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were cast in favor of increasing the capital stock from $250,000 to $300,000. There were then 2,500 shares of the original stock. W. Shirk, president of the company, made and filed a certificate, subscribed and sworn to before J. Foster Rhodes, as notary public, that at least two-thirds of all the votes represented by the whole stock of the corporation voted for the increase. This certificate was recorded, and J. Foster Rhodes knew it to be untrue. After the stockholders' meeting, a directors' meeting was held, at which J. Foster Rhodes was present and took part as a director, and it was then resolved that the 1,000 shares subscribed for by Eames, together with the 500 shares to be issued to increase the stock, should be sold for $3 per share, the existing stockholders to have the first option to purchase at that price. The 1,500 shares were issued and distributed among the stockholders, and they paid $3 per share of $100 for it, surrendering their old certificates and receiving new ones of two shares for each share surrendered. The corporation received but $4,500 for stock of the par value of $150,000. J. Foster Rhodes was the owner of 255 shares of paid-up stock, and surrendered his old certificate and received a new one for 510 shares. The stock delivered to Georgette E. Coolidge for the lot was a part of the 510 shares so issued to him. He was an active member of the board of directors, and had full knowledge of all the proceedings; knew the number of votes cast for the increased stock, and that the certificate was false. He was one of the movers in the scheme to increase the stock and to distribute the original and increased stock at $3 per share. The complainants first learned of the facts of the fraudulent increase, and that the stock was not fully paid for, within three weeks previous to filing the bill. Georgette E. Coolidge had received in dividends on the stock $838.50, and she brought the stock and these dividends into court, and tendered them to the defendants.

The facts alleged and admitted by the demurrer to be true are that the defendant J. Foster Rhodes sold to the complainant Georgette E. Coolidge $7,800 of the capital stock of a corporation as paid-up stock which was not in fact paid up, although issued as such, and that he participated in the issue. This was a fraud on the purchaser of the stock. Cook, Stock, Stockh. & Corp. Law, $ 350. The subscription of Eames was a fictitious and fraudulent one, not paid nor intended to be paid by him, and it amounted to $100,000,--two-fifths of the entire capital stock. That stock was issued to the other stockholders by virtue of a resolution of the board of directors, in which J. Foster Rhodes participated, to be paid for at $3 per share. The proceeding was fraudulent on its face, and the stock was unpaid to the extent of $97 per share. Coleman v. Howe, 154 Ill. 458, 39 N. E. 725, 45 Am. St Rep. 133; Sprague v. Bank, 172 Ill. 149, 50 N. E. 19,

42 L. R. A. 606, 64 Am. St. Rep. 17. The corporation had creditors, and the unpaid balance could be reached. The same thing is true of the $50,000 of capital stock issued as an increase, and, in addition to that, the proceedings for the increase were illegal and void. Section 3 of the act authorizing an increase of capital stock provides that votes representing two-thirds of all the stock of the corporation shall be necessary for the adoption of the proposed change. Hurd's Rev. St. 1899, p. 443. An increase of capital stock can only be made by a vote representing two-thirds of all the capital stock. No additional stock could be created, except by complying with the statute. McNulta v. Bank, 164 Ill. 427, 45 N. E. 954, 56 Am. St. Rep. 203.

Defendants in error contend that the representation that the stock was full-paid and nonassessable amounted to no more than an opinion on a legal question whether the steps taken by the corporation were sufficient to give the stock that character. There are cases, where the facts are truthfully stated, and are understood by both parties, in which a statement with respect to their legal effect may be a mere opinion on a matter of law; but the assertions of J. Foster Rhodes set forth in the bill are not in the nature of a conclusion of law. It certainly is not a question of law whether he had paid $100 for a share of stock or paid $3 on it. The stock was issued to him, and he participated in the whole proceeding, and knew, as a matter of fact, that the certificate made by the president and sworn to before him was false in its facts. His assertion that his stock was full-paid, and that the entire stock of the corporation had been paid for in cash to the corporation at its full face value, was not an opinion, but a representation as to facts. According to the bill, he told his vendee that there had been paid into the treasury of the company the sum of $300,000, and the effect of that was that she would become the owner of 78 shares out of 3,000 shares in a paid-up capital of that amount. Instead of becoming a shareholder in capital of $300,000, she became a shareholder in capital of little more than half that. The representations were false and fraudulent, both as to the amount of the capital stock and the amount of money which the company had received for it. It would not be permissible, under the direct allegations of the bill, to indulge in imaginings that he might have regarded the stock as paid for in the increased value of the corporate property. It was original capital stock to the extent of $100,000, and none of it had the character of a stock dividend, or could have that character under the resolution. The false representations were of material facts relating to the capital and assets of the company and affecting the value of the capital stock. They were representations which Georgette E. Coolidge might properly assume

