Chicago Title & Trust Co. v. Central Trust Co.

Mr. Justice Duncan delivered the opinion of the court:

Some of the questions involved in this appeal have heretofore been considered by this court in the case of Golden v. Cervenka, 278 Ill. 409 . A sufficient statement of the pleadings of the parties on the present appeal and the history of the litigation are to be found in the former decision of this court. As in that case stated, the original bill of John F. Golden and the Importers and Manufacturers’ Company, as amended and supplemented, was a bill to enjoin the prosecution of the suits against the stockholders of the LaSalle Street Trust and Savings Bank, (hereafter referred to in this opinion as the trust and savings bank,) brought by one Cervenka, and the institution or prosecution of other suits of like character to ascertain the creditors of the bank and its liabilities, as well as its stockholders and the extent of their liabilities to the creditors, for a decree for the amount of the stockholders’ liability and the distribution of such amount among the creditors of the bank and for the appointment of a receiver to collect such amount from the stockholders. The receiver, William C. Niblack, appointed by the court under the bill previously filed by the State Auditor, after filing his answer filed a cross-bill containing the same allegations and asking the same relief as was asked in the original bill, a part of the relief asked being a decree against the Central Trust Company because of certain of its acts in connection with the organization of the trust and savings bank. This cross-bill was answered by the Central Trust Company, as well as the original bill. On the hearing as the case then' stood in the circuit court a decree was rendered against the Central Trust Company for $1,487,854.16, and against the stockholders for an amount equal to the par value of the respective shares of stock held by them. That decree was reversed by this court. For the reasons stated in the case cited aforesaid, this court held that the act of the Central Trust Company in allowing the Auditor to count $1,250,000 of its money as the money of the trust and savings bank and as its cash capital and surplus upon which to start its business as a bank, and thereby inducing the Auditor to issue his certificate of authorization to the trust and savings bank to conduct its banking business, estopped the Central Trust Company, as against all persons giving credit to the trust and savings bank, to deny that that money was the money of the trust and savings bank and for the purposes of the bank in the due course and transaction of its business as a bank. In other words, the sum of money aforesaid was a trust fund for the benefit of the creditors in satisfaction of all their losses by reason of the acts of the Central Trust Company aforesaid and its subsequent withdrawal of that money from the trust and savings bank. A number of authorities were cited by this court in that case sustaining the court in that holding, and that decision is not only the law of that case but is also the law of the case now in hand. We further decided in that case that if the entire assets or resources of the LaSalle Street National Bank (herein referred to as the National Bank) assigned and turned over to the trust and savings bank as assets and as capital and surplus were equal to the amount in value at which they were carried on the books of the National Bank, then the capital stock and surplus of the National Bank would not be impaired, but if the capital stock and surplus of the National Bank were impaired at that time the Central Trust Company was liable to the creditors of the trust and savings bank to make good the deficiency, and also for the interest on such deficiency from the time of demand upon it or from the time the receiver, Nib-lack, filed his cross-bill, which was September 24, 1915? and that the receiver could maintain that suit for the creditors. It was also decided in the same suit that the stockholders of the trust and savings bank were also liable to the creditors of the bank under the original bill brought in the former suit but that their liability was different from and had no relation to the liability of the Central Trust .Company to receiver Niblack for the creditors, and that the issues in the two suits, the one against the Central Trust Company and the other against the stockholders, should be separated for the purposes of trial and upon remandment by this court should be referred to different masters in chancery for the reasons stated in our former decision. We also Held in that decision that the Central Trust Company was only bound to account to the receiver for the benefit of the creditors of the trust and savings bank and that there was no liability on its part to the stockholders; that the trust and savings bank, by the action of the Central Trust Company and the stockholders and officers of the trust and savings bank, was only provided with a capital stock and surplus by the assets of the National Bank assigned to it, and that if those assets fell short of $1,250,000 in value, (the amount with which the trust and savings bank was to begin its business as capital and surplus,) the creditors, by the receiver, have the right, to the extent of the deficiency, to complain of the Central Trust Company and of the stockholders and to require them to make good the deficiency. We also said in that case: “Whether or not this amount [the capital and surplus] had been impaired depends upon the collectibility of the loans which constituted a large part of the resources of the bank.” The word “loans” in that sentence, as used by this court, means all bills receivable and bonds and securities held by the bank, and it is important in this consideration to have an accurate understanding of the holdings of this court and the law of the case as set forth in our former decision.

We have gone into the details of our former decision because of the fact that in the consideration of the case now before us many of the same points that were decided in that case are re-argued and the correctness of the" holdings are thereby challenged. We are satisfied with our rulings in that case as above explained and do not deem it necessary to further consider them. Most of the propositions of law contended for by the parties to this suit are discussed in the beginning parts of their briefs and arguments. Some of them we may have occasion to consider in connection with the items of account to which they are applied, but we make the distinct point here that the law of the case now in hand, so far as announced in our former decision, is still the law of the case, and our former decision must be taken as a complete answer to all arguments against its correctness.

After the cause was remanded to the circuit court of Cook county by our former decision, the Central Trust Company on October 19, 1917, filed a cross-bill and. on April 29, 1918, its amended cross-bill, making the stockholders and others parties defendant thereto, in which it made claim that “in equity the stockholders of the trust and savings bank ought to make good its capital and surplus and asking that they be required to pay whatever amount the trust company should be held liable for and to thus exonerate it in the premises, and that if prior to such payment on the part of the stockholders any part of such liability should be satisfied by the trust company, the stockholders be required to reimburse the trust company therefor.” On April 29, 1918, the circuit court entered an order striking the cross-bill from the files on motion of William C. Niblack, as receiver, on the ground that it did not state a case which entitled the Central Trust Company to any relief in the court of equity and that it could not be helped by further amendment. From the order of the circuit court the Central Trust Company prosecuted an appeal to the Appellate Court for the First District, and that court on January 28, 1920, affirmed the decree of the circuit court. It does not appear from this record that any attempt was made by the Central Trust Company, by appeal or by petition for certiorari, to have reviewed the decision of the Appellate Court affirming the order of the circuit court aforesaid, except that the trust company has filed a separate transcript of the record in this court containing the proceedings of the circuit court of Cook county with reference to the filing of the cross-bill, the motion and order of the circuit court dismissing the same, and the record and opinion of the Appellate Court affirming the order of the circuit court, etc., together with an assignment of errors, setting forth in the assignment certain reasons why it claims the Appellate Court erred in affirming the order of the circuit court. It is clear from the foregoing that this court has no jurisdiction to review the order of the Appellate Court affirming the order. Nevertheless, a purported appeal from that order, entitled “Chicago Title and Trust Company, as receiver, appellee, vs. Central Trust Company of Illinois, appellant,” and bearing our general docket No. 14,703, was docketed in this court. This appeal, by order of this court, was consolidated with No. 14,702 for hearing, the latter cause being the main cause now presented for hearing. A motion by the receiver was allowed by this court at our June term, 1922, based upon the facts above stated, to strike from the files of this court the record in appeal case No. 14,703. The allowance of that motion virtually disposes of this appeal, and the same is now by the order of this court dismissed for want of jurisdiction in this court to further consider the same.

In pursuance of our order of remandment in the former case, the matters relating to the Central Trust Company were referred to a master in chancery to take the evidence on behalf of the respective parties and to determine the assets of the National Bank assigned to the trust and savings bank and their cash value for banking purposes, and also to determine the liabilities of the National Bank assumed by the trust and savings bank. This reference was under the cross-bill of the receiver, Niblack, in the former suit, which is treated in this case as an original bill, and also the answer to the cross-bill by the Central Trust Company and the replication thereto. The original bill in the former suit against the stockholders and others, and their answers thereto, were treated as another and distinct part of the suit, and the issues thus formed were referred to another and different master and have no connection with the matters now before this court and no further reference thereto will be made. The master reported the evidence to the court with his conclusions, holding that the Central Trust Company, appellee in this proceeding, was liable to the receiver, the Chicago Title and Trust Company, appellant, for the creditors, in the sum of $79,198.42, with interest thereon at five per cent per annum from September 24, 1918. Objections to the master’s report were overruled and stood as exceptions before the circuit court, which were also overruled. A decree was entered by the circuit court against the Central Trust Company in the sum of $101,691.05, including the interest, and for costs of suit. On appeal to the Appellate Court for the First District the second branch of that court modified the decree of the circuit court and as modified affirmed the decree in the sum of $978,029.11, including interest, and it was further decreed by the Appellate Court that the Central Trust Company pay the costs in both the circuit court and in the Appellate Court. During the pendency of the suit in the circuit court the receiver, Niblack, died, and the Chicago Title and Trust Company was appointed in his stead and prosecuted the appeal to the Appellate Court. It has prosecuted a further appeal to this court, and makes the claim that the evidence taken before the master showed that the capital and surplus of the National Bank on October 21, 1912, were entirely lost. The Central Trust Company’s claim is that the evidence in the record shows that on October 21, 1912, there was no impairment of the capital and surplus of the National Bank, and it has assigned cross-errors on this appeal.

The questions involved in this appeal are in the main very simple, and the action in the circuit court may be properly characterized as a bill for an accounting to determine the liability of the Central Trust Company to the Chicago Title and Trust Company, as receiver and appellant, for the benefit of the creditors of the trust and savings bank. To determine this liability it was necessary to ascertain the cash value of the entire resources or assets of the National Bank and the entire liability of that bank on October 21, 1912, the day on which the National Bank was denationalized and its assets turned over to the trust and savings bank and its liabilities assumed by the trust and savings bank. The difference between the value of the resources of the National Bank and the liabilities of that bank on said day, when properly stated and valued, must necessarily be the liability of the Central Trust Company, as that difference would necessarily show the amount of the depreciation, if any, of the assets of the National Bank, which would also constitute the amount of the liability of the Central Trust Company, hereinafter referred to as appellee!

The record in this case is very voluminous and consists of 13,571 typewritten pages. The master’s report contains 525 printed pages and the opinions of the Appellate Court 337 pages. The printed abstracts contain 4176 pages, not including the index, in a special volume of 191 pages. The appellant’s brief and argument and its reply contain 771 pages and appellee’s brief 699 pages. There are a great number of items constituting the assets or resources of the National Bank, and more than 200 of them are contested in the printed briefs and arguments. The three Appellate Court judges all differed in their findings as to the amount of the impairment of the capital stock and surplus of the National Bank. The presiding justice, who wrote the opinion of the court, reached the conclusion that the amount of such impairment was $737,220.54. Another one of the justices, who disagreed with the presiding justice only as to three items of assets and two items of alleged liabilities, reached the conclusion that such impairment amounted to $597,411.94. The other judge reached the conclusion that the capital stock of the National Bank was worth $72,520.06 less than nothing, and that the bank was insolvent and tliat the capital stock and surplus were impaired to the extent of $1,250,000, which amount he fixed as the liability of appellee, with five per cent interest thereon from September 24, 1915, while the master and the circuit court fixed the amount of such impairment at $79,198.42.

Early in our consideration of this case it became very apparent that we could not sustain the judgment of the circuit court or of the Appellate Court, or the findings of the master or any member of the Appellate Court, as to the amount of the liability of the Central Trust Company, because of the fact that their findings were against the manifest weight of the evidence. Our finding on that question as to the amount does not differ very materially from that of the master and the circuit court, but there are quite a number of the contested items in which our judgment differs radically from that of the master as well as from the different members of the Appellate Court, and the reasons therefor will later appear. We have given due consideration to the evidence in the record on the contested items, and also to the opinion of the Appellate Court and the two dissents on particular items of the account, and to the briefs and arguments of counsel. Wherever a debt to the National Bank has been paid in full, either to the trust and savings bank or to the receiver after the closing of the bank, and without any outlay to the bank or to the receiver for attorneys’ fees or other extra expense in collecting the same, we have allowed the claim in full, no matter by whom paid. The main business of a bank is loaning money at interest for profit, and if a debt is paid in full, every object for banking purposes is realized out of that asset if paid in full without unnecessary expense. There is simply one good and sufficient reason for our ruling in this matter, and that is the simple fact that the receiver, for the creditors, is not entitled to a double satisfaction of any debt, and a debt paid by an honest poor man who pays because he is honest is worth just as much to the creditors as the debt of a millionaire who pays because he is solvent, provided the debts are the same amount. We regard it also as true that a debt paid by a rascal, if such appears in the evidence, is just as good money to the creditors or to the receiver as the money of any other man, and one satisfaction is all they are entitled to or should demand.

There are instances in this record where certain debtors did not pay their debts either to the bank or to the receiver and were shown to be insolvent when the debts came into the hands of appellant. Wherever the evidence in such cases shows that the debtor was solvent and the debt collectible on October 21, 1912, that debt we also regard as a good asset on this inquiry and one that should be allowed in full. The question in such a case, as was stated in our former opinion, is not as to the collectibility of the note when it came into the hands of the receiver, but as to its collectibility when it came into the hands of the trust and savings bank. The Central Trust Company in this case is not to be prejudiced by any failure of the trust and savings bank, or by appellant, to use proper diligence in the collection of the assets turned over to them. If the debt was as good on that day as cash for banking purposes, we regard it as a good debt and have allowed it. It was this ruling that we made in the former case that is used by appellant in its contention that all debts, whether they have been paid or otherwise, must be determined as to their worth on October 21, 1912. This very argument has occasioned the great difference in the finding of one of the Appellate Court judges and the other two judges, the holding of the dissenting judge in many instances being to the effect that the debt should be regarded as worthless although paid, because of the fact that there was no evidence tending to show that it was good and collectible when it came into the hands of the trust and savings bank. .The receiver has also taken the position in some instances in this case that a debt of a debtor is not to be regarded as a good asset in a bank for banking purposes unless the trust and savings bank could have re-discounted that note to another bank had it attempted to do so. We do not regard such proof necessary in this case, but the simple question is, Were the assets collectible in the ordinary course of business, principal and interest? — and if so, we have regarded the assets as good and worth full value for banking purposes because they have served the purposes of the bank in reaping a profit on them by collecting the principal and interest. No bank would discount any paper for cash without a profit on the cash invested in the purchase. This court never meant to indicate in its former decision that a debt paid was not to be regarded as a good and collectible asset. Payment of such an asset is the very best evidence that it was good, and where a note is paid it is immaterial whether or not another banker would have discounted it for cash or otherwise, or whether or not it was good or bad within the judgment of bankers on October 21, 1912.

