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for repetition, and said to him, "Nobody ain't kidding with you"; that he approached within two feet of Flynn; that Flynn staggered over sidewise and then straightened up and struck Warren; that Warren was then taken away by his friends, and Flynn continued at his work.
Brannan testified on the part of the defendant. His testimony is in substantial accord with that of Jordan, and it appears from the evidence of both that immediately before Warren was struck he had his right hand in his overcoat pocket, and that his manner toward Flynn was threatening.
Flynn testifies that when Warren came back to where Flynn was at work, Warren struck him on the left side of the head with a stone, saying immediately thereafter: "You dirty son of a bitch; I will kill you," and thrust his right hand in his overcoat pocket in a threatening manner; that he, Flynn, staggered from the blow, and when he straightened up he struck Warren with a pick handle; that he had never seen Warren before and did not know him, and struck the blow without any purpose of killing Warren, but for the purpose of defending himself; that shortly thereafter his head troubled him, and he quit work and went home. He remained there until the succeeding Friday, when he was arrested there, and when arrested was asked by the policeman making the arrest who struck the blow that injured the boy, and he replied that he did not know. While at the station he found that Brannan and Jordan, and four other men who had been working for the Chicago City Railway Company near him on Halsted street on the morning of January 22d, were also in the police station under arrest. Each of these men was arrested for the reason that it was believed by the police or the prosecuting officers that some one of them had struck the blow that injured Warren. Each was examined in the "sweat-box" and each denied that he knew who struck Warren. They were kept in the police station several days without being taken before any court or judicial officer. Later, Fynn, upon learning that, Warren was dead, told the police officers that he was the man who had inflicted the fatal blow.
The evidence shows that Flynn, at the time of the altercation, was 29 years of age; that he was born in Ireland, and lived there until he was 22 years of age; that he was a married man, residing with his family, and had been in the employ of the Chicago City Railway Company as a laborer for about two years prior to this difficulty, and that his reputation as a peaceable and quiet citizen was good. The only evidence in this record which supports this conviction is that of Miller. The evidence of Jordan and Brannan is entirely consistent with and lends support to the theory of self-defense upon which Flynn sought an acquittal. The fact that they did not see Warren strike Flynn may
perhaps be explained by the darkness. Both swear they saw Flynn stagger as Warren approached, and Flynn swears that the staggering resulted from Warren's blow with the stone. We do not regard the fact that Flynn denied having struck the blow, when undergoing the "sweating" process, as of any moment. He could not be lawfully required to make any answer that would incriminate him, and no doubt made answer in the way he did for the purpose of relieving himself of the importunities of those who had no right to insist that he reply when he did not desire to do so.
As this judgment must be reversed, and the cause remanded, we refrain from any further discussion of the evidence. It is a case in which the instructions should have been accurate. The twenty-first instruction given on the part of the people, after advising the jury that an acquittal cannot be justified on the ground of self-defense unless it appears that the accused believed, at the time of striking the blow, that he was in danger of losing his life or receiving great bodily harm or injury, continues: "And it must also appear that the person assaulted by the defendant was the assailant, that is, that the defendant had really and in good faith endeavored to decline any to decline any further struggle before such assault was made by him, before an acquittal is warranted on the ground of self-defense." This instruction is correct when given in a case where the accused, and the deceased had been engaged in a fight or struggle preceding the time when the fatal blow was given, but it was wholly inapplicable here, where there had been no such struggle, and the idea conveyed to the jury was that Flynn was not entitled to an acquittal unless he had "endeavored to decline any further struggle" before he struck Warren with the pick handle. Manifestly that is not the law of this case. No struggle had taken place between them, and for that reason the instruction was inaccurate and misleading.
Flynn asked an instruction in reference to the presumption of innocence. The court modified it and gave it as modified, in these words: "The court instructs the jury that it is their duty to presume the defendant, John Flynn, not guilty. That it is the duty of the jury to give the defendant the benefit of this presumption throughout the trial until evidence shall have been introduced which to the minds of the jury is sufficient to establish the guilt of the defendant beyond all reasonable doubt, and if such evidence be not introduced then defendant should have the benefit of such presumption through all stages of the trial. And, further, it is the duty of the jury to explain the evidence offered against the defendant upon the hypothesis that the defendant acted in self-defense, if they can reasonably and consistently do so in the light of the whole evidence." The words which we have
italicized were inserted by the court in lieu of the words, "and when they shall have retired to consider of their verdict," which were contained in the instruction as requested.