to be within the knowledge of J. Foster Rhodes, who made them. They were not matters of mere general commendation of the stock, nor as to facts that would not be supposed to be known by him. They were not unreasonable or unnatural, and the bill shows no facts which would arouse suspicion in her mind, or require her to make an independent investigation to ascertain whether he was telling the truth. Under such circumstances she had a right to take him at his word. 2 Pom. Eq. Jur. § 891. It is not always necessary, in order to charge a vendor in equity with fraud, that he should know his statement to be false, if he has no good and reasonable ground to believe it to be true, and the consequences are the same to the vendee as if he had such knowledge. Id. § 885; Lockridge v. Foster, 4 Scam. 569; Hicks v. Stevens, 121 Ill. 186, 11 N. E. 241; Borders v. Kattleman, 142 Ill. 96, 31 N. E. 19. But in this case the facts alleged show that J. Foster Rhodes did know the representations to be false, that they were made with the intention they should be acted on by the purchaser, that she did act upon them, and that she did suffer an injury in consequence.

The most important question in the case is whether complainants are barred by laches. Where this defense appears upon the face of the bill, it may be taken advantage of by demurrer, either special or general. Kerfoot v. Billings, 160 Ill. 563, 43 N. E. 804. The transaction took place on September 30, 1885, and the bill was filed on July 1, 1891. Complainants first learned the facts upon which their rights depend within three weeks before filing the bill. Laches cannot be imputed to one who is ignorant of the facts, and for that reason has failed to assert his rights. Middaugh v. Fox, 135 Ill. 344, 25 N. E. 584; Sutherland v. Reeve, 151 Ill. 384, 38 N. E. 130. If the averment is true, the complainants are not guilty of laches. In Henry Co. v. Winnebago Swamp Drainage Co., 52 Ill. 299, an averment that knowledge of the facts did not come to the complainants until within a certain period before filing the bill was held to be a clear and concise statement of a fact that was traversable, and sufficient without an allegation of the facts and circumstances tending to explain why the information did not reach complainants at an earlier period. is true that, where the question of laches is involved, if there are facts which would put a person of ordinary prudence upon inquiry, the complainant will be chargeable with such knowledge as would have been obtained upon such inquiry; but there is nothing in the bill in this case which shows anything to excite the attention of complainants or call for an inquiry into the transaction. The stock was issued as full-paid stock, and there is nothing in the bill from which we can say that they remained in ignorance through Their fault or want of diligence, or that they

It

ought to have started an investigation to ascertain whether the representations were false. The corporation had paid dividends on the stock, and there is nothing appearing in the allegations of the bill to excite suspicion on the part of complainants. The bill, when tested by general demurrer, was sufficient to call for an answer, and the circuit court erred in sustaining the demurrer.

The judgment of the appellate court and the decree of the circuit court are reversed, and the cause is remanded to the circuit court, with directions to overrule the demurrer. Reversed and remanded.

(198 Ill. 328)

PERRY et al. v. BOZARTH et al. (Supreme Court of Illinois. Oct. 25, 1902.) APPELLATE COURT-JURISDICTION-HIGH

WAYS-FREEHOLD-APPEAL TO
SUPREME COURT.

1. A perpetual easement, which is a freehold, is involved in proceedings to vacate a highway and establish another, so that appeal from certiorari to review such proceedings will not lie to the appellate court.

