After careful readings and full consideration of all the evidence in this case, including the exhibits, we are unable to concur in the decision or with the conclusion therein by the court. We deem it necessary to a clear understanding of the issues to state accurately the substantial averments or charges in the bill.
The bill as framed by the State contained one separate and distinct charge which applied to Small, only, which we will designate as the first charge and which is substantially the following:
First, that it was the duty of the defendant Small, during his term of office, to receive all revenues and all public moneys authorized by law to be paid to him and safely keep the same; to disburse the same in the manner prescribed by law and to deliver to his successors all moneys remaining in his hands and all papers, books and records of his office; to keep a regular and fair account of all moneys so received, stating particularly from what source the same was received, and make semi-annual reports of all moneys paid out and received by him, at least ten days before each regular session of the General Assembly; and to account *Page 483 also for all interest and profits received by him on public funds in his hands as treasurer.
It was Small's duty to deposit all moneys received by him as treasurer, within five days after receiving the same, in such banks in the cities of the State as in his opinion were secure and which should pay the highest rate of interest; that it was his duty to account to the State for all moneys received by him as interest on public moneys deposited in banks pursuant to the statute, and to account for all interest or profits received from the use of public moneys in his custody not deposited in banks of said cities as provided by statute and pay the same to the State.
The second paragraph of the above charge was, in effect, taken out of the bill by the decision of Judge Jones in sustaining the demurrer to certain parts of the bill, as stated below. That decision left the charge against Small only that part of it which is stated in the first paragraph, and which merely states the duties of Small, without alleging any violation of such duties. We are disposed, however, to treat as a part of this charge against Small the following allegations found in that part of the bill which is the charge against Small and the Curtises jointly, inasmuch as such allegations are applicable to this first charge. The allegations which we substitute in lieu of the second paragraph of the first charge, and as part of the first charge, are the following, and are taken from the last and next to the last paragraphs of the second charge, to-wit:
"It is alleged that the only reports made by Small of interest received by him upon public moneys while he was treasurer was, first, on September 30, 1918, in which he charged himself with $306,424.33 as interest received by him as treasurer; and second, on April 23, 1920, in which he charged himself with the sum of $143,585.79 as interest upon public money; that in neither of the reports is there any itemized statement of interest and profits realized [by him] from the use of public moneys of the State while he *Page 484 was such treasurer; * * * that Small, at the expiration of his term as treasurer, unlawfully and wrongfully removed from the office of State treasurer all books and records relating to interest which has been collected by him upon public moneys,and no public record was ever made or left by Small in theoffice of the State treasurer from which the amount of interestand profits can be determined, and complainant charges upon information and belief that the amount of such interest so collected by him as treasurer largely exceeds the amount so reported by him, and that such reports do not include anything whatever on account of interest and profits realized [by him] from the use of public moneys turned over by him to Ed C. Curtis and Verne S. Curtis."
The second charge of the bill, omitting the parts thereof to which the demurrer was sustained, and which parts we contend are no longer parts of that charge, is substantially in the following language:
Second, that Small, acting in combination with Edward C. and Verne S. Curtis, entered upon the execution of a plan whereby a large portion of the moneys in his possession as treasurer were to be used for the personal advantage and benefit of the three of them, and the State of Illinois was to be deprived of the interest and profits resulting from the use of such moneys; that in furtherance of said plan Small * * * turned over such large part of the moneys to the control of Edward C. and Verne S. Curtis, who, with full knowledge that said moneys so turned over to them were public moneys, and acting in connivance with Small, used the same for the profit of themselves and Small; that * * * the public moneys so turned over to them were carried by Small on his books, as treasurer, in an account which was characterized by him as the "Safe Account," and the books and accounts of the treasurer's office contained no record of the public moneys *Page 485 turned over to Edward C. and Verne S. Curtis or of the interest and profits realized from their investments, and the books were so kept by Small, as treasurer, as to conceal the fact that said public moneys had been turned over to Edward C. and Verne S. Curtis; that as a further device in the execution of the said fraudulent plan, Edward C. and Verne S. Curtis executed, when public moneys were turned over to them, pretended certificates of deposit purporting to be issued by the Grant Park Bank, * * * and the certificates of deposit were a mere device and pretense by which the public moneys were withdrawn from the treasury and turned over to the control of Edward C. and Verne S. Curtis, as above set forth, by which the State was deprived of a large part of the interest and profits resulting from the use of such moneys.
It is alleged that the public moneys so turned over by Small, as treasurer, to Edward C. and Verne S. Curtis were used in the purchase of notes and other securities of divers persons and corporations, and by reason of the failure of Small to keep any public records relating to such transactions, complainant is unable to state the moneys or the persons and corporations in whose notes and securities the public moneys were invested; that a large part of the public moneys so used by Small and the Curtises was invested in notes of Swift Co. and Armour Co.; that the Curtises collected from Armour Co. and Swift Co., as interest and discount on such notes purchased, large sums of money, which amounted to more than one million dollars, as complainant is informed and believes and charges the fact to be. It is alleged that complainant is unable to state the exact amount so collected as interest and discount from Armour Co., Swift Co. and from other persons and corporations in whose notes and securities such moneys were invested, for the reason that Small did not keep and did not leave in his office, as treasurer, any record or account *Page 486 relating to such moneys so used by him and the Curtises and the interest and profits derived from such use; that at all times when such moneys were being so used and invested by Small and the Curtises they all knew that the moneys were public moneys of the State and that the State was entitled to the interest and profits thereof from such use, and they all acted together in the execution of the plan whereby the State was deprived of said interest and profits; that in furtherance of said unlawful and fraudulent plan Small at the expiration of his term of office removed from his office as treasurer all books and records which related to deposits and loans of public moneys and of the interest and profits received therefrom; that no accounting was ever made by Small and the Curtises for such interest and profits received, and no public record was ever made by them or any of them, or left by Small in the office of the State treasurer, from which the amount of interest and profits can be determined. It is alleged that the only reports made by Small of interest received by him upon public moneys while he was treasurer was, first, on September 30, 1918, in which he charged himself with $306,424.33 as interest received by him as treasurer, and second, on April 23, 1920, in which he charged himself with the sum of $143,585.79 as interest upon public money; that in neither of the reports is there any itemized statement of interest and profits realized from the use of public moneys of the State while he was such treasurer, and therefore it cannot be determined how much of said amounts, if any, was realized from the use of the public moneys turned over to the Curtises; that Small, at the expiration of his term as treasurer, unlawfully and wrongfully removed from the office of State treasurer all books and records relating to interest which had been collected by him upon public moneys, and complainant charges upon information and belief that the amount of such interest so collected by him as treasurer largely *Page 487 exceeds the amount so reported by him, and that such reports do not include anything whatever on account of interest and profits realized from the use of such public moneys turned over to the Curtises, and that the amount of interest and profits from these funds realized by Small and the Curtises which Small has failed to report and account for is in excess of one million dollars.
The words in the second charge against Small and the Curtises that we have omitted because expunged therefrom by the sustaining of the demurrer are, first, "did not comply with the requirements of the statute as to a large part of the public moneys in his possession, and did not deposit such large part of said public moneys in banks in the cities of the State, but" as indicated by the first stars in the charge as we have framed it; second, the next words expunged from this charge as we have framed it are indicated by the second group of stars, which words are, "in furtherance of said unlawful and fraudulent plan large sums of the public moneys were turned over by Small, as treasurer, to Edward C. and Verne S. Curtis, and," which words are expunged merely to prevent unnecessary repetition; third, the last words expunged from the second charge as we have framed it are these: "that there was in truth and in fact no such bank," which words should be expunged as the demurrer sustained by the court necessarily removed them from the charge.
The bill does not allege, as set forth in the opinion of the court, that "such lump sum reports were made for the purpose of concealing the amount of money received through the Grant Park Bank transactions; that the account of public funds invested by Small through the Curtises was kept by Small personally in his private office above his bank in Kankakee, and that this private account book and certain records of the State treasurer's office have been destroyed by Small for the purpose of concealing the amount of interest and discounts realized from the private *Page 488 use of said public moneys." The answer of Small does not contain a denial of the destruction of any records and books and no such issue was made by the pleadings. There is quite a difference in an allegation of the unlawful removal of records and the unlawful destruction of records of the treasurer's office, and the consequences of an unlawful removal of a record and the unlawful destruction of a record would necessarily be very different, particularly so if the record removed or destroyed was a public record of the treasurer's office, as intimated by the court in its decision. It is not our desire to be technical in this case, but simply to clearly set forth the issues between Small and the State on the first charge, and between Small and the Curtises and the State on the second charge. This is important, because the measure of proof on the first charge against Small and the measure of proof against Small and the Curtises on the second charge must necessarily be different, and the finding of the issues against Small individually, in the first charge, cannot affect the question whether or not there should be a finding of the issues against Small and the Curtises on the second charge.
The prayer of the bill as to the accounting is in this language: "That said Small may be required to disclose and state the items of interest included in the aggregate amounts reported by him as interest collected upon public moneys, and to state and disclose all items of interest so collected by him as interest upon public moneys deposited by him in banks which are not included in said aggregate amounts so reported by him; and that an accounting may be had and that the amount of interest and profits realized from said use of said public moneys by said Len Small, Edward C. Curtis and Verne S. Curtis may be determined, and that said defendants Len Small, Verne S. Curtis, and Etha G. Curtis, administratrix of the estate of Edward C. Curtis, deceased, to the extent of their respective liabilities, may be decreed to pay to the complainant the amount found *Page 489 due to such complainant upon such accounting, and that said complainant may have such other and further relief as may be proper in a court of equity."
It will be noted that both charges in the bill, including the prayer for relief, have been fully set forth above as they were originally framed by counsel for the State and presented to the lower court. We have also indicated clearly the matters that we have considered as eliminated from the bill by the decision on the demurrer, and have also indicated what should now be regarded as the first charge in the bill which concerns Small, only, as well as the matters that should now be considered as the second charge in the bill against Small and the Curtises jointly. It will be also noted that we have considered as forming a part of the first charge certain allegations that are found in the second charge as framed by the State, and that we have also considered the same allegations as also a part of the second charge. Our position in this dissenting opinion is, that the first charge in the bill which concerns Small, only, may be sustained by a mere preponderance of the evidence or by the same measure of proof as is ordinarily required of a complainant in an ordinary bill for an accounting where no crime is charged, and that the words "unlawfully and wrongfully removed," as used in that charge, are not to be considered as having the effect to charge a felony. Merely charging the removal of records, and particularly private records, from his office as treasurer of Illinois, even though alleged to be done unlawfully and wrongfully, does not have the effect to charge a felony. We make no contention that the averments of the bill are insufficient in either charge to give the court jurisdiction to decree an accounting in equity if the averments are proved, and we concede that the bill contains sufficient averments in both charges to warrant the chancellor in entering a decree against the defendants for an equitable accounting if the facts alleged are sufficiently proved. *Page 490
As to the second charge, our position is that it charges the defendants, jointly, with a felony, or an unlawful conspiracy to defraud the State of Illinois out of interest and profits upon public funds in the hands of the treasurer, or of some part thereof, to which the State is justly entitled and for which Small has not accounted; and that a felony is charged by the State as the second charge was originally framed by it, and that the charge as we have framed it, after eliminating the part taken out of it by the demurrer, still charges a felony. We have been particular to state accurately what this bill charges against Small individually and Small and the Curtises jointly, because of the fact that in the decision of the majority of the court in this case the court seems to lose sight of the proposition that the simple showing in the record that Small ought to account to the State is by no means a sufficient showing that there is any such duty upon the part of the Curtises.
The record in the case shows, without question, that Judge Jones held that the statute approved March 7, 1908, with reference to the deposit of State moneys by the State treasurer, the provisions of which are hereinafter set forth, was unconstitutional and void. The decision of the circuit court was rendered on a special demurrer to the bill, which applied to every section or part thereof alleging any duty of Small under that statute, and to every such part of the bill the demurrer was sustained. That decision had the effect to strike or remove from the bill every part thereof to which the decision of the court on the demurrer applied, which were all parts of the first and second charges based on such statute. The ruling of the court on the demurrer also amounted to a holding that the allegation "that in truth and in fact there was no such bank as Grant Park Bank," was surplusage and immaterial.
We think the court is undoubtedly in error as to the legal effect of its decision as to the validity of said statute. It is stated in the decision that the court declines to consider *Page 491 the question of the validity of the statute, yet it affirms the decree of the court below in all things, — and that affirms the decree of Judge Jones on the demurrer holding the statute void. The decision of this court is therefore as clear a decision of the court that the act is invalid as if the court had directly and expressly passed on the question of its validity and had held the statute invalid so far as this case is concerned. The rule is, that where some controlling fact or question of law material to the determination of the case has been adjudicated in the lower court, and this court, though not expressly passing on the question on appeal or writ of error, affirms the decree without qualification, such affirmance is an adjudication of the fact or question of law. Brack v. Boyd,211 Ill. 290.
There is another reason why that question of law is the settled law of this case. Appellee has assigned no cross-errors on the record and cannot be heard to contend in this court that the statute is valid. It is therefore bound by the circuit court's decision that the statute is invalid, without regard to the question of the correctness of that ruling. Appellee has sought to raise the question of the validity of the statute without assigning cross-errors. If appellee were permitted to question the validity of the statute on a proper assignment of cross-errors, the decision of Judge Jones was in every respect correct, for the reason that the statute is clearly void, as hereinafter shown.
