APPEAL FROM THE CIRCUIT COURT OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS.
MR. JUSTICE BLATCHFORD delivered the opinion of the court.
On the 20th of February, 1869, a written agreement was executed by Samuel H. Fox and I. Willard Fox, to which was appended a memorandum signed by Samuel H. Fox, the papers being as follows:
"Whereas I. Willard Fox is indebted to Samuel H. Fox and Henry W. Fox, partners doing business under the firm name and style of Fox & Co., in the sum of seventy thousand dollars, ($70,000,) over and above all discounts and set-offs of every name and nature; and whereas said Fox & Co., at the request of said I. Willard Fox, have taken up and satisfied, or [are]
about to take up and satisfy, certain other of the indebtedness of said I. Willard Fox, some of such indebtedness, and to the amount of about sixteen thousand dollars, ($16,000,) more or less, being satisfied by payment thereof, and to the amount of about thirty thousand dollars, ($30,000,) more or less, being so satisfied by payment at the rate of fifty cents on the dollar, whereby the said I. Willard Fox has become further indebted to said Fox & Co.; and whereas the said I. Willard Fox has sold and conveyed to the said Samuel H. Fox all and singular the stock of goods, wares and merchandise with the store fixtures, in the city of Chicago, including therewith his notes, books and accounts of every name, nature and description, and also the premises known as No. 376 North La Salle Street, being lot two (2) in block twenty (20), in Bushnell's Addition to Chicago, Illinois, in said city of Chicago, with power forthwith, at such times and in such manner as he, said Samuel H. Fox, shall deem best, to sell and collect and convert the said goods, wares, merchandise, fixtures, notes, accounts and premises into money, and apply the proceeds to the payment of said indebtedness to said Fox & Co., both said original indebtedness and that so taken up by them, at the rate paid therefor, with such interest added thereto as the said Samuel H. Fox or Fox & Co. shall have to pay thereon, or on any portion thereof, and has also conveyed to said Samuel H. Fox his farm in Lake County, Illinois, known as the Lake Zurich farm: Now, therefore, the said Samuel H. Fox agrees, that if the said I. Willard Fox shall and will, within six months from the date hereof, pay the entire amount of each name and kind of said indebtedness, or such portion thereof as remains at that time unpaid, then he, said Samuel H. Fox, shall and will reconvey the said Lake Zurich farm to said I. Willard Fox, but in default of such payment it is hereby agreed by the parties hereto that the said Samuel H. Fox may immediately foreclose the certain mortgage comprised in said conveyance of said Lake Zurich farm and this agreement.
"And the said I. Willard Fox hereby agrees, that, in case proceedings for such foreclosure be commenced, that he will interpose no defence thereto, nor attempt, by injunction, bill in equity, or in any other way, to hinder or defeat the same.
"Witness the hands and seals of the said Samuel H. Fox and I. Willard Fox, this twentieth day of February, A.D. 1869.
"And the said Samuel H. Fox hereby agrees to release a certain mortgage which he has on a portion of said Lake Zurich farm, the indebtedness secured by said mortgage having become merged in said debt of seventy thousand dollars.
By deeds in fee simple, I. Willard Fox and his wife conveyed to Samuel H. Fox the North La Salle Street lot and the Lake Zurich farm, mentioned in the above agreement, simultaneously with its execution.
On the 17th of February, 1877, Kate W. Fox brought a suit in equity, in the Circuit Court of the United States for the Northern District of Illinois, against I. Willard Fox and his wife. Kate W. Fox was the widow of Henry W. Fox, who, with Samuel H. Fox, composed the firm of Fox & Co. Henry W. Fox had died in 1876, and by his will Kate W. Fox was made his sole executrix and sole devisee. In her bill she set forth the contents of the above agreement, without stating that it was in writing. The bill averred that, in pursuance of the agreement, Fox & Co. paid the $16,000 and the $30,000 of the indebtedness of I. Willard Fox, named in it; that I. Willard Fox and his wife executed and delivered to Samuel H. Fox deeds in fee simple of the Lake Zurich farm and the La Salle Street lot; and that I. Willard Fox assigned to Samuel H. Fox the goods, wares and merchandise, store fixtures, notes and accounts, mentioned in the agreement.
The bill also alleged that it was then further agreed between I. Willard Fox and Fox & Co., that the former should carry on his business, which was at Chicago, Illinois, in connection with the said stock of goods, wares and merchandise, notes and accounts, as though no such assignment thereof had been made to Samuel H. Fox; that Fox & Co., who were manufacturers of glass, in the State of New York, should advance and
furnish to I. Willard Fox goods in the way of his business, from time to time, as he should need and they should be able; that the price or value of the goods so furnished should be added to the indebtedness so due from I. Willard Fox to Fox & Co., and the former should apply the proceeds and avails of the business, as he should realize the same, to the payment of such indebtedness, until such future time as should be agreed upon by the parties, at which time he should turn over and deliver to Samuel H. Fox the merchandise which should then be on hand, the store fixtures, and the notes and accounts then uncollected, the proceeds and avails at which should then be applied by Samuel H. Fox towards the payment of the indebtedness which should then be due from I. Willard Fox to Fox & Co.; and that the original agreement should in all other respects remain binding.