2. Const. 1870, art. 6, § 11, authorizing creation of inferior appellate courts, to which such appeals as the legislature provide may be prosecuted, and from which appeals shall lie to the supreme court in cases involving a freehold, does not give the appellate court jurisdiction of an appeal involving a franchise, but merely authorizes the legislature to do so, with a condition that in such case there may be a further appeal to the supreme court.

3. Act June 2, 1877 (Laws 1877, p. 69), establishing appellate courts and defining their jurisdiction, by section 8 denies to appellate courts jurisdiction to review cases involving a freehold. The amendatory practice act, adopted the same day (Laws 1877, p. 149), by section 67 provides that appeals may be taken to the appellate courts from all final judgments, except as hereafter stated. Section 88 provides that appeals in cases involving a freehold shall be taken directly to the supreme court, in case appellant so elects. Section 90 provides, in a case involving a freehold, which shall be heard in an appellate court, and affirmed, any party may remove it by appeal to the supreme court. Said section 88, as amended by Laws 1879, p. 222, provides that appeal in all cases involving a freehold shall be taken directly to the supreme court. Held, that said section 90 was thereby impliedly repealed; and a case involving a freehold being erroneously appealed to the appellate court, and there affirmed, cannot be appealed therefrom to the supreme court, so as to be considered on its merits.

Appeal from appellate court, Third district. Certiorari by Elihu Bozarth and others against W. R. Perry and others. From a judgment of the appellate court (95 Ill. App. 566) affirming a judgment for plaintiffs, defendants appeal. Reversed.

James L. Loar, for appellants. Chas. I. Will and Owen & Owen, for appellees.

BOGGS, J. These appellees presented in the circuit court of McLean county a petition for a common-law writ of certiorari ordering the appellant commissioners of highways of

1. See Courts, vol. 13, Cent. Dig. §§ 563, 564

the town of Allin, Edgar Phillips, justice of the peace, and A. T. McReynolds, town clerk, also of said town of Allin, to bring before the court the record of the proceedings had and taken by said commissioners in which an order was entered by said commissioners laying out and establishing a certain new road in said town, described in detail in the petition, and vacating a certain other established road in said town, also fully described. The writ was issued as prayed, and return thereto duly made by the appellants. The cause was heard by the court, and judgment entered finding that the proceedings for the vacation of the old road and the establishment of the new road were irregular and void, and adjudging that the order vacating the old road and that establishing the new road be each quashed, vacated, and set aside. The appellant commissioners prosecuted their appeal to the appellate court for the Third district, and a judgment was entered in that court affirming the judgment of the circuit court. This is a further appeal attempted to be perfected to this court.

The interest acquired in the lands of others by proceedings taken by highway commissioners for the establishment of a public highway is a perpetual easement, and the right and interest of the highway commissioners, as the representatives of the public, in an established public highway, is a perpetual easement, and a perpetual easement in the lands of another is a freehold. Chaplin v. Commissioners, 126 Ill. 264, 18 N. E. 765; Town of Brushy Mound v. McClintock, 146 Ill. 643, 35 N. E. 159; Waggeman v. Village of North Peoria, 160 Ill. 277, 43 N. E. 347; Village of Crete v. Hewes, 168 Ill. 330, 48 N. E. 36; Farrelly v. Town of Kane, 172 Ill. 415, 50 N. E. 118. In the former of the cases cited we held that the decisions in the cases of Lucan v. Cadwallader, 114 Ill. 285, 7 N. E. 286, and Eckhart v. Irons, 114 Ill. 469, 6 N. E. 15, in which this court held that an easement in land did not constitute a freehold estate, were pronounced without sufficient consideration, and said: "A perpetual easement in lands, or any interest in lands in the nature of such easement, when created by grant or by any proceeding which in law is equivalent to a grant, constitutes a freehold." We further held in the same case that the appellate court was lacking in jurisdiction to entertain an appeal in a cause in which a perpetual easement in land was involved, and reversed the judgment of the appellate court entered in the cause because it was so wanting in jurisdiction, and remanded the cause to the appellate court with directions to dismiss the appeal. In Town of Brushy Mound v. McClintock, supra, the town claimed a highway existed by prescription, and the appellee, who owned the fee in the land, disputed the existence of a highway. The cause came to the appellate court for the Third district, and that court dismissed the appeal for the reason the controversy involved a freehold.

