{ "id": 5122240, "name": "Robert E. Barrett, Director of Insurance of State of Illinois, as Liquidator of United States Mutual Insurance Company, Appellant, v. Continental Illinois National Bank and Trust Company of Chicago, Appellee", "name_abbreviation": "Barrett v. Continental Illinois National Bank & Trust Co.", "decision_date": "1954-02-24", "docket_number": "Gen. No. 46,166", "first_page": "70", "last_page": "80", "citations": [ { "type": "official", "cite": "2 Ill. App. 2d 70" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "370 Ill. 646", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 2561592 ], "opinion_index": 0, "case_paths": [ "/ill/370/0646-01" ] }, { "cite": "377 Ill. 199", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 2546117 ], "opinion_index": 0, "case_paths": [ "/ill/377/0199-01" ] }, { "cite": "199 Ill. 436", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 3263971 ], "pin_cites": [ { "page": "441" } ], "opinion_index": 0, "case_paths": [ "/ill/199/0436-01" ] }, { "cite": "264 Ill. App. 358", "category": "reporters:state", "reporter": "Ill. App.", "case_ids": [ 3293563 ], "opinion_index": 0, "case_paths": [ "/ill-app/264/0358-01" ] } ], "analysis": { "cardinality": 665, "char_count": 13949, "ocr_confidence": 0.526, "pagerank": { "raw": 1.6439856263442015e-07, "percentile": 0.6915725588634705 }, "sha256": "f79ed95935625e96437487a14918ca8fe37e0b86ee09214bd9d58c79dc48fed3", "simhash": "1:248edfb15c4e84f9", "word_count": 2282 }, "last_updated": "2023-07-14T21:56:23.997308+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "Robert E. Barrett, Director of Insurance of State of Illinois, as Liquidator of United States Mutual Insurance Company, Appellant, v. Continental Illinois National Bank and Trust Company of Chicago, Appellee." ], "opinions": [ { "text": "Mr. Justice Kiley\ndelivered the opinion of the court.\nThis action was begun as an accounting suit by the United States Mutual Insurance Company against two of its officers. Subsequently the Director of Insurance of the State of Illinois was appointed liquidator of the Insurance Company, was substituted as plaintiff and filed an amended complaint of three counts. Only the amended count I of the amended complaint is material here. It charged the Continental Illinois Bank and Trust Company with negligence in paying a check for $217,500 drawn against the Insurance Company account by allegedly unauthorized persons. We shall refer to the Director of Insurance as plaintiff, to the United States Mutual Insurance Company as Company and to the Continental Illinois National Bank and Trust Company as Continental.\nThe trial court denied plaintiff\u2019s motion to strike Continental\u2019s answer, sustained Continental\u2019s motion for \u201cjudgment on the pleadings\u201d and entered judgment accordingly. Plaintiff has appealed.\nThe following facts are admitted by the pleadings: In 1949 Carl Barrett and Evelyn Marks were respectively president-treasurer and secretary of the Company, and were also directors. May 4, 1949 the Company had an active checking account at the Northern Trust Company and an inactive checking account in the Continental. On May 4th and May 9th the sums of $125,000 and $100,000 respectively were transferred from the Northern Trust to the Continental account. At the time Continental had in its possession signature cards and Company resolutions designating persons authorized to draw checks against the Company account. On May 9th W. L. McFarling and John Doolin came to the \u201coffices\u201d of the Continental and represented themselves to be officers of the Company. They presented a check for $217,500 payable to the order of the Insurance Investment Corporation. That check was deposited in that Corporation\u2019s account which had that day been opened in Continental. Thereafter cashier\u2019s checks for $165,000 and $35,000 payable respectively to Carl Barrett and Evelyn Marks were issued by Continental and charged to- the Insurance Investment Corporation account.\nThe questions on appeal are: (a) whether the court erred in finding that by suing Carl Barrett and Evelyn Marks for an accounting an election was made precluding plaintiff from later suing Continental for damages resulting from its alleged negligence, (b) whether the Liability for Forged of Raised Checks Act [chap. 16%, par. 24, Ill. Rev. Stat. (1953)] [Jones Ill. Stats. Ann. 10.35] applies so as to bar plaintiff\u2019s action and (c) whether plaintiff was prejudiced by \u201cdenial\u201d of the right to reply to Continental\u2019s answer.\nPlaintiff filed the amended count I on January 11, 1952. Continental answered. June 26, 1952 no reply had been filed and Continental moved for \u201cjudgment on the pleadings.\u201d The following day plaintiff moved to strike the answer and in support filed an affidavit and several exhibits. The trial court filed a \u201cmemorandum\u201d March 27,1953 which concluded by overruling plaintiff\u2019s motion to strike Continental\u2019s \u201cmotion for summary judgment\u201d and \u201cjudgment is given to the defendant bank.\u201d April 2, 1953 the order appealed from was entered overruling plaintiff\u2019s motion, sustaining defendant\u2019s motion and dismissing amended count I.\nContinental\u2019s motion for \u201cjudgment on the pleadings\u201d was not a motion used in place of a demurrer under section 45 of the Practice Act [chap. 110, Ill. Rev. Stat. [par. 169] (1953)] [Jones Ill. Stats. Ann. 104.045] because Continental had already answered setting up facts to lay the foundation for the application of the Liability for Forged or Raised Checks Act [Ill. Rev. Stats. 