The bill further averred, that, in pursuance of the last-mentioned agreement, I. Willard Fox continued to carry on his business until about February 20, 1870, that is, for about one year, in connection with the said stock of goods, store fixtures, and notes and accounts; that, during that period, Fox & Co. furnished to him merchandise, in the way of his business, to the amount of about $24,000; that, at the expiration of that period, he, in pursuance of that agreement turned over and delivered to Samuel H. Fox the stock of goods, store fixtures, notes and accounts, then on hand, of the value of $27,343.07, which amount was then credited to him and applied on his indebtedness then due to Fox & Co.; that, after the making of the last-mentioned agreement, and while I. Willard Fox was so carrying on business, he paid out of its avails, upon his indebtedness to Fox & Co., the sum of about $10,000; that Samuel H. Fox, some time before September 1, 1875, sold the La Salle Street lot and realized from it about $14,000, which amount was credited upon the indebtedness of I. Willard Fox to Fox & Co.; that the said sums of $27,343.07, $10,000, and $14,000, were all that had ever been paid on said indebtedness; and that there was due to the plaintiff, at the time of filing the bill, on account of said indebtedness, about $70,657, besides interest.
The bill further alleged that, on or about September 1, 1875, Samuel H. Fox and Henry W. Fox dissolved their partnership, and it was agreed that the debt due from I. Willard Fox to Fox & Co., and all securities therefor, should thereafter belong to Henry W. Fox; that Samuel H. Fox executed and delivered to Henry W. Fox a deed in fee simple of the Lake Zurich farm, a description of which by metes and bounds was given in the bill; and that there was due to the plaintiff, as such executrix and devisee, from I. Willard Fox, $103,600, principal and interest.
The bill waived an answer on oath, and prayed for an account of the amount due to the plaintiff for principal and interest on the security of the Lake Zurich farm; that the defendants be decreed to pay that amount, the plaintiff offering to reconvey the premises to them on such payment; and that, in default of such payment, the defendants be barred and foreclosed of all equity of redemption in and to such mortgaged premises. The bill contained a prayer for general relief, although it did not pray specifically for the sale of the Lake Zurich farm; nor did it treat the La Salle Street lot as being subject to a like mortgage with the Lake Zurich farm, but only as being subject to be sold by the grantee under the power contained in the agreement, the proceeds of sale to be applied upon the indebtedness.
On the 21st of April, 1877, I. Willard Fox and his wife put in an answer to the bill. It denies the indebtedness of $70,000, but admits that a paper drawn up at the instance of Samuel H. Fox stated the indebtedness at that amount. It also avers, that, prior to February 20, 1869, I. Willard Fox had been engaged at Chicago for several years in selling paints, oils and window glass; that during that time he had sold for Fox & Co. large quantities of window glass made by them, such sale being upon commission; that he never regarded himself as purchasing the glass in the ordinary way; that a short time prior to February 20, 1869, he became embarrassed; that then Fox & Co., under the pretence of making a favorable settlement with some of his creditors, forced him to enter into an agreement, wherein he was apparently made to say that he
owed Fox & Co. the $70,000, but which did not state truly such indebtedness, the amount being made up for a specific purpose on the part of Fox & Co., without his consent; that, in making up the $70,000, interest was, without his consent, calculated for several years back on all pretended balances apparently due to Fox & Co., every three months during each year, thereby compounding interest; that the amount of such interest was $20,000 or $30,000; that after the agreement was signed, Fox & Co. allowed him to go on in business, using his own name, for about the period of one year, but the business was really theirs, and he turned over to them his store and its contents, and all the debts due to him, on or about February 20, 1869, the contents of the store being then of the value of over $60,000; that, in equity, under such arrangement, that property ought to go to the cancellation of the indebtedness stated in the agreement, and Fox & Co. ought to be charged in the accounting with the property so delivered to them, at its fair value; that Fox & Co. pretend that the business was conducted by him after February, 1869, and, because there were losses in it to the amount of $15,000, he ought to suffer that loss, when the business was really that of Fox & Co., and the adjustment ought to be made at the time of the turning over of the store and its contents, and of his property, to Fox & Co., and he ought to be allowed to set off against any indebtedness of his to Fox & Co. the amount of property so turned over to them; that he was the owner in fee simple absolute of the land described in the bill; that whatever debt is due to Fox & Co. is a lien upon the same, including the La Salle Street lot, in the nature of a mortgage, and the land ought in equity to be subjected to such lien, if any indebtedness is proved to exist in favor of Fox & Co.; and that the plaintiff stands in no different relation to him, in regard to such indebtedness, from that occupied by Fox & Co., and has only the same rights and interest in and to such security which Henry W. Fox or Fox & Co. had.