The town prosecuted an appeal from the judgment of dismissal to this court, and we held the decision of the cause involved the issue whether the public had the interest of a perpetual easement in a highway passing over appellee's land, and that that issue involved a freehold, and that the appeal was properly dismissed by the appellate court. In Village of Crete v. Hewes, supra, the issue involved was whether the village of Crete had lost a portion of a street by abandonment, and we held the appellate court was without jurisdiction to entertain the appeal, and reversed its judgment for that reason, and remanded the cause, with directions to dismiss the appeal. Upon the authority of these adjudicated cases it is clear the appellate court was without jurisdiction to entertain the appeal in the case at bar.

In view of the phraseology of section 90 of the act to amend an act entitled "An act in regard to practice," etc., approved June 2, 1877, being the section which now controls the matter of removal of cases from the appellate courts to the supreme court by appeal or writ of error, being section 90 of the present practice act, it seems necessary we should consider the proper course to be pursued by this court when the appellate court entertains jurisdiction of a cause which involves a freehold and an appeal is prosecuted to this court from the judgment of the appellate court. Said section 90 provides that appeals may be taken from such appellate courts to the supreme court "in all criminal cases and in all cases where a franchise or freehold or the validity of a statute is involved," etc. It here arises as a pertinent suggestion that the purpose of the phrase quoted from said section 90 is to authorize this court to entertain appeals from the appellate courts in cases which by design of the parties or by inadvertence were submitted to and determined in the appellate court, but in which a franchise, a freehold, or the validity of a statute is involved. It is thought, also, section 11 of article 6 of the constitution of 1870, which authorized the creation of the appellate court, adds force to the suggestion. Said section 11 of article 6 of the constitution reads as follows: "After the year of our Lord 1874, inferior appellate courts, of uniform organization and jurisdiction, may be created in districts formed for that purpose, to which such appeals and writs of error as the general assembly may provide may be prosecuted from circuit and other courts, and from which appeals and writs of error shall lie to the supreme court, in all criminal cases, and cases in which a franchise or freehold or the validity of a statute is involved, and in such other cases as may be provided by law." If said section 90 of the practice act authorizes this court to entertain appeals from the appellate courts in cases acted upon in such courts in which a freehold, a franchise, or the validity of a statute is involved, it will relieve this court of the by no means pleasant duty of

saying to litigants whose controversies involve a franchise, a freehold, or the validity of a statute, but who have by inadvertence appealed to the appellate court: "We would take jurisdiction of your case if you had prosecuted the appeal from the circuit court directly to this court; but, as you have carried your appeal to the appellate court, we will require you to retrace your steps through the appellate court to the circuit court, and return to this court by direct appeal from the trial court." If, however, the appellate court be without jurisdiction of a case brought there by appeal, nothing but an express statute would justify this court in entertaining a further appeal removing the case from the appellate court to this court. Such practice, if indulged in this court, would subject successful suitors in the trial court to the delay and costs incident to the presentation of the case in the appellate court, and could be availed of by the defeated party for the mere purpose of delay and vexation of his adversary.

