{
  "id": 3346717,
  "name": "Equitable Trust Company, Appellee, v. L. R. Taylor, Appellant",
  "name_abbreviation": "Equitable Trust Co. v. Taylor",
  "decision_date": "1927-05-17",
  "docket_number": "Gen. No. 31,296",
  "first_page": "345",
  "last_page": "352",
  "citations": [
    {
      "type": "official",
      "cite": "244 Ill. App. 345"
    }
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  "court": {
    "name_abbreviation": "Ill. App. Ct.",
    "id": 8837,
    "name": "Illinois Appellate Court"
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  "jurisdiction": {
    "id": 29,
    "name_long": "Illinois",
    "name": "Ill."
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    {
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    {
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    {
      "cite": "178 Ill. 404",
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  "last_updated": "2023-07-14T19:23:28.054403+00:00",
  "provenance": {
    "date_added": "2019-08-29",
    "source": "Harvard",
    "batch": "2018"
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  "casebody": {
    "judges": [],
    "parties": [
      "Equitable Trust Company, Appellee, v. L. R. Taylor, Appellant."
    ],
    "opinions": [
      {
        "text": "Mr. Justice Fitch\ndelivered the opinion of the court.\nThe question presented by this appeal is whether under the circumstances shown by the evidence the defendant, L. R. Taylor, is personally liable on a promissory note for $1,000 payable on demand to the order of the plaintiff and signed \u201cWm. Groyette, per L. R. Taylor, Trustee.\u201d\nGroyette, a building contractor, was possessed of assets valued at $6,218.48, most of which were accounts receivable, some on completed contracts and others on unfinished contracts. He owed $7,425.45 to 22 creditors and was unable to pay them. Thereupon his creditors appointed a committee consisting of Taylor and two other creditors, who, on May 4, 1922, entered into a written agreement with Goyette, in the nature of a voluntary assignment for the benefit of creditors.\nBy the terms of this agreement Goyette assigned all his property to the creditors\u2019 committee in trust, and it was provided that they should convert the assigned property into money and \u201cpay the creditors\u201d; that Goyette should \u201ccontinue in his present business\u201d and complete his unfinished contracts under the direction of the creditors\u2019 committee, but \u201cshall incur no further liabilities\u201d without their consent, and that \u201call contracts to be let\u201d must be first submitted to them for their approval; that he would \u201cpersonally attend to the collection of all accounts\u201d and immediately deliver the proceeds to them, to be used in carrying out the purposes of the agreement; that he would assign all his contracts and mechanics\u2019 liens rights to them, and should receive from them a weekly salary for his services; that \u2018 \u2018 out of the proceeds realized from this trust,\u201d the committee should \u201cdevise ways and means to provide for and pay the payroll of the business of .this trust\u201d and pay the overhead and current expenses, \u201cbut it is expressly understood and agreed that said parties of the second part in no way assume or are obligated personally in carrying out this or any other provision of this agreement.\u201d\nThe agreement further provides that Goyette constitutes and appoints the creditors\u2019 committee \u201chis true and lawful attorney, irrevocably, with full power and authority to do all acts and things which may be necessary in said premises to the full execution of the trust hereby created,\u201d and to sign his name \u201cto any instrument in writing whenever it shall be necessary so to do to carry into effect the object, design and purpose of this trust.\u201d It was further stipulated that the specified 22 creditors should be entitled to a dividend of 10 per cent as soon as received by the trustees, but that the latter should always keep on hand a surplus of $300 for emergencies.\nOn June 24, 1922, Taylor, accompanied by Morris Frisch, the attorney for the creditors\u2019 committee, called at defendant\u2019s bank, showed a copy of the trust agreement to William A. Nicol, defendant\u2019s cashier, and asked for a loan of $1,000. The cashier testified that the trust agreement \u201cwas presented to us by Mr. Taylor and his attorney, and on the strength of that document and the note that he signed, we made the loan of $1,000.\u201d He also testified that after reading the copy of the trust agreement, he prepared the note for Taylor to sign, and saw him sign the name \u201cWm. G-oyette, per L. R. Taylor, Trustee,\u201d that the other two members of the creditors\u2019 committee were not present, and that he (Nicol) \u201cwas willing to accept it (the note) in the form it was signed,\u201d and understood \u201cthat Mr. Taylor was acting as one of the trustees\u201d named in the agreement.\nThe note is in the form of a collateral note and the trust agreement is referred to on the face of the note in the following language (written in the blank space ordinarily used to describe the collateral deposited), which the cashier testified was written on the note before it was signed: \u201cCopy of Trust agreement fr Morris Frisch atty 62 N. Clark St.\u201d\nTaylor had a personal bank account with defendant\u2019s bank at that time, but a new account was opened in the name of \u201cWm. Goyette, per L. R. Taylor, Trustee,\u201d to which account the proceeds of the loan were credited and from which all were later drawn out on checks signed by Taylor in that form. It is not claimed the proceeds were not used by Taylor for the purposes of the trust. The note shows indorsements of interest paid each month following the date of the note to and including July 1,1923. The cashier testified that \u201cwe charged the interest to Mr. Taylor\u2019s personal account one month, and when he objected we credited it back to his account.\u201d Taylor testified that he did not know that interest had been thus charged to his personal account until he received his bank statement, and then he immediately telephoned to the plaintiff\u2019s cashier that he \u201cwas not personally liable and for him not to charge the interest to my account.\u201d\nThese facts are uncontradicted. Plaintiff\u2019s cashier and the defendant, Taylor, were the only witnesses. The case was tried by the court without a jury, and the court entered a finding and judgment for the plaintiff.