This modification was erroneous. The jury were thereby authorized, upon consideration of the evidence for the prosecution, if they deemed that evidence sufficient to establish the guilt of the defendant beyond all reasonable doubt, to then take away from the defendant the benefit of the presumption of innocence and consider the evidence offered in his behalf without any regard to that presumption. The defendant is entitled to the benefit of the presumption of innocence through all the steps of the trial and during the consideration of all the evidence by the jury after they have been instructed by the court, and until they determine, from a consideration of all the evidence, that the guilt of the defendant has been established beyond a reasonable doubt. The presumption of innocence attends the accused at every stage of the proceedings until the jury agree upon a verdict. Everett v. People, 216 Ill. 478, 75 N. E. 188; Cochran v. United States, 157 U. S. 300, 15 Sup. Ct. 628, 39 L. Ed. 704; Kirby v. United States, 174 U. S. 55, 19 Sup, Ct. 574, 43 L. Ed. 890.
Plaintiff in error has devoted 47 pages of his brief and argument to a discussion of assignments of error questioning the course pursued by the assistant state's attorney, who prosecuted in the criminal court, in examining witnesses and in arguing the cause to the jury. We are inclined to think that some of the remarks of the prosecutor in argument should not have been made. Defendant in error seeks to justify these remarks, in part, by saying that they were in response to statements of like character made by counsel for plaintiff in error. The abstract does not show anything that was said in the argument of the cause by those who spoke for Flynn. An attorney who has, in his argument to the jury, transgressed the rules of law and the ethics of his profession by making remarks that were improper and prejudicial to the opposite party will not be permitted to justify his course by saying that he was answering improper statements made by his opponent, unless such statements so made by his opponent are preserved in the record and abstracted, so that we may determine whether they warrant the reply made to them.
In this case, however, we place the reversal upon the ground that the court erred in giving the people's twenty-first instruction, and in modifying the instruction asked by the defendant below, which, as modified, is hereinabove set out.
The judgment will be reversed and the cause will be remanded to the criminal court of Cook county.
Reversed and remanded.
(222 III. 254)
HLADOVEC v. PAUL et al.
(Supreme Court of Illinois. June 14, 1906. Rehearing Denied October 11, 1906.)
1. INJUNCTION-SUBJECTS OF RELIEF-MANDAMUS SUIT.
Several persons who contemplated the formation of a corporation entered into a contract with another person who controlled the subscriptions to the stock of a corporation which had ceased to do business, which contract provided that the charter of the dormant corporation should be used for the purposes of the contemplated new corporation, that its stock should be issued in limited amounts to the persons contemplating the organization of a new corporation, and that the subscribers to the stock of the old corporation should relinquish all their rights to have the stock issued to them. Thereafter the majority stockholder in the dormant corporation sought, by mandamus, to compel the officers thereof, elected after it had been reorganized pursuant to the contract, to deliver to him a portion of the stock for which he had subscribed before the contract was made. Held, that as the stockholders in the reorganized corporation were not parties to the mandamus suit, and as they could not require the officers to set up as a defense in that suit the stockholders' right in the unissued stock, the stockholders were entitled to enjoin the majority stockholder from prosecuting the mandamus suit.
2. CORPORATIONS - REORGANIZATION TRACTS-CONSTRUCTION-CONSIDERATION. Defendant owned and controlled the subscriptions to all the stock of a corporation which had ceased to transact business. Plaintiffs contemplated the organization of a corporation to do a similar business, and entered into a contract with defendant by which it was agreed that the existing corporation should be reorganized, should transact a manufacturing business, sell its product mainly to its stockholders, and that defendant and the other subscribers to the capital stock of the dormant corporation should relinquish their rights to the stock, which should be issued in quantities of not more than 10 shares per stockholder to plaintiffs, defendant, and such other persons as might be admitted to become stockholders. Held, that the agreement for reorganization of the existing corporation for the disposition of its stock and the transaction of the business contemplated was a sufficient consideration for the agreement of defendant to relinquish his rights to the stock, so that defendant's agreement was not invalid, on the ground that its consideration was an unlawful contract by which defendant was to be relieved from his liability upon his subscription to the stock of the dormant corporation.
3. CONTRACTS-VALIDITY OF OBJECT-RESTRICTION OF SALE OF CORPORATE STOCK.
An agreement between persons contemplating the formation of a corporation that no more than a limited number of shares of stock shall be issued to any one stockholder is binding upon the parties to the agreement, though not on the corporation.