A party who, upon a hearing in a trial court, has been found without a cause of action if the plaintiff, or to be in the wrong if the defendant, if he desires to have his case reviewed, should be required to take his appeal to or sue out his writ of error from the court which the law has invested with jurisdiction and power to hear and determine the controversy. Any other course would entail unnecessary delay to the party who had established his right in the trial court, and would subject him to the additional expense of defending the judgment which he had been adjudged entitled to hold against the attacks of adversaries in a court which had no legal right or power to determine whether the judgment was correctly and legally entered or not. The constitutional declaration that every person ought, under the law, to obtain justice and right "completely and without denial, promptly and without delay," forbids any practice in the matter of entertaining appeals in this court which would tend to enable one litigant to vex his adversary by adding delay and the burden of additional expense. If the defeated party in a case in which a franchise, a freehold, or the validity of a statute is involved has a lawful right to but one appeal, and that to this court, no action on the part of this court should be taken which would enable him to vex and wrong his adversary with the delay and additional expense consequent upon two appeals,-one to the appellate court and a second to this court. If, however, said section 90 of the practice act, or the constitutional provision before referred to, gives the right of appeal to this court from the appellate court in such cases, we must, of course, entertain such appeals. But we do not think such is the meaning and effect of either the organic law or the statute in question. The constitutional authority to the legislature is broad enough to authorize the lawmaking power to invest the appellate court with ju

risdiction to entertain and review cases in which a franchise, a freehold, or the validity of a statute is involved; but it was the constitutional intent that, if such power of review should be given the appellate court, the action of such court in such cases should not be final. Hence the provision in said section 11 of the constitution that appeals to and writs of error from the supreme court should lie from the decisions of the appellate courts in all such cases. That provision is but a limitation on the power of the legislature to invest the appellate courts with the power to finally decide cases of that character. Plainly stated, this section of the constitution authorized the legislature to create appellate courts and endow them with appellate jurisdiction in all cases, but makes it incumbent on the legislature, if authority is given the appellate courts to review criminal cases and cases in which a franchise, or freehold, or the validity of a statute is involved, to provide that such cases may be reviewed finally in the supreme court upon appeal or error.

On the 2d day of June, 1877, the general assembly adopted the act establishing the appellate courts of the state and defining the jurisdiction of such courts (Laws 1877, p. 69); and on the same day the general assembly adopted an act amending the then existing practice act and adding a number of sections thereto (Laws 1877, p. 148). The amendatory sections thus added to the practice act relate, in the main, to the mode and manner of obtaining the review of cases determined in the trial and appellate courts, and incidentally purported to affect the jurisdiction of the appellate courts. Section 8 of the appellate court act and such amendatory sections of the practice act must, therefore, be construed together. Young v. Stearns, 91 Ill. 221; Lynn v. Lynn, 160 Ill. 307, 43 N. E. 482. Section 8 of the appellate court act denies to the appellate courts jurisdiction to review cases which involve a franchise, a freehold or the validity of a statute. Section 67 of the amendatory practice act, as adopted in 1877, provided that "appeals from and writs of error to all circuit courts, the superior court of Cook county, and city courts, and from other courts from which such appeals and writs of error may be allowed by law, may be taken to the appellate courts from all final judgments, orders and decrees except as hereinafter stated." Laws 1877, p. 149. Thereinafter, in section 88 of the act, it was provided as follows: "Appeals from and writs of error to circuit courts, and the superior courts of Cook county, and city courts, in all criminal cases and cases in which a franchise or freehold or the validity of a statute is involved, shall be taken directly to the supreme court in case the party appealing or prosecuting such writ of error shall so elect, excepting in cases of chancery." This section implies, at least, that an appeal from or writ of error to circuit courts and other trial courts shall be taken to the appellate

courts unless the party who desires to appeal or prosecute the writ of error shall elect to proceed directly to the supreme court.