. The expert accountants, in listing the resources or assets of the National Bank, have not listed them at their face values, in many instances, as such face values appear in the original instruments. This is notably true of bills receivable. The face value of all notes for the purpose of this accounting the experts valued as of October 21, 1912. In those instances in which the face of the original note was drawing interest to a date after October 21, 1912, the value for this accounting is the face value of the note plus accrued interest to said date, following the methods of the experts in this particular; and in the case of other notes in which their faces express the principal and interest for a given time after October 21, 1912, their due date, the face values of those notes we give at face, less accrued interest, and for the same reason. So, if in our accounting we find a note to be worthless, the total loss or depreciation of assets for that note is its face value less its accrued interest or plus accrued interest, according to the class to which it belongs, and if we find the note good and collectible we allow it for its face value less accrued interest or plus accrued interest, according to the class to which it belongs. On a number of no'tes contested in this record only part payment was made and the remainder of the notes was held to be worthless. In all such instances the value of the notes for banking purposes is not the amount of the payments on the notes but the present worth of the payments on October 21, 1912, unless interest was also paid to date of the payments. In other such instances payments are made, and at the date of the payments all interest on the notes was paid up to the date of the payments. In such cases the payment or payments represent a complete discharge of the debt to the amount of the payments, and the note or notes would in such cases be worth the amount of the payments or the total amount of the debt discharged, with interest, if the debtors were insolvent and the notes not collectible. In still other instances payments were made on other notes, and also interest on them up to a certain date prior to the last payment. In such cases the amount of the payments made up to the time the interest was paid in full discharged completely the amount of the debt to the extent of the payments, and payments thereafter made are accounted for at present value from the time the interest was completely paid on the note to the date of the payments, to ascertain the full amount of the debt discharged by such latter payments. The reasons for our action in this regard are, that a partial payment on a note or claim cannot be regarded as the same as cash in the trust and savings bank except to the extent that that note or claim is completely discharged as to both principal and interest. There will be found in our accounting a number of instances in which we have allowed less on notes on which partial payments have been made than either the master, the circuit court or the Appellate Court. We make all the foregoing explanations in this part of our decision so that our accounting may be understood without going into details in every instance when we come to our consideration and explanation of particular items passed on by us in this accounting. In counting present worth or value as to partial payments made we have used the rate of six per cent per annum.

In the following tabulations we give the itemized resources or assets of the National Bank turned over to the trust and savings bank and our valuations of the same, and also a complete list of the liabilities of the National Bank assumed by the trust and savings bank, together with the total values or amounts of such resources and liabilities as we have found them, and the difference between the same, which is our finding as to depreciation of the assets of the National Bank and also for that reason the liability of the Central Trust Company to appellant on September 24, 1915, the date of the filing of the cross-bill, to-wit:

Resources

1. Cash in bank.................................. $231,555.91

2. Exchange for clearing house.................... 47,386.36

3. Redemption fund in U. S. treasury............... 32,500.00

4. Due from national banks....................... 313,305.46

5- Due from State banks.......................... 151,010.01

6. Accrued int. on amt. due from Nat. and State banks 206.09

7. Cash items ................................... 426.88

8. Overdrafts................................... 3,265.92

9. U. S. bonds to secure circulation................. 659,663.25

10. Bonds to secure postal savings deposits.......... 78,409.76

11. Other stocks and bonds......................... 191,572.52

12. Furniture and fixtures.......................... 5,950.00

13. Loans and discounts............................ 2,299,274.27

14. Funds in transit............................... 305,247.32

15. Account new bank building..................... 50,000.00

16. Good will .................................... 65,000.00

Total •_....................................$4,434,77375

Liability of appellee to balance............. 108,055.78

Liabilities

. 1. Capital stock .................................$1,000,000.00

2. Surplus...................................... 250,000.00

3. Individual deposits............................ 1,852,969.64

4. Accrued interest on individual deposits........... 941.51

5. Savings deposits.............................. 109,903.36

6. Accrued interest on savings deposits............. 720.00

7. Postal savings deposits......................... 58,011.89

8. Accrued interest on postal savings deposits....... 425.05

9. Due national banks............................. 192,886.52

10. Due State banks............................... 200,768.70

11. Accrued int. on amt. due Nat. and State banks.... 468.96

12. Time certificates of deposit..................... 98,727.50

13. Accrued interest on time certificates of deposit____ 683.78

14. Demand certificates of deposit................... 4,000.00

15. Accrued interest on demand certificates of deposit. 6.01

16. Marginal certificates of deposit.................. 27,500.00

17. Accrued interest on marginal certificates of deposit 15.79

18. Cashier’s checks .............................. 41,461.93

19. Certified checks ............................... 50,440.32

20. Expense vouchers.............................. 39.25

21. Circulation................................... 647,495.00

22. Circular expenses............................. 2,109.89

23. Certain liabilities not shown on the books........ 3,254.43

Total.....................................$4,542,829.53

It has occurred to us that we can better make ourselves understood in this accounting by first considering the liability side of the account we have just stated, although it may seem like considering the matters somewhat out of their natural order.

In all well regulated banks, whether State, national or private, in which their books are properly kept, the assets and liabilities as carried on their books exactly balance. The liabilities to stockholders are generally, and we think universally, placed at the head of the tabulations representing the liabilities of the bank, although in case of dissolution and winding up of the affairs of any of the banks aforesaid, for whatever cause, the stockholder is the last to receive consideration in the distribution of the proceeds realized from the asset side of the account. Generally three terms are used to express this liability to stockholders: First, capital stock; second, surplus; and third, undivided profits. The item designated as “surplus” represents permanent surplus or a liability that is carried permanently on the books and is rarely ever decreased or increased except by necessity, in case of a loss to the bank or in case of an increase by reason of a new declaration of a permanent fund to be carried under that designation. The undivided profits are the funds usually drawn on to pay the declared dividends of the bank. The term “capital stock” requires no explanation. The liabilities other than capital stock, surplus and undivided profits carried on the books, represent, of course, the amount of liabilities owed to the real creditors of the ba'nk by the bank, and by the stockholders as well, under such laws as ours, where stockholders are bound to the creditors in a double liability in case of insolvency, etc. The National Bank carried on the liability side of its account capital stock and surplus in the same amounts that we have above listed on the liability side of our account in this case. It also carried on that side of the account undivided profits to the amount of $17,815.72. We have omitted this last named item from the liability side of our account for two reasons. In the first place, the liability of the Central Trust Company in this case, as we have already declared it, was simply to make good the capital stock and surplus of the trust and savings bank, amounting-to $1,250,000. If the assets of the National Bank would pay off its entire liability to its real creditors and leave $1,250,-000 for its stockholders, its capital stock and surplus transferred to the trust and savings bank would not have been impaired for the purpose of this accounting, because its entire assets transferred to the trust and savings bank would upon such supposition be worth in cash the amount due both creditors and stockholders. It must therefore be clear that for the purpose of this accounting the liability side of our account should not contain an item of undivided profits. The second reason for not including it is the fact that the National Bank did not have the amount of undivided profits carried on its books that was backed or secured by good and collectible assets above its other liabilities as listed by us. In making up the liability side of its account in this case the Appellate Court omitted the items of capital stock and surplus. We think that this is one of. the causes that led it into error in its consideration and reasoning as to other items of the liability account which the attorney urged on the part of the receiver should be included on that side of the account. It seems to us that a moment’s reflection ought to convince anyone that we have included on the liability side of our account every liability to stockholders, but we will now proceed to consider other such items which it is urged by the receiver should go into the account, and only very briefly, because the questions are so simple.

As was disclosed in our former opinion, there were a number of stockholders of the National Bank who were not willing to, and did not, exchange their National Bank stock for shares of the trust and savings bank. The receiver insists there should be included on the liability side of the account an amount necessary to settle with those stockholders. There were 426 shares held by such stockholders, and two members of the Appellate Court have charged up in this accounting $53,250, or $125 per share. The other member of the Appellate Court reduced this amount to $21,202.02, and all of them treated these stockholders as creditors, simply. These stockholders are not to be considered at all as creditors of the trust and savings bank and entitled to share in the proceeds of what the receiver shall realize out of the assets of the trust and savings bank, and neither is their assignee of these shares entitled to be rated as such a creditor. This record shows, without dispute, that C. B. Munday purchased the shares of the dissenting stockholders at about $125 per share and thereby canceled all claim against the trust and savings bank as to those creditors, and it will certainly not be urged that Mun-day, as their assignee, has any standing as a first creditor of the bank. There is no more reason for considering or treating the amount due said stockholders as an extra item in the liability account, than there is for considering any other stockholder of the National Bank as a creditor to the extent of the value of his stock and who exchanged his National Bank stock for stock in the trust and savings bank. Under the evidence in this record there is no liability of the Central Trust Company, and could be no liability, to stockholders'of the National Bank, or their assignees, on account of the fact that they held such stock at any time. It will be noticed that we carry the entire amount of liability to the stockholders of the National Bank ($1,250,000) in the first two items of our liability account. That liability as to said stockholders ceased the very moment they accepted stock in the trust and savings bank, and as to the dissenting stockholders the very moment that Munday purchased their stock. The liability as to these latter stockholders passed to Munday when they assigned their shares to him, and this liability is a liability of the trust and savings bank, which amounts to nothing until all the creditors of that bank are satisfied. The liability of the Central Trust Company is to creditors of the trust and savings bank to make good the $1,250,000 of capital stock and surplus of the National Bank assigned to the trust and savings bank. We therefore place as their liability $1,250,000 for these two items, and after satisfying all the other creditors on the liability side of the account out of the assets, if the remainder is less than said liability the actual liability is the difference, and nothing more. So in reality the entire liability of our side of the account, so far as this accounting is concerned, is a liability of the Central Trust Company to the creditors of the trust and savings bank, and never can become a liability to the stockholders of the trust and savings bank, assignees of the stockholders of the National Bank. The assets of the Central Trust Company for the purpose of this accounting are represented on the side of the account which we have headed “Resources.” In other words, although they were the assets of the National Bank on the day it assigned them to the trust and savings bank, they are now to be considered as the assets of the Central Trust Company for this accounting, to pay off the liabilities on the other side of the account. The amount that such resources are insufficient to satisfy the liabilities is the amount that the Central Trust Company shall pay from its own bank to satisfy such liabilities.

For similar reasons mentioned in the preceding paragraph there is no liability of the Central Trust Company for the taxes assessed against the individual stockholders of the National Bank on their stock, amounting to $12,182.24. The National Bank, apparently as all other national banks usually do, was accustomed to pay the taxes of its stockholders on their National Bank stock. The reason for this custom in this State is apparent. By section 35 of our Revenue law the stockholders of the bank are personally assessed for their shares, and, of course, are primarily liable therefor and bound to pa}'- the same. By section 39 of the Revenue act it is the duty of every bank and its managing officers or officer to retain so much of any dividend or dividends belonging to such stockholders as shall be necessary to pay taxes levied upon the stockholders’ stock. The officers of the bank are personally made liable for these taxes if they do not conform to section 39 in paying the tax out of the stockholders’ dividends. Accordingly the National Bank on October 21, 1912, carried an item in its liability account in this language: “Reserved for taxes, $6000.” That sum was almost one-half of the taxes, and if the Na- 1 tional Bank had continued in business it is probable that this item would 'have been doubled or fixed at the amount of the taxes at tax-paying time after it had ascertained the correct amount. The trust and savings bank paid a dividend .in 1913, and should have deducted this tax from that dividend just the same as would the National Bank have done had it been in business at tax-paying time and at the time of the declaration of the dividend in 1913. This liability was clearly a liability of the stockholders of the National Bank. Because the National Bank took steps to protect itself against liability for said taxes, and also its officers, in the manner above stated, the taxes did not become its obligation primarily. The Central Trust Company is under no obligation to pay the taxes of the stockholders of the National Bank. The trust and savings bank assumed no obligation to pay such taxes. Its contract was that it would “assume all the indebtedness of the National Bank of every kind and agree to pay such indebtedness in the manner and form in which the National Bank agreed to pay the same.” There is no proof of any special agreement to pay these taxes, as the trust and savings bank was only under obligation to the State to pay these taxes, as the National Bank would have done, out of the dividends of the stockholders. Two of the Appellate Court judges erred in including in the liability account of the Central Trust Company $6000, the amount carried on the books of the bank and reserved to pay taxes. The mere fact that this item was carried on the liability side of the account of the National Bank did not make it a real obligation of the bank and consequently not an obligation of the Central Trust Company.

The receiver makes the further claim that the expenses in carrying on the trust and savings bank from its organization to its close were $316,104.17, and that the total expenses of the receiver were $274,170.45, making a total of v $590,274.62, which should be considered as a liability of the National Bank and as a liability of the Central Trust Company. We think the mere statement of this claim ought to be sufficient to refute its correctness. No reasonable theory is advanced or can be advanced for charging these amounts in the liability account of appellee. Appellee cannot be charged for any mismanagement of the bank or for the expenses of the receiver in winding up its affairs, because it was in no way responsible for the same.

The master and the circuit court, and also the Appellate Court, have charged appellee in its liability account a $500 fee paid to Joseph O. Morris for legal services rendered by him prior to October 21, 1912, to the National Bank on a claim placed in his hands by that bank. It was paid to him by the trust and savings bank on November 30, 1912. At that time Morris owed the National Bank a $600 note due on demand. The trust and savings bank, had it seen fit to do so, could have set off this $500 claim with Morris’ note, and should have done so. Morris also owed the National Bank another note, which made his total indebtedness on October 12, 1921, $2079.45, and we have allowed nothing on this claim against Morris. We do not dispute the propriety or correctness of the courts in charging this on the liability side of the account, but the Appellate Court erred in not crediting a like amount on the debt of Morris to the bank for reasons aforesaid. We have disregarded this item as charged for the reason that we would simply have to give credit on the other side of the account and reduce Morris’ indebtedness to the bank that much.

It appears from the evidence that C. B. Munday, after the close of the trust and savings bank, made a claim against the trust and savings bank in his bankruptcy schedule for $20,125 as salary due him as president of the National Bank. It further appears from the evidence that he received payment on his salary up to December 31, 1910, and that he thereafter relinquished his salary and made no further claim therefor until after the close of the trust and savings bank. Our conclusion is that the master and the Appellate Court both properly refused to charge said sum as a liability in this accounting.

We also think that the master and the Appellate Court properly refused to charge as a liability in this accounting the claim for the unexpired term of the lease of the Rookery building by the National Bank, and which claim the receiver alleges amounts to $211,500.03. Both the master and the Appellate Court declined to allow this claim of the receiver on the ground that the trust and savings bank was substituted as lessee in lieu of the National Bank, and that the lessor thereby released the National Bank from its obligation. The evidence supports that finding.

The Appellate Court properly allowed the receiver’s contention that there were certain liabilities not shown on the books of the bank and estimated these liabilities to amount to $3254.43. The master charged on the liability side of the account for those items $5364.32. This action is accounted for on the part of the master by reason of the fact that he included circular expenses to the amount of $2109.89, thereby duplicating the charge for circular expenses by oversight. There is no contention that this charge is not correct as made by the Appellate Court, and we allow the same. The liability side of the account from item No. 1 to item No. 22, inclusive, as we have above stated them, are conceded to be correct by both appellant and appellee.

In our consideration of the side of the account which we have above designated as “Resources,” we will follow the same order in considering it that the Appellate Court did in its discussion. The master and every member of the Appellate Court agreed as to the amount that should be allowed for the first seven items of resources as numbered by us and also as to item 12. The evidence amply supports them upon every item, and we will make the same allowance without further discussion. For the eighth item, overdrafts, we have allowed full value, $3265.92, as did the master, for the reason that the record discloses that they were all paid, and without contradiction. The Appellate Court allowed the same except the overdrafts of William Lorimer, Jr., and Josephine Lorimer, amounting to $313.24. We will further consider this item when we come to consider two bills receivable that were paid by Lorimer at the same time that he paid the overdrafts and which were also disallowed by the Appellate Court. The master and all members of the Appellate Court found the value of the ninth item, United States bonds to secure circulation, to be the sum of $658,018.75. We are compelled to disagree with this allowance upon the testimony of C. Frederick Childs, a specialist in government bonds officing in Chicago, and of expert accountant Hawkins. Childs sold 13,000 of the Panama 2’s at 101% on October 21, 1912. On that same date United States consols 2 per cents were offered at ioij4> and 101 1/16, plus accrued interest, was bid, and as we understand the evidence there was no sale at the latter price. Hawkins valued these bonds at 101.1875, plus accrued interest, and found the value of all of the bonds to be $659,663.25, and we have allowed the same. The master and the Appellate Court allowed for the bonds the amount they sold for about three days after October 21, 1912. For. item 10, bonds to secure postal savings deposits, the master allowed $78,434.91. We approve the finding and allowance of the Appellate Court on the evidence of Holtz and Hawkins and allow $78,409.76. The master seems to have erred in counting interest on this item.