Appeal from Appellate Court, First District.
Action by Frank Paul and others against Josef Hladovec. From a judgment of the Appellate Court, reversing a decree for defendant, he appeals. Affirmed.
This is an appeal from a judgment of the Branch Appellate Court for the First District reversing a decree of the circuit court of Cook county upon a bill filed in that court
by the appellees, against the appellant and others, and remanding the cause, with directions to the circuit court to enter a decree in conformity with the opinion of said Branch Appellate Court.
The bill was filed by 76 stockholders of the Garden City Brewery, a corporation organized under the laws of this state, against said corporation, the appellant, Josef Hladovec, and Vaclav Topinka, Joseph Hodek, as executor of the last will and testament of Vaclav Hodek, deceased, and the president, secretary, and treasurer of said corporation, and averred, in substance, that on February 24, 1891, the Josef Hladovec Brewing Company was organized under the laws of Illinois with a capital stock of $150,000, represented by 1,500 shares of stock, the value of which was fixed at $100 per share. Its object was to manufacture and sell beer, its duration 99 years, and its principal office in the city of Chicago. Hladovec subscribed for 1,000 shares, and Topinka and Hodek each subscribed for 250 of the remaining 500 shares of said capital stock. The three selected themselves directors, and the corporation proceeded to business. It acquired a brewing plant and began to manufacture and sell beer. The business was not successful, and shortly thereafter the brewing plant was disposed of, and the corporation retired from business. In the year 1901 41 of the appellees, complainants herein, together with the appellant, Hladovec, all of whom were engaged in selling beer at retail, which they were in the habit of purchasing from various brewing companies, determined to organize for themselves a corporation to manufacture and sell beer for their retail business at cheaper rates. They formulated a plan in accordance with which the capital stock of the new corporation should be equally divided between them and such other persons as from time to time they might permit to become stockholders; the intention being that no stockholder should acquire more than 10 shares of stock, and that the stockholders should all be persons engaged in the sale of beer at retail. Before application had been made to the Secretary of State for a license to organize the proposed corporation, Hladovec represented to his associates in the enterprise that it was unnecsary to create a new corporation, because the charter of the Josef Hladovec Brewing Company could then be adapted to the purpose they had in view; that he was the owner or had control of all the subscriptions to its capital stock, and that the original subscribers would release all rights; that in lieu of the shares of stock being issued to said original subscribers, Hladovec, Topinka, and Hodek, certificates might issue in lots of 10 shares each to the new associates in said enterprise who paid into the treasury of the corporation $1,000, and to such other persons as might thereafter be permitted to become stockholders of said corporation, until the
entire capital stock of said corporation should be issued. The proposition to revive the old corporation was accepted, and it was agreed inter alia that each person thereafter permitted to become a stockholder should pay into the treasury for each 10 shares of stock issued to him such sum, not less than $1,000, as might be from time to time fixed by the board of directors of said corporation. In accordance with the agreement the name of the corporation was changed from Josef Hladovec Brewing Company to Garden City Brewery; the number of its directors was increased from 3 to 11; Topinka, Hodek, and Hladovec released their rights, respectively, under their original subscription to the capital stock, and agreed that neither of them would assert any rights nor claim any right to have certificates issued to them under their original subscriptions, and that the stock of the corporation should be issued thereafter and disposed of in accordance with the agreement between the parties. The parties to the agreement proceeded with the enterprise. Seven hundred and eighty shares of the stock of the corporation in all have since been issued. Of this number, 520 were issued to and paid for by stockholders at the rate of $100 per share, 140 at the rate of $125 per share, 100 at the rate of $150 per share, and 20 at the rate of $200 per share, making in all $88,500 which has been paid into the treasury of the corporation as a part of the capital stock of the company since its reorganization and under and in accordance with the agreement then made, to which Hladovec was a party. Since the election of the first board of 11 directors the corporation has purchased real estate in the city of Chicago, has erected a brewing plant thereon, and carried on the business of manufacturing and selling beer to its stockholders and others. The business has been exceedingly profitable and advantageous to the stockholders, both on account of the earnings of the company and from the fact that the stockholders, by reason of their ownership of stock, have been able to purchase beer for their retail trade at much lower prices than they would otherwise have been compelled to pay. The total indebtedness of the corporation does not exceed $38,000, $37,000 of which represents outstanding bonds of that amount not yet due or payable. The fair cash value of all its assets exceeds $200,000, and it is averred that for the purpose of its stockholders who are engaged in selling beer at retail, the stock is now worth several times its par value. Hladovec has participated, either as director or otherwise, in the management of the corporation from the time of reorganization, and has held out to each of the complainant stockholders that the agreement that each stockholder should be the owner of 10 shares, and no more, was valid and binding, and neither he nor any other stockholder had any right to acquire, in any man
ner or form, more than 10 shares of the capital stock. It is alleged that strict adherence to this agreement is of the utmost importance to complainants and other stockholders interested in the success of the business, and that a departure from its terms would be detrimental to the stockholders' interests and bound to defeat the purpose for which the corporation exists. It is alleged that on the 15th day of August, 1904, Hladovec, unmindful of his agreement and desiring to repudiate it, filed a petition for mandamus, claiming that under the original subscription, and by assignment of the rights of Topinka and Hodek, he had become entitled to have issued to him, in person, the entire unissued 720 shares of the capital stock of said corporation, having made tender of $72,000 in payment of its par value, and seeking to compel the officers of the corporation to issue said remaining shares to him.
