he is ready to redeem the same, interest upon this certificate shall cease.

This certificate is one of series A, of like tenor and effect, to secure the redemption or payment of which the said bank has transferred unto the trustee countersigning this certificate, notes or obligations whose principal sums exceed, in the aggregate, the amount of said certificates, which notes yield interest at the rate of ten per cent per annum, and are secured by said deeds of trust; and said bank has executed to said trustee a deed and declaration of trust insuring such redemption, which, together with the deeds of trust therein described, have been duly recorded in Cook county, Illinois. In making such redemption, said secured notes shall be estimated at par, with accrued interest. This certificate will be received at par, with accrued interest, on account of any notes due to said bank.

In witness whereof, The Merchants, Farmers and Mechanics' Savings Bank has caused the certificate to be executed, this ____ day of ____, A. D. 187--.

Entered.

_______________, Teller _______________.

Entered and countersigned.

_______________, Trustee.”

Across the face of the certificate, printed in red ink, is the following:

“Secured by collaterals held in trust, which may be examined by the holder hereof on application to the trustee.

The value of the real estate securing this series is about $300 for every $100 of certificates.

Secured by bonds and first mortgages on improved and productive real estate.

$100.

And said certificates shall all be countersigned before issue by said trustee and entered in a book to be kept for that purpose, and shall be redeemable at the pleasure of the holder, upon presentation in sums of not less than five hundred dollars ($500) to the trustee herein, at his office in Chicago, by the transfer by him to the said holder of one or more of the promissory notes hereby transferred, or which may hereafter be transferred to him, as herein provided, which shall be equal in the amount of the principal and accrued interest to the sum of the principal and accrued interest of such certificates, according to the conditions of said certificates and indorsements thereon, as above set forth, or, at the option of said trustee, he may pay the amount due upon said certificates in lawful money of the United States or current funds in redemption thereof.

Now, therefore, for the purpose of carrying into effect and operation the said investment department of said savings bank, and to furnish the necessary security for such certificates, and to insure their redemption according to their terms, and in accordance with a vote of the board of directors of said savings bank appointing said party of the second part trustee for the purpose aforesaid, this transfer of said promissory notes and securities is made, and for no other purpose whatever.”

The duties and powers of said trustee shall be as follows, to-wit:

“ First. He shall receive and faithfully keep all of said notes and securities so transferred or which may hereafter be transferred to him for the purposes aforesaid.

Second. He shall receive and safely keep all other promissory notes or other evidences of indebtedness or securities which may hereafter be transferred to him by said party of the first part, in pursuance of the covenants and agreements of this deed of trust, for the security and redemption of said certificates, and shall use them in the same manner and with like...