Under the-designation “Other stocks and bonds,” item 11, there are a number of stocks and bonds considered: (a) Artesian Stone and Lime Works bonds, which we value at $79,469, which is the same value given them by the master and all members of the Appellate Court, (b) City of Chicago special assessment coupons we value at $3767-33; the same as did the master, because it appears from the evidence that they were redeemed at full face value, plus accrued interest, by the city in the regular course of business as they came due, and that the receiver could have realized the same for those that came into his hands had he presented them to the city for payment instead of selling them at a lower price. It is our constant holding all through this opinion that the Central Trust Company is not bound by the action of the receiver in selling any of the assets for less than their proved value when the evidence is clear that there was a want of due diligence in finding out their value. There was no reason whatever to doubt that these instruments would be paid in full when due or a reasonably short time thereafter, (c) Florida Indian River Land Company bonds were collected in. full by the bank when they were due, plus six per cent interest. We therefore value them at $8028, being face and accrued interest, and thereby approve the master’s finding. There is no dispute on the evidence, (d) McGuire gold bonds we value at $12,319, face value and accrued interest. The bank also sold these bonds at full face value, plus interest, according to the testimony of Radish, and we therefore agree with the master’s finding, (e) Rock Island Southern railway bonds were proved to have been sold in the month of October, 1912, at 94^, and just before and after that month at from 93 to 94 *4- The Appellate Court valued these bonds at 90 and the master at 70. We value them at 94, plus accrued interest, or $39,489.42. (/) United Gas and Electric Company bonds were valued by the Appellate Court at $19,072.23, and it is amply supported by the testimony in the record that these bonds were worth 93, the valuation placed on them by that court, (g) Western Stoneware Company bonds were valued by the master at $5357. The Appellate Court valued them at $5082, being the same valuation given them by the Central Trust Company’s witness. We concur in the finding and allowance of the Appellate Court. There are a number of other items carried under the designation “Other stocks and bonds,” the aggregate value of which is $24,345.54, which is the value given them by the master and all members of the Appellate Court. They are not contested and we value them at the same aggregate amount.

The Appellate Court has considered the loans and discounts of the National Bank in fourteen divisions or groups, and it appears from the opinion of that court that in the discussion of the loans and discounts before it the parties to this suit presented them in the same manner as the court has considered them. For convenience of the parties we will therefore consider them in the same manner, taking up each division separately.

Division 1.

Bills receivable of J. G. Munday, the Bank of Smithboro, the People’s Bank of East Alton, the Litchfield Mill and Elevator Company, John K. Seagrave, and J. K. Sea-grave & Co.

C. B. Munday was vice-president of both the national and trust and savings banks during their entire existence, May, 1910, to June 12, 1914. Prior to that time he resided at Litchfield, Illinois, where his principal business had been the operation of a mill at Litchfield and the purchase and sale of grain and flour. He did a very large business in exporting- grain in addition to his local grain trade and also purchased and sold grain in Chicago and other large cities of this country. He owned elevators at Litchfield and at many other points near there, and continued to conduct his grain business during the existence of the banks. C. B. Munday & Co. was a co-partnership, consisting of C. B. Munday and his son, J. G. Munday, and carried on business at Litchfield and elsewhere. It was controlled by C. B. Munday. After the organization of the banks in Chicago this company continued under the name of J. G. Munday & Co. The Litchfield Mill and Elevator Company was a corporation organized under the laws of 'Illinois, with a capital stock of $200,000. Its stock was owned entirely by C. B. Munday and his family and Munday controlled its operation. The Bank of Smithboro and the People’s Bank of East Alton were private banks of C. B. Munday & Co. for carrying on a private banking business at Smithboro and East Alton, Illinois. John K. Seagrave was in the employ of C. B. Munday & Co. as manager of the Litchfield Mill and Elevator Company, C. B. Munday & Co., the Litchfield Drug Company, and a business carried on under the name of J. K. Seagrave & Co. J. G. Munday appears to have had no property in his own name. All of the foregoing debts to the National Bank under Division 1 are for the foregoing reasons treated in this record as the debts of C. B. Munday, and there is no contention to the contrary. The personal indebtedness of C. B. Munday to the National Bank is treated by the Appellate Court in its Division 15 under the head of “Transit items,” and under the accounting in that division Munday is charged on the liability side of his account with all the debts considered under this division. This brief explanation will serve to shorten our discussion under this and other divisions, for the reason that under our finding from the evidence in this record Mun-day was undoubtedly solvent on October 21, 1912, as was found by the master. The Appellate Court found that Munday on October 21, 1912, had good assets amounting to $800,295.88, and also found that his total liabilities were $937,080.60. The court has treated him and all his concerns in the name of which he did business as totally insolvent on that date, in all its considerations of his indebtedness to the bank and to others, and, unless his indebtedness has been found by the court to have been actually paid in whole or in part, has found his debts to the bank and to others worthless, although the court found in an actual finding that his assets were about 85 per cent of his liabilities. But on the very facts considered by the Appellate Court, if we value the assets of Munday as to the particular items as the court valued them, there should be added to the asset side of Munday’s account $30,235 for the notes and accrued interest of William Lorimer, Sr., secured by a mortgage on his Michigan farm, which were unquestionably good and which were actually paid by Lorimer on April 8, 1914. There should also have been deducted by the Appellate Court from the liability side of Munday’s account the notes of John K. Seagrave and J. K. Sea-grave & Co., which, with accrued interest on October 21, 1912, amounted to $40,611.26, because he was charged, twice with these items. So under the Appellate Court’s facts and valuations Munday’s assets should have been found by it to have been $830,530.88 and his liabilities $896,469.34. These facts will clearly appear when we come to discuss the National Bank’s claim against Munday in Division 15. Errors in book-keeping similar to the fore-, going and similar conclusions of the Appellate Court account largely for the great discrepancies between the judgments of the Appellate Court and circuit court in this case. It was clear oversight on the part of the Appellate Court to reach the conclusion that Munday having good assets to the amount of more than $830,000, and which were more than 92 per cent of his liabilities, was totally insolvent and without financial ability to pay any part of his obligations that were unpaid in whole or in part.

After considering the evidence in the record we find that all six of the debts aforesaid to the National Bank were good and collectible on October 21, 1912, and we have allowed them in the following amounts, being the notes plus accrued interest to that date, to-wit: J. G. Munday, $14,-049; Bank of Smithboro, $51,474.75; People’s Bank of East Alton, $16,841.90; Litchfield Mill and Elevator Company, $120,578.68; John K. Seagrave and J. K. Seagrave & Co., combined, $40,611.26; which makes a total allowance for this division of $243,555.59.

As to the indebtedness of J. G. Munday, both the master and two members of the Appellate Court have found that it was amply secured by shares of stock in the banks of Oconee, Alhambra, Marine and Bethalto, of the aggregate market value of $16,575. 'The claim made by the receiver is that the foregoing securities or collateral were withdrawn from the bank before October 21, 1912. The evidence amply sustains the master and the Appellate Court. This debt is treated by all parties as a debt of C. B. Mun-day, who was solvent on said date, and no further comments are necessary.

The first item of indebtedness of the Bank of Smithboro is referred to in the record as its indirect liability of $5034.39, which was all entirely paid in due course of business, as found by the master and as testified to by Radish, the expert accountant who was employed by the receiver in this litigation and who was the witness of the Central Trust Company. This indirect liability consisted of a certificate of deposit of the Bank of Smithboro of the value of $3077.92 and eleven other items or notes discounted by the Bank of Smithboro, amounting to $1956.47. The witness testified that the certificate of deposit was carried as an indirect liability, possibly for the purpose of concealing its identity. As the record discloses that the paper discounted by the Bank of Smithboro in this account, and without contradiction, was paid by the direct obligors in full in the ordinary course of business, we have credited the amount of those items on the asset side of Munday’s account. The next item, the note of Fred and Bessie Ahlers, for $2007, was discounted by the Bank of Smithboro to the National Bank and was actually paid by them just prior to the suspension of business of the trust and savings bank. It was carried as a direct liability of the Bank of Smithboro to the National Bank, but, in fact, was indorsed to the Bank of Smithboro and by it to the National Bank, and as it was unquestionably good we have also credited the asset side of Munday’s account to the National Bank with this item, as will hereafter appear. The third item was a certificate of deposit of the Bank of Smithboro, No. 6867, for $5125, and was paid November 23, 1912, by charging it to the deposit account of the Bank of Smithboro, which was at that time $22,924.06. The next item, No. 7657, was a certificate of deposit for $10,250, which, after being renewed, was sold to the Ashland Twelfth Bank on January 5, 1914, and charged to the deposit account of the latter bank'. It remained a liability to the latter bank until the closing of the trust and savings bank, June 12, 1914. The remaining three items were Nos. 8345, 8346 and 8347, and were certificates of deposit for $5000 each. The first two of these items, after renewals, were on April 14, 1914, sold and transferred to the A. H. Hill & Company State Bank and charged against the credit balance of the latter bank and later re-transferred to the trust and savings bank and by the latter to the State Bank of Calumet and were charged against the credit deposit of that bank. The indebtedness represented by these two certificates of deposit remained as an obligation in the Bank of Calumet on June 12, 1914. Certificate of deposit No. 8347 was renewed for $5125 and on January 5, 1914, transferred to the Ashland Twelfth Bank, where it remained until the closing of the trust and savings bank. It was charged to the credit balance of the Ashland Twelfth Bank. The banks to whom the certificates of deposit aforesaid were transferred by the trust and savings bank are those known in this record as subsidiary banks, which will be discussed in a later part of our opinion. We have treated none of these notes thus transferred as paid for reasons hereinafter stated. The total amount of the indebtedness above listed to the Bank of Smithboro is $36,462.24, which amount was allowed in full by the master. Two members of the Appellate Court allowed on the total indebtedness aforesaid, indirect liability $1989.23, although the testimony of Radish shows it all paid in due course of business. It allowed on the direct liability $17,-019.51, which was paid.

Three of the certificates of deposit above discussed, and which were numbered 8345, 8346 and 8347, and three other certificates of deposit aggregating $15,012.51, including accrued interest, were all certificates of deposit issued to William Lorimer, Sr., by the Bank of Smithboro as a loan. Lorimer gave a mortgage on his Michigan farm to secure the $30,000 in certificates to C. B. Munday, which is the same mortgage heretofore spoken of and hereinafter more fully considered. This mortgage was paid, as heretofore stated, and Lorimer’s indebtedness to Munday entirely canceled. Lorimer discounted the certificates of deposit to the National Bank and thereby got the money which he had borrowed. For unexplained reasons the National Bank charged three of these certificates of deposit to Lorimer and three of them to the Bank of Smithboro. Lorimer’s liability was only as an indorser. All of them should be charged to the Bank of Smithboro, and in this accounting we have charged them all to the Bank of Smithboro as a direct liability, and when we come to consider Lorimer’s indebtedness we deduct them from his obligations for reasons which will appear later. We have therefore allowed the debt of the Bank of Smithboro in the sum of $51,474.75 as good and collectible, because it is all a direct liability of C. B. Munday. C. B. Munday & Co., as already explained, owned this private bank. It was a going concern and according to the appearances in this record a very thriving country bank from the time of the organization of the National Bank to the day it was denationalized, and continued as a going bank until the closing of the trust and savings bank, on June 12, 1914. In addition to the fact that a portion of this obligation was paid and Munday good for the remainder of it, it is clear from the evidence in this record that the entire sum could by proper diligence have been collected by the trust and savings bank long before the bank was closed, even if the Appellate Court’s showing that Munday’s assets only equaled a little more than 92 per cent of his liabilities on the day the trust and savings bank began business. The Bank of Smithboro is shown to have been a thriving country bank at that time and did considerable business, as already stated. There was not a breath of suspicion, so far as this record discloses, that Munday was insolvent or without ability to pay his obligations in full. On the other hand, he was reputed by his neighbors and by all the business men in the country who knew him or knew of him, to be worth at least a half million dollars above his indebtedness. He had unlimited credit, and all that the trust and savings bank would have had to have done to collect this indebtedness would have simply been to have made demand and insisted on payment when due. The appellee in this case is not to be prejudiced as to any debt considered in this record by the fact that Munday, the vice-president and managing head of the trust and savings bank, had allowed collectible debts to the National Bank to go uncollected until the trust and savings bank was finally closed for business.

The Bank of East Alton was another private bank, — a partnership composed of C. B. Munday and J. G. Mun-day, — and on October 21, 1912, was indebted to the National Bank on three demand notes aggregating $15,052.50, including accrued interest, and also as indorser on eight notes of its customers re-discounted to the National Bank, aggregating $1789.40. Radish testified that the eight notes representing the indirect liability “were cleaned up and paid in the regular and ordinary course of business,” as the books of the bank showed, and that he knew of no reason why they were not good on October 21, 1912. This testimony is undisputed, and two members of the Appellate Court have given the notes representing the indirect liability full value while the third member of that court dissented and found them worthless. Two of the demand notes were renewed April 24, 1913, and were sold to the Broadway State Bank in December, 1913, and there remained, the same being charged to the deposit account of the latter bank. The third note was renewed April 24, 1913, and was sold to the State Bank of Calumet on January 5, 1914, and was charged to the deposit account of that bank. There is no showing in the record that any one of these three notes was collected or pressed for collection until after the notes came into the hands of the receiver. The further showing in the record is to the effect that the People’s Bank of East Alton had on deposit with the National Bank on October 21, 1912, the sum of $2940.30, and that after that date its deposit balances in the trust and savings bank often exceeded the indebtedness it owed to that bank, and as the notes were demand notes they could have been collected by simply offsetting them against the deposit account. The sum and substance of the receiver’s contention is that these notes must all be regarded as worthless because of Munday’s connection with this bank and the trust and savings bank. Every member of the Appellate Court found these three notes to be worthless. We have allowed full value, as did the master. We have also credited C. B. Munday in his personal account with $1789.40, the amount of the discounted notes aforesaid, as they were his property when discounted and were unquestionably good assets, and we have also charged him with $16,841.90, the entire amount of the three notes and the indirect liability. The notes represented by the indirect liability were, of course, paid by the makers to the trust and savings bank, as shown by its books. We will reserve further comments on this indebtedness until we consider Munday’s individual liabilities.

The Litchfield Mill and Elevator Company owed the National Bank on October 21, 1912, a number of notes, aggregating $120,578.68, less unearned interest. Two members of the Appellate Court found from their consideration of the evidence that $22,009.65 of the total liability of the company had been discharged by actual payments, and they only allowed this amount of the entire debt while the other, member of the Appellate Court allowed nothing. The master allowed the full value of the claim. We will not go into the full details of this indebtedness or consider the question as to how much ought to be allowed by actual payments made. We allow full value on the ground that a large portion of the debt was paid and that the remainder of the debt was good and collectible because of the fact that C. B. Mun-day was responsible therefor.