\nThere is a provision in the trust agreement requiring \u201call checks or other evidence of payment made in carrying out the purposes of this agreement\u201d to be signed by Goyette and countersigned by Taylor, but it is not claimed that this provision applies to the note in question. There is no other provision authorizing any one of the creditors\u2019 committee to act alone, and it is contended that for this reason Taylor acted without authority when he, alone, signed Groyette\u2019s name, \u201cper L. R. Taylor, Trustee,\u201d to the note. Conceding this to be true, the question presented is whether defendant made himself personally liable because of that fact.\nThe plaintiff\u2019s representative, Mr. Nicol, knew that the only authority Taylor had to sign Groyette\u2019s name to a note was set forth in the trust agreement. He knew that by the terms of the trust agreement, the creditors\u2019 committee were authorized to act not only as trustees for the creditors, but that \u201cfor any purpose necessary to carry into effect the objects of the trust,\u201d they were also authorized, as Groyette\u2019s agents, to sign his name to a promissory note. It was by virtue of this clause of the trust agreement that Taylor assumed to act when he signed the note in question. It is clear, therefore, that after Nicol had read the trust agreement, he, as well as Taylor, made the mistake of construing it to authorize Taylor alone to sign Groyette\u2019s name to the note. This was not a mistake of fact, but a mistake of law.\nIn Seeberger v. McCormick, 178 Ill. 404, an action was brought by a lessor to recover rent upon a lease made to the Market National Bank of Chicago, and signed, on behalf of the lessee, in the name of the bank, by Seeberger as its president and Cox, its cashier. The bank was organized and incorporated, but had not received a certificate of the comptroller authorizing it to transact business, and the organization was abandoned within a few months. It having been determined in another suit that the bank had no power to enter into the lease, suit was brought against Seeberger and Cox personally on the theory that they were personally liable ex contractu upon their implied warranty of their authority to execute the lease on behalf of the corporation. The court said: \u201cThe principle is one of agency, and that plaintiffs in error, as the agents of the corporation in making the contract of lease, by necessary implication asserted to the lessor that they were in fact authorized to cause the lease to be executed by the corporation. Where the contract is made in good faith and both parties are fully cognizant of the facts, and the mistake is one of law only, the result of which is to exonerate the principal from liability because the agent had no lawful authority to make the contract, it is clear that the agent cannot be held liable, either ex contractu or ex delicto.\u201d In that case, because McCormick, the lessor, did not know that the bank was not authorized to do business when the lease was signed, Seeberger and Cox. were held personally liable for a breach of the implied warranty of authority. In the present case, both parties were fully cognizant of all the facts, but were mistaken as to the legal right of Taylor to act alone in signing Goyette\u2019s name to the note. That mistake being one of law only, the result of which was to exonerate Goyette from liability because Taylor alone had no authority to execute a note in his name, it must be held, on the authority of the Seeberger case, supra, that Taylor is not personally liable. To put the matter in another form, there can be no recovery in this case on the theory of a breach of an implied warranty of Taylor\u2019s authority, because the nature and extent of his express written authority were fully known to the plaintiff when the note was executed.\nPlaintiff also invokes the rule that when a trustee contracts for the benefit of his trust, he becomes personally liable thereon \u201cunless it is specially contracted otherwise.\u201d That such is the rule in this State does not admit of doubt. It was so held in Wahl v. Schmidt, 307 Ill. 331, and in Austin v. Parker, 317 Ill. 348. In the opinion filed in each of those cases the case of Taylor v. Mayo, 110 U. S. 330, is cited. Part of the opinion in that case is as follows: \u201cIf a trustee, contracting for the benefit of a trust, wants to protect himself from individual liability on the contract, he must stipulate that he is not to be personally responsible, but that the other party is to look solely to the trust estate.\u201d Nearly all the cases cited in plaintiff\u2019s brief on this subject contain similar or equivalent language.\nThe application of this rule to the facts of this case, however, does not help the plaintiff. When the loan was applied for, defendant and his attorney made it clear to the plaintiff\u2019s representative that defendant was assuming to act only under the authority given by the trust agreement. As the provisions of the trust agreement were discussed at the time and as the trust agreement is specifically referred to in the body of the note, and the loan was made \u201con the strength\u201d of that agreement, the provisions of the agreement must be read into the note, when considering the question of defendant\u2019s personal liability. When that is done, it is clear that as part of the contract with the plaintiff, defendant did, in fact, expressly stipulate that he is not to become \u201cpersonally obligated\u201d in carrying out any of the provisions of the trust agreement. By so stipulating, defendant protected himself from individual liability on the contract; and this seems to have been the construction placed on the contract by both parties.\nFor the reasons stated, the judgment is reversed, and as such reversal is occasioned by errors of law and not of fact, a judgment of nil capiat will be entered in this court against the plaintiff.\nReversed and judgment here.\nGridley, P. J., and Barnes, J., concur.",
        "type": "majority",
        "author": "Mr. Justice Fitch"
      }
    ],
    "attorneys": [
      "D. W. Parker, for appellant.",
      "Winston, Strawn & Shaw, for appellee; Harold A. Smith, of counsel."
    ],
    "corrections": "",
    "head_matter": "Equitable Trust Company, Appellee, v. L. R. Taylor, Appellant.\nGen. No. 31,296.\nHeard in the second division of this court for the first district at the October term, 1926.\nOpinion filed May 17, 1927.\nRehearing denied May 28, 1927.\nD. W. Parker, for appellant.\nWinston, Strawn & Shaw, for appellee; Harold A. Smith, of counsel."
  },
  "file_name": "0345-01",
  "first_page_order": 379,
  "last_page_order": 386
}