It being the law of this case that the statute of 1908 is void, there is no provision in our constitution or in our statutes that required the State treasurer to loan the public funds in his charge and no direction as to where he should keep or deposit them. Section 4 of article 4 of the constitution provides that no person who has been or may be a collector or holder of public moneys, who shall not have accounted for and paid over, according to law, all such moneys due from him, shall be eligible to the General Assembly or to any office of profit or trust in this State. *Page 492 Section 17 of the same article provides that no money shall be drawn from the treasury except in pursuance of an appropriation made by law and on the presentation of a warrant issued by the auditor thereon, and no money shall be diverted from any appropriation made for any purpose or taken from any fund whatever, either by joint or separate resolution; that the auditor shall, within sixty days after the adjournment of each session of the General Assembly, prepare and publish a full statement of all money expended at such session, specifying the amount of each item and to whom and for what paid. Section 20 of article 5 of the constitution provides that an account shall be kept by the officers of the executive department, and of all the public institutions of the State, of all money received or disbursed by them, severally, from all sources and for every service performed, and a semi-annual report thereof be made to the Governor under oath, and any officer who makes a false report shall be guilty of perjury and punished accordingly. Sections 7 to 15, inclusive, of chapter 130, (Smith's Stat. 1925, P. 2489,) provide as follows:
"The State treasurer shall receive the revenues and all other public moneys of the State, and all moneys authorized by law to be paid to him, and safely keep the same. All persons paying money into the State treasury shall first obtain from the auditor an order, directing the treasurer to receive the same; and if the treasurer shall receive and receipt for any money, without such order being presented to him, he shall be removed from office. When moneys are sent to the treasury, by express or otherwise, it shall be the treasurer's duty to obtain the auditor's order, hereinbefore required, before receipting therefor. The treasurer shall, on the receipt of any money, give the person paying the same duplicate receipts therefor; which shall be presented to the auditor, who shall countersign and return one of them to the person presenting the same, and retain the other on file in his office, and charge the amount thereof *Page 493 against the treasurer. No receipt shall be of any validity unless the same is so countersigned. The treasurer shall not pay out of the treasury any money, except upon the warrant of the auditor. When any warrant is presented to him to be countersigned, or for payment, the treasurer shall personally countersign the same, and shall also enter in a book, to be kept for that purpose by him, the date, amount and name of the person to whom the same is made payable. He shall keep regular and fair accounts of all moneys received and paid out by him, stating, particularly, on what account each amount is received or paid out. On the payment of any warrant, the treasurer shall cancel the same with a canceling hammer, or some proper canceling instrument, which will cut or perforate the paper. He shall, at the close of each month, report to the auditor the amount of money received and paid out by him during the month, stating on what account the same was received and paid; and shall, at the same time, deposit with the auditor all warrants, properly canceled, which he may have paid, and take the auditor's receipt for the same. He shall also make out and present to the Governor, at least ten days before each regular session of the General Assembly, a full report of all moneys by him received and paid out, and also a general account of all the business of his office."
The provisions of the constitution and of the statute set forth every duty required of the State treasurer concerning the public funds in his possession and all other duties required of him as to receiving, keeping, paying out and accounting for the public funds during the time that Small was treasurer, from January 8, 1917, to and including January 11, 1919, when his term ended, except as to taking his official oath and giving the bond required by him, set forth in the first part of the statute. The constitution and the statute leave it solely at the discretion of the treasurer as to where he shall deposit and keep public funds. There is no duty placed upon the treasurer to loan public *Page 494 funds in his custody. It is not even contemplated by the constitution or the statute that the State treasurer has any such duty as the loaning of public funds. His duty is to receive the funds according to the provisions aforesaid and tosafely keep the same and pay them out according to law. It is clear, therefore, from the foregoing provisions, that there is no requirement in the law or in the constitution that directs or commands the treasurer to keep an account of moneys loaned by him, in case he shall loan them, as the statute of 1908 is void by the settled law of this case. How, then, can this court say that the records of a State treasurer kept by him of the loans that he has made, if he does make them, are public records, or records which he shall preserve or keep in his office? If it be conceded, as we think it must be, that the records that Small made concerning loans and the collection of interest thereon are merely his private records kept for his convenience, so that he might at all times know to whom he had made a loan and the terms of the loan, etc., then we ask, How long should a State treasurer be expected to keep and preserve such private records as evidence after he has made a complete settlement with his successor and after the auditor of the State has issued a certificate under his official seal that the balance of the several funds in the retiring treasurer's hands was on the day of such settlement with his successor the exact amount that the retiring treasurer is turning over to his successor in office? The evidence in the record shows without dispute that such records of loans made by the State treasurers were not considered as any part of the public records of the State treasury but as mere private records of the treasurers of the transactions between them and the parties to whom loans were made. The State proved these facts by its own witnesses, and the State further proved by its witnesses that it had been the custom of all predecessors of Small to have such private records shipped to them at their homes after settlement with their successors, *Page 495 because of the fact that they were only considered as their own private records. Their conclusion that they were their private records and that they had the right to the custody of them was absolutely correct, in our judgment, and the court's conclusion that they were public records is without foundation in fact or in law.
The reasons why the records of loans made by Small or any other treasurer are not public records but mere private records or memoranda of the treasurer, kept by him to show the transactions between himself and the parties to whom such loans were made, are obvious. Such loans were mere movements of public money within the treasury and not movements out of the treasury or into the treasury, and because all the funds of the treasury on any given date were in the treasury, no matter in what banks or depositories they were kept or deposited. The depositories in which Small kept the public funds were, first, the treasurer's office, in a safe in which he kept cash and from which he sometimes paid parties to whom the State owed money by a check on the treasury itself or on the safe account in the treasury; second, banks in which he deposited cash subject to check at any and all times, and which accounts were known in the treasurer's office as "open accounts" or "checking accounts;" third, banks in which he kept deposits that were made for a definite time, and which deposits were evidenced by certificates of deposit not subject to check or call until due, and which accounts were known by all the employees in the treasurer's office as "vault account;" and fourth, deposits of money with the Grant Park Bank or the Curtises, and which account, though not subject to check, was evidenced by certificates of deposit subject to call for payment to the treasurer at any time he was in need of public funds with which to pay claims of parties to whom the State was indebted, and which account is known and referred to in this record as "safe account." For the purposes of the consideration of this case the four *Page 496 foregoing accounts are all that need explanation in order to understand or comprehend the issues and the evidence bearing thereon in this case.
Whenever Small, or any treasurer, deposited money with any bank that gave a certificate of deposit to the treasurer for the same payable on any definite date, and which deposit was not subject to call or check, the treasurer, after receiving such certificate of deposit, issued his check upon some one of his checking accounts or open accounts in another bank, payable to the bank which had given him such certificate of deposit. This movement of money from the checking account in one bank to another bank on time deposits was a mere movement of money within the treasury. The treasurer did not have to obtain a warrant from the auditor to pay the money out of one bank into the other bank, for the simple reason that such movement of money was not a movement of money out of the treasury or a payment of money by the treasurer to a party to whom the State owed money, and for that reason Small could not credit himself on the public record hereafter explained as the cash book, as money paid out of the treasury. The only effect the transferring of this money from a bank in which the treasurer had a checking account to a bank to which the treasurer was loaning money on time, was to decrease the amount in the bank in which he had the checking account by the amount that he loaned to the other bank on time, and his balance in the treasury was just the same after this transfer or time loan had been made as before. When money was loaned to the Grant Park Bank or to the Curtises by Small, the Curtises first deposited with Small a certificate of deposit not subject to check, as already stated, but subject to call, for the entire amount of the loan at any time the necessities of the treasurer required the payment of the money back to the treasury. On the giving to Small a certificate of deposit by the Curtises or the Grant Park Bank, Small then issued his *Page 497 check or draft upon one of his checking or open accounts, usually on the Fort Dearborn Bank of Chicago, payable to the Grant Park Bank. The Grant Park Bank or the Curtises with this check or draft purchased a packer's note or other similar security and deposited such security with Small as security to him as treasurer. These packers' notes or securities were what is known in the record as "liquid securities" of a very high grade, readily salable on the market at any time. There is no question as to the desirable character of these securities. To put it in the language of State witnesses who testified concerning the same, they were "gilt-edged" securities. So highly were these securities valued, it is stated by one witness that if the packers should go broke all the banks in Chicago would go broke, because of their large investments therein. We also call attention to the fact that the loaning of the money in this manner to the Curtises or the Grant Park Bank was a mere movement of money within the treasury, and the only effect such a loan had was to decrease the amount of the checking account in the Fort Dearborn National Bank by the amount loaned to the Grant Park Bank, and after such transfer and loan the total funds in the treasury remained exactly the same as they were before such transfer and loan were made. Consequently, no entry whatever by reason of such transfer and loan could be made upon the public records of the treasurer's office as money received into the treasury or as money paid out of the treasury. It seems to us that these are facts overlooked by the majority of the court when speaking about the transactions and the book accounts between the treasurer and the Grant Park Bank or the Curtises.
All of the depositories or banks in which Small kept deposits of the public moneys paid interest upon their deposits except the American Exchange National Bank of New York City, and these depositories are the three different ones heretofore characterized as the checking or open *Page 498 account, the vault account and the safe account. These various accounts were so kept by Small and his employees merely as a matter of convenience in the way of bookkeeping. They were put into three classes because of the fact that there was a difference between the accounts, as already explained. When Small turned over the money and all other funds to his successor he had at that time ten banks or depositories called open accounts or checking accounts. He had a great number of banks to which he loaned money on time, not subject to check or call, and the accounts with these banks were all kept in the vault account, and the account with the Grant Park Bank or the Curtises was kept in the safe account. Every one of these accounts was well known to the employees of Small during his term, and the court is altogether in error in its statement in the opinion that the safe account was kept in any more secret manner than was either the open account or the vault account, as hereinafter shown. We will further say at this point that the Grant Park Bank or the Curtises had exactly the same right to receive from Small, as treasurer, deposits of public funds on a contract to pay him interest thereon as had any one of the ten depositories which had checking accounts or as any one of the two hundred or more banks whose accounts were kept in the vault account. We will further say that Small had the same right to regard his accounts with these three classes of banks as private transactions and the records of the same as private records, the custody of which belonged to him, as did any treasurer preceding him. Small stated frankly and readily on the witness stand, when asked, that he had destroyed a part of these private records of loans three months or a year after he had made his final settlement with Sterling because he thought he had no further use for them or any reason to keep them. It is therefore no more a circumstance of suspicion against Small that he received these private records, if he did receive them, and destroyed them, than it *Page 499 would have been for any one of his predecesors to have done so, and according to the showing in the record it is well nigh a certainty that no previous treasurer of the State has in existence any records of private loans that he made, and it is absolutely proved in the record, without dispute, that none of Small's predecessors left such records in the treasurer's office.
There was just one part of the transaction of Small as treasurer with any one of his various depositories, whether it be a bank with a checking account, or a bank under the vault account, or the Grant Park Bank or the Curtises under the safe account, that should be made a matter of public record in his office, and that was the receiving or the collecting of interest. This is so because the paying of interest by Small into the treasury is a movement of funds into the treasury, and before Small could legally receive such interest and charge himself with it on the public record he was required to obtain the auditor's order to receive such new funds. This is exactly what Small did when he made the two payments of interest into the treasury that are referred to in the pleadings above mentioned, and he could not have legally received such interest into the treasury without an order from the auditor. The State's own witnesses testified that Small did obtain that order in the regular and legal way and that he was charged in the cash book with those two amounts of interest, and the evidence shows, without any equivocation or doubt, that his successor received the full amount of both these payments of interest and the rest of the public moneys in his hands, less what he had paid out on warrants of the auditor.
With reference to the first payment of interest by Small into the treasury of $306,424.33 on September 30, 1918, the majority opinion states: "He did not itemize his remittance nor in any respect show from whom or when the interest was collected." This statement is true, and that is the only real fault that can be found with this payment of *Page 500 interest, — that it did not show the parties from whom it came or when it was collected. This statement of the court is followed by a very extraordinary and unusual statement, which is not founded upon any evidence whatever in the record but is based solely on the bare statement of counsel for the State, without any evidence whatever to substantiate the statement. In fact, the evidence in the record contradicts that statement altogether, and that evidence was nearly all furnished by the State itself. The statement referred to is in these words: "No money actually changed hands in this transaction, but Small simply charged himself, as treasurer, with this sum and squared the treasurer's books by adding $307,000 to the safe account, showing a deposit of that amount in the Grant Park Bank." We wonder if the court really understands the position that it has put itself into in making such a statement in its opinion. How could Small square his account by charging himself with $306,424.33 and by charging Curtis with $307,000 in the safe account? The very moment that Small charged himself in the cash book or the public records of the treasurer's office with that amount he became absolutely liable to the State for it, because he charged himself on the order of the auditor. That amount could not be squared by Small unless he also credited himself on the cash book, a public record of his office, with an equal amount paid out by him upon the auditor's warrant, and in the record there is not even a claim by anyone that any amount was credited by Small against this receipted interest by him by any warrant of the auditor. The statement of the court that Small charged the safe account with $307,000 in the manner aforesaid, besides being without any evidence whatever to back it, would only have gotten Small into trouble with the Curtises. They certainly would not have stood for his charging them with $307,000 that they did not get. Counsel for the State in arguing this proposition do not pretend to have any evidence to back their claim that $307,000 was *Page 501 thus charged to the safe account, but their statement seems to have been sufficient for the court to reach the conclusion that it has stated in its decision.
There are many other statements of the court in its opinion, which it is claimed are facts, which are not only not proved by the evidence in the record, but the evidence in many instances is squarely against the existence of any such facts, and in a great many instances the evidence was furnished by the State. We do not wish to unnecessarily criticise the opinion of the majority of the court, but we unhesitatingly say that the misstatements made in the opinion can only be accounted for by a misconception of the facts in the record and a misconception in regard to the system of book-keeping in the treasurer's office. We will say further that the "Analysis of Facts" furnished by counsel for the State is by no means an analysis of the real facts in the record. With all due regard for counsel and without any attempt to criticise them, the analysis is but an ingenious juggling of the facts in many instances which cover up the real facts proved in the record. The analysis of facts appears to have been made on the conclusions of an expert book-keeper trying to explain how the transactions by Small and the Curtises might have been transacted, but which must be considered as falling short of a real analysis of the facts because not based on the facts but on surmise and conjecture.