Both the Appellate Court and the master listed what ■ they found to be the liabilities and assets of the Litchfield Mill and Elevator Company. We have examined the record eviderce and from the same find the liabilities of this company to be the following:

Notes held by National Bank.........................$120,578.68

Bonds sold to Rosehill cemetery...................... 100,000.00

Notes held by Colonial Trust and Savings Bank........ 40,000.00

Notes held by Bank of Marine....................... 4,000.00

Notes held by Bank of Alhambra.............■........ 3,500.00

Notes held by Bank of Bethalto.......................3,500.00

Debt due Shearson, Hammill & Co................... 19,131.25

J. K. Seagrave note to National Bank................. 15,654.60

J. K. Seagrave & Co. note to National Bank........... 24,956.66

Bonds sold to Bank of Marine........................ 500.00

Bonds sold to Bank of Bethalto....................... 2,500.00

Total..............................t.......... $334,32!-19

The master found the liabilities the same as above, except that he omitted from his list of liabilities $3000 in bonds sold to the Marine and Bethalto Banks. He also made an error of $10 in addition of the liabilities. The Appellate Court added $50,000 to the master’s finding and adopted his error in addition. The evidence shows that $150,000 of bonds were authorized by the company, but only $103,000 of them were outstanding • on October 21, 1912, as above shown. So far as we can ascertain from the record, the testimony of J. G. Munday in the first instance was to the effect that all of the $150,000 of bonds were outstanding, but his examination in full shows that he had no actual knowledge upon the subject and his statement a mere assumption on his part. The evidence does clearly establish the liabilities as we have above shown them, and there is no dispute as to the liabilities except on the question whether or not $47,000 of the bonds, in addition to what we have found, were outstanding.

The total assets as found and valued by the Appellate Court are the following:

Physical assets .....................................$250,000.00

Flour and grain on hand.................. 75,000.00

Bills receivable and cash in bank.................... 11,274.33

Good will.......................................... 25,000.00

Total.........................................$361,274.33

In valuing the assets of this company we have adopted the views and values of the two concurring members of the Appellate Court. The witness Seagrave testified that the physical assets, not including good will, were in his judgment worth $225,000. C. B. Munday valued the property at from $240,000 to $300,000. Expert Seward, who in October, 1915, examined the property at Litchfield and all the other elevators and prepared complete statements as to the value of the physical property at that time, valued the physical assets at $259,932.03. In this, valuation he included nothing for good will, and omitted the elevator at McVey for the reason that it was not in existence at that time. He also valued another elevator in his valuation that was not in existence in 1912 but which was of less value than is given for the one at McVey. He was three weeks in making his examinations and estimates. He arrived at the value of buildings by standard methods used by engineers and architects in determining costs of buildings and equipment, making allowance for depreciation. He estimated the value of the real estate by inquiries in the neighborhood. While there is no question as to the ability of the expert, we think the Appellate Court was justified in considering his testimony in connection with all the other evidence, and also in taking into consideration the fact that the expert did not see the property and was not acquainted with it in 1912, and was warranted in placing the value at $250,000 exclusive of good will. Other witnesses valued this property much lower. One of them shows from his testimony that he was a prejudiced witness against the Mun-day concerns, and the others, with possibly one exception, clearly showed by their testimony that they were not sufficiently posted to give correct conclusions as to valuations.

The evidence in the record discloses that Munday & Co. had been running a flour mill in connection with warehouses and the various elevators and were engaged in buying and selling grain and in producing and selling flour. They did a large domestic and export business and also had a good local trade. During the seasons of 1911 and 1912 their business was unusually large. They purchased from one broker in Chicago more than $658,000 worth of grain. Seagrave’s testimony was that their profits were from $30,-Ó00 to $50,000 a year. Another witness testified that their profit on domestic business was from $50,000 to $60,000 a year but that in 1912 they suffered a loss of from $43,000 to $100,000 on their export trade. Some idea may be had of the magnitude of their business by their deposits in the National Bank, which were more than $2,900,000 covering a period of two years and five months, and in the Litchfield bank approximately $3,000,000. We have recited these facts as our reason for approving the Appellate Court’s finding that the good will of the concern was worth at least $25,000. Nothing was allowed in this accounting by the Appellate Court for grain in transit. The firm was justly entitled to a credit of at least $32,496.42 on the asset side of this account, but as that court has considered transit items under its Division 15, we have reserved the consideration" of this item for our discussion of transit items, in connection with which Munday’s liabilities and assets are considered, and for the further reason that Munday & Co., the Litchfield Mill and Elevator Company and all other Munday concerns are considered as Munday individually.

The master finds that of- the John K. Seagrave and J. K. Seagrave & Co. indebtedness $10,013.13 was paid or canceled September 23, 1913, by charging that amount to the deposit account of C. B. Munday & Co. in the trust and savings bank, which was on that date $15,314.46; that $22,500 thereof was credited out by a charge to cash on October 6, 1913, which was taken up with a check or draft on October 7, 1913, and that the remainder of the debt was exchanged December 30, 1913, for two notes of the Litchfield Mill and Elevator Company, which, together with three other notes of that company, were exchanged for a certificate of deposit for $25,000 of the East Alton Bank, which was afterwards paid. Both the master and the Appellate Court twice charged this entire indebtedness to C. B. Munday. All members of the Appellate Court found that this debt was worthless, either as a debt of John K. Seagrave, of J. K. Seagrave & Co. or of C. B. Munday.

Division 2.

The bills receivable of this division consist of the paper of the following banks in the following amounts: Citizen’s State Bank of Alhambra, $6986.58; Farmer’s Bank of Bethalto, $11,242.93; Bank of Marine, $10,202.26; First National Bank of Mt. Olive, $15,052.50; and State Bank of Oconee, $10,050.88. The aggregate amount of these debts is $53,535.15, and we have allowed them all in full as good and collectible assets. The evidence amply supports the master in his finding, who also allowed them in full. All members of the Appellate Court agreed that the debts of the Bank of Alhambra and the First National Bank of Mt. Olive were paid in full according to the record evidence and allowed both of these debts. Two members of the Appellate Court allowed in full the debt of the Bank of Oconee for the same reason, — that it was paid in full according to the testimony of Radish. The other member of the Appellate Court dissented and held that this claim was worthless. Two members of the Appellate Court only allowed $9805.68 for the debt of the Farmer’s Bank of Bethalto, which amount they found was actually paid according to the evidence, and the remainder of the debt they found to be worthless, while the third member of the Appellate Court found the entire debt to be worthless. The direct liability of the Bank of Marine was on a certificate of deposit for $10,000, dated June 2, 1912, and payable January 2, 1913, the unearned interest thereon being $95.83. The indirect liability was for $298.09 on a note of F. H. Rohmeyer and others discounted by the Bank of Marine to the National Bank, and which note was paid in the usual and ordinary course of business, according to the evidence. All members of the Appellate Court agree in allowing the indirect liability in full because it was paid, but hold that the direct liability is worthless.

The record evidence shows that the five banks were very prosperous down-State banks in October, 1912, and had been for years prior to that date, and continued as going banks during the existence of the trust and savings bank. The master and the Appellate Court both found, when considering Munday’s assets, that on October 21, 1912, the market value of the stock of the Bank of Marine was $150 per share, the stock of the Farmer’s Bank of Bethalto $120 per share, the stock of the Citizen’s Bank of Alhambra $15° per share, and the stock of the State Bank of Oconee $125 per share. Munday had stock in all of the banks except the First National Bank of Mt. Olive, and this was one of the principal grounds of the receiver’s contention that none of the debts of the five banks were good. We do not deem it necessary to at this time further discuss the liabilities of the three of these banks whose debts were given full value by the Appellate Court. We will have occasion to consider the receiver’s other ground of objection when we come to consider Munday’s indebtedness to the National Bank.

The indebtedness of the Farmer’s Bank of Bethalto was a certificate of deposit dated September 25, 1912, due on demand. It never was collected in full. After the receiver was appointed he applied the final deposit balance of this bank in the trust and savings bank on this debt to the amount of $9305.68. Afterwards the bank paid the receiver $500 in part payment of the balance. The uncontradicted evidence in this record is that on October 21, 1912, the Bank of Bethalto had on deposit in the National Bank $6798.55. On October 11, 1912, its deposit account was $14,947.67; on January 23, 1913, $28,823.56; in February of the same year $32,685.69; and in March of the same year its deposit account reached as high as $32,479.26. It is thus shown conclusively that if demand had been made on this note or certificate of deposit it could have been easily collected on any one of the above dates except October 21, 1912, by charging it to the deposit balance of the Bank of Bethalto. There is no reasonable theory from the evidence in this record upon which to base a conclusion that this debt was not a good and collectible debt on October 21, 1912, so far as we are able to see. It is simply another case in which the trust and savings bank made no effort to urge or press the debt for collection. Had such effort been made, this bank, whose stock was selling at $120 per share at that time, would undoubtedly have paid off the certificate. It could not have afforded to do otherwise. It was only the closing of the trust and savings bank that ever at any time rendered this debt uncollectible, if it is really uncollectible at this time.

The certificate of deposit of the Bank of Marine was eliminated from the National Bank on November 21, 1912, by the substitution of three notes of H. W. Huttig and the Huttig Manufacturing Company, and the canceled certificate of deposit was returned by the trust and savings bank to the Bank of Marine. The claim for disallowing the debt of the Bank of Marine is that the Huttig notes were never paid.. The real question on this record is whether or not the certificate of deposit on the Bank of Marine was good and collectible on October 21, 1912, and if it was, this is the end of the inquiry so far as the Central Trust Company is concerned. There is no contention that the Bank of Marine was insolvent and its paper worthless on that date. The actual showing is that its deposit account in the National Bank in January, 1913, was not less than $19,532, and that the high point of that account was $45,581.65, and that the certificate of deposit was due in that month. Its deposit account after January, 1913, and up to April, 1914, was not less than $17,700, and there was no month within that time that its deposits did not reach as high as $36,362, and within that time the high point was $170,889.63. This evidence settles it beyond question that this debt was first class and could have been collected at any time after due up to May, 1914. . . -r

Division j.

There are seventeen debts or claims in this division, numbered by the Appellate Court from 1 to 17, inclusive. We find the aggregate valúe of all these bills receivable to be $294,231.84. The master and two members of the Appellate Court have allowed in full under this division the following claims in the following amounts: Granville W. Browning, $5454.35; William Carey, $2482.10; Collie Clavin, $10,033.05; William DeBuhr, $7696.23; Frank J. Delaney, $8688.79; John R. Farthing, $14,570.72; Annie V. McComb, $1968; William J. Moxley, $54,912.49; and Walsh Bros. Western Securities Company, $49,144.83. The other member of the Appellate Court agreed with the master and the other members of the court as to only four of the above mentioned claims, to-wit, those of Browning, Delaney, Moxley and Walsh Bros. Western Securities Company. The principal question passed on by the master and the Appellate Court is whether or not payment was made in full on the same as disclosed by the record. As to one or more of these claims there was a further question whether or not the claims were good and collectible on October 21, 1912. The evidence sustains their finding in every instance as to the claims allowed, and we do not deem any further comment necessary.

Item No. 1 under this division was a note of $3010.50. including accrued interest, of the Bethalto Lumber Company, dated August 13, 1912, due on demand. The evidence is to the effect that it was a partnership, consisting of C. B. Munday, or C. B. and J. G. Munday, and E. R. Starkey. Starkey owned a half interest. The proceeds of this loan appear to have been credited to the account of the Litchfield Mill and Elevator Company. The trust and savings bank sold and transferred this note to the Farmer’s Bank of Bethalto, and it was not in the trust and savings bank afterwards. The testimony of H. H. Starkey, brother of E. R. Starkey, deceased, is to the effect that this was the only note or obligation of the lumber company, and that the company had sufficient stock or lumber in the yard at all times to pay this debt, and his testimony is uncontradicted. This note was collectible at least a year or more after it was given, as the lumber company was a going concern until after the trust and savings bank closed. J. G. and C. B. Munday were,liable to the National Bank for any part of it not paid by the lumber company, under the law of partnerships. We have therefore allowed this claim in full, charged the same to C. B. Munday in his account and also given him credit for an equal amount of assets, as, the partnership is shown to have been solvent on October 21, 1912.

David Davis was indebted to the National Bank on his notes amounting to $30,217.83 and as an indorser in the further sum of $10,110. The m?.ster found that he was solvent October 21, 1912, and well able to have paid this indebtedness, and that in the opinion of prudent and conservative bankers acquainted with his financial condition he was worth from $20,000 to $25,000 over and above his debts. One member of the Appellate Court approved this finding. Another member of the court allowed the sum of $10,035 on the direct liability, which the record' positively shows, without contradiction, was paid by Davis. The third member of the court allowed nothing. The master’s finding is sustained by the evidence. The receiver offered no testimony. A banker living in Litchfield, well acquainted with Davis and who knew all about the properties that he owned, testified positively that on said date Davis was worth $15,000 or more over and above his indebtedness, and his testimony is uncontradicted. The receiver offered no rebutting evidence. The evidence satisfies us that all of Davis’ indebtedness to the bank could and would have been collected if the bank had made proper effort to do so. We know of no rule of law by which we are permitted to disregard the prima facie case made by appellee.

Claim No. 9 in this division was a note of John M. Lavin for $2000 which he had executed to the bank to settle his liability as an indorser of certain notes of the Federal Fuel Company. This note came into the hands of the receiver and there was paid thereon to him $280. The receiver compromised the indebtedness to the bank for $1000 in addition to the amount already paid. The master applied the $280 credit on Lavin’s note and only allowed that sum as the value of his note. He applied the other $1000 payment to two other notes of Lavin for $2500 each, which were given in payment for stock of the National Bank. Two members of the Appellate Court applied this latter payment, and also the payment of $280, on Lavin’s $2000 note and allowed $1280 as the value of the note. We approve the Appellate Court’s action in applying both credits on the $2000 note, and we value the note at $1140, — the amount of the debt completely discharged by the payments. The Appellate Court failed to recognize the fact that simple payment on a note does not reduce the total indebtedness to the amount of the payment unless the interest on the note is paid up to the date of the payment, in accordance with the rule that we have already announced as to partial payments. ' The two notes of Lavin for $2500 each were sold to the trust and savings bank on March 10, 1913, by the Bank of Bethalto and remained in that bank until it closed, according to the testimony of Radish, and were not a liability of Lavin to the Bank of Bethalto at any time thereafter. According to the testimony of Radish, and other evidence in the record, these notes of Lavin for $5000 were liabilities of Munday, and should be included among his liabilities because the notes were given for bank stock which Mun-day got and did not credit to Lavin’s account. We have therefore charged them as liabilities against Munday, as will later appear.

As to item No. 11 in this division, the master and two members of the Appellate Court found that Sims Maguire’s demand note No. 8029, for $25,000, and his indirect liability of $332.32, amounting to $25,419.82, to the National Bank was completely discharged by payments. The other demand note for $18,540, dated October 14, 1912, was not paid in full, but there was a total reduction of this debt of $615.50 by payments to the bank before it came into the hands of the receiver. The receiver has collected nothing ón the notes. Maguire had a deposit balance on October 21, 1912, in the National Bank of $1010.75, which could have been applied by the bank on this demand note, and the master finds that the indebtedness on this note should be further reduced by that sum, making a total reduction thereof of $1626.25. We sustain the finding of the master and find the value of this item to be $27,046.07, the amount of the first note plus the total amount paid on the second note, because the evidence clearly sustains him. The Appellate Court allowed nothing for the second note and the dissenting member of the Appellate Court found both notes to be worthless.