The bill prays for an injunction restraining Hladovec from asserting any claim to, or receiving or taking steps to cause to be issued to him, any of the shares of stock in said Garden City Brewery other than the 10 shares which he now owns, and from the further prosecution of his petition for mandamus, and prays that the court declare and decree neither Hladovec, nor any person claiming under him, or the other original subscribers to the capital stock of the Josef Hladovec Brewing Company, have any right, title, or interest in or to any portion of the unissued capital stock of said corporation, and that the said Hladovec, and all persons claiming under him, or the other original subscribers, be required to execute and deliver to the Garden City Brewery proper instruments in writing releasing to said corporation all claims, of every kind and character, to the 720 shares of stock in controversy.
To this bill the defendants Hladovec, Topinka, and the executor of the will of Hodek, deceased, filed a joint and several demurrer; the other defendants having been defaulted. The demurrer having been overruled, Hladovec elected to abide by it. Topinka and the executor of the last will and testament of Hodek, deceased, filed disclaimers. By the decree Hladovec is restrained from asserting any claim, of any kind or character, to, or receiving or taking any steps to cause to be issued to himself, the 720 shares of capital stock in controversy, or any part thereof, under or by virtue of the original subscription therefor, and from the further prosecution of the petition for mandamus referred to, and he is released and discharged from further liability to the corporation on account of his original subscriptions to its capital stock. The Branch Appellate Court held that the appellees were entitled to an injunction restraining Hladovec from asserting, at law or otherwise, his alleged claim to have said 720 shares of stock issued to him for his benefit, and found that he held
the legal title thereto in trust for the benefit of himself and the other stockholders or persons who might hereafter become stockholders in said corporation, who were the equitable owners thereof, and that the decree of the circuit court was erroneous in so far as it held the appellant had no interest in said unissued stock, and in so far as it undertook to release and discharge the appellant from all liability to the corporation upon said unissued stock.
John S. Cooper, W. P. Thornton, and Edwin G. Lancaster, for appellants. Sidney S. Pollak, Edward J. Novak, and Hiram T. Gilbert, for appellees.
HAND, J. (after stating the facts). The first contention made by the appellant is that a court of equity is without jurisdiction to grant to the appellees the relief prayed for in the bill filed herein, on the ground that they have a complete and adequate remedy at law, in this, that the grounds averred in their bill for equitable relief can be pleaded as a defense to the action of mandamus, wherein the officers of the corporation were sought to be coerced by appellant to issue to him said unissued shares of stock, if the grounds of relief averred in the bill have a valid existence in law. The stockholders of the corporation who are the complainants in this bill were not parties to the mandamus suit, and their rights in the unissued stock of said corporation, if any, could not be set up by them in said suit, neither could the appellees require the officers of said corporation to set up their rights in said unissued stock as a defense to the relief sought in said mandamus suit. The interest of the appellees in the unissued stock, if any, grows out of a contract with appellant to which the corporation was not a party, and we think the appellees can maintain a bill, as against appellant, to establish their interest in said stock and prevent the stock being issued to him by the corporation.