In this dissent we take the positive ground that there can be no serious question about the invalidity of the act of 1908 requiring the State treasurer to deposit money in the banks of the cities of this State which shall pay the highest rate of interest to the State for such deposits, etc. The constitution provides, in as plain and positive terms as can be written, that no person shall be eligible to either the General Assembly or to an office of profit or trust in the State who has been or may be a collector or holder of public moneys and who shall not have fully accounted and paid *Page 502 over the same according to law. This provision of the constitution indicates clearly that public treasurers are to be held to an accounting absolutely, and that they are insurers of the safety and of the return of all public money entrusted to their hands for distribution. They cannot escape the penalty inflicted by this section of the constitution by answering unto the people that they lost the money by reason of the fact that some bank or banks became insolvent and could not return it to them, although they may have used the highest degree of diligence and their best judgment in selecting banks as their depositories. The State treasurer is an executive officer of the State, and the legislature has no constitutional right or power to direct him as to the manner or place in which he shall deposit funds, and thereby subject him to an increased liability for loss of funds which the constitution has provided, in substance and in effect, he shall safely keep, and that he must see to it that he selects the depositories and so handles the public funds that not one penny shall be lost, and shall suffer the penalty if he does not safely keep and account for the same. The provisions of the statute that we have quoted recognize the absolute liability that the constitution has placed upon the treasurer, and merely follow, in substance, the idea expressed in the constitution, and until 1908 the legislature never went farther than to require of a treasurer that he shall receive the revenue from all public money of the State and all money authorized by law to be paid to him and safely keep the same. This was a recognition by the legislature of the absolute liability of the treasurer for the safe keeping of the public funds, and that upon him must rest the choice and the duty of selecting safe depositories and of guarding and guaranteeing the distribution of the funds according to law, and of returning the remainder thereof to his successor not legally paid out by him. It was the privilege of the legislature, as well as its duty to the people, to provide for the manner of accounting *Page 503 to the State as well as the manner of receiving and paying out funds of the State. No one can examine and study well the foregoing provisions the legislature put into law in 1845 without being impressed with the idea that it has put into our statutes a masterpiece of legislation that cannot be improved or excelled. It is not possible for a State treasurer to defraud the State in his accountings and dealings with the State if the provisions of the statute are followed in all their details. It was intended that the Auditor of Public Accounts should at all times keep a record of his dealings with the treasurer so that he could at all times know exactly the amount of money paid into the State treasury on the authority of the auditor to receive it and also the amount legally paid out on the auditor's warrants. Wherein can these provisions of the statute be improved in the interest of the people of this State?
This court has repeatedly held that the aforesaid provisions of the constitution and of the statute of 1845, and other provisions of our constitution, make the liability of public officers in the State to receive public money and distribute the same according to law that of insurers. The decisions of this court are to the effect that the liability of such officers is absolute, and that they cannot plead in defense that they used the highest degree of diligence and care in depositing the funds in their hands in safe banks or depositories. Other courts in this country have made the same holdings. (Estate of Ramsay v. People, 197 Ill. 572; People v.McGrath, 279 id. 550; Swift v. Trustees of Schools, 189 id. 584; County of Lake v. Westerfield, 273 id. 124;State v. Moore, 74 Mo. 415; United States v. Prescott, 3 How. 578; Boyden v. United States, 13 Wall. 17; United States v. Dashiel, 71 U.S. 182; Commonwealth v. Conly, 3 Pa. St. 972;State v. Harper, 6 Ohio St. 607.) In Mechem on Public Offices and Officers, in sections 298 and 302, it is stated that this is the general rule as applied to the liability of public officers whose duty it is *Page 504 to receive and safely keep the funds and distribute them according to law. The statute of 1908 is void for other reasons stated by Mr. Justice Heard in his dissent.
The statute of 1908 being invalid, the State treasurer may loan or not loan the public money in his charge, as he pleases, and he may loan it to whom he pleases. He is not required to loan it to a bank or banks but may do so, and he may also loan it to any individual or individuals in this State, no matter what their business, their calling or their standing. The risk is his, and the State is not interested as to the character of the borrower or the character of security the treasurer requires. The law is, as repeatedly held by this court, that if such an officer fails or refuses to loan the public money in his hands he is only liable for the amount he receives, less the amount he has legally paid out; and if he loans for interest or if he makes a profit on such funds, in such case he is only liable for the principal and interest and profits actually realized thereon. County of Lake v. Westerfield,supra.
The court should have passed on the question of the degree of proof required of the State in this case, and particularly with reference to the second charge in the bill. It is clear, and it is practically conceded by the court, that criminal acts amounting to a felony are charged in the bill against Small and the Curtises, yet the court states that it is not necessary to decide these questions because the evidence shows, "beyond all reasonable doubt, a liability to account." This statement is followed by the further statement that "proof of the fact that a public official having custody of public funds loaned these funds to others with a secret arrangement respecting the payment of interest and that in reporting interest collected he did not reveal the source of the payments, without more, would be sufficient to justify an order to account." This latter statement can only be sustained when applied to Small under the first charge of the bill. The court cannot well ignore the fact *Page 505 that this latter statement by it can have no application to the three defendants under the second charge. We certainly cannot assent to the proposition that the three defendants should be found guilty under the second charge, which charges a felony, on the evidence or ground, alone, that the arrangement with Small for the loan of the funds to the Curtises was a"secret arrangement," even if it be proved that the arrangement was, in fact, a secret one. We are not to be considered as yielding to the assertion that the arrangement was a secret one, for we assert with great confidence that there is no more reason, under the evidence in the record, for the assertion that the arrangement between Small and the Curtises for the loan of the funds was a secret one, than there is for the same assertion as to the two hundred or more loans or arrangements for loans that Small made with the other banks, yet all through the court's opinion a great deal of stress is attached to the conclusion that the arrangement with Small for the loan to the Curtises was a secret one. We assert with confidence that no bank in this State, whether it carried an open account or an account treated under the head of "vault account," would be interested in having the fact published to its patrons generally that it was borrowing money at the rate of two or three per cent from the State while it was loaning to its customers the same money at six or seven per cent interest. We assert with greater confidence, if possible, that there is no State treasurer, past or present, who has ever made it his practice of letting it be generally known that he deposited money in a certain bank under an agreement that the bank should pay interest at two or three per cent. Such an arrangement, when considered from the standpoint of either party, is not one that they would care to have generally known, even when they were acting with the best of motives. It would naturally create more or less annoyance to a treasurer to have such fact made known generally, because of the multitude of banks that would want a similar *Page 506 favor. There is no reason, from a business standpoint, why a banker should want the fact published that he was one of the parties favored by the State treasurer. Bankers are a class of business men that do not publish the details of their business in that manner, and particularly if the subject matter relates to the obtaining of cheap deposits or loans, — that is, deposits at a low rate of interest. It certainly ought not then to alarm anybody, — not even this court, — if the agreement a banker makes for loans is made known only to the treasurer and his employees and those to whom the loans are made. We see no occasion for its alarming anybody because the State treasurer's loans were secured by packers' notes. We shall later undertake to show that no State treasurer ever had his loans better secured than were the loans of Small to the Curtises.
Another real question raised by the parties in the case is, What is the measure of proof required under the allegations charging a felony against Small and the Curtises as set out in the second charge of the bill? Section 80 of our Criminal Code, (Smith's Stat. 1925, p. 895,) in so far as it relates to State officers, provides that if any State officer elected or appointed under the constitution or laws of this State embezzles or fraudulently converts to his own use, or fraudulently takes or secretes with intent so to do, any money, bonds, notes, warrants, funds or securities, or other property belonging to or in the possession of the State, or in the possession of such officer by virtue of his office, he shall be imprisoned in the penitentiary not less than one nor more than fifteen years. The charge in the bill as to the three defendants is, in substance, that a State officer, — Small, as treasurer, — fraudulently converted to his own use, or had fraudulently taken money or funds belonging to the State or that were in his possession by virtue of his office, and appropriated or applied them to his own personal use; and the Curtises are each charged in the second charge with combining with Small to assist him to *Page 507 commit the same crime. Even conceding, as is said in a previous paragraph of the court's opinion, that the alleged private injury to the State is not merged in the alleged crime and is not in any manner affected thereby, still that statute has nothing to do with the measure of proof that the State must make to recover against the Curtises and Small jointly. That statute has no reference whatever to the degree of proof required in the civil suit, and it does not even suggest such an idea. The rule in this State is clearly established that where a felony is charged in the pleadings the offense must be proved beyond all reasonable doubt; and that rule applies to bills or pleadings in equity as well as to pleadings in actions at law. (Oliver v. Ross, 289 Ill. 624; McInturff v. InsuranceCo. of North America, 248 id. 92.) The rule is still adhered to in Rost v. Noble Co. 316 Ill. 357, that case simply holding that the rule will not be extended so as to apply to misdemeanors.
The complete record of the indictment upon which Small was tried and acquitted at Waukegan, from the finding of the indictment by the grand jury of Sangamon county up to and including the verdict of not guilty and the judgment thereon, appears in this record and was made the basis of a special plea by Small in this case and substantially the same facts were set forth in his answer, by which he claimed that the State is estopped by what is known as estoppel by verdict, and he now claims that the conspiracy charged in the second charge of the bill for an accounting cannot be the subject of a second inquiry between him and the State, as that question was settled in his favor in the criminal case, and it was settled that there was no such conspiracy. All the counts of the indictment in that case to which Small's motion to quash was not sustained but was overruled are therefore a part of the record in this case. The count of that indictment found on page 43 of the abstract makes the following charge against Small and Verne Curtis: "That upon the 10th day of February, 1920, they did *Page 508 then and there feloniously, unlawfully, wickedly and fraudulently, designing and intending the State of Illinois to defraud and cheat of its lawful money, funds, goods and property, did then and there unlawfully, feloniously and fraudulently conspire, combine, confederate and agree together to deposit with certain persons, to-wit, one Edward Curtis, now deceased, and Vernon Curtis, also called Verne Curtis, who were assuming and pretending to do business under the firm name and style of Grant Park Bank, large and divers sums of money, the property of the State of Illinois, to-wit, the sum of ten million dollars lawful money of the United States of America and of the value of ten million dollars, whereas in truth and in fact there was then and there no such bank known and called the Grant Park Bank, they, the said Len Small, Edward Curtis, Vernon Curtis, also called Verne Curtis, then and there well knowing that there was not then and there such a bank known and called the Grant Park Bank," concluding in the usual way, "contrary to the form of the statute in such case made and provided," etc. We have omitted one defendant's name appearing in the indictment as he is not a party to this record, otherwise we have stated the substantial part of this indictment, — the charging part, — in the identical language found in the indictment. The circuit court before which Small was tried overruled a motion to quash this indictment. It will be seen that the substantial averments in that count are identical with some of the averments or charges in this bill, and we further state that every substantial charge made in the bill in chancery is found in some one of the twelve counts of the indictment upon which Small was tried, and in the very language that is used in this bill as originally framed by the State. There is not a chance for the State's claim to be sustained that the second charge of this bill did not charge a felony as framed by the State or as we have framed it, if the indictment on which Small was tried charges a felony. There can be no *Page 509 serious question that the bill in this case charges a felony, — the felony which is penalized in section 80 of the Criminal Code.
We call attention at this time to the fact that the plea filed in this case by Verne S. Curtis as a bar to this action, and which plea was sustained by the lower court, sets forth these facts: That he is the same person and that Small is the same Len Small named in the indictment; that the alleged fraudulent plan, combination, confederacy and conspiracy charged against Verne S. Curtis and Small in the bill of complaint are the same alleged and supposed plans, combination, confederacy and conspiracy charged against them in the indictment and the bill of particulars filed thereunder; that the alleged deposits, alleged withdrawals, alleged certificates of deposit, alleged devices and pretenses, alleged notes and securities, alleged interest and profits, alleged discounts, alleged investments, alleged use of the public moneys of the State, charged in the bill of complaint to have been made, are the same instruments, etc., alleged interest, profits, discounts, investments and use of public moneys of the State charged in the indictment and bill of particulars to have been made; that the supposed transactions alleged in the indictment and bill of particulars to have been made are the same and not other or different; that the counts of the indictment set out remained pending and undetermined in the circuit court of the county of Lake as to Verne Curtis until September 20, 1923, on which date the State's attorney of Sangamon county entered his motion for and on behalf of the People of the State of Illinois to nolle prosequi the indictment and all of the counts thereof, which said motion was by the circuit court of the county of Lake allowed and an order of the court entered in accordance therewith. It is further averred in the plea that he was never tried upon any charge in that indictment by a jury, and that no verdict of a jury or order of a court has ever been entered to that effect and that he remains *Page 510 subject and liable to an indictment and trial upon said charge; that he has been advised that the answer and discovery sought and asked by the bill of complaint in this case might subject him to penalties and punishment and might tend to incriminate him, and might be used as the basis for another indictment against him for the same alleged matters and transactions set forth and charged as aforesaid. He therefore pleads the several matters aforesaid in bar of the bill of complaint and prays judgment whether he be bound to make any further answer, etc.