Section 90 of the amendatory act of 1877 lends additional force to this implication. Said section 90 is as follows: "In all criminal cases, and in all cases where a franchise or freehold, or the validity of a statute is involved, and in all other cases where the sum or value in the controversy shall exceed one thousand dollars ($1,000) exclusive of costs, which shall be heard in any of the appellate courts, upon errors assigned, if the judgment of the appellate court be that the order, judgment or decree of the court below be affirmed, or if final judgment or decree be rendered therein in the appellate court, or if the judgment, order or decree of the appellate court be such that no further proceedings can be had in the court below, except to carry into effect the mandate of the appellate court, any party to such cause shall be permitted to remove the same to the supreme court by appeal or writ of error." This section was framed in view of section 88 of the same act, which, as before said, indicated that it was the legislative intent, in adopting the practice act, that the appellate courts should have power to review cases involving a freehold, a franchise, or the validity of a statute, unless the party desiring such review should elect that the case should be reviewed at once by the supreme court. Therefore section 90 was so framed as to authorize judgments rendered in the appellate courts in cases in which a freehold, a franchise, or the validity of a statute was involved to be reviewed in the supreme court on appeal or writ of error. Section 67 of the amendatory act of 1877 has not been amended or changed, but appears now as section 67 of our practice act. Section 88 of the amendatory act was, however, amended at the session of the general assembly in 1879 (Laws 1879, p. 222), and as amended and changed (3 Starr & C. Ann. St. 1896, c. 110, § 88, p. 3114) constitutes the statutory authority for obtaining the review of judgments entered in the circuit courts, the superior court of Cook county, or any city court; and it provides that in all cases in which a franchise or freehold or the validity of a statute is involved an appeal shall be taken directly to or the writ of error sued out of the supreme court.

The amendment of said section 88 of the act of 1877 rendered the section consistent with the act of 1877 establishing the appellate court and defining its jurisdiction. But said section 90 of said act of 1877, which, as we have seen, was framed in view of the provisions of section 88 of the same act as originally adopted, and for that reason provided for the removal from the appellate courts to the supreme court, by appeal or writ of error, of all cases in which a freehold, a franchise, or the validity of a statute was involved, has been retained in the body of our statute without change or amendment, and now appears

as section 90 of the practice act. 3 Starr & C. Ann. St. 1896, p. 3153. The amendment and revision in 1879 of section 88 of the act of 1877, whereby all semblance of authority in the appellate courts to review cases involving a franchise, a freehold, or the validity of a statute was removed by implication, operated to repeal the provisions of section 90 relating to the matter of the review in the supreme court of the judgments entered in the appellate courts in cases involving a franchise, a freehold, or the validity of a statute. All reasons for such provisions in section 90 were removed by the amendment of section 88, and that amendment impliedly repealed such provisions in section 90. Hayward v Gunn, 82 Ill. 385; Geisen v. Heiderich, 104 Ill. 537; 23 Am. & Eng. Enc. Law (1st Ed.) 489.

The general assembly has not conferred upon appellate courts jurisdiction of the subject-matter of suits which involve a franchise, a freehold, or the validity of a statute, and jurisdiction of the subject-matter of a suit cannot be conferred by consent of the parties upon either a trial or appellate court. Ginn v. Rogers, 4 Gilman, 131; Fleischman v. Walker, 91 Ill. 318; Richards v. Railway Co., 124 Ill. 516, 16 N. E. 909; 17 Am. & Eng. Enc. Law (2d Ed.) 1061. The appellate court was without jurisdiction to decide the controversy in the case at bar, and without authority to enter any judgment therein. We can take no other course than that pursued in Chaplin v. Commissioners, supra, which is to reverse the judgment so entered, for the reason the appellate court was wanting in jurisdiction to enter the same, and remand the cause to the appellate court, with directions to dismiss the appeal. Reversed and remanded, with directions.

(199 Ill. 80) COMMISSIONERS OF UNION DRAINAGE DIST. NO. 3 v. COMMISSIONERS OF HIGHWAYS OF TOWN OF CORTLAND et al.

(Supreme Court of Illinois. Oct. 25, 1902.) COURT OF APPEALS-JURISDICTION-CONSTITUTIONAL QUESTION.

1. Where, on appeal from a judgment of the appellate court, the record discloses that the question of the validity of a statute was raised, the cause will be remanded to that court to dismiss the appeal for lack of jurisdiction.

Appeal from appellate court, Second district.

Proceedings by the commissioners of Union drainage district No. 3 against the commissicners of highways of the towns of Virgil and Cortland. From a judgment of the appellate court (87 Ill. App. 93) for plaintiffs, defendants appeal. Reversed.

Carnes & Dunton and John Faissler, for appellants. Hopkins, Thatcher & Dolph and 1. See Courts, vol. 13, Cent. Dig. § 553.

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