1953, ck. 16%, \u00a7\u00a7 24, 25; Jones Ill. Stats. Ann. 10.35, 10.36] and to negative the charge of negligence in the complaint. Neither was it a motion for involuntary dismissal under section 48 of the Practice Act [Ill. Rev. Stats. 1953, ch. 110, \u00a7172; Jones Ill. Stats. Ann. 104.048], because it pointed out none of the defects, claimable under that section, on the face of the complaint, and was not supported by affidavit pointing out any of those defects not appearing on the face of the complaint. We think we would not be justified in isolating any part of the sworn answer, disregarding the rest, and considering that part as the equivalent of such an affidavit. Moreover, section 48, as well as section 45, presupposes that the moving party considers the pleading attacked so insufficient as to obviate further pleading.\nContinental\u2019s motion was designed to present to the court for decision questions of law arising through lack of a reply. Considered in this light, the motion was superseded by plaintiff\u2019s motion made the following day \u201cto strike the answer.\u201d A motion to strike is the usual vehicle to accomplish the design we attribute to Continental\u2019s motion. The Civil Practice Act makes no provision for \u201cjudgment on the pleadings\u201d as such, except in sections 45 and 48. We need not decide whether the Summary Judgment section [chap. 110, par. 181, Ill. Rev. Stat. (1953)] [Jones Ill. Stats. Ann. 104.057] might be available were plaintiff basing his action on alleged breach of contractual duty.\nThe trial court\u2019s memorandum relied upon the doctrine of election of remedies as authority for dismissal of count I. Appellee cites Kaszab v. Metropolitan State Bank, 264 Ill. App. 358, to sustain the dismissal on this ground. We hold there was no election because the original complaint justifies the inference that the Company had no knowledge of the alleged unauthorized payment when it filed the accounting suit. Garrett v. John V. Farwell Co., 199 Ill. 436, 441. In the Kassab case there was knowledge of facts upon which an intelligent choice could be made. The doctrine was erroneously applied by the trial court.\nThe amended count I charged negligence on the part of Continental in the payment of the check drawn by persons unauthorized under the Company\u2019s signature cards and appropriate resolutions. Continental\u2019s sworn answer alleged that McFarling and Doolin represented themselves to be officers and presented the checks \u201cdrawn in accordance with the signature card which had been furnished to the Bank.\u201d Under its separate defense number 1, Continental relied upon the Liability for Forged and Raised Checks Act to bar plaintiff\u2019s action. In number 5, it alleged that even if McFarling and Doolin were not authorized, Continental was not liable because it was entitled to rely \u201con the certified copies of corporate resolutions and signature cards which showed McFarling and Doolin as officers . . . authorized to draw checks . . . and which were presented to the Bank . . . appeared proper and valid . . . and were imprinted with the corporate seal.\nWe need not discuss the question whether plaintiff waived a reply and, by standing on his motion, admitted the defenses. We think the liberal spirit of the Practice Act justifies the conclusion we are about to draw. The Act provides that pleadings shall be liberally construed with a view to substantial justice, \u00a7 33 (3), chap. 110, par. 157, Ill. Rev. Stat. (1953) [Jones Ill. Stats. Ann. 104.033, subd. (3)].\nPlaintiff\u2019s motion was supported by an affidavit which set forth what transpired at the adjourned annual meeting of the Company. This affidavit and the supporting exhibits tend to show that the meeting was held at 1:00 p. m. on May 9th and that the then Board of Directors, including Carl Barrett and Evelyn Marks resigned and McFarling and Doolin and their associates were elected successor directors. They tend to show further that the Board of Directors met the same day at 2:00 p. m. and elected McFarling and Doolin to succeed Barrett and Marks as officers of the Company and that McFarling and Doolin were duly \u201cinstructed and authorized to execute appropriate resolutions with the present depositories.\u201d The affidavit states that when the check was drawn neither McFar-ling or Doolin was an officer and neither was authorized to draw checks.\nWe think these statements and exhibits, if embraced in a reply, would be sufficient to raise questions of fact on those parts of the answer which allege that when McFarling and Doolin drew the check the Bank was in possession of certified copies of resolutions bearing the imprint of the corporate seal appearing to authorize the transaction. Prima facie, the meetings were held at the time indicated in the minutes and presumably the check transactions took place during regular banking hours. The inference could be that when the transaction took place the Continental had no basis for relying on the apparent authority of McFarling and Doolin.\nWe think, therefor, that the spirit of the Civil Practice Act [Ill. Rev. Stats. 1953, ch. 110, \u00a7 125 et seq.; Jones Ill. Stats. Ann. 104.001 et seq.] required that plaintiff\u2019s motion be treated as a reply. In this view a judgment for Continental in the face of what is set up in the affidavit and exhibits with respect to the charge of negligence was erroneous unless plaintiff is precluded under the Liability for Forged and Raised Checks Act [Ill. Rev. Stats. 