The fact that Verne S. Curtis filed that plea, claiming that if he made discovery, as he was asked to do, his testimony might tend to incriminate him, or, to put it in the language of the State's counsel many times repeated in their argument and in their alleged analysis of facts, the fact that he claimed his privilege of refusing to testify in this case, is called to our attention very frequently by the State, and it is made use of by the court in its decision to the great prejudice of Verne S. Curtis, and particularly so to Small. There is no reason why Small should be held responsible for the position or embarrassment in which the State has deliberately placed Verne S. Curtis and he should not be prejudiced by reason of that fact. The State is entitled to every presumption that can justly and rightly be drawn in its favor from any fact or facts in this record. Small is equally entitled to full consideration of the fact that the State has deliberately placed Verne S. Curtis in the position in which he is found in the record, and he is entitled to the indulgence of this court in the further presumption that if the State had really desired the testimony in this case of Verne S. Curtis and his co-defendant named in the indictment and whose name we have refrained from mentioning, it was within the State's power, and was its right, to have put those parties in a position where they could have testified, and that they could have been compelled to testify without any pretense or claim that their *Page 511 testimony might tend to incriminate them. The State could, instead of nolleing the indictment, have tried them upon the indictment, or if it did not desire to re-try the case as to those two defendants, it could have had them arraigned, a jury empaneled to try them on their plea of not guilty, and a direction by the court to have the jury return a verdict of not guilty because it was considered a waste of time to further prosecute the criminal case against them. In lieu of the foregoing proceedings the State might also have refused to further prosecute at that time and have entered a nolleprosequi, as it did do, and then in the prosecution of this suit have taken the position outright that it proposed to hold or keep its right to later prosecute them criminally, if developments justified. The State should also frankly have taken the position in this case that it was not its intention to contend that Small should be held to be prejudiced by reason of the action regarding Verne S. Curtis. The parties to this suit are in a court of equity, and the rule in equity has always been that every party to a suit should come into the court with clean hands, without any disposition to take undue advantage of a party by reason of any embarrassing position in which he or it has deliberately placed another party to the suit. We make these statements not with any intention of criticising or being unjust to the State's counsel, but for the purpose of properly stating, as we view it, that in considering the case this court should give full consideration to the entire record as it finds it. Small applied for and obtained a separate trial in the criminal case. It was not possible for him to obtain that privilege in this case under the allegations of the bill. Therefore, while we are willing to give the State all that it is entitled to in the way of presumption by reason of the fact that Verne S. Curtis by plea claims his privilege to abstain from testifying, yet we are unwilling that the State be allowed any presumption or advantage against Small by reason of that fact, — a fact which he was powerless to *Page 512 change and in which the State voluntarily and deliberately placed him.
In view of what we have stated in the preceding paragraph, we call particular attention to the fact that the issue in this suit as to the charge of 'unlawful conspiracy in the second count is identical with the charge of conspiracy made in the indictment. Small is the only defendant tried on that indictment, and he was acquitted. That verdict and judgment of acquittal necessitated the finding as against Small, and it was a finding that the criminal conspiracy charged did not exist. That fact was a principal and controlling fact in the criminal case, as the defendant could not be convicted if that was not true. It is also a controlling fact in this suit in chancery, and Small cannot be held to a joint accounting under the second charge in the bill unless that fact is proved beyond a reasonable doubt. It is also the contention of his counsel that the State is estopped to further contest that question of fact, which is an ultimate or controlling fact in this case. It must be conceded, therefore, we think, that Small has in no way waived his right to contend that the State is estopped to again litigate or question the fact that he is guilty of the criminal conspiracy herein charged and which was also charged against him in the indictment, and that the State should not be allowed to take away from him that right and privilege by reason of its deliberate act in putting Verne S. Curtis in the embarrassing position he finds himself in this suit, and which the State has the right, as against Curtis, to so embarrass him. We therefore take the positive position that the State is estopped to contend, as against Small, that the criminal conspiracy is an ultimate question of fact which the State may prove. We want to make it plain, also, that the State may raise that question and prove it, if it can, as against Verne S. Curtis, and it may also prove it against the administratrix of Edward C. Curtis, deceased, if there is a possibility that a joint decree may be on that *Page 513 theory entered against her as administratrix, which we assert cannot be done. It can so be proved against them because neither Verne S. nor Edward C. Curtis was ever tried on the indictment, and therefore a verdict of not guilty as to Small could not work an estoppel in their favor against the State. In taking the above position we do not want to be understood as holding that the doctrine of res judicata is to be applied in favor of Small. In other words, the criminal suit and judgment therein were not a bar in favor of Small to the prosecution of this suit on the ground of res judicata, the doctrine of which is quite different from that of estoppel by verdict. The distinction between these two doctrines, of estoppel by verdict and of res judicata, is clearly drawn by this court in Hanna v.Read, 102 Ill. 596, in an opinion written by Judge Mulkey. It is there pointed out that when a former adjudication is relied on as a bar to the whole cause of action, then it must appear that the cause of action and things sought to be recovered are the same in both suits, and that such former adjudication is known as an estoppel by judgment, and that it is the judgment itself that is a bar to the action; but when some specific fact or question has been adjudicated and determined in a former suit and the same fact or question is again put in issue in a subsequent suit between the same parties, its determination in the former suit, if properly presented and relied on, will be held conclusive upon the parties in the later suit, without regard to whether the cause of action is the same in both suits or not; that this is known as an estoppel by verdict, and is equally available to a plaintiff in support of his action, when the circumstance is warranted, as when offered by a defendant as a matter of defense. It is further stated in that decision that it is sufficient to make a former adjudication as to any material fact determined an estoppel that the parties be substantially the same, and that the fact that in the second suit one is made a party who was not a party in the first action will *Page 514 not defeat the application of the rule of estoppel when such person is a mere formal party, having no interests that can be affected.
In the suit we are now considering the facts are extraordinarily favorable to the idea that the plea of estoppel by verdict of Small must be sustained. The issue in the criminal suit and in this suit is identical. The same State of Illinois was the party prosecuting Small in the criminal case. The same Small that was the defendant in that case is the defendant in this case. The same limitations upon Small or the same embarrassments against him exist in this suit as existed in the criminal suit, viz., that if he testified in this suit he might subject himself to a prosecution for a felony or might incriminate himself, for the reason that if the charge of conspiracy in this case is true, as alleged, he could be prosecuted for perjury for swearing falsely to his two reports as to the amount of interest he collected. The fact is very apparent that he could not be guilty of a conspiracy to defraud the State or the defrauding of the State, and not be guilty of making false oaths to his two reports of interest collected. Therefore we have in the criminal case and in this suit more points that are the same than are necessary to support the plea of estoppel, under the decision in the Hanna case, supra, as the issues are the same, the parties to the action are the same, the rules of evidence are the same, the burden of proof cast upon the State is the same, the weight of the evidence is the same and the competency of the witnesses is the same. The only things dissimilar in the two cases are the objects of the two suits, which are different, and the result to the parties is different and the procedure is different, as in this case we have no jury. These points of difference, under the authorities, have no bearing or tendency to defeat the doctrine of estoppel by verdict, as is clearly held by this court and also clearly held by other courts, and the State is in no better position in this regard than any other litigant. The cases *Page 515 in Illinois that follow and support Hanna v. Read, supra, areLeopold v. City of Chicago, 150 Ill. 568, Wright v. Griffey, 147 id. 496, Attorney General v. Chicago and Evanston RailroadCo. 112 id. 520, and Markley v. People, 171 id. 260, in which the State was estopped; and Brack v. Boyd, supra; ChicagoTitle and Trust Co. v. Storage Co. 260 Ill. 485; City ofChicago v. Partridge, 248 id. 442; Silurian Oil Co. v. Neal, 277 id. 45.
The same rule is applied against the State or government where the measure of proof is the same and the cases are otherwise applicable. This is clearly laid down inCoffey v. United States, 116 U.S. 436, 6 Sup. Ct. 437, which is also cited and quoted from in Stone v. United States,167 U.S. 178, 17 Sup. Ct. 778, and cited in the majority opinion in this case. We assert that the opinion of the majority of the court is clearly wrong on that question. The cases cited by the court in its favor are cases that do not apply, because of the fact that in several instances the parties were not the same while in others the measure of proof required in each case was entirely different. No such condition exists in this record. The statute of this State cited in the majority opinion has no effect or tendency to change the rule, and it does not change and was not intended to change it. If applied to this case, the only effect the rule would have would be to prevent the State from re-litigating the question of conspiracy as to Small, only. It would not apply to the Curtises. How often should the State be allowed to litigate over and over again some controlling fact in a case, as the majority of the court decides it may do in this case? The statute cited by the court was intended simply as a declaration of the rule that the doctrine of res judicata should not be applied, which would bar the suit altogether. There was no intention of upholding any party, — not even the State, — in persisting in litigating over and over again some question of fact that is controlling in the case. If applied to this case it would *Page 516 simply have the effect of taking away the State's right to have a joint judgment against Small and the other defendants. It would not prevent the State from recovering every right that it had against Small individually. It would not prevent the State from recovering against the Curtises upon any theory, — not even upon the doctrine of estoppel, if the evidence warranted it, — for the reason that neither Verne S. nor Edward C. Curtis was a party to the judgment of acquittal in the criminal case. We assert that the court ought not to overrule decisions of this court that are so firmly settled and there is no occasion for overruling them.
Judge Jones did not try the case in the court below. The trial judge who followed him paid no attention whatever to Judge Jones' ruling on the special demurrer that the statute of 1908 is invalid. Apparently the main question tried and passed on by him, and the one upon which he considered the case as depending, was the question whether or not the Grant Park Bank was a real bank, and he found against the mass of testimony in the record which demonstrates positively that it was a bank, — a private bank, — under the laws of Illinois. We do not concur in the views expressed by the court that this fact was considered without prejudice to the defendants. A mass of incompetent and irrelevant evidence was heard and considered by the court. The principal finding of the lower court made in this case is in this language: "The said alleged Grant Park Bank mentioned and described in the bill of complaint in this cause had no existence and was not in fact a bank during the period of January 8, 1917, to January 11, 1919, but was a mere scheme or device used by said Len Small, Edward C. Curtis and Verne S. Curtis in an attempt to give legal color to such use of said funds for investments in the notes and securities aforesaid." The court did not find the allegations of the second charge were proved. The language indicates clearly that the court considered that the above findings settled the case against the defendants, and *Page 517 that he considered it illegal for the State treasurer to deposit money in a private bank in violation of the statute of 1908. That question was also one of the questions passed on by the master in chancery, whose theory of the case was that the Curtises were merely the agents of Small in the loaning of said funds, and proceeded to decide the case on the doctrine of agency but did not find the allegations of the second charge to be proved, thereby abandoning the consideration of the allegations of the second charge, which must be sustained before there can be any finding against the defendants jointly and be proved beyond all reasonable doubt. This court in its opinion makes the finding, apparently, that the unlawful conspiracy and the fraud charged were proved, but neither the master in chancery nor the circuit court made any such finding, and the defendants' counsel filed proper exceptions upon those grounds and have urged them upon this court as grounds for reversal. This court is not a court of original jurisdiction in bills for an accounting in equity, and it has no jurisdiction to absolutely settle such a matter of fact on review without first having before it a finding as to such fact by the master, approved by the court, or by the court under the evidence in the record. The question now is, Did the lower court find that the defendants were jointly liable because of the fact that they had entered into a conspiracy to defraud, and had defrauded, the State of money or funds to which it was legally entitled? and the answer should be no.
The State's counsel abandoned the actual charges made against the defendants in the second count, both in the lower court and in this court. They state positively in their brief filed in this court that their theory now is that the Grant Park Bank and the Curtises were but agents of the State treasurer in the loaning of the funds placed in their hands by the treasurer, and that there should be an accounting for all interest and profits earned on State money as the result of these direct transactions by the State treasurer *Page 518 with the packers and other persons from whom packers' notes and other securities were purchased by the Curtises for Small, as treasurer. This change of position by the State's counsel no doubt accounts for the finding of the master on their theory of agency, and for the failure of the trial court to make a finding that the allegations in the second charge in the bill were proved. No such theory is disclosed by the allegations of the bill, and the State is not now entitled to an accounting on that theory. If allegations had been made in the bill on this theory of agency, or if the State should be permitted to now contend against the defendants on that theory, before the Curtises could be held liable as the agents of Small in these transactions, Small being himself but an agent or trustee of the State, the State would be required to prove that the Curtises, as agents of Small, knew that he was intending to defraud the State of the interest and profits that it would be entitled to recover on this theory, and that they participated with him in his fraudulent intent and scheme and aided him in defrauding the State. Such would simply amount to a charge of a felony against Small and the Curtises, and would also have to be proved beyond a reasonable doubt and would be an entirely different charge from the one made in the bill. The State cannot be permitted to recover, for the foregoing reasons, upon such new theory and charge. Besides, the evidence in the case shows conclusively that the Curtises bought every note and security they did buy with the funds loaned them by Small, as treasurer; that they handled such securities as their own property, and retained and used for their own private purposes the discount or profits realized by them on such securities, except the amount of such discount and profits paid to Small for the State's interest and profits and which was accounted for by Small to the State, and if he did not so account fully, there is not a scintilla of evidence in the record that the Curtises knowingly assisted him in any way in thus defrauding the State. *Page 519
We now call attention to the fact that there are two distinct charges in this bill: The first a charge against Small, only, which is required to be proved simply by a preponderance of the evidence; the second a charge against the three defendants jointly, which must be proved beyond a reasonable doubt; and further, that there is a distinct prayer for relief in the bill which applies to the charge against Small, only, and the other prayer for relief applicable only to the second charge against the three defendants; and finally, that the prayer for relief applicable to the second charge closes with this language: "That said defendants, Len Small, Verne S. Curtis, and Etha G. Curtis, administratrix, to the extent of their respective liabilities, may be decreed to pay to the complainant the amount found due to such complainant upon such accounting," concluding with a prayer for other and further relief as may be proper. The word "respective," as used in this second prayer of the bill, indicates clearly that the prayer is for a several and not a joint accounting, as is contended by the defendants' counsel in this case. As counsel for appellants contend, the word "respective," as used in this prayer for relief, is defined to mean, "singly or severally considered; singly, in the order designated." The author of the dictionary then uses these words to indicate that word's use: "they answered respectively to their names; the first, second and third seats belonged to John, James and William, respectively."