Item No. 13 of this division was a demand note of the Pleasant Valley Land Company for $10,035, dated July 22, 1912. On January 13, 1913, this note was paid by charging it against the credit balance of C. B. Munday & Co., and the note was eliminated from the bank. The proceeds of the note when given were credited to the Litchfield Mill and Elevator Company. There was no evidence as to the financial condition of the Pleasant Valley Land Company on October 21, 1912. The payment of the note by C. B. Munday & Co. was a recognition of the fact that they were liable for this note to the bank, either directly or indirectly. The result would not have been different had C. B. Mun-day & Co. borrowed the money themselves July 22, 1912, on their own note and paid it January 13, 1913, by having it charged to their deposit account. It made no difference where the money came from so the bank actually received payment. It was their liability and they were solvent on that date, and the argument by the receiver that Munday & Co. were insolvent on October 21, 1912, cannot be sustained by the record. We have allowed this debt in full and have also charged it as a liability to C. B. Munday. The Appellate Court found the note to be worthless.

Item No. 14 consisted of two notes aggregating $1051.43 including accrued interest, given by Lloyd J. Smith. The small note, of $300, was a demand note and was collected in full- after it came into the hands of the receiver. The other note was due on October 18, 1912. The undisputed evidence in the record is that Smith’s entire indebtedness could have been collected from his deposit account, notably in November, 1912, when his deposit account ran as high as $2481.33. In May, June and July, 1913, his deposit account exceeded the total amount that he owed. His indebtedness at no time exceeded $1550.50 up to August 30, 1913. Thereafter his indebtedness rose to $6400, and because this entire indebtedness was not collected and there was due a remainder of $1115.44 at the time the master took the evidence, the receiver contends, and the Appellate Court finds, that nothing should be allowed on this debt. We sustain the master in allowing this debt in full.

Item No. 15 is represented by five notes, aggregating $25,764.46,-of Clinton S. Woolfollc, and two demand notes of the Texas Gulf Realty Company, aggregating $50,175. Woolfolk’s note for $10,035, including accrued interest, was reduced to another note of $4500 May 3, 1913. This reduction was made by Woolfolk giving the bank a note and mortgage of Hudson D. North for $5500 of the debt. The note and mortgage were unquestionably good and collectible. The $4500 note was taken up by a note of the UlinoisLouisiana Land Company on October 11, 1913. Note No. 8123, for $2496.67, was secured by collateral and was charged to his account on the day it was due. No. 8124, for $2485, less unearned interest, was collateraled, and the books of the bank show that it was paid on its due date, November 25, 1912. No. 8125, due December 27, 1912, for $2471.67, less unearned interest, was secured by collateral and shown to be paid on its due date. The last note was a demand note for $8276.12 and was also secured by collateral. It was reduced on November 11, 1912, by credits to the sum of $6166.66. The remainder of this note is shown to have been paid in full. Most of the payments on the above notes may have been made, as contended by the receiver, out of the proceeds of $75,000 worth of notes of the Illinois-Louisiana Land Company and the proceeds of a $50,000 loan to the Texas Gulf Realty Company, but the record does show that Woolf oik was the owner at those times of $33,057.50 of certificates of deposit of the National Bank and that the bank might have charged his indebtedness against these certificates, or at least have made the money out of Woolf oik by pressing the claims for collection. He was undoubtedly well able to pay the debts to the bank at the time they were due and had the confidence of the banks and business men generally and appears to have had almost unlimited credit. The Texas Gulf Realty Company maintained a deposit account on October 21, 1912, and up to November 25, 1912, which was not less than $2115.89 between those dates. It was over $4000 on four different days between those dates, and there were six other days between those dates when it was over $3000. It was $3363.87 on October 22, 1912, and the bank could have collected this last amount by applying the amount of the deposit on the demand notes. We agree with the finding of the Appellate Court that nothing further could have been realized, with anything like certainty, on these notes and that their value should only be $3363.87. The master allowed full value for the same, and the Appellate Court only allowed full value for one of the small notes of Wool-folk, which was found to have been collected. Our total valuation for these two claims is $29,128.33.

Item No. 16 is represented by six $5000 notes of the Topeka Milling Company, aggregating $29,742.12, less unearned interest. All were dated August 14, 1912. Two were due November 12, 1912, three December 16, 1912, and one February 14, 1913. The milling company received for these notes three certificates of deposit of the Bank of East Alton and three of the Bank of Smithboro, for $5000 each. The six notes held by the bank were executed to Munday and he discounted the notes to the National Bank, and the proceeds of five of them were credited to the First National Bank of Litchfield and one of them to the Litchfield Mill and Elevator Company. All six of these certificates of deposit were charged to the liability account of C. B. Munday. On January 28, 1913, the milling company returned to Munday two of the certificates of deposit and directed him to return to it two of its notes, which was done and the obligation of the milling company was extinguished on these two notes. Munday at the same time paid off these two notes in the trust and savings bank by his check drawn on the Bank of East Alton, which was paid in due course of business. The foregoing facts are undisputed, and it must be held that there was a complete discharge of the milling company’s liability as to two of the notes, the bank having received full payment thereof. The other four notes were twice renewed and. were in the bank on July 24, 1913, when the milling company went into the hands of a receiver. Thereafter the trust and savings bank and its receiver collected an aggregate of $18,502.50 on the notes, leaving a balance due of $1497.50. In making this collection the receiver paid an attorney fee of $1500. The net result to the creditors was $17,002.50. Much of the testimony in the record tends to show that the milling company was solvent October 21, 1912, and that its assets amounted to about $60,000 over its liabilities. It had $109,-393.40 of liabilities on October 21, 1912. None of the notes to the National Bank were then due and the last note was not due until February 14, 1913. The evidence is also to the effect that at the time the milling company borrowed the money from Munday in August, 1912, it had exhausted its credit in the banks of its home State, Kansas, and was not making any money at that time, for which reason the Kansas banks had refused to loan it money and were demanding payment of the amounts due them. This state of affairs continued until it went into the hands of a receiver. It is apparent that in order for all creditors to have collected their money in October, 1912, or at any time thereafter, legal proceedings would necessarily result, and did result by throwing it into the hands of a receiver. Only ninety per cent of its indebtedness was paid by the receiver after its affairs were wound up. This showing is not inconsistent with the fact that it might have been able to pay all its debts if it could then have made a sale of its assets at a reasonable price, and it is not an unusual circumstance that at forced sale made by the receiver it fell short by ten per cent of paying its indebtedness. We do not think that we are warranted, under the evidence, in allowing more than has been actually collected on this claim less actual attorney fees paid in collecting the same, and in addition thereto whatever the evidence shows with reasonable certainty the receiver will collect on the balance due less attorney fees. On this latter question the evidence is to the effect that all four of the notes that were unpaid were guaranteed by the written guaranty of Herbert and George W. Hackney, president and vice-president of the company and residents of Kansas. The undisputed evidence is that they were worth $25,000 over and above liabilities. Suit has been brought against them by the receiver, and it appears reasonably certain from the testimony of the receiver’s attorney, Edwin A. Austin, that a judgment will be obtained against the guarantors and the same collected. From the nature of the litigation it is probable that about one-half of the remaining amount, or near that sum, will be expended in collecting the remainder unpaid. We have no means of knowing what the attorney fee will be, but a fee of $700 ought to be amply sufficient to pay the same. Therefore we allow the entire claim of this debtor, $29,742.12, less attorney fees already paid and to be paid of $2200, or $2yj-542.12. The master allowed the full amount of this debt. Two members of the Appellate Court allowed $18,502.50,— the amount actually collected by the receiver, less the $1500 attorney fee for collecting the same, — and allowed nothing on the remainder. The third member of the Appellate Court found the claim to be worthless.

Division 4.

There are eleven bills receivable in this division, designated by the receiver as “Lorimer paper.” The following are the names of the debtors, which are followed by the amounts they owed the National Bank on October 21, 1912, to-wit: John A. Cooke, $10,238.33; Federal Improvement Company, direct liability $6117.15, indirect liability $357-83; George J. Fitzpatrick, $790.67; Joseph P. Gallagher, $49,171.50; W. T. Keating, $2508.75; William Lorimer, $15,012.51; Lorimer & Gallagher Company, $104,865.75; Albert G. Sebillo, $300.85; E. W. Sebillo, president, and Sebillo Bros:, $6522.75; Adam Sebillo, $3846.90, and Helen Sebillo, $5017.50. We have allowed on all of the foregoing claims the aggregate amount of $189,737.98.

The first note under this division is that of John A. Cooke for $10,238.33, including accrued interest. This debt is the debt of William Lorimer and is listed as a liability of Lorimer by both the master and the Appellate Court. At the time Cooke gave this note Lorimer gave him ample collateral security to secure it. Later Cooke returned the collateral to Lorimer in consideration of Lorimer’s agreement to pay the note to the bank. The bank recognized it as Lorimer’s debt by receiving from him interest on the note. It is the law of this country and of this State that a third party may maintain an action on a promise made to another for his benefit. (Bristow v. Lane, 21 Ill. 194 ; Eddy v. Roberts, 17 id. 505; Thompson v. Dearborn, 107 id. 87.) There is no dispute about the foregoing facts as testified to by both Lorimer and Cooke. We allow full value for this claim, for the reason that Lorimer was solvent on October 21, 1912, as will later appear.

The following claims under this division were allowed in full by the master and two members of the Appellate Court on the ground that they were paid in full or that the debts were good and collectible on October 21, 1912, to-wit: Those of the Federal Improvement Company, Joseph P. Gallagher, W. T. Keating, the Lorimer & Gallagher Company, E. W. Schillo, president, and Sebillo Bros., Adam Schillo and Helen Schillo. The third member of the Appellate Court agreed with the other members of that court and the master as to the claims of Joseph P. Gallagher, the Lorimer & Gallagher Company, and E. W. Schillo, president, and Schillo Bros., and also agreed with them as to the indirect liability of the Federal Improvement Company. The remainder of these claims he found to be worthless. We have allowed full value for all of them.

As to the claims of George J. Fitzpatrick and Albert G. Schillo, and the overdrafts of William Lorimer, Jr., and Josephine H. Lorimer, which overdrafts have heretofore been allowed in full by us, we consider them together at this time for reasons now given. The overdraft of Josephine H. Lorimer of $46.12 on October 21, 1912, was increased to $178.55 on November 15, 1912, and. continued in this amount until November 30, 1912. On the last named date the overdraft in the latter sum and the overdraft of William Lorimer, Jr., which had increased from $267.12 to $288.12, were both eliminated by a check of William Lorimer, Jr. On the day this check was drawn, November 30, 1912, William Lorimer, Jr., gave a note for $3000, and the overdrafts were paid out of the proceeds of that note. The $3000 note was paid December 28, 1912, by William Lorimer, Jr., by discounting a note of William Lorimer, Jr., trustee, which was secured by a mortgage on the Pistakee Bay property, which had been previously deeded to him by his father, William Lorimer. The note and mortgage were for $20,000. The note and mortgage were subsequently paid in full. The foregoing facts are testified to by Spohr and are uncontradicted. Spohr, who is an expert accountant employed by the receiver and who had been, general auditor of the National Bank and of the trust and savings bank during their entire existence, further testified that about July 24, 1913, the $790.67 note of Fitzpatrick and the note of Albert G. Schillo for $300.85 treated under this division were charged against the deposit account of William Lorimer, Jr., and that at the beginning of business on that day his deposit account was $33,049.11 and at the close of business on that day $21,777.89. These credit balances were obtained by Lorimer, Jr., on July 23, 1913, by two credits, one of $24,250 and another of $24,-338.54, which were obtained by the sale of two notes and mortgages, for which he received cash, and the proceeds were passed to his credit on the books of the bank. The foregoing testimony settles beyond question that the overdrafts and the Fitzpatrick and Schillo notes were paid with real cash deposited in the bank. The testimony of Spohr is also corroborated by Radish, and on this testimony we have allowed the overdrafts and the two notes in full, as did also the master. The Appellate Court allowed nothing on the overdrafts and found the two notes to be worthless.

As to Lorimer’s paper in this division a great deal has been said by the receiver, but it will only be necessary to confine our consideration of the same to the facts in the record. The plain, simple facts shown by the record are to the effect that on September 16, 1912, Lorimer informed C. B. Munday that he desired to borrow $30,000, and Munday informd him that he could get it for him at one of his down-State banks. Thereupon Lorimer executed to him his notes for $30,000, secured by a mortgage on his Michigan farm of 670 acres, and upon delivering these instruments to Munday the latter gave him six certificates of deposit of the Bank of Smithboro, which Lorimer indorsed and discounted to the National Bank. Three of these certificates of deposit were dated September 16, 1912, and were due September 12, 1913, and they bore the National Bank’s numbers 8345, 8346 and 8347, and have heretofore been considered by us in our consideration of the indebtedness of the Bank of Smithboro. The other three were dated October 15, 1912, and were due September 12, 1914, and bore the National Bank’s numbers 8698, 8699 and 8700 and constitute the indebtedness charged to Lorimer in this division. It thus appears that all these certificates of deposit were the direct liability of Munday and that Lorimer was only liable to the National Bank as indorser. '

About the strangest feature that we are able to note about this whole transaction is, that only three of the certificates were charged to the Bank of Smithboro, the direct debtor, while the other three were charged to Lorimer, the indirect debtor, upon the books of the National Bank and were not charged to the Bank of Smithboro at all. We have regarded them all as the direct liability of the Bank of Smithboro and have allowed them all as good assets against that bank under Division 1, and we will therefore allow nothing as against Lorimer for the three certificates here considered for the reason already stated, and for the further reason that the record shows that Lorimer in April, 1914, sold his Michigan farm for $42,500 in cash and with the money paid off his notes and mortgage given to Mun-day and received his notes and mortgage from the trust and savings bank, which had custody of them and was at that time the owner of them. So far as Lorimer was concerned, this canceled all his direct liability to either the National Bank or to the trust and savings bank concerning this loan. On October 23, 1912, Munday discounted the notes of Lorimer to the trust and savings bank after the National Bank had been denationalized and the proceeds were credited to his account, and this is the full explanation of how the trust and savings bank came into possession of these notes and mortgage. It appears from the evidence that Lorimer did not know anything about this latter transaction of Munday until quite a while thereafter. The notes and mortgage of Lorimer were good security for his debt and no one questions that fact. They were the property of Munday on October 23, 1912, and the trust and savings bank being a State bank, was permitted, under the law, to buy the same, and there was absolutely no prohibition against Munday selling the same, and the endless argument to the effect that the two banks “thus lost” $60,000 upon the worthless paper aforesaid cannot be made effective under the facts in this record. The fact is, Lorimer discharged all of his direct obligation in this transaction and Munday owed his direct obligation on the certificates of deposit to the trust and savings bank or its assignees, and they are all properly charged to him in his liability account. The master found three of these certificates of deposit good and collectible assets on the ground that Munday was solvent and liable on the same, and this was one of his reasons for allowing these claims against the Bank of Smithboro. He has allowed the claims on the other three their full face value against Lorimer under this division on the ground that he was solvent and liable for the same. The Appellate Court allowed three of them against the Bank of Smithboro and allowed the other three against Lorimer under this division on the theory that the certificates of deposit were good and collectible because secured by Lorimer’s notes and mortgage, and has refused to allow any of them on the ground of the solvency of either Munday or Lorimer and found both of them to be insolvent. As a matter of fact, the certificates of deposit never were secured by the mortgage of Lorimer. It was the notes of Lorimer that were secured by the mortgage,— in the first instance a debt to Munday. The certificates of deposit must be held good upon the solvency of Munday or of Lorimer, as the National Bank and its assignees had to depend entirely upon the obligation of Munday as maker and Lorimer as an endorser.