1953, ch. 16%, \u00a7 1 et seq.; Jones Ill. Stats. Ann. 10.01 et seq.].\nPlaintiff contends the Liability for Forged and Raised Checks Act does not apply in this case because what was admittedly done by McFarling and Doolin was not forgery. He argues that since they signed their own names they were guilty of the making of a false instrument and not the false making of an instrument. He cites English and American authority to support his theory that the making of a false instrument is not forgery. The Act does not define the term \u201cforgery.\u201d We think, however, that our Supreme Court has decided against plaintiff\u2019s theory in the construction of the broad and comprehensive language of chap. 38, par. 277, Ill. Rev. Stat. (1953) [Jones Ill. Stats. Ann. 37.219]. The statute provides in part \u201c. . . or shall utter, publish, pass or attempt to pass . . . any of the above named false, altered, forged or counterfeit matters . . . shall be deemed guilty of forgery. . . .\u201d\nThe Supreme Court in People v. Mau, 377 Ill. 199, found a defendant guilty of forgery in a case where he had signed his own name to a disbursement order\u2014 made a false order instead of falsely made an order\u2014 payable to a fictitious payee. The court on page 207 alluded to the above-quoted portion of the statute and said: \u201cIt is to be noted that in this part of the section \u2018false\u2019 and not \u2018falsely made,\u2019 is the term used.\u201d The case of People v. Kubanek, 370 Ill. 646, also supports our conclusion that the forgery statute is broad enough to comprehend the instant case. There the defendant exceeded his authority in completing a check and in diverting the funds and was convicted of forgery.\nWe think that the Legislature in enacting the Liability for Forged and Raised Checks Act intended at least as broad a conception of forgery to control the civil liability of banks as it expressed in defining the term in the Criminal Code. It would not be consistent to hold that Man, authorized to sign disbursement orders, was guilty of forgery in signing his name and to hold also that McFarling and Doolin could not be guilty of forgery if they signed their names without authority. We are of the opinion that the conduct of McFarling and Doolin constituted forgery under the Illinois law.\nThe affidavit states in substance that wrongdoers were in control of the Company affairs from May 9, 1949 until December 20, 1950 when plaintiff was appointed liquidator; that in the interim the policyholders were not informed of the May 9th transactions and had no reasonable access to the information; and that they were first informed of the facts December 20, 1950. This was intended to toll the running of the limitation for suit in the Liability for Forged and Raised Checks Act. Its provisions preclude recovery for payment of a forged check unless the bank be notified of the forgery within a year after notice by the bank that the voucher representing payment of the check is ready or within a year after the voucher is returned to the depositor.\nThe trial court rejected plaintiff\u2019s argument that lack of knowledge of the check transaction tolled the beginning of the year within which notice is required. Had plaintiff set forth the averments with respect to lack of knowledge in a reply, it is likely that Continental would have moved to strike. The motion would have presented the question of the legal sufficiency of the averments. Upon an adverse ruling by the court, plaintiff would have amended or stood by his reply. Amending, he would present further averments to supply the deficiency. Standing by his reply, the court would enter judgment for Continental.\nWere we to decide now that the \u201creply\u201d is insufficient at law and that the judgment for Continental, though reached by irregular means, was the inevitable result, we might preclude plaintiff from the opportunity of doing what he might have done under regular procedure.\nIt is our opinion that, on the record presented to us, justice will be better served by reversing the judgment and remanding the cause for further proceedings. Under appropriate procedure the danger of prejudice to the rights of the parties will be obviated.\n\u25a0Reversed and remanded for further proceedings.\nFeinberg, P. J. and Lews, J., concur.", "type": "majority", "author": "Mr. Justice Kiley" } ], "attorneys": [ "Ettelson & O\u2019Hagan, of Chicago, for appellant; Leonard B. Ettelson, and Robert E. Samuels, both of Chicago, of counsel.", "Mayer, Meyer, Austrian & Platt, of Chicago, for appellee; Frank D. Mayer, Louis A. Kohn, and Dwight W. Fawcett, all of Chicago, of counsel." ], "corrections": "", "head_matter": "Robert E. Barrett, Director of Insurance of State of Illinois, as Liquidator of United States Mutual Insurance Company, Appellant, v. Continental Illinois National Bank and Trust Company of Chicago, Appellee.\nGen. No. 46,166.\nOpinion filed February 24, 1954.\nReleased for publication April 22, 1954.\nEttelson & O\u2019Hagan, of Chicago, for appellant; Leonard B. Ettelson, and Robert E. Samuels, both of Chicago, of counsel.\nMayer, Meyer, Austrian & Platt, of Chicago, for appellee; Frank D. Mayer, Louis A. Kohn, and Dwight W. Fawcett, all of Chicago, of counsel." }, "file_name": "0070-01", "first_page_order": 84, "last_page_order": 94 }