We recognize the rule in equity that bills for an accounting should be construed liberally and that in an equitable accounting pecuniary or money damages may be recovered. We want particularly, however, to call attention to the fact that in a decree for an accounting it should be merely for an equitable accounting by the defendant or defendants if the bill is sustained, and that the court in the first instance merely fixes the basis for an accounting. On review of a bill for an accounting this court should confine its decision *Page 520 to the question whether or not the complainant below was entitled to a decree for an accounting, and if so, then the court cannot go farther than to merely fix the basis of the accounting. We take the position that it is not proper for this court on such review to make any specific finding whatever as to what amounts should be accounted for or as to the amounts owed by the defendants below upon any item of accounting. The court in its decision should not prejudice the defendants by going further than indicated by us. The court apparently holds, or indicates to the lower court out and out, that as to certain loans by Small to the Curtises the lower court should find, on the remanding of the cause, that those loans purchased certain Ridgely National Bank stock, and that the defendants in the accounting before the court should be charged with that amount of money as to such particular item. There are other findings in the court's decision of similar character that have no proper place therein and can only tend to prejudice the defendants in the final accounting, which we contend ought not to be done. In its decision the court in no way indicates that the defendants are entitled to any credit whatever for the amount Small paid into the State treasury as interest and profits realized by him, whether such payments concerned either the first or second charge in the bill.
We have already clearly shown, we think, that the acts of Small charged against him as to the manner of reporting interest and profits collected by him are not unusual, because in making his reports he followed exactly the same form used by his predecessors. We call attention to the fact that he followed the action of his predecessors strictly as to the time of making his first report of interest collected, but he filed his second report at least eight months earlier in his successor's term than did any of his predecessors, they all having made their second report and payment into the treasury on September 30 of the year their successors made their first report of interest collected. It is also proved that none *Page 521 of his predecessors itemized any more particularly than did Small such interest or profits collected by them.
In this dissent we are directing special attention to what we consider as errors of the majority of the court in their findings and as to the decree entered on the second count of the bill. Our contention on the second count is, that the evidence fails to show beyond a reasonable doubt, or even by a preponderance of the evidence, that the Curtises and Small are found, or can legally be found, to be jointly liable thereon and should make a joint accounting. Our further contention is, that if there is a showing in the record (which we do not concede) that the defendants should jointly account to the State, the basis of accounting herein fixed by the majority of the court is entirely wrong, when viewed from any angle of the case. The finding and conclusion of the court are that the three defendants should account jointly for the entire interest and profits received by all of them in the transactions under what is called the "safe account." In no event can the defendants be decreed to pay a greater amount of damages to the State than the actual or pecuniary damages sustained by the State. The damages awarded by the majority of the court are in the nature of punitive or exemplary damages, which are never allowed in equity. We undertake to say that no well-considered decision of any court of last resort can be found that has awarded punitive or exemplary damages in a proceeding in equity. We call attention particularly to the fact that the only case cited by this court as authority for its decision awarding damages in this case, (Farwell v. Great WesternTelegraph Co. 161 Ill. 522,) is not a case in which the court sustained a joint liability. This court refused to apply the general rule of joint liability, but did hold that the wrongdoers in that case were all severally liable for the amount of damages actually sustained. There is not a single paragraph or sentence in that whole opinion which recognizes *Page 522 the rule that more than the actual damages sustained can be recovered in a court of equity, either on a joint or several liability. In that case the court did not compel the defendants to forfeit any rights they really had, but the holding was that they would be entitled to recover whatever was their equitable part of the assets of the corporation, but that they should be liable for the actual damages inflicted upon the other parties by their gross frauds.
We have not been able to find a single case which holds that in a court of equity, on a simple bill for an accounting, where no question of legal rights is to be considered, or in any other case in which legal rights are considered, any more than pecuniary damages or compensatory damages may be awarded, whether the finding of liability was joint or several. The defendants' counsel cite a number of cases that are applicable to this case on the question of damages, some of which we will now consider.
In United States v. Bernard, 202 Fed. 728, the court recognized the general rule that where a court of equity has entertained jurisdiction of a controversy for any purpose or on any ground it may retain jurisdiction for the purpose of administering complete relief or doing complete justice with respect to the entire adjustment of the subject matter in controversy, even to the extent of allowing damages. But the court in its opinion says: "In an action of trespass, where the injury is wanton or malicious or gross and outrageous, or is done against the protest of the plaintiff or in known violation of the law, the court may permit the jury to add to the measured compensation of the plaintiff further damages by way of punishment or example. * * * But the function of the court in equity goes no further than to award, as incidental to other relief or in lieu thereof, compensatory damages. It has no authority to assess exemplary damages. By applying to a court of equity for relief the complainant waives all claim to vindictive damages." *Page 523
In Bank v. Kern, 8 Pa. Dist. 72, the court said: "Decrees in equity, even when based upon frauds and conspiracies, are given for the amounts out of which the injured parties have been defrauded, and not for punitive damages, fines or penalties, nor are double recoveries allowed." That case was sustained by the Supreme Court of Pennsylvania in 193 Pa. St. 59.
The Supreme Court of Wisconsin, having under consideration the question as to recovery of exemplary, vindictive or punitive damages, in the case of Karns v. Allen, 135 Wis. 148,15 Ann. Cas. 543, said: "After considerable search we have been able to find no case where exemplary damages were allowed by a court of equity, and while our investigation shows a great dearth of authority in point on the subject, the cases which in any way touch the question appear to lean to the doctrine that a court of equity should award only compensatory damages." The court further said: "The damages which may be recovered in an equitable action, under our decisions are compensatory and not exemplary damages. We think no decision of this court can be found where in an equitable action exemplary damages were allowed." To the same effect is Bird v. Railroad Co. 8 Rich. (S.C. Eq.) 46.
Compensatory damages have reference only to damages actually sustained by a party litigating. They are usually referred to in equity as pecuniary damages, or such damages as a party actually sustains in money value. This case is simply for an equitable accounting. In that class of cases equity recognizes the action as one in which pecuniary or money damages may be, and most always are, awarded, if damages are awarded at all. No question of legal rights, as a rule, ever enters into the consideration of such a case. No such rights enter into the consideration of the case now before us. The defendants' contention that the damages awarded in this case are excessive and in the nature of punitory damages or penalties should be sustained, *Page 524 and if sustained three per cent interest on the loans by Small to the Curtises (the largest rate of interest paid to him by any other bank) is the utmost that should be allowed to be recovered in any view that may be taken, unless the evidence should show that Small received a greater amount of profits and interest than three per cent on the money loaned to the Curtises, and in case that is shown, then the utmost amount of recovery is the amount that Small himself actually received and appropriated to his own use. There is no reason, from an equitable standpoint, why the Curtises should be decreed to forfeit all interest received under their contract with Small.
We think there is also merit in the contention of the defendants that no joint decree or judgment can be entered against Etha G. Curtis, administratrix, and the other two defendants. In Eggleston v. Buck, 31 Ill. 254, it is said: "The rule is well settled, if a contract is several, or joint and several, the administrator of the deceased may be sued at law in a separate action, but he cannot be sued jointly with the survivor, because one is to be charged de bonis testatoris, and the other de bonis propriis." It is apparent that the rule ought to be applied to a case in equity, and particularly to the case now before us. It is shown by the record that no judgment or decree can be entered against the administratrix except a decree or judgment payable in due course of administration out of subsequently discovered assets of the estate of Edward C. Curtis, deceased, because of the fact that the time for filing claims against that estate has long since passed, as provided by statute. Regardless of that fact, a joint judgment cannot be legally or equitably entered against an administrator or administratrix, even in cases where there was a joint liability between the deceased and one or more other persons on a joint and several liability. The character of judgment is not the same, and cannot be the same, against the administratrix and the *Page 525 other defendants jointly, because they are not in the same manner liable on a joint obligation.
We here append two tables, which show the complete transactions between Small, as treasurer, and the Curtises or the Grant Park Bank, concerning the loans of public moneys to them by Small, so far as shown by the record:
[EDITORS' NOTE: TABLE IS ELECTRONICALLY NON-TRANSFERRABLE.] *Page 526
[EDITORS' NOTE: TABLE IS ELECTRONICALLY NON-TRANSFERRABLE.] *Page 527
In the above table we show in the fifth column, counting from the left, the loans of public funds made by Small to the Curtises or the Grant Park Bank, and the dates of those loans appear in the third column, opposite the loans. In the sixth column are shown the securities or collateral filed with Small by the Curtises, and the date on which each security was filed is indicated in the date column, or third column from the left. These securities were most generally packers' notes, bought by the Curtises from Swift Co., Morris Co., Wilson Co., Armour Co. and Cudahy Co. Packers' notes purchased from Swift Co. are indicated simply by the word "Swift" written at the right of the amount of the collateral. We also simply use the word "Morris" to indicate Morris Co., "Wilson" to indicate Wilson Co., "Armour" to indicate Armour Co. and "Cudahy" to indicate Cudahy Co. The amount of discount the Curtises realized on each collateral note or other security is indicated in the column designated "Discount." "Re-discount," in the next column, indicates that the security was re-loaned and re-discounted, and the amount of the discount realized during Small's term is the sum of these two columns, or $730,046.42. In the second column we give the same item number to each transaction as is used in the table in the majority opinion. We have five items in our table that are not found in the table in the majority opinion, and we designate these items as A, B, C, D and E. To prevent repetition the same date in the date column is not repeated, and each item below any date having a blank space below it is of the last preceding date.
The following table, with its headline, is self-explanatory as to most of it. The third column indicates the notes or securities turned over to Sterling by Small, and the date of each is indicated in the date column. The due date is indicated in the sixth column, headed "Due date," and the date each item was paid to the treasurer is indicated in the column headed "Date paid." The discount collected during *Page 528 Sterling's term is indicated in the last column. The line column and the item column simply indicate the source of the notes or securities when they were turned over to Sterling by Small, and these two columns refer to items and lines in our first statement.
[EDITORS' NOTE: TABLE IS ELECTRONICALLY NON-TRANSFERRABLE.]
Small's term ended January 11, 1919, on Saturday, and on the following Monday, Andrew Russel, Auditor of Public Accounts, issued his official certificate that the balance in the several funds of the State treasury at the opening of business on Monday, January 13, 1919, was $19,567,109.05. On the same day Fred E. Sterling, as State treasurer, issued his official receipt to Small for the full sum certified to by the auditor under his official seal, and Sterling's receipt recites that the funds received by him consisted *Page 529 of certificates of deposit aggregating $15,735,000. This receipt contains a list of all the banks in the State that were treated and considered under the account known as the "vault account," and gives the specific amount each of said banks had on deposit and had given certificates of deposit to Small. The total amount in those banks is shown to be $6,035,000, $3,000,000 of which was deposited in the bank of Dunlap, Russel Co., of Jacksonville. The remainder of the total sum represented the total amount of certificates of deposit on the Grant Park Bank, amounting to $9,700,000. The receipt further recites that the remainder of the funds turned over by Small to Sterling consisted of checks of Small, as treasurer, on ten banks in which he kept his open or checking accounts, specifying the amount of the checks upon each one of the ten banks, and also further cash items which total $3,832,109.05, making a grand total of $19,567,109.05. This receipt shows the total number of banks in which Small had State funds at the close of his term to be one hundred and thirty-eight, including the Grant Park Bank, which is a clear indication that the witnesses in this case were probably mistaken in estimating the total number of banks to be more than two hundred. We particularly call attention at this point to the fact that the State introduced the auditor's certificate aforesaid and the receipt of Sterling aforesaid, and that the State was apprised of all the banks and the addresses of such banks in which funds were deposited, and had the ready means, had it desired, to put in evidence the testimony of the parties controlling said banks for the purpose of ascertaining the total amount of interest paid by them to Small. We also now call attention to the further fact that the evidence in the record reveals the name of every packer and every other company from whom the Curtises bought packers' notes or other securities with loans made them by Small, as treasurer. In fine, the State had the ready means of proving every cent of interest collected by Small from all the banks *Page 530 in which he made deposits, with the exception of the Grant Park Bank. The burden was on the State to show that Small had not accounted for all the interest paid to him. The total of the interest paid by all other banks, deducted from the amount of interest paid into the treasury by Small, would necessarily show the amount of interest the Curtises paid him. The State has apparently omitted in several instances to put evidence into the record that would explain fully several items it now claims the evidence does not clear up, and it contents itself with saying that the defendants did not introduce such evidence, the burden of introducing which was on the State. Apparently a number of items could have been more fully explained, had the State seen fit to do so, that were carried into Sterling's office during his term.
In our first table there are listed in the column designated as "Treasurer's collateral," fifteen notes, all of which are packers' notes and identified as such, except the one which is marked "unknown," in line 32. These small packers' notes were bought by the Curtises and put up with Small as collateral, and all of them, excepting one $30,000 note, were purchased by the Curtises with what the State and the majority of the court in their opinion refer to as interest from the large notes purchased by the Curtises and listed in the same column. As a matter of fact, these notes were purchased with the same character of funds as the large notes were, — that is, purchased with money coming directly from the State treasury. The packer's notes were discounted at four and one-half, five, five and one-quarter, six and seven per cent discount. Of all the notes purchased by the Curtises only three drew interest by their terms, and those are the notes described in our table of notes turned over to Sterling and listed as "demand" notes in items 12A and 46 and provided for six per cent interest. The total discount on the notes purchased by the Curtises during *Page 531 Small's term, including re-discount, only amounted to $730,046.42, and we included in that discount, discount up to the last day of his term. We do not think the discount the Curtises collected on the securities turned over by Small to Sterling, and under their agreement with Sterling that he would make loans to them of State funds, should be considered as discount earned in Small's term, as it was all discount collected in Sterling's term and under a new agreement with him. The record discloses that the notes turned over to Sterling were re-loans made by him to the Curtises on the last day of Small's term, under a similar arrangement with Sterling that the Curtises had with Small for the loaning of State funds.