It will be necessary to consider the question of Lorimer’s solvency only because of the fact that he was liable to the National Bank on two other notes which we have allowed in full, to-wit, the note of John A. Cooke, considered under this division, and the note of William Webb, to be considered under a subsequent division. The Central Trust Company admitted that the liabilities of Lorimer on October 21, 1912, are as charged to him by the Appellate Court, and are the following:

To National Bank on Smithboro certificates........... $30,000.00

To National Bank on John A. Cooke note............. 10,238.33

To National Bank on William Webb note.............. 1,987.67

To Munday on notes................................ 22,000.00

To Munday on open account......................... 65,646.32

To Moxley on note.................................. 90,000.00

To Moxley other than on note........................ 15,000.00

To Ernest Magerstadt............................... 12,000.00

To Lorimer & Gallagher Company.................... 4,429.27

Other indebtedness, general.......................... 18,000.00

Total.........................................$269,301.59

It will be noted that Lorimer’s indirect liability on the certificates of deposit is charged to him in this list of liabilities, and that the notes and mortgage to Munday, which were a direct liability of his on October 21, 1912, are not charged as a liability. The Appellate Court found Lorimer’s resources or assets, and their values, on October 21, 1912, to be the following:

Michigan farm (equity)............................. $12,500.00

Bittersweet property (equity)........................ 10,000.00

Ridgeway avenue property........................... 17,000.00

Pistakee Bay property............................... 40,000.00

Cash in bank....................................... 5,008.97

Half interest in Lorimer & Gallagher Company........ 47,892.48

900 shares of stock in National Bank................. 94,500.00

Total.........................................$226,901.45

It will be noted that in the above list of assets the Appellate Court gave Lorimer no credit for the $30,000 certificates of deposit or Munday’s liability thereon, which we have found to be of full value. We do not controvert the proposition that for a proper casting of Lorimer’s assets and liabilities his indirect liability on the certificates of deposit is properly charged to him as a liability, but if that is done he should have credit for his right against Munday to make the certificates of deposit good. Our accounting as to this item of liabilities and the corresponding assets would simply offset each other, but our accounting as to the notes and mortgage and the corresponding assets makes $30,000 difference in favor of Lorimer. In other words, we would charge to Lorimer as a liability $30,000 for the notes and mortgage given to Munday on his Michigan farm, and we would give him as an asset against that liability not simply an equity in the farm less Munday’s mortgage, but the value of the farm itself. By the Appellate Court’s method of accounting Lorimer has suffered a $30,000 loss by a simple error in book-keeping or in casting the accounts, because the Appellate Court found as a matter of fact that Lorimer’s farm in October, 1912, was worth just the amount Lorimer obtained in cash for it in April, 1914, ($42,500,) as it only gave him an allowance on the farm of $42,500, less the notes and mortgage, or $12,500. In other words, it only gave him credit for the equity instead of the value of the farm. We are in doubt as to whether or not the Appellate Court has made a similar error in accounting as to the Bittersweet property. The facts are, that Lorimer paid for this property $10,000 in cash and assumed a mortgage thereon of $12,500, making the cost price to him $22,500, the latter sum being the value the Appellate Court actually found the property to be worth October 21, 1912. The evidence does not show whether or not the note and mortgage are charged to Lorimer in his liabilities.

On the valuations of Lorimer’s assets we are forced to disagree with the Appellate Court as to three of those items. Lorimer was forced to sell his Michigan farm in 1914 at a time, as all the evidence in the record shows, when property in this country was selling much lower than in 1912. The record shows that about the highest time for real estate in this country for several years prior to and after 1912 was in October, 1912, the time at which this property is to be valued. Lorimer testified that this property was worth $75,000 on October 21, 1912. There were two other witnesses, who were farmers in the neighborhood of the land, who valued it considerably higher than Lorimer, but the basis of their valuations was erroneous and improper. The master valued the farm at $68,300. We feel sure that this land ought to be valued at least at $50,000.

The testimony shows that Lorimer bought the Bittersweet property in 1912, while it was in litigation, and at a very low figure. This property was sold in the summer of 1914 for about $30,000 at a time when real estate values were lower than in 1912. A competent witness as to the value of this land testified it was worth $53,750 in October, 1912. One witness by the name of Mullaley testified that he bought part of this land from Lorimer in August, 1914, for $12,000, and that he sold the same part in October, 1916, for $30,000, without additional improvements. The master found the value of the property as of October 21, 1912, to be $38,125, and we sustain his finding, as the evidence in the record amply sustains his valuation, and even a higher one. We have only given a value to the equity in this property in our accounting and have deducted from the full value the $12,500 mortgage, and value the equity at $25,625 under the assumption that the mortgage was not charged by the Appellate Court.

The testimony in the record bearing on the value of, the Ridgeway avenue property shows that property was at least of the value of $25,000 on October 21, 1912. Two expert real estate men in Chicago, Levy and Pace, valued this property, respectively, at $46,500 and $40,000. Lorimer valued the property at $35,000. This was Lorimer’s home. Lorimer sold this property in 1913 for $17,000, at a time when real estate was lower in Chicago than in 1912. Both the master and the Appellate Court valued it at $17,-000, the price for which it was sold in 1913, and refused to consider the evidence as to what it was worth on October 21, 1912. The value of the real estate on that date is what we are to ascertain in this case, and we are not content to value it at less than $25,000, and would value it at $35,000 if a higher valuation made any material difference in this case, because we must be controlled by the evidence. The receiver had the option to introduce further testimony if he saw fit to do so, and his failure in that particular warrants us in the conclusion that his effort to lower the value fixed by the witnesses would have been unavailing. For the reasons aforesaid we find the assets of Lorimer and their values on October 21, 1912, to be the following:

Michigan farm ........ $50,000.00

Bittersweet property (equity)........................ 25,625.00

Ridgeway avenue property........................... 25,000.00

Pistakee Bay property........................... 40,000.00

Cash in bank............... 5,008.97

Interest Lorimer & Gallagher Company............... 47,892.48

National Bank stock....................... 94,500.00

Munday’s.obligation on certificates of deposit.......... 30,000.00

Total.............. $318,026.45

We add to Lorimer’s liabilities as found by the Appellate Court $30,235 for his notes and mortgage on the Michigan farm to Munday and find his total liabilities to be $299,536.59. As we have found Lorimer to be solvent we have allowed the John A. Cooke note in full, and will also allow the William Webb note in full for $1987.67 when we come to consider it in a subsequent division. The evidence clearly shows that Lorimer was liable on the Webb debt, and he states in his testimony that he was so liable. The receiver applied a credit balance of $194.62 on Cooke’s note when it came into his hands, and he also realized a substantial credit by compromise with Cooke, the total sum thus collected being $4044.25. The master allowed this latter sum on Cooke’s indebtedness and found the remainder worthless, and two members of the Appellate Court did likewise. The third member of the court allowed nothing. On the Webb note the master allowed $22.82, being the amount of his deposit account when the note came into the receiver’s hands, and found the remainder of the note worthless. The Appellate Court found the entire note worthless.

. Division 5.

The bills receivable under this division are owed by the following named debtors in the following amounts: H. W. Huttig $39,136.60; Huttig Manufacturing Company, direct liability $2560.80, indirect liability $7096.58; and John R. Norris $1000.51. We have allowed full value for all these items, amounting to $49,794.49. The master also allowed full value on all three of these items. Two members of the Appellate Court allowed on the Huttig claim $35,000, allowed the debts of the Huttig Manufacturing Company in full, and on the Norris claim only $500. The third member of the court found all three of the claims to be worthless.

The note of H. W. Huttig was secured with notes of F. J. Moss of the face value of $39,600, 350 shares of the American Sash and Door common stock, and Huttig’s trust receipt for 320 shares of stock in the Omaha State Bank. On October 25, 1912, Huttig put up 40 more shares of said bank stock as collateral. On December 21, 1912, John R. Norris, an insurance salesman, borrowed $50,000 from the trust and savings bank and took up Huttig’s $39,000 note. He did this for Huttig and gave as collateral to the latter note 360 shares of the bank stock of the Omaha State Bank and 26 bonds of the Motzorongo Company, par $500 each, and also a note of the Cemetery Securities Company for $47,000, all of which was obtained by him from Huttig. In May, 1914, the trust and savings bank gave all of the above collateral and the Norris note, together with other paper, to the city treasurer of Chicago, Flynn, as security for the deposits of the city. The Omaha State Bank was organized in September, 1912, with a capital stock of $300,000 and $75,000 surplus, and the shares of stock were paid for at $125 per share. The undisputed testimony of Robert S. Drusdow is that he sold stock of said bank in November, 1912, at $130 per share. This bank stock was therefore worth on October 21, 1912, the amount paid for it, $125 per share, and Huttig’s 360 shares must have been worth $45,000 on the date Norris put them up as security for the $50,000 loan. Receiver Niblack, for the trust and savings bank, on application to the Cook county circuit court, secured an order authorizing him to sell to Huttig for $35,000 cash the $50,000 note of Norris, together with all the above collateral which secured the same. Joseph O. Morris, a Chicago attorney, gave the uncontradicted testimony that he told Huttig he ¿could get Niblack to sell the . Norris note and the collateral thereto for less than its face. Huttig thereupon gave Morris $40,000 cash and told him he could have the difference between that sum and the amount he could get Niblack to accept for said note and collateral. Morris talked with Niblack and got him to take $35,000 cash for the note and collateral, and in pursuance of this agreement Niblack secured the order of court. The witness Drusdow further testified before the master that the lowest price he had ever sold bank stock of the Omaha State Bank was $117.50 per share, and that sale occurred in February, 1915, about the time the court order was entered; that in 1914 he sold this bank stock for $122.50 per share, and within the last year (the year in which he testified) as high as $132.50 per share. Huttig’s bank stock of 360 shares was worth at least $42,300 at the very time Niblack made the above agreement. Bonds of the Motzorongo Company were worth par according to the uncofitradicted testimony of the manager of that company, Alfred M. Turner, and the company had assets on July 15, 1912, of $2,009,567.10, on which there was a first lien to secure $167,300 of bonds. Those held by the receiver as collateral were part of those bonds, and in 1915, when the collateral was sold back to Huttig, the profits of the company were $65,561.50. Under this evidence the 26 bonds held by the receiver were of the value of $13,000. The undisputed evidence also shows that Huttig, in order to raise the $40,000 that he paid Morris to compromise with the receiver at $35,000, borrowed $40,000 from the Omaha State Bank upon 360 shares of stock of that bank as collateral, being the same number of shares held to secure the $50,000 note. It is upon the above evidence that we allow full value for this note.

The master and two members of the Appellate Court found from the evidence that the liability of the Huttig Manufacturing Company was paid, and the record evidence sustains that finding. The vice-president of the First National Bank and the First Trust and Savings Bank of Muscatine, Iowa, testified that on October 21, 1912, the Huttig Manufacturing Company owed his bank $52,000, unsecured, and that the indebtedness was all subsequently paid. He regarded the paper as perfectly good in October, 1912. He was familiar with the company, its plant and its business and kept in close touch with its affairs. It carried a large stock of merchandise of about $150,000, and its volume of business ran from $50,000 to $70,000 per month. The company paid dividends for a number of years and was still a going concern in 1918, when this evidence was taken, and was in all respects prosperous and earned for the year 1917 about $50,000 net profits. There is absolutely no testimony that the company was not financially good and its debt collectible in 1912, whatever might have been its condition when the trust and savings bank closed in June, 1914, or later. In conclusion we again announce that there is no reason or law for the receiver’s proposition that the Central Trust Company is bound by the action of the receiver in compromising Huttig’s indebtedness for less than its value on October 21, 1912, and this rule applies to any debt considered in this record.

The undisputed evidence in the record is that a payment of $500 was made on John R. Norris’ indebtedness November 23, 1912. Accountant Kadish testified that the books of the bank showed that the remainder of the debt was paid one day after its due date, February 15, 1913, and that he knew of nothing to indicate that it was not paid in cash in the usual and ordinary course of business.

Division 6.

The bills receivable under this division are those of the Commercial Bond and Investment Company and the Catholic Bishop of Bismark, who owed the National Bank $50,-033.19, including accrued interest, and $39,088.68, including accrued interest, respectively. We have allowed upon these two claims the aggregate sum of $69,609.49, being full value for the debt of the Catholic Bishop of Bismark and $30,520.81 for the debt of the Commercial Bond and Investment Company. The master allowed full value for both claims. All members of the Appellate Court allowed full value for the debt of the Catholic Bishop of Bismark and two members of the court allowed $17,239.28 on the other claim, while the third member found it worthless.

The Appellate Court and the master properly allowed $17,239.28 on this indebtedness, which was realized out of the notes of the Sisters of the Holy Child of Jesus, which notes had been obtained in exchange for note No. 6940, amounting to $17,239.28, including accrued interest. The remainder of the debt ($32,793.91) went into four notes, three for $25,000 each and one for $50,000, aggregating $125,000. One of these $25,000 notes was transferred to the Ashland Twelfth Bank on December 29, 1913, and while there there was a reduction of it of $1015. Another of the $25,000 notes was credited or paid in full according to the testimony of Kadish. The other $25,000 note was reduced by payments of $4593.30, and the balance of the note went into the hands of the receiver as a note of $20,-406.70. The $50,000 note was credited with a $20,000 reduction and the remainder of $30,000 went into the receiver’s hands. The foregoing evidence shows a total reduction of the $125,000 indebtedness of $50,608.30, or 40.5 per cent, of the entire $125,000 debt. Giving the old notes proper proportion of this reduction, we find that the $32,793.9! that went into the $125,000 was reduced by said payments by the sum of $13,281.53, and this further amount should be added to the amount of the old note that was paid, which amounts to the sum of $30,520.81, which we have allowed as the value of this debt.

The record evidence amply supports the master and the Appellate Court in finding that the debt of the Catholic Bishop of Bismark was a good and collectible debt on October 21, 1912, and that the note was paid in full.

Division 7.