It is next contended that the agreement of the appellant to transfer to the appellees and other vendors of beer his subscription to said stock, and that the stock might be issued to them instead of to him, was upon the consideration that he should be released from liability to the corporation upon his subscription for said stock, and that, as said agreement to release him from such liability was void, the consideration for the agreement to transfer his subscription for said stock to appellees and other vendors of beer who might desire to take stock had failed, and he was not bound to carry out his agreement with the appellees or such vendors of beer as might desire to take stock in said corporation, and that he was entitled to have said stock issued to him by the corporation upon the payment to it of the amount of his original subscription for said stock. The bill does not aver that appellant was to be
released by the corporation from liability upon said subscription in consideration of the release to appellees or other stockholders of his subscription to said stock, and, as we understand the averments of the bill, the release of appellant from liability upon said stock subscription was not the consideration moving from appellees and other persons taking stock to the appellant for the release to them of said subscription, but the consideration was that the appellant and appellees, and other vendors of beer, would form a corporation of which they should be stockholders, the object of said corporation being the manufacture and sale of beer, which should be mainly sold to its stockholders at prices below the general wholesale prices at which beer could be purchased from other manufacturers of beer, and that upon the suggestion of appellant the charter of the Josef Hladovec Brewing Company was used to effect such organization, with the understanding that Hladovec controlled the subscriptions to all the stock, and that the stock should be issued so that the original and subsequent stockholders of the reorganized corporation should each hold 10 shares of said stock and no more, and that in the consummation of said plan nothing was said or agreed upon as to the liability of appellant to the corporation as an original subscriber for said stock. This conclusion must necessarily follow from a consideration of all the averments of the bill, as from these averments it nowhere appears that the corporation was a party to the plan of reorganization, but that the contract with reference to the reorganization was a contract made between Hladovec and the appellees, and that the only part the old corporation played in the reorganization scheme was that its charter was used to effect the reorganization. We think the mutual agreements of the parties to form a new corporation, and the subsequent agreement to use the charter of the old corporation and the investment of the moneys of the new stockholders in the enterprise, were a sufficient consideration moving from the appellees to the appellant to support the agreement of the appellant that the stock of the old corporation which he controlled should be issued to the new stockholders if the old charter should be used, in such manner that each stockholder should be the holder of 10 shares and no more, and that the parties to the reorganization, and the subsequent stockholders who joined the enterprise, cannot be deprived of the benefits of the reorganization on the ground that the promise of the appellant to release the right to the stock which he acquired by the original subscriptions was void for want of a consideration.
It is finally contended that the agreement of the parties that each stockholder should have issued to him 10 shares of stock, and no more, is void, as it is said such agreement is in restraint of the free sale and transfer of the stock of said corporation, which is in
contravention of public policy. It has been held that a by-law of a corporation which elogs the sale and transfer of the stock of a corporation is void (McNulta v. Corn Belt Bank, 164 Ill. 427, 45 N. E. 954, 56 Am. St. Rep. 203) as being contrary to public policy. Here, however, we are not dealing with a by-law of a corporation, but a contract made by appellant with appellees, and which was to inure to the benefit, not alone of appellees, but such other persons as might thereafter become stockholders of said corporation, to which the corporation was not a party. We see no reason why a number of persons in trade, such as vendors of beer, may not engage in manufacturing the beer they sell their customers, and to that end each contribute an equal portion of the capital used in the manufacture thereof, and share equally in the management of the business and the profits and losses incident to the business. Such an arrangement would make the parties to the enterprise partners and the enterprise a partnership undertaking. If parties can thus agree to carry on such an enterprise as a partnership, why may not they incorporate under the statute and carry the business on through the medium of a corporation? While an agreement limiting the number of shares which should be issued to each stockholder would not be binding upon the corporation, we know of no reason why it would and should not bind the parties to the agreement.
In Kantzler v. Bensinger, 214 Ill. 589, 73 N. E. 874, a very similar contract to the one now under consideration was before this court, which was sustained. In that case shareholders of a corporation entered into a contract whereby it was provided that certain persons should be elected to the offices of the corporation for a fixed period, and it was contended, as here, said contract was contrary to public policy and void. The court, in discussing such contention, on page 598 of 214 Ill., page 877 of 73 N. E., said: "The contract was entered into by all the stockholders of the corporation, and, while it might not have bound the board of directors afterwards elected, we think there is no reason in law why it should not be held to be binding upon the defendants and enforceable against them. The entire stock of the corporation was held by the plaintiffs, and, in making a contract with the defendants whereby the latter were to obtain at once six-tenths of said stock, it was open to the parties to make any arrangements with regard to the management of the company mutually agreeable to them. The price to be paid for the stock was a matter to be determined by them, and by them only. They owned all the property represented by the stock, and the mere fact that it was represented by corporate stock could make no difference. No other person had any interest in it, and no one else could complain. Instead of paying a different price than that