There are four of the fifteen small notes above described by us that are in dispute by the parties to this suit. It is admitted by both parties that the other eleven small notes are notes purchased regularly by the Curtises with either discount or money loaned to them by Small. The four of these notes that are in dispute are designated by stars.
The first of these notes is the one for $30,000, in line 14 of our first table. The evidence in the record clearly shows that this note was purchased by E.C. Curtis with either his own private funds or funds of the Grant Park Bank that did not come from the treasury, and the State admits it was not purchased with funds loaned by Small. This note was evidently deposited with Small as additional security or collateral, and the record shows, without question, that when this note became due it was collected by Curtis in the usual way that he collected all these notes, the proceeds were paid to Small, as treasurer, through the Fort Dearborn National Bank, and the Grant Park Bank account, or the safe account in the treasurer's office, was credited therewith. It was probably intended as a payment of interest when paid. This note could not have been purchased by Curtis with discount on the packers' notes purchased by him as collateral to loans from Small preceding *Page 532 the date of this note, as the total discount collected by him up to that time would not amount to anything like the face of this note and would be less than half of it. It will also appear that we have not included any discount for the loan and re-loan of this note, simply because it was not purchased with money coming out of the State treasury or the proceeds thereof. There can be no question, however, that the Curtises are entitled to credit for the amount of this note paid to Small, as treasurer.
The second disputed note is the $27,000 note described in line 32 of our first table. The evidence as to this note is not sufficient to indicate whose note it was. We have been influenced in placing this note in the table for the reason that on August 6, 1918, $27,000 was paid into the treasury through the Fort Dearborn National Bank by a check of V.S. Curtis, which was received by him from the collection teller of the Live Stock Exchange Bank. Further light is thrown on this note by the fact that on the day it was loaned there is found the record of a check for the discount payable to E.C. Curtis by the Live Stock Exchange Bank, where the packers' business was transacted. The record also shows a check for discount on a re-loan of the note to E.C. Curtis by the Live Stock Exchange Bank. The purchase of this note by Curtis is further shown by the fact that on the date it was purchased there was withdrawn from the account of the Curtis Trust Company at the Grant Park Trust and Savings Bank an amount exactly sufficient to purchase a note for $27,000 with the discount on the note. At the time this note was purchased there was ample discount in Curtis' hands to purchase such a note. There is just one element of doubt as to it. The evidence discloses that the Grant Park Trust and Savings Bank was one of the banks in which Small had made a deposit of public funds. It is possible that this might have been a payment by V.S. Curtis or a return by him of a part of the deposit in the Grant Park Trust and Savings *Page 533 Bank. We sustain the State's claim on this note that it should be considered as a note of the Curtises or the Grant Park Bank and as purchased with funds loaned to them by the State treasurer.
The next small note in dispute is the $15,000 note of Swift Co. described in line 59. The note register of Swift Co. shows that this note was payable to the Grant Park Trust and Savings Bank, which, if not otherwise explained, would show no connection with the Curtises or the Grant Park Bank, but on the day after this note was due it was paid to E.C. Curtis and by him deposited to the account of the State treasurer at the Fort Dearborn National Bank. There is the same element of doubt about this note as about the $27,000 note, but we have listed it here as a probable note of the Curtises or the Grant Park Bank. E.C. Curtis was an officer of the Grant Park Trust and Savings Bank. We think that in case of doubt, such as exists as to this note and the $27,000 note, it ought to be determined for the State that this is a note of the Curtises or the Grant Park Bank under the condition of the record, and that the burden is thrown on the defendants to show that it was not a note of the Curtises or the Grant Park Bank, if that be their claim. It would seem from the history of this note that evidence ought to be obtainable that would render the question beyond doubt. We have given the whole of the evidence that now appears in the record, so far as we have been able to find it, as to these two notes.
The note for $28,000 described in line 60 of our table is a note of Armour Co. payable to E.C. Curtis. This note was purchased with a draft of the Grant Park Trust and Savings Bank deposited by Curtis at the Live Stock Exchange Bank. The note was paid on its due date and the proceeds deposited to the treasurer's account at the Fort Dearborn National Bank by Curtis. Although the source of the funds with which this note was purchased cannot be traced to any certain amount of State money or discount *Page 534 therefrom, it is clear that it was a payment by the Curtises or the Grant Park Bank to Small, as treasurer, and should be included in this table. Since it was paid to Small on its due date, it follows that it was deposited with him as additional collateral on the date it was purchased. The history of this note is exactly the same as the history of other notes purchased by drafts from the Grant Park Bank by Curtis. It was undoubtedly a note of the Curtises or the Grant Park Bank.
The table in the majority opinion contains a $7500 "unknown" note described in line 7, an $8500 "unknown" note described in line 11, and a $30,000 Swift note described in line 84. There is little evidence in the record that there were ever any such notes as the $7500 and $8500 notes. All that the record shows is a payment by the collection teller at the Live Stock Exchange Bank to E.C. Curtis of $7500 on November 14, 1917, and of $8500 on November 21, 1917. No doubt Curtis received these amounts as discounts on some other notes or as collections of some notes. These collections are not even shown to be discounts or proceeds of discounts of packers' notes. The evidence simply shows that Curtis collected these amounts, and there is no evidence whatever that he or the Curtises or the Grant Park Bank ever paid any such amount into the State treasury or that any such notes were deposited with Small as treasurer, or otherwise. They therefore should not be considered as having any bearing on this case. As to the $30,000 note, the record shows that it was a Swift note purchased with discount or proceeds of discount from moneys loaned the Curtises or the Grant Park Bank by Small, as treasurer. What E.C. Curtis, or the Curtises or the Grant Park Bank, did with the proceeds of this note is not disclosed by the record. It is certain that they were never paid to Small and the note ought not to be further considered in this record. The Curtises had the complete right, under their contract with Small, to retain the proceeds of *Page 535 this note and do with them as they please. We will further say with reference to the $7500 note, that on November 15, 1917, (the day after the above amount was paid upon this alleged unknown note,) that amount was deposited with the Grant Park Trust and Savings Bank to the account of the Grant Park Bank, and E.C. Curtis bought a draft for $7073.75 from the Grant Park Trust and Savings Bank, and with that draft, and a check on the Grant Park Bank account in the Grant Park Trust and Savings Bank for $19,600, he purchased the $27,500 Swift note described in line 47 of the above table. This $27,500 note was deposited with Small as treasurer, and was paid into the treasury October 1, 1918, and the account of the Curtises, or the safe account, was credited with this amount in the treasurer's office. There is no dispute about this last note being deposited with Small and collected by him.
On May 1, 1918, Small loaned the Curtises $100,000, which is mentioned in line 74, (our item A,) and is the first large star item in the table. With this $100,000 E.C. Curtis purchased three cashier's checks at the Fort Dearborn National Bank, for $50,000, $30,000 and $20,000, respectively. With the $30,000 and $20,000 checks he purchased two drafts on the Grant Park Trust and Savings Bank for like amounts. There is no further evidence in the record as to what disposition he made of these two drafts, but it is certain that he retained them for his own use or for the use of himself and brother. He deposited the remaining $50,000 cashier's check at the National City Bank and purchased the following bonds or securities: Bethlehem Steel, $10,000; American Foreign, $10,000; Chicago Great Western, $20,000; British, $10,000, and Anglo-French, $10,000. The entire cost of these bonds or securities was $49,761.11. The remainder of the $50,000 deposit was paid to Curtis by a cashier's check of the National City Bank, amounting to $238.89. We have charged this $238.89 in the discount column to the Curtises or the Grant Park Bank as a profit *Page 536 on money received from the State treasurer. There is no evidence in the record as to whether these securities were placed in Small's hands as collateral, and we have treated them as not having been deposited with the treasurer but have merely written the words "National securities" in line 74, to call attention to the history of this item. The record does not disclose what the Curtises or the Grant Park Bank did with those securities. So far as we can find from the record, it is certain that they were never deposited with Small. The evident reason for the Curtises retaining this $10,000 is to be found in the fact that on the date this loan was made to the Curtises they had deposited with Small a total of $407,950 in securities more than the loans they had taken out at that time. This excess was made up of twelve of the fifteen small notes already spoken of, found in lines 14, 27, 32, 47, 52, 59, 60, 62, 64, 67, 70 and 73. The Curtises had a right to retain this $100,000 and do with it as they saw fit. They already had up as collateral more than was necessary to secure the loans that were in their hands and pay all interest they owed Small.
On and after August 12, 1918, Small and the Curtises began and continued to collect or cash packers' notes theretofore deposited as collateral in excess of their liability to Small for the purpose of their final settlement, which appears to have been made on January 10, 1919, the day before Small's term ended. On September 8, 1917, Small loaned $100,000 to the Curtises, with which they purchased a $100,000 Wilson note, which is the star item mentioned in line 35. This note was put up as collateral with Small and became due on February 11, 1918, and on that day the loan was renewed and extended to August 12, 1918, the second note being also put up as collateral with Small. This latter note was cashed by E.C. Curtis on its due date, and with the proceeds of this note he purchased a certificate of deposit on the Grant Park Trust and Savings Bank. The State's counsel contend that with the proceeds of this note *Page 537 Curtis purchased $97,988.34 of the stock of the Ridgely National Bank. Curtis had other certificates of deposit on the same bank at the same time as the one in question. It may be true that he purchased with the certificate of deposit in question, and other certificates of deposit, Ridgely National Bank stock, but the main fact is that Small allowed Curtis to take the proceeds of that note because Curtis on August 12, 1908, had on deposit with Small as extra collateral all of the fifteen small notes aforesaid, the last three deposited being the $35,000 Swift note mentioned in line 77, the $30,000 Armour note in line 81 and the $35,000 Armour note in line 84. The Curtises had a perfect right to retain the proceeds of this latter note for the same reason that they retained the proceeds of the $100,000 loan.
As to the $100,000 Swift note in line 88, which is another of the star items, the evidence in the record does not definitely and conclusively show its history and resting place. The State's counsel have the following to say concerning this note: "The $100,000 note in this item came due February 18, 1919, — about a month after Small's term expired, — and it continues to be attended by unusual circumstances. It was brought to the Live Stock Exchange before maturity, registered in the collection teller's tickler, collected at maturity, and the proceeds paid to Curtis (E. C.) per requisition by cashier's check which bears Curtis' endorsement, and, instead of the clearing house stamp of the Fort Dearborn National, we note the endorsement of E.C. Curtis and the Grant Park Trust and Savings Bank and the clearing house stamp of the Continental and Commercial National, dated February 20, 1919." We agree with counsel for the State in the main in what they say about this Swift note but do not at all agree with their conclusion that this note was turned over by Small, as treasurer, to his successor as part of the $9,700,000 in notes and securities delivered by Small to Sterling, as treasurer. We will conclusively show later, we think, that this is not the fact. We *Page 538 agree with counsel for the State that his note was deposited with Small by the Curtises or the Grant Park Bank, and that it remained in his custody until his final settlement with the Grant Park Bank or the Curtises, on January 10, 1919. We think it is evident that on that day, for the purpose of a final settlement, the Curtises cashed this note, paying to Small the full face value of the same, and that they retained it until its due date, in February, 1919, and then collected it and applied it to their own use. This will be further explained later. What the Curtises or the Grant Park Bank did with this demand certificate, or the proceeds thereof, the record does not disclose, and so far as we view the matter it is not important to determine what the Curtises did with it. It is certain that after they cashed it and paid Small for it it was their property, and the record does not trace any of the proceeds of it to Small.
The next star item is in line 89, and is described as a $60,000 loan to the Curtises or the Grant Park Bank and secured by $60,000 face value of Armour debentures. The facts shown in the record concerning these debentures or bonds are these: On June 24, 1918, $60,000 was loaned to the Curtises or the Grant Park Bank by the State treasurer. With this $60,000 Curtis purchased from the Live Stock Exchange Bank $60,000 of Armour debentures for $1990 less than their face value. The debentures were deposited with Small as collateral, and on October 31, 1918, Curtis sold these debentures and returned the $60,000 to the State treasurer through the Fort Dearborn National Bank in the way he usually re-paid other loans. We have charged the $1990 discount to the Curtises or the Grant Park Bank in the discount column, line 89.
It is further shown by the evidence that Small and E.C. Curtis were both directors of the First Trust and Savings Bank of Kankakee. At a meeting of the directors of that bank, at which Small and Curtis were present, it was decided by the directors to purchase these Armour debentures, *Page 539 then being placed on the market. An order for these debentures was made by that bank in pursuance of the decision of the board of directors. The order was canceled by the bank June 18, 1918. Curtis then told Small that he would take the debentures if Small would accept them as collateral for a loan of $60,000. Small agreed to accept them as collateral and loaned Curtis $60,000 on June 24, 1918, to purchase the debentures, as already stated. The debentures were purchased by Curtis and were paid for by him June 29, 1918, and forwarded to Small, at Curtis' direction, by the Continental and Commercial Trust and Savings Bank or the bank from which they were purchased, and Small received these debentures from that bank and receipted for them on July 10, 1918. (See complainant's Exhibits 2034 and 913-3, abst. 1667.) These debentures remained in Small's hands as collateral for the loan until October 31, 1918, and on this latter date Small purchased the debentures from Curtis and paid him out of his personal funds by cashier's check on the First Trust and Savings Bank, as testified to by Small. Curtis then paid to Small, through the Fort Dearborn National Bank, $60,000 in payment of said loan on the debentures, by exchange on the Corn Exchange National Bank of Chicago, and the safe account, or the account of the Curtises or the Grant Park Bank, was credited with this payment. (See complainant's Exhibits I 178 and 37-R, abst. 1667.) Small testified positively in confirmation of his payment to the Curtises for these debentures and that he paid for them out of his own private funds. The record thus completely answers the contention of the State in regard to the transaction as to these debentures. There is no other evidence in the record that is contradictory of the foregoing. It shows absolutely that so far as the Curtises or the Grant Park Bank are concerned they fully re-paid Small for this loan. The contention of the State that Small paid for these debentures out of State funds is based on surmise and conjecture. The *Page 540 record does not even furnish a shadow of evidence that the Curtises were in a conspiracy with Small to defraud the State in these transactions, and we cannot accept the bare assertion of the State that Small was guilty of defrauding the State thereby. Curtis ordered the debentures delivered direct to Small when he purchased them, for the sole reason that they were not then ready for delivery to Curtis. If Small did really defraud the State by paying for these debentures out of State money, of which fact there is no evidence in the record, that would have no tendency to convict the Curtises of a conspiracy. They had discharged all their obligation as to the debentures and the loans secured by them, and that was the end of it as to them.