The bills receivable of the Cemetery Securities Company are the only ones treated under this division. They consist of six notes, one for $100,000 and five for $5000 each, aggregating a net face value on October 21, 1912, of $121,-413.25. We have allowed full value for these notes. The master allowed full value. Two members of the Appellate Court allowed for this item $77,106.43 and the other member allowed nothing. The large note was dated June 3, 1912, due June 3, 1913. The unearned interest on that note was $3055. The other five notes were dated September 25, 1912, and were due March 25, 1913, the unearned interest on each note being $106.25, all of which were paid on the dates when they were due. There can be no serious question about the payment of the five notes under the evidence, and both the master and two members of the Appellate Court so found. The $100,000 note was renewed and came into the hands of the receiver on July 20, 1914, and he applied the sum of $1781.43, the deposit balance of the company, on the note. This credit was properly so applied. There were other notes of the Cemetery Securities Company in the trust and' savings bank that also came into the hands of the receiver, but they represented later indebtedness to the trust and savings bank, and under the Clayton rule of applying credits not directed by the debtor, the deposit account was properly applied to the oldest note. The receiver also properly applied an additional amount of $68,550 on this note, because on November 20, 1912, 2283/2 shares of stock of the Rosehill Cemetery Company were placed as collateral in the trust and savings bank, with a power of attorney running to the National Bank authorizing it to treat the shares as collateral security to the National Bank. The $68,550 was the amount realized by the receiver by sale of the stock under an order of the circuit court, and the receiver was not authorized, to apply the same otherwise than on the debt of the National Bank, in accordance with the power of attorney aforesaid. After applying the above credit, the balance due on the $100,000 note, less unearned interest, was $26,613.07. On April 1, 1914, there was deposited as collateral for the indebtedness of the Cemetery Securities Company 124 more shares of stock of the Rose-hill Cemetery Company. On that date the total liability of the Cemetery Securities Company to the trust and savings bank, including the debt to the National Bank, was $155,653.10. There is no proof that there was or was not an agreement as to how this credit should be applied, or that there was or was not a direction by the debtor as to how this credit should be applied on the indebtedness. One of the first rules in applying credits is that the debtor has the right to have his payment applied to the debt as he directs. Another rule is to the effect that if the proof shows the debtor made no such direction then the creditor may apply the credit as he sees fit, in case no third party is unjustly prejudiced. The Central Trust Company would have had the right in this case to have the credit applied to the oldest indebtedness if it had made the proper proof. There being no proof on the subject, we have apportioned the latter payment on all the remaining indebtedness of the Cemetery Securities Company. We find that the proper amount to be applied on the National Bank’s debt under the apportionment is $23,800, which would leave a balance due on the National Bank’s debt of $2813.07. The receiver had no authority, as against the Central Trust Company, to transfer 66 shares of this collateral to the Marquette Insurance Company for indebtedness to it and thereby seek to defeat the Central Trust Company of its proper proportion of this security. It is a matter of little consequence, however, at this time as to how much we actually find due from the Cemetery Securities Company, as we have allowed this debt in full, or the remainder of it, because of the fact that we hold that C. B. Munday, H. W. Huttig and others were liable to the National Bank on this indebtedness.

A short history of the Rosehill Cemetery Company and of the Cemetery Securities Company will be necessary to a further understanding of our finding in this case that Mun-day and Huttig were liable for the debt of the Cemetery Securities Company.

Rosehill cemetery was incorporated by a special act of the legislature in 1859. By the act it was authorized to acquire 150 acres of land in Chicago for cemetery purposes. The corporation was to provide for and dispose of burial lots and for the permanent care and preservation of the cemetery. The lots were exempted from taxation, execution and judgment liens. It might receive donations and bequests. No roads or streets could be laid. through the cemetery without the consent of the board of managers, by condemnation or otherwise. In 1863 the original act was amended, and as amended it provided for the acquisition of a fund of $100,000 as a perpetual care fund. The company issued 5000 shares of stock of a par value of $100 each, and for about ten years prior to 1912 it had been collecting fifty cents per square foot from each purchaser of lots, to be held in trust by the Northern Trust Company for the preservation of the particular lots purchased. The fund so collected was known as the perpetual care fund, and over which the Rosehill cemetery had no control. It had another perpetual care fund of over $700,000, the custody and management of which were under control of the officers of the Rosehill cemetery. The Rosehill cemetery was entitled to the interest produced from the funds for caring for the graves but was not entitled to any portion of the principal. The record evidence is to the effect that this cemetery is located in a beautiful section on the north side of Chicago; that there is a growing demand for the property by reason of the growth of the north side of that city, and by reason of the fact that by ordinance of the city of Chicago no new cemetery could be created in the city and other existing cemeteries could not add to their area for cemetery purposes. This ordinance could not apply to Rosehill cemetery for reasons already stated, and under its charter it could still condemn 200 acres additional land for cemetery purposes. The cemetery was easily accessible from all parts of the city and its property was exempt from taxation. The contour of the land was desirable for cemetery purposes and it was patronized by the best citizens of the city. The ground and surroundings were so kept and maintained that Rosehill cemetery was regarded as one of the most beautiful cemeteries in the United States. The record contains the testimony of various experts who had been managers of cemeteries in many of the large cities in the United States, each of whom had spent from twenty to thirty years in such work, and were well qualified to testify as such experts. They were familiar with Rosehill cemetery, and they testified that it was considered by them as one of the leading and best cemeteries in the United States. They were familiar with the factors that determine the value of cernetery property, such as its location, demand for the property, accessibility of the grounds, management and care given the property, its protection, from a legal standpoint, in its charter provisions, the character of the patrons, the physical features, the contour of the ground and the beauty of the surroundings. The cemetery in October, 1912, had 4,779,963.40 square feet of unsold lots or more. The experts valued the unsold portion of the cemetery in 1912 at an average of $2.50 per square foot, or $11,949,908.50.

In the spring of 1913 a dispute arose between the Rose-hill cemetery and the Federal government as to the amount of tax which should be paid under the Corporation Income Tax act. The unsold portion of the cemetery was then being carried on the books of the company at $482,000, the original purchase price. The government contended that the difference between the sale price of a lot and its price as carried on the books represented profit and was subject to income tax. One Harrison, an expert accountant, was employed to adjust the matter and to ascertain the actual value as of January 1, 1909, and place it on the books of the company as of that date. In this investigation he made a study of the cemetery situation in the United States for three months, taking into consideration the price that was charged in other cemeteries in the United States, including Chicago. He considered all the elements of value aforesaid. He found the total unsold portion available for burial, excluding drives and spaces reserved for ornamental purposes and twenty acres used in connection with the greenhouse, to be 5,013,114.95 square feet and fixed the value at $2.35 per square foot, or $11,789,667.60. The treasury department accepted his valuation for the purpose of taxation. He figured the probable life of the cemetery, taking into consideration the probable increase in sales and all other matters proper to be considered, and estimated that the property would be sold out in from fifteen to twenty years, or by 1933 or 1938.

Prior to May, 1912, the stock in the Rosehill cemetery was owned by the following named parties in the following amounts: Lansingh family, 2668J/3 shares; Henry S. Osborn, 300 shares; Pettibone, 137 Já shares; Miner, 10 shares; Chicago Dempsters, 1853¿4 shares; Rosehill Cemetery Company, 305/12 shares; making a total of 5000 shares.

For a number of years prior to 1912 there had been intense feeling and much litigation between the stockholders for the control of Rosehill cemetery. This same feeling seems to have existed between the two Dempster families, designated as the California and the Chicago Dempsters, and this resulted in the Lansinghs purchasing the interests of the California Dempsters in April, 1912. There was not entire harmony in the Lansingh family and they determined to sell their interest. William Freeman, the husband of Blanche Freeman, one of the Lansingh heirs, obtained an option on the Lansingh interest and he. interested and finally sold the interest of the Lansinghs to C. B. Munday, H. W. Huttig, Joseph O. Morris, Jesse Briegel and Frederick L. Reynolds. The five purchasers were to have a one-fifth interest in the shares purchased by them and Munday and Huttig were to raise the money to finance the venture. The contract by the five purchasers with the Lansinghs was actually made in May, 1912, by which the entire stock of the Lansinghs was purchased for $325 per share, or for a total of $867,208.33. A cash payment of $96,208.33 was to be made, and the deferred payments (of $771,000) were to be made on October 1 and April 1 of each and every year for a period of ten years. The first payment was to be October 1, 1912, $20,000; the next eight were to be $25,000 each; the next ten to be $50,000 each, and the last payment $51,000. All payments were to bear interest at five per cent, evidenced by coupons, payable semi-annually. The interest aggregated $234,760, the total principal and interest amounting to $1,005,760.33. By their contract the entire stock was to be deposited with the Chicago Title and Trust Company as trustee, to secure the payment of the notes, and after $150,000 was paid on the purchase price the syndicate was to be permitted to withdraw from the trustee one share for each $325 paid until 167 shares were withdrawn, and the remainder was to remain until all the indebtedness was paid. No lien was to be placed on the property.of the Rosehill cemetery and no indebtedness incurred by it, except in the usual course of business, without the consent of the owners and holders of two-thirds of the principal of the notes then outstanding. The shares were to be transferred in the name of the trustee, and, unless default in payment occurred, the syndicate was to be paid the dividends of the cemetery. The trustee was to deliver proxies to the syndicate or purchasers, to vote the stock in the corporation meetings as should be requested by the purchasers.

Under a separate contract Munday and his associates purchased the shares of Pettibone and Osborn for $44,-661.46 cash and the balance in two deferred payments, $45,937.5° in November, 1912, and $44,843 in May, 1912. They also bought the stock of Miner for $3272.60 cash. They thereby secured 3115 5/6 shares of stock, which was a controlling interest, amounting to 62 per cent of the entire stock.

On June 1, 1912, the Cemetery Securities Company was organized by the syndicate under the laws of the State of Delaware, with a capital stock of 6000 shares, no par value. The object of this organization was to acquire and hold the shares of stock in the Rosehill cemetery purchased by them. One thousand shares of stock were issued to each one of the purchasers except Morris, to whom were issued 994 shares. Three shares were issued to each of two other parties for the purpose of providing the seven directors, but the stock was to belong to Morris. One thousand of the shares remained in the treasury. By an arrangement among the members of the syndicate no one of them was to receive any of the dividends or profits of the cemetery until their contracts for the purchase of the stock were paid in full. Munday and Huttig were to be paid in full for all the money they advanced in payment of the contracts, and thereafter each member of the syndicate was to be an equal owner of the stock and of its profits. It was the expectation of all the members of the syndicate that after the Pettibone and Osborn contract had been paid and a few payments had been made on the Lansingh contract their portions of the dividends from Rosehill cemetery would of themselves discharge the remainder of the Lansingh contract, and the evidence in this record clearly shows that their expectations would have been fully realized except for the unexpected crash and closing of the trust and savings bank in June, 1914, and other similar occurrences which closed up and put out of business all the various businesses and concerns with which Munday was connected. Munday was a very wealthy man in 1912 and previous years, and under the showing in this record was worth at least a half million dollars or more; but the facts are that he was connected with so many interests or business concerns which so constantly and persistently drew on him for money that he was not able to meet the demands, and his bank was not able to resist the opposition naturally engendered by his diverse business interests in Chicago and elsewhere and by the many losses he sustained after October 21, 1912. The Rosehill cemetery dividends actually declared and paid in 1908 were $49,695.85; 1909, $79)513-34; 1910, $89,452.48; 1911, $79)513-34; 1912, $29,817.51; and 1913, $99,396.66. In 1912 there were heavy expenses in building a new greenhouse, and other expenses. The dividends were increasing yearly, and one of the experts in his calculation estimated that under normal conditions the dividends that would have gone to the syndicate from 1912 to 1922 (the period of the Lansingh contract) would have amounted to $1,028,000, or about $23,-000 more than was necessary to have discharged the Lansingh contract. He further estimated that at the end of 1922 there would have remained about 4,035,745 square feet of unsold land; that at $1.69 per square foot, — the average selling price for the seven-year period from 1910 to 1916, inclusive, — the value of the unsold land at that time would be $6,850,409.05. He made this computation in 1917, when the books for that year had not been closed. After the books were audited for the years 1917 and 1918 the actual facts indicate results larger than his estimates for those years.

Up to October 21, 1912, Munday and Huttig had paid on the contract of purchase a total of $199,033.41. Of this amount Munday raised $100,000 and Huttig $59,-585.51. The remainder was raised by the Cemetery Securities Company by borrowing from the Bank of Bethalto and the National Bank. The last loan is represented by the five $5000 notes we have above considered as a part of the indebtedness of the Cemetery Securities Company to the National Bank, which notes, when discounted by the bank, produced $24,447.90. For the money which Munday raised, the Cemetery Securities Company made to him a note for $100,000, which he agreed with his associates he would not discount to any bank, and particularly to the National Bank. This $100,000 note represents the large note above considered by us as the debt of the Cemetery Securities Company to the National Bank, and which was discounted by Munday to the bank in violation of his agreement.

Under the management of the syndicate the Rosehill Cemetery Company constructed what is referred to in the record as a community mausoleum. The building of the mausoleum required 57,660 square feet of ground of the cemetery. Much has been said about this mausoleum and its construction, but the undisputed testimony is to the' éffeet that this improvement will add a value of $1.50 per square foot on 1,500,000 square feet of the Rosehill cemetery ground, or $2,500,000. The highest priced property in Rosehill cemetery prior to 1911 was $2.50 per square foot, including fifty cents for perpetual care fund. From the testimony of the witness referred to, it appears that the 1,500,000 square feet around and near the mausoleum will be sold for from $4 to $6 per square foot, including fifty cents per square foot for perpetual care. The total expenditure on the mausoleum for the years from 1913 to 1916, inclusive, including cost of ground, cost of building and other expenses, was $495,173.63. The total receipts for the same years for sales of space in the mausoleum were $576,148.08, and the total net receipts, less the perpetual care fund, were $22,030.45,. showing a net profit to the stockholders on the mausoleum of the latter amount. One of the expert witnesses estimated that the net receipts or profits from the mausoleum to the stockholders for the years from 1917 to 1920, inclusive, and also including the net receipts already mentioned, would amount to $233,-943-57, or that amount of profits to the stockholders, assuming the sales to be equal to the 1916 sales, until all space was sold, in 1920. The books of the Rosehill cemetery actually showed as a net profit from all sources for distribution to stockholders in 1916, the sum of $123,537.37. It was the building of the mausoleum that diverted the syndicate’s share of the dividends of the Rosehill cemetery and caused it to borrow large sums of money it would otherwise not have borrowed, and this is the real reason that the Cemetery Securities Company was found to owe so heavily in June, 1914, when the bank closed.

After the closing of the trust and savings bank the Chicago Title and Trust Company was appointed receiver for the Rosehill cemetery, and a suit was instituted by the Dempsters to regain control of the cemetery, alleging improper management of Munday and his associates and the looting of its treasury by them. We have already sufficiently discussed the result of their mismanagement of the Rosehill cemetery. The final result of the litigation was that the Dempsters bought at forced sale all. the shares purchased,by the syndicate from the Lansinghs. The syndicate at this time owned in the name of the Cemetery Securities Company 573^2 shares of stock, including the number of shares it had withdrawn under the provisions of the Lansingh contract, and the Pettibone, Osborn and Miner shares it had purchased and paid for, except two shares sold to one Wallis. Of the 571 *4 shares owned by the syndicate, 219 were held by the Rosehill Cemetery Company as collateral to a $65,700 note of the Cemetery Securities Company payable to it. The remainder of 352^4 shares were held by the trust and savings bank, 66 of which it transferred to the Marquette National Fire Insurance Company, as already stated. The Dempsters also became the owners of all of the 571*4 shares owned by the syndicate after it had purchased the Lansingh shares. The showing in the record is that the Dempsters paid for the Lansingh shares, including the amount of $131,575.86 the court decreed they should pay into the treasury of the Rose-hill cemetery to make good “the loot” of its treasury by the syndicate, a little more than $350 per share. The receiver in this case contracted with the Dempsters to sell all the shares held by it at $300 per share, while all the other shares purchased by them at forced sale cost them $350 per share. The shares were undoubtedly worth what the Dempsters paid for them, and if the receiver had sold them for $350 per share, — the amount the Dempsters considered them worth, — the amount of the National Bank’s debt already considered would have been fully paid to the receiver and also several thousand dollars more on the notes of the Cemetery Securities Company held by the trust and savings bank. But the facts are undisputed that the Dempsters only paid $300 per share for the entire 571*4 shares held by the syndicate in the name of the Cemetery Securities Company, and they only received credit at this rate on the entire indebtedness, which will be stated later. The average purchase price for the entire shares acquired by the Dempsters, as above stated, was a little more than $348 per share. The further facts are that the Dempsters in 1914 refused to take $350 per share for their holdings to Munday and his associates, and refused absolutely to sell to the syndicate for less than $400 per share. We must therefore necessarily conclude from the evidence in the record that the Dempsters considered that the stock in the Rosehill Cemetery Company was worth $400 per share in 1914, and there is nothing in the record to indicate that it was worth less at any time after 1914. The evidence does show that the stock was worth much more than that by reason of the fact that the mausoleum turned out to be such a valuable asset to the cemetery.