The next star item to be considered is as to the transactions between Small and the Curtises or the Grant Park Bank and Sterling and Miller, as successors to Small, with reference to item D, described in line 116. The record as to these transactions shows the following: On December 20, 1918, $100,000 was loaned by Small, as treasurer, to the Curtises or the Grant Park Bank. To this $100,000 Curtis added $1000 and purchased a cashier's check for $101,000 at the Fort Dearborn National Bank. He deposited this $101,000 check with the National City Company and purchased $100,000 of American Thread bonds for $100,783.33, and received a draft or a check for the remainder of the $101,000, or $216.67. (See complainant's Exhibit 195, abst. 1675, and Exhibits 1391-92-93, abst. 1854.) These thread bonds were deposited with Small as collateral to the loan, and the evidence shows conclusively, we think, that they remained on deposit with him as collateral and that he turned the loan and the collateral over to his successor, Sterling, as indicated in item D, — the last item in the second table. Small's testimony is to the effect that these thread bonds were owned by the Curtises and were in the possession of Verne S. Curtis as owner on the last day of Sterling's term, when the certificate of purchase secured by these *Page 541 bonds was turned over to Miller. Miller testified that he had a photographic copy made of all the certificates of deposit of the Grant Park Bank that were turned over to him by Small for Sterling, as treasurer, and of all securities that accompanied those certificates of deposit as collateral on January 10, 1921, the last day of Sterling's term. The copies of these certificates of deposit were put in evidence by the State, and they are copied into the record on pages 1677-78 of the abstract as Exhibits 954 to 973, inclusive. The certificate or copy of the certificate of deposit which was secured by the thread bonds in Sterling's hands is Exhibit 973, at page 1677 of the record, is signed by V.S. Curtis, cashier, and is in this language:
"$100,000 GRANT PARK BANK, E.C. Curtis Bro. Proprietors.
GRANT PARK, ILL., January 11th, 1920.
"This certifies that Fred E. Sterling, State Treas., has deposited in this bank One Hundred Thousand Dollars in current funds, payable to the order of himself on the return of this certificate properly endorsed. Five days demand. Maturity twelve months. Interest at 2% per annum. No. 71."
It will be noted that the above certificate fell due on the last day of Sterling's term. We will further consider this item later.
The last of the star items is the loan of $175,000, described in line 114, and which loan was made by Small to the Curtises or the Grant Park Bank on November 22, 1918. So far as the record shows, no packer's note or other collateral was put up by the Curtises at that time. They had already put up as collateral $307,950 more than they had borrowed in money before this loan was made. This left in Small's hands $132,950 in collateral more than the amount of cash he had loaned on the date of this last loan. It is evident that on January 10, 1919, Small and the Curtises had their final settlement for interest due Small and for all matters between them, as already stated. All of the fifteen small notes, aggregating $507,950, had been cashed by Small and the proceeds credited to the safe account or the Grant *Page 542 Park Bank in the way that all other notes had been cashed and credited to the safe account, except three $55,000 notes, one $50,000 note and one for $13,950, which were cashed January 10, 1919, (their due date,) along with the $250,000 Wilson note described in line 61, which was also then due. The Curtises then paid Small in cash $214,050 on the same day, all of which payments amounted to $693,000 and are shown in lines 121 to 127, inclusive. As we have already shown, Small at this time had the $100,000 Swift note described in line 88, which was not due on January 10, 1919, but was due the following February. This note was not delivered by Small to Sterling as one of the $9,700,000 notes turned over to Sterling, as we have fully and satisfactorily shown, and because of that fact the $100,000 packer's note secured by the thread bonds was the only note of that size turned over to the Curtises by Small, as is admitted by the State's counsel. After paying off the loan that secured this note the Curtises then retained it as their property, because it was shown clearly that they cashed it and retained it for their own purposes when it became due. This left the remainder of the cash payment by the Curtises at the sum of $114,050, as the balance that was considered due from them to Small at that date, or the last day in Small's term.
As we have cast the accounts between Small and the Curtises or the Grant Park Bank the showing is as follows: The total amount of loans made by Small to the Curtises is $16,883,500. As against that sum the Curtises returned to Small, as treasurer, up to the last day of his term, a total of $7,430,000, being the sum total of the collateral that was cashed and returned to Small. In addition to this latter sum Small had in certificates of deposit from the Curtises or the Grant Park Bank a total of $9,700,000, secured by packers' notes and other securities, all of which were turned over to Sterling, his successor, and for which Small was receipted by Sterling, as already stated. The evidence further *Page 543 shows that Sterling then extended all these loans for the Curtises or the Grant Park Bank to definite dates, shown in our second table in the column headed "Due date," except the demand notes or demand loans shown in that table, which includes item D, the last item in the second table. The total amount of credits, therefore, that the Curtises or the Grant Park Bank had against Small was the sum of $7,430,500 paid to Small in notes collected by Small and in cash, and the further sum of $9,700,000 in certificates of deposit, packers' notes and other securities turned over to Sterling, making such sum $17,130,500, or $247,000 more than the entire amount of loans obtained from Small. This last sum of $247,000 represents the total amount of interest on loans collected by Small from the Curtises during his entire term according to our interpretation of the evidence in this case.
It may be noted that we agree exactly with the decision of the majority of the court as to the total amount of loans made by Small to the Grant Park Bank, but the court failed to take into consideration the full amount the Curtises or the Grant Park Bank had paid to Small as treasurer, although the same is shown by their table item for item, and in addition to that their table shows additional amounts paid by the Curtises or the Grant Park Bank to Small which we have shown should be discarded for reasons already stated. It will be further seen that we have charged the Curtises with, or have shown that the Curtises or the Grant Park Bank collected, a total of discounts during Small's term of $730,046.42. Deducting from this amount the $247,000 that the Curtises or the Grant Park Bank paid Small as interest on the sums borrowed by them, leaves a remainder of $483,046.42 as the total profits realized by the Curtises during Small's term. We further state, in conclusion, as to these matters of settlement, that the cash sum of $214,050 which the Curtises paid to Small on the last day of his term, as noted in line 127, was paid from the cash discount they *Page 544 collected on the $9,700,000 re-loaned by Sterling, as treasurer, to them on their new arrangement for loans with Sterling. It will also be noted that the loans and re-loans to the Curtises or the Grant Park Bank by Small do not amount to anything like the total sum of $30,000,000, and the total discounts collected from those loans do not amount to anything like $1,000,000, and the court in reaching those conclusions included the re-loans by Sterling to the Curtises and the amount of discount collected on those re-loans by the Curtises, as shown in our second table. This is a showing that the Curtises or the Grant Park Bank started off with Sterling with loans of $9,700,000 by him to them which were secured by packers' notes and the thread bonds in the same amount, and we can see no reason why the transactions between the Curtises and Sterling can have anything whatever to do with Small, as the Curtises had settled with him. The matters were all closed incidents as to him, and after that time he represented Sterling as an employee.
The real controversy as to the facts is concerning the disposition of the loans described in the five large items, amounting to $535,000, referred to as star items, or items A, 15, 38, C and D, in lines 74, 78, 88, 114 and 116 of our first table. The State does not controvert the fact that the Curtises purchased the National securities described in line 74 and that they retain them, and that there is no evidence that traces them to the hands of Small, either as collateral or to him as owner; and the State does not dispute the facts that the Curtises retained the other $50,000 of this loan and that there is no evidence in the record that any part of this loan was traced into Small's hands. The State's evidence confirms the facts concerning this item as we have stated them. The State's counsel do not controvert any of the facts we have stated as to the Wilson loan or note described in line 35. They admit that the second Wilson note was collected August 12, 1918, by E.C. Curtis, and that the Curtises retained the $100,000, returning none *Page 545 of it to Small. They admit that the Swift note described in line 88 was deposited with Small as collateral when that loan was made, and that the note was collected on its due date in February, 1919, by E.C. Curtis, while Sterling was treasurer, and that none of that money was traced into Small's hands. The only presumption that we have drawn from all these transactions, so far, is as to this note, and that is, that it was delivered to the Curtises on January 10, 1919, by Small when they had their final settlement; and this is drawn from the fact that it was in the possession of the Curtises when they cashed it and applied it to their own purposes, and such presumption, we think, is warranted by the facts admitted by the State and proved. It is said that this last note was not held by Sterling on the last day of his term and that it could not have been collateral to the $100,000 note turned over to Miller, as treasurer, and that is true.
Every fact that we have stated as to the item described as a loan of June 24, 1918, secured by the Armour debentures mentioned in line 89, was proved by the State, as shown by exhibits on pages 1663-1668 of the abstract, except the testimony of Small that he purchased the debentures with his own funds in October, 1918, when the Curtises re-paid this loan with the money which he paid them for the bonds. The State proved by evidence that Small did pay the Curtises for the debentures and every other fact testified to by Small concerning the debentures, and its real contention, apparently, is that he did not corroborate his testimony with other evidence that the funds he used in payment for the debentures were his own funds. The State assumes, therefore, against the positive testimony in the record, that these bonds were at all times the property of Small, against his evidence and its evidence to the contrary.
As to the transaction regarding the thread bonds, in line 116, the State's counsel state in their brief that these bonds "probably were regarded as taking the place in the safe *Page 546 account of the $100,000 Swift note, and the proceeds of the remainder were regarded as the profits of the loans to the packers." This is mere supposition against all the facts proved by the State and against other facts in evidence. Both counsel have apparently been in doubt as to whether the Swift note already mentioned, or the thread bonds, secured the only $100,000 loan turned over to Sterling by Small. The facts, we think, settle beyond doubt that the $100,000 note was secured by the thread bonds; that that note was further extended in Sterling's term; that he had it at the close of his term, secured by the thread bonds, and that the thread bonds were the property of Verne S. Curtis at that time. The State's counsel have made proof that coupons on these bonds for $9000 were collected by the Fort Dearborn National Bank and credited to the account of the Grant Park Trust and Savings Bank, and they introduced Exhibit 333, which confirms that fact. They introduced further evidence showing that the Grant Park Trust and Savings Bank issued its demand certificate for $9000 but state that the payee is unknown. They offered Exhibit 1382, which proves that the Grant Park Bank issued a certificate for that amount, and this certificate is in the extended list of the same demand certificates of deposit out of which they show that E.C. Curtis was paying for stock in the Ridgely National Bank from August, 1918, to about January 17, 1919. This is certainly evidence that the Curtises were the owners of these bonds, and determines the further fact that Small was neither the owner nor in possession of them as his property during Sterling's term.
The further facts concerning the thread bonds were, that Sterling's successor, Miller, declined to make any new contract with Verne S. Curtis for further loans from State funds or to extend any of the Sterling loans on packers' notes, but stated, in substance, that he would accept all of the certificates of deposit of the Grant Park Bank for the Curtises, secured by the packers' notes and other securities *Page 547 and would collect them himself. All of them were due at that time, and Small (representing Sterling) and Curtis assented to Miller's proposition. The collateral was all in Chicago, and Curtis and Small went to Chicago to get it to deliver to Miller. They overlooked or omitted to get the thread bonds, and when Miller checked over the collateral he noticed it, and remarked that the security was short on the $100,000 certificate. Small turned to Curtis and said, "Oh, yes; that was secured by the thread bonds." He then said to Miller that those securities were bulky and they did not bring them but would secure him with other securities. Small then gave Miller other securities that were satisfactory to him, and within two days thereafter paid Miller this $100,000 and took the original certificate of deposit of the Curtises and held it for payment to him by Curtis. The evident reason for Small's action in paying to Miller this loan was because he had turned it over to Sterling and was under obligation to see that it was made good. The thread bonds were a different character of security than the packers' notes and could not be then collected from the obligors because not due. Miller had already stated that he would collect the securities. At any rate, this testimony tends strongly to show that these thread bonds were the securities for the $100,000 note in Sterling's hands. There is no evidence to the contrary, and it cannot be legally assumed that these bonds belong to Small in the face of all this evidence.
After all, there was really very little controversy between the counsel for the State and the defendants as to the facts proved in the record, even as to the four items we have just discussed. The real point of difference is in the conclusions drawn from the facts. It is also true that there is not a great deal of difference between the court's findings from the facts in the case and our findings except as to the two items concerning the thread bonds and the Armour debentures. The court holds in its opinion that the question whether or not the Grant Park Bank was a real bank is *Page 548 not material in the case, but it passes on that question and holds that it was not a real bank. It seems to me that Judge Heard has demonstrated in his dissent that the Grant Park Bank was a private bank and that the bank or institution was the Curtises. It cannot make any material difference whether or not the Curtises constituted a private bank. They gave Small a certificate of deposit properly executed by E.C. Curtis as president of that bank, or by Verne S. Curtis as cashier, for every loan Small made them. We have already set forth a copy of one of these certificates in our discussion of the thread bonds, which copy was given Sterling, as treasurer. Small received the same character of certificates of deposit for the loans he made the Curtises. The certificates bound both of the Curtises when signed by either Verne S. Curtis as cashier or by E.C. Curtis as president, and an action at law could have been sustained against them by Small, as treasurer, as they were given to him for loans made to them. (Kavanagh v. Bank ofAmerica, 239 Ill. 404.) Every loan by Small to the Curtises was of the same character as all the other loans by him. The account we have cast between the Curtises and Small in our table shows that these loans were handled by both parties as loans are usually dealt with. It shows that the Curtises were to pay interest to Small, and that they did pay to him $247,000 of interest. The evidence and this account further show that the Curtises dealt with the discount they received in the sale of these notes as their property, and that Small regarded it and treated it as their property. Small had just as much legal right to loan to the Curtises as individuals as he had to lend to them as bankers. So it matters little whether the Curtises be regarded as private bankers or simply as individuals, because the statute of 1908 was held void by the affirmance of Judge Jones' decision. We think it is unfortunate that the court did not pass on this question outright, because it is a real question in the case. *Page 549
As we interpret the small notes in this accounting there is no difference between them and the large notes except as to size or amount of the loans expressed in the small notes. We say this because of the manner of their purchase by the Curtises. When they received a loan from Small, E.C. Curtis sometimes deposited the money in the Grant Park Bank or in its account with the Fort Dearborn Bank. A number of times he did not do this, but it made no difference whether he deposited the money or did not deposit it to the account of the Grant Park Bank. The transaction amounted to the same thing. If he deposited the money in that account he checked it out and bought Fort Dearborn cashier's checks. If he did not deposit the money in the account he took the draft of Small that was sent to him and with that draft obtained cashier's checks of the Fort Dearborn National Bank and deposited these checks in the Stock Exchange Bank of Chicago and received credit for the same. That bank, which is the bank that sold the packers' notes, then sold him a packer's note of the face value of the loan he received from Small, and after deducting the discount the bank gave him credit for the remainder of his deposit, which was of the same character as the funds with which he bought the packer's note, — that is to say, it came directly from the State treasury. It was not discount, although the remaining amount of money he had equaled the amount that the note was discounted. He continued discounting notes as he continued to borrow money in the same manner as before, and when the remnants of the money loaned by him reached a sufficient amount he bought a small packer's note, and these small packers' notes were bought just as certainly with money direct from the State treasury as were the larger notes. Therefore we say that the small notes were not interest notes or notes purchased with discount or interest any more than were the larger notes. On no note the Curtises thus purchased were they paid any discount by the packers. They were given a note that had *Page 550 the discount in it, and they collected the discount when the note was collected. So in dealing with these notes we think they should be considered in that way.
The small notes were evidently put up with Small as further or additional security. The Curtises were handling a considerable amount of money, and Small, if his testimony is to be believed, was seeing to it that the loans to the Curtises were well secured. We call attention to the fact that Small testified that in the very beginning the Curtises entered into a contract with him by which they were to file with him, and did file with him, quite an amount of collateral, consisting generally of bank stock, and by the contract this collateral was to stand good for any loan he might thereafter make the Curtises. While Small did not state the amount of this collateral, he did state that it was several times the amount of the first loan, which was a $50,000 loan. This collateral must then, if his testimony is true, have amounted to as much as $150,000 or more — at least $100,000. When the Curtises bought their first $50,000 packer's note it was at once filed with Small as security, and so with all the other packers' notes the Curtises purchased. If his testimony is true he was well secured every time he made a loan to the Curtises. A glance at our tables will show that Curtis very shortly commenced to place with Small the small notes as additional collateral, and some of them were finally collected by Small, apparently for interest the Curtises owed him. For these reasons we think the court is in error in stating that Small was not well secured by the Curtises at the time these loans were made.
The transactions appear to be criticised because Small, when he wanted any note collected for use in the treasury, delivered it to the Curtises a few days before it was due and they collected it from the packers and paid the proceeds at once to Small and they were credited in their account in the treasurer's office under the head of "Grant Park Bank" or safe account. The character of these loans *Page 551 made it necessary that they be collected in this way. Small testifies that he always in such case delivered the collateral to the party putting it up for collection. The Curtises could not pay any other way except by cashing a loan. They did not have sufficient capital of their own to cash the large number of notes that were cashed. It is certain that Small was not betrayed by thus trusting to the honesty of the Curtises to cash the loans.
We have examined into these transactions carefully. We have weighed well the reasons of the court for its conclusion drawn against these loans to the effect that they were all Small loans, and that the large loans and the small loans eventually were paid to him. We see no evidence, in looking over the account or the table we have made of transactions between Small and the Curtises, that Small made his first payment of interest and balanced that payment by charging the Curtises with $307,000 in the safe account. We call attention to the fact that on September 30, 1918, when Small made his first payment of interest, only two of the small notes were due, and they amounted to only $57,000. The next small note paid was on October 1, 1918, for $27,500, so it is certain, we think, that Small did not pay his interest out of any notes taken from the Curtises or from the proceeds thereof. We have already discussed this matter of payment of interest by Small and do not care to extend the discussion. The only way that Small could square his account or balance his first payment of interest after he was charged with it upon the public records of the treasury was by obtaining a similar credit on the same records. In order to obtain that credit he would have to have the warrants of the auditor to pay out that money before his credit would be recognized on the public records. This is so because the auditor at all times knew exactly the amount of money paid into the State treasury. He knew by his books that that money was paid on his order to the treasurer to receive the money, and he knew equally well *Page 552 that for every dollar Small paid out of the treasury he gave his warrant for that payment.
In the summer of 1918 E.C. Curtis and another party were working on a merger of the Ridgely National Bank and the Farmers National Bank, both of Springfield. The other party we will refer to in this transaction as the third party, because he has no interest in the other transactions mentioned in the record. Small asked Curtis and the third party what the Ridgely stock could be bought for, and they told him that it could be bought for a little more than book value. Curtis asked Small to get into the transaction with them, and after some conversation Small indicated his willingness to buy stock provided Curtis would attend to the business details. Small indicated that he would be willing to participate to the extent of $100,000, saying that he would like to have five hundred shares in the new bank after consolidation. Curtis then suggested that they put in Small's name all the stock bought, and that he should hold it in the proportion of two-fifths for himself, two-fifths for Curtis and one-fifth for the third party, and that each one should pay that proportion of the cost of the stock. Curtis made the suggestion with the idea that he could make better deals in the name of Small than he could in the names of the other parties. There was no secrecy about these transactions either before or after they were agreed on, and Curtis began purchasing the stock of the Ridgely National Bank in August, 1918, and the purchase thereof was concluded some time in January, 1919. The transaction agreed on was that the money derived from the liquidation of the Ridgely Bank should be used to pay for stock purchased in the new bank, the Ridgely-Farmers State Bank. There is no controversy about the parties being interested in the transaction in the proportions already set forth. Small was to pay over to Curtis his $100,000 to pay for the first stock, and Small's testimony is to the effect that he paid every dollar of that amount to Curtis to be handled *Page 553 in the transaction. His testimony is that he used $40,000 of Liberty bonds and other negotiable securities that he had in his possession to pay for his stock. He is corroborated by the fact that Curtis' demand certificates of deposit in the Grant Park Trust and Savings Bank were increased constantly as the purchases of the stock by Curtis went on. When Curtis began the purchase of this stock, in August, his credit balance appears to have been $93,247.34, and the showing is that this account continually increased from that time to January, 1919, when the first purchases were completed. The third party was to pay $50,000 toward the purchase of this stock, and it is shown that on January 9, 1919, $50,000 was added to the credit side of Curtis' account.
It is contended by the State that on August 8, 1918, a Wilson note was collected by Curtis, as we have already stated, and that the proceeds from the collection of that note were placed in the demand certificate account, and that the payments for the Ridgely stock were made out of the $100,000 derived from the Wilson note. This note, of course, originally was purchased with State funds, and we have already detailed the facts concerning that note. We think the evidence shows or tends to show that the proceeds of the $100,000 Wilson note were used in those purchases, but it cannot be definitely stated what particular items or credits in Curtis' account had been used to make these payments. Our view of the matter is that the $100,000 proceeds of the Wilson note were Curtis' individual property, and that he might legally use this money, the same as any other property he had, in his private enterprise. So far as Small is concerned, he is only interested as to the manner in which the stock was paid for. If his testimony is true, — and we think it is corroborated by competent evidence in the case and he is an unimpeached witness, — then there is no showing as to him, or even as to Curtis, thus far, that any of such funds were taken out of the treasury for the purpose of completing this transaction. If this deal had been *Page 554 an unlawful or corrupt deal, as the State's counsel seem to think it was, it appears to us that it would not have been so openly and so publicly transacted. All the stock was in the first place taken out in the name of Small, and the final stock in the Ridgely-Farmers State Bank was divided among the three parties in the proportions already named. The evidence also shows that Small was financially able to make such payments from his own personal property or funds.
We may further say in regard to this transaction that it is clearly shown, as we understand the evidence, that Curtis had in his hands much more than was necessary to pay for his own stock and for the stock of the other two parties. After those payments were made a dividend was declared on the Ridgely National Bank stock and applied to the credit of each of the three parties to the transaction, so that the final result was that the cost of Small's two-fifths of the stock and of Curtis' two-fifths was a little less than $85,000 and the cost of the third party's stock less than $43,000.
The formation of the new bank took place in February, 1919. This was during Sterling's term of office as treasurer. It is contended by the State that the liquidation of the old bank was not quite completed when the new bank was formed and that the liquidating dividend on the old stock was not received until some time later; that during this short interval of about two weeks Curtis concluded the transaction by using money borrowed by him from the treasurer, Sterling. It is not shown by the evidence what securities, if any, Curtis deposited with Sterling for this loan, and the most that is contended for by the State on this question is that Curtis used in the short interval aforesaid money that he borrowed from the State through Sterling, as treasurer, to complete the deal. There is no contention that Curtis borrowed this amount of money out and out for this purpose. The contention is, that after borrowing $200,000 from Sterling he used a portion of the money to *Page 555 complete the transaction as to the Ridgely Bank stock. We do not think this evidence ought to invalidate the transaction as to any one of these parties, and particularly as to Small and the other party to the transaction. The evidence shows that they paid for their stock, or that is the tendency of the evidence, and there is no showing, — at least no sufficient showing, — that Small did not pay for his stock as he testified he did. Small at that time was not State treasurer and was not the custodian of State funds, and it is not contended that he purchased any of the stock himself with such funds.
The State has invoked the doctrine of presumption against the despoiler of evidence that was in his possession. It is the rule that where a party to a suit has intentionally destroyed material evidence in a case every presumption will be indulged against him. However, this presumption does not relieve the opposite party from the burden of proving his case, but only has the effect, where the evidence is vague and uncertain, of raising a presumption against the party who has destroyed evidence which would have made the facts clear. This rule was laid down in the case of Hudson v. Hudson, 287 Ill. 286. The records destroyed in this case were all private records, but they were records that were in the possession of the defendants and the rule applies here. It is not necessary that the intention of the party be to destroy the records for the purposes of the case in hand or one likely to be brought. It is the intentional destruction of records that raises such a presumption. In some cases the presumption is not applied where it appears positively that no intentional wrong was intended against another suitor. We think the rule applies in this case, though there is but little evidence for applying the doctrine.
The evidence as to the transactions between Small and the Curtises and the packers is pretty clearly shown. There are some facts reaching into the treasurer's office during the term of Sterling that might have been more fully cleared *Page 556 up by the complainant, and it does appear in this case that the State could have shown the amount of interest collected on the accounts outside of the safe account and also the amount collected from the Curtises. We think the evidence shows that the thread bonds and the National securities were traced into the hands of the Curtises, and the evidence does not show that those bonds, or the proceeds thereof, were traceable into the possession of Small as an individual owner. It is also clear that E.C. Curtis at his death was still the owner of the Ridgely-Farmers State Bank stock, or two-fifths of the stock bought by himself, Small and the third party. The evidence shows that the Curtises paid to Small $247,000, as already stated, as interest on the money borrowed by them from him. We may be in error as to the $27,000 note above discussed and that it should not be charged as interest collected by Small from the Curtises. If that is true, then the amount of interest paid by them is $220,000. We may also be in error as to the small $15,000 note being paid by the Curtises to Small as interest. If we should be in error as to both notes, it is still clearly shown that the Curtises have paid Small $205,000 as interest. This leaves the necessary inference that Small collected as much as $203,010.12 interest on all the other accounts he had in banks that were drawing interest, and if only $205,000 was paid in for interest on the safe account then the remainder of the $450,010.12 was paid on all the other accounts. It is not our intention to preclude an investigation by the lower court as to what was the real amount paid by the Curtises to Small for interest.
As the decree of the court is affirmed and the cause remanded for an accounting it seems to us there ought to be an indication in the opinion and remanding order that Small and the Curtises cannot be jointly held to account for the interest or discount paid to Sterling for loans made to them by Sterling at the beginning of his term and which loans extended entirely into his term on a new agreement. Small *Page 557 having failed to itemize his receipts of interest in his two reports, as required by the statute, upon that ground a decree might be entered requiring him, alone, to make an itemized account of all interest and pay to the State such sum, if any, which may be found not heretofore to have been accounted for and paid by him; but it would be manifestly unjust and inequitable for a court of equity to hold the Curtises jointly liable to again pay over $200,000 which the evidence shows they have already actually paid to Small as treasurer, $30,000 of which the State admits was their own private property or money.
Therefore, for the reasons herein stated, and for all the reasons assigned in the dissenting opinion of Mr. Justice Heard, I most respectfully dissent from the decision of the court.