The facts concerning the alleged looting of the treasury of the Rosehill Cemetery Company by Munday and his associates, so far as we can gather them from the record, are in substance the following: Having elected the directors of the corporation they were able to control the corporation and transact its business. They caused it to sell a large amount of its stocks, bonds and other securities that were in the perpetual care fund, which at that time was more than $700,000. According to the statement of the receiver, the amount of securities so sold amounted to $221,500. Munday and his associates substituted other securities for those so sold, which were: $19,000 of the certificates of deposit of the Bank of Smithboro, $100,000 of the bonds of the Litchfield Mill and Elevator Company, $60,000 of the preferred stock of the Huttig Manufacturing Company, $20,000 of other bonds, and $22,500 in notes and mortgages of the wives of Morris and Reynolds. The cash realized from the proceeds of the sale of the bonds and stocks of the perpetual care fund was deposited in the trust and savings bank. As we understand the record, the trust and savings bank issued its certificates of deposit to the amount of $125,000 drawing three per cent interest on their face, with an agreement on the side that six per cent interest would be paid to the Rosehill cemetery to secure the cash deposited in the bank. It appears, also, that Munday issued certificates of deposit amounting to $51,000 on the Bank of Smithboro to' the Rosehill Cemetery Company. The record is not very clear as to just how many securities, from first to last, were thus given the Rosehill Cemetery Company to secure the perpetual care fund or cash belonging to that fund, but the evidence is clear as to just how many of these securities so given by Munday and the trust and savings bank remained unpaid. When Munday’s associates turned the management of Rosehill cemetery over to the receiver appointed by the court, the Rosehill Cemetery Company held the following of the above securities that were unpaid: $100,000 Litchfield Mill and Elevator Company bonds, $60,000 preferred stock of the Huttig Manufacturing Company, and $71,000 of the certificates of deposit of the Bank of Smithboro. The witness on whom we rely for this information is Joseph O. Morris, who also testified that the Reynolds mortgage, when it was foreclosed, was insufficient to satisfy Reynolds’ note by about $2000 or $3000. This testimony, so far as we are able to find, is undisputed, and the total securities so placed in the care fund not completely paid off in June, 1914, could not be, under Morris’ testimony, more than $234,000. The circuit court only found the deficiency in the perpetual care fund to be made good by the Dempsters to be $131,575.86, and decreed in the final disposition of the litigation by the Dempsters against Munday, Huttig and others, that the Dempsters should make good the above deficiency by applying future dividends of the Rosehill Cemetery Company until the deficiency was discharged. We cannot make it out definitely from the record, but we assume that the above amount represents the entire amount that the court found was unsettled by the syndicate and not good enough security for the perpetual care fund. Assuming that this is the total amount of the “loot” or loss, or even that the $234,000 was an entire loss to the Rosehill cemetery, it is very clear that under the management of the syndicate the stock of the company was worth more than it was in 1912, when it took hold of it, by reason of the gains to the cemetery by the building of the mausoleum and greenhouse under its management. We may further say here that the syndicate saved the Rosehill cemetery a loss of several thousand dollars by disposing of $25,000 worth of bonds of the St. Louis and San Francisco, Kansas City, Mexico and Orient bonds that were in the perpetual care fund as securities, as that railroad company, known as the Frisco road, went into the hands of a receiver within a very short time after the bonds were sold and its bonds became very greatly depreciated. There were also other bonds that the syndicate sold and by such sales similar losses were saved to the Rosehill Cemetery Company. The reason for selling the bonds was because of the fact they were adjudged by the syndicate to have become of doubtful value.

The Cemetery Securities Company owed the following notes in June, 1914, when the trust and savings bank closed, and which were made for part of the cash raised by the syndicate to apply on stocks purchased by them: $100,000 to the National Bank; $35,000 to the trust and savings bank; $20,000 to the Broadway State Bank; $10,000 to the Illinois State Bank; $20,000 to the Marquette Insurance Company; $50,000 to the trust and savings bank, borrowed by Huttig, Morris and Reynolds; $60,000 to H. W. Huttig direct; and $65,700 to the Rosehill cemetery, — making a total of $360,000, $100,000 of which was owed direct to Munday and which was discounted by him to the National Bank. As has already been shown, the Rosehill cemetery was fully secured on its indebtedness, and the Marquette Insurance Company, the National Bank and the trust and savings bank were partially secured, by 352I/2 shares of stock of the cemetery. If the receiver had received $350 per share, (the amount paid by the Dempsters for the Lansingh interest,) and if the same price had been paid for the shares held by the Rosehill cemetery to secure its debt, the total indebtedness would have been reduced to $180,025, an¿ $60,000 of this remainder is owing direct to H. W. Huttig, a member of the syndicate.

The master has found from the record that the total shares owned by the syndicate were worth, over and above all the debts it had incurred by the purchase of the stock, $561,417.87, and that the value of each member’s stock in that company was one-fifth of that amount, or $112,283.57. The master’s estimate is apparently a conservative estimate of the value of the shares, and would be supported by the record evidence if it were not for the further fact that Munday and his associates after 1912 were not financially able to finance and pay out their investment. In considering and determining the value of their shares on October 21, 1912, and in June, 1914, their financial condition at those times must be considered. The record evidence shows that Morris, Huttig and Reynolds undertook to make disposition of their interests in the Rosehill Cemetery Com- ' pany, and that they had on several occasions interested parties who desired to buy their interests and who were financially able to do so but were deterred from doing so by parties who were apparently interested for others and in seeing to it that no such sales should be made. Munday was then a bankrupt, and by reason of his inability after October, 1912, to finance all of his interests, his interest in the Cemetery Securities Company and the interests of the syndicate were sacrificed by Munday’s misfortune. But we are only interested in this discussion in passing upon their ability to sell their interests in the Rosehill Cemetery Company on or before October 21, 1912, and to pay their indebtedness up to October, 1912, which, as already stated, is $199,033.41. We have no hesitancy in saying that the record evidence is such that it is morally certain that the Dempsters at any time before October 21, 1912, would have paid the members of the syndicate for their interests every dollar invested in Rosehill cemetery stock and have taken their contract off their hands at their contract price. The Chicago Dempsters knew better than anyone else, other than the syndicate, the value of the syndicate’s investment in the Rosehill cemetery. The payment by the Dempsters of $350 per share for the Lansingh stock in 1915, and the fact that they had refused to accept that price for their shares in 1914 and refused to sell for less than $400 per share, is very significant evidence that the Dempsters would have been glad to have gotten the syndicate’s interest for all, and' even more than, it had invested in October, 1912. We do not believe, under the evidence, that the syndicate would have been able to realize very much more, even from the Dempsters, than the amount invested by the syndicate in October, 1912. The record furnishes no evidence that the snydicate could have sold it for very much more than the amount of its indebtedness to any other purchaser. We therefore conclude that Munday’s and Huttig’s interests in October, 1912, were worth all that they had invested in the cemetery stock, and they are the only ones of the syndicate who had invested any money up to that time. Munday and Huttig were to have their money invested before any of the other members were to receive anything. We have therefore valued the notes of the Cemetery Securities Company to the National Bank at full value, and for two reasons: First, we think the evidence shows that the receiver could have realized from the Dempsters as much as they paid for the Lansingh stock, $350 per share, which would have satisfied in full, as we have already shown, the entire indebtedness to the National Bank of the Cemetery Securities Company. Second, the Cemetery Securities Company under the laws of Illinois, being a foreign corporation, could not lawfully hold stock in a resident corporation of Illinois. The ownership of the shares of stock of the Rosehill Cemetery Company was therefore in the snydicate, or in the individuals who formed the Cemetery Securities Company in the corporation. Munday indorsed or discounted the note for $100,000 given him by the Cemetery Securities Company to the National Bank, and he was unquestionably liable to the National Bank on that note and was solvent on October 21, 1912, as we will hereafter find.

Division 8.

Bills receivable considered under this division are notes of the following parties in the following named amounts: Jesse Briegel, $10,035 > William S. Freeman, $5492.63; Joseph O. Morris, $3079.45; and Frederick L. Reynolds, $3512.25. The master allowed all of these claims in full, and the main ground for this allowance as to the claims of Briegel, Morris and Reynolds was his finding that the interest of each one of those parties in the Rosehill cemetery was worth the sum of $112,283.57. He found that Freeman was solvent on October 21, 1912, and the claims against him collectible. The Appellate Court allowed nothing for the debts of Briegel and Morris. Two members of the Ap7 pellate Court allowed $1000 on the claim of Freeman and $500 on the claim of Reynolds. The third member of that court found all four of the claims to be worthless. We find the notes of Briegel and Freeman to be of full face value, the notes of Reynolds to be of the value of $650, and the notes of Morris to be uncollectible or worthless. Our aggregate value for all the notes in this division is $16,177.63.

The testimony of Briegel is to the effect that he only owed, in addition to the above notes, about $21,000 or $22,-000; that he owned personal property, consisting of furniture, rugs, paintings and jewelry, of the value of $10,000, and had about $2000 or $3000 in cash on October 21, 1912. He also claimed to be the owner of $10,000 worth of bank stock in a Texas bank. The above note of $10,035, according to his testimony, was secured by the bank stock which Munday bought for him and which was placed in the National Bank as collateral for the note. The record evidence corroborates Briegel to the effect that the $10,000 borrowed by him from the National Bank paid for the Texas bank stock, and that he was either entitled to the bank stock, which should be included in his assets, or that the note must be regarded as an accommodation for Munday a,nd charged as a Munday liability. The receiver states that it was evident that this note was merely an accommodation note executed by Briegel for Monday’s benefit, for which Briegel never received any consideration, and that Munday subsequently sold the stock but did not pay Briegel’s note. Briegel’s note was surrendered to him and the indebtedness was transferred to the account of the Commercial Bond and Investment Company, one of the corporations of Munday and Huttig. That corporation never paid the note and was at the time of the transfer insolvent, as we have already found. We have allowed this note in full as an indebtedness of Munday and have charged the same to him as a liability.

The sum of $1000 was actually paid by William S. Freeman on his note to the National Bank, as found by the master and the Appellate Court, on the due date of the note by debiting his deposit account with that sum, he having over $1300 on deposit on that date. The remainder of this debt was paid March 25, 1913, by the Cemetery Securities Company by a check on its deposit account in the trust and savings bank and the note was taken up by Freeman. The receiver claims that this was a mere substitution of one worthless debt for another and that the Cemetery Securities Company was not good for the amount. The note was nevertheless paid out of the deposit balance of the Cemetery Securities Company in the bank, and on the same day it also paid $25,000 of its own debts to the bank of $180,000 which it had owed since November 20, 1912, and thereby reduced its indebtedness to $155,000. The indebtedness of the Cemetery Securities Company did not at any time thereafter increase to the amount of $180,000, and the claim of the receiver cannot be sustained. It is unnecessary in the view we take of it to go into the question of the solvency or insolvency of Freeman as disclosed by his evidence.

We agree with the Appellate Court that nothing can be allowed on the debt of Joseph O. Morris. From his own testimony he owed between $90,000 and $100,000, and was that much short in his ability to pay his debts, except for a few credits and other matters that were due him or things that he had “that were lying around loose.” He gives no testimony that would indicate that there was any certainty of realizing anything out of his property or ■ credits to pay on his indebtedness. He had a good law practice that apparently netted him, above expenses, about $15,000 a year. He had been owing a great deal more in prior years and had greatly reduced his debts. His testimony impresses us with the idea that he is truthful and honest and disposed to pay all that he owes. He has never gone into bankruptcy or attempted to evade his debts. Outside of his interest in the Cemetery Securities Company and his law practice he has no assurance of being able to pay his debts. In short, his ability to pay out depends upon his health and his law practice, as we have already found that his interest in the Cemetery Securities Company, which is now all canceled, will amount to nothing at the highest price that it could ever have been sold for, after all the debts of the syndicate and the Cemetery Securities Company are discharged.

The evidence in the record shows that $500 was paid on the note of Frederick L. Reynolds on February 3, 1913. His note was renewed for $3000 on April 9, 1913, and the interest was paid on it to June, 1914. There were 34 shares of Bear River Paper and Bag Company stock and $4000 of six per cent bonds of the same company put up as collateral with this note. The evidence discloses that that company went into the hands of a receiver in October, 1912, and after its affairs were wound up' there would be a $200 dividend, only, which the receiver may realize out of the collateral, and that it will probably be three years and a half after June, 1914, until this amount is collected from the receiver of the Bear River Paper and Bag Company. Reducing this payment to present value as of the date the interest was paid up on this note, the credit will extinguish only $150 more of the debt. We have therefore allowed $650 as the full value of this note. We further find that the evidence in the record sustains the Appellate Court in finding that Reynolds was insolvent on October 21, 1912. His only real expectancy of being financially able to pay this debt was from his interest in the Rose-hill Cemetery Company* which we have already found to be of no further value to him.

Division p.

Under this division, which the Appellate Court refers to as “Bills receivable transferred to subsidiary banks,” the Appellate Court simply makes the statement that the bills receivable belonging in this division were considered under the previous divisions and that no further reference to them need be made. The banks known as the subsidiary banks were organized by Munday and others after the trust and savings bank had begun business, and were the Illinois State Bank of Chicago, the Ashland Twelfth State Bank, the Broadway State Bank, the State Bank of Calumet, the A. H. Hill & Company State Bank, and the International Trust and Savings Bank. The trust and savings bank furnished the capital and surplus of all these banks, or a large part thereof, and gave to each bank cash and also worthless notes to make up the amount of cash it was to furnish. It also appears that from time to time after these subsidiary banks were organized the trust and savings bank would transfer to them worthless claims, in some instances indorsed in the regular way, while in other instances this paper was indorsed without recourse. There are quite a number of these transactions discussed by the receiver, but his principal cause of complaint is the allowance by the master of some of these worthless claims that were thus indorsed to these banks as good claims, the claims being charged to the deposit accounts of the subsidiary banks. We have no need to further discuss these subsidiary banks or the dealings of the trust and savings bank with them, as we have allowed no claim simply because of the fact that it was transferred to a subsidiary bank without recourse, or otherwise, and charged to its deposit account. The record indicates the transfer backwards and forwards of a great number of these worthless claims on the part of the trust and savings bank and its subsidiary banks, and we have refused for that reason to allow any notes or claims of the National Bank which were transferred to subsidiary banks that were of themselves worthless, unless those claims were collected or partially collected after they went into the hands of the subsidiary banks. Several of these banks have filed claims against the trust and savings bank for worthless paper thus assigned, and we are unauthorized to allow any claim so assigned unless the proof shows that the note was collectible or collected and resulted to the benefit of the creditors.

Division 10.

The bills receivable considered under this division are those exchanged for paper of Sidney Long & Co., and are bil

This text is long and has been trimmed here. Open the source document for the complete record.