The answer asks that an accounting may be had between the parties before a master, and avers that all indebtedness from I. Willard Fox to Fox & Co. has been paid; and that
both the Lake Zurich farm and the La Salle Street lot are free from any lien in favor of Fox & Co. or of the plaintiff. It avers that the goods furnished by Fox & Co. to I. Willard Fox, after the 20th of February, 1869, were the goods of Fox & Co., and he conducted the business for them; that the indebtedness held against him by other persons, and which was settled by Fox & Co., amounted to $24,000 and was settled for about $12,000 by Fox & Co.; that he also owed the First National Bank about $15,000, which was paid out of the proceeds of a loan of $6000 made on the La Salle Street lot, and the rest of it out of the collections, etc., due to I. Willard Fox; and that, such indebtedness having been so settled out of the La Salle Street lot and a portion of the property turned over by him to Fox & Co., he ought to have the Lake Zurich farm free from encumbrance, because of the large surplus which was left in the hands of Fox & Co. after paying such outstanding debts. The answer also avers that he will rely upon the statute of Illinois in regard to usury.
A replication was filed to this answer.
On the 26th of October, 1877, the plaintiff filed an amended bill, under an order made on that day, giving her leave to do so, and requiring the defendants to answer within thirty days. The amended bill is a full and complete bill in itself. It contains mainly the same averments as the original bill, but has some variations and additions. One addition is a statement of the contents of the memorandum signed by Samuel H. Fox, appended to the agreement, which was not contained in the original bill. There is also added a statement that Samuel H. Fox did, on the 5th of October, 1869, release and discharge of record the mortgage so held by him on a portion of the Lake Zurich farm. It states the amount of goods furnished by Fox & Co. to I. Willard Fox, during the time from February 20, 1869, until some time in December, 1869, at $12,999.64, instead of $24,000; and that the property, amounting to $27,343.07, was turned over and delivered to Fox & Co. in December, 1869, instead of in February, 1870. It also states that the indebtedness mentioned in the agreement as $16,000 was in fact only $15,000, and was due to the First National Bank of Chicago;
that, after the making of the agreement and the conveyance of the La Salle Street lot to Samuel H. Fox, he, with the knowledge of I. Willard Fox, raised, by mortgage on that lot, about $6000, which was handed over to I. Willard Fox and paid by him on the indebtedness to the bank, and that afterwards, and during the time that he carried on the business after February 20, 1869, he paid to the bank the remainder of the debt due to it, out of the avails of the business and of collections of the notes and accounts; that the indebtedness estimated in the agreement at about $30,000, due to other parties, was only about $24,000 or less, and Fox & Co. compromised and paid it in full by paying altogether the sum of about $10,971.39; that, about the time that Samuel H. Fox mortgaged the La Salle Street lot for $6000, he effected an insurance upon the improvements upon it for the same amount, and afterwards the improvements were destroyed by fire, and the insurance was applied in discharge of the mortgage; that, on the 25th of September, 1875, Samuel H. Fox conveyed the La Salle Street lot to Henry W. Fox for the sum of $8000, which amount was then credited upon the indebtedness of I. Willard Fox to Fox & Co.; that the $27,343.07, which was the value of the stock of goods, store fixtures, notes and accounts, turned over to Samuel H. Fox in December, 1869, and the $8000 realized from the sale of the La Salle Street lot, is all that has ever been received by Fox & Co. on the debt from I. Willard Fox to them; and that there was due to the plaintiff at the time of the filing of the amended bill, on account of such debt, about $60,000, besides interest.
The amended bill states the amount due to the plaintiff, as executrix and devisee, from I. Willard Fox, at about $100,000, principal and interest, instead of $103,600. It waives an answer on oath, and its prayer is the same as that of the original bill, and it does not treat the La Salle Street lot as subject to a lien in favor of the plaintiff.
No answer to such amended bill appears in the record, nor is there any stipulation that the answer to the original bill shall stand as the answer to the amended bill.
On the 10th of September, 1878, an order was made referring
the cause to Mr. Henry W. Bishop as a master, to take proofs and report the same to the court, together with the amount due to the plaintiff.
On the 11th of February, 1880, an order was made, modifying such order of reference, by directing the master to report the testimony taken by him, and not his conclusions thereon.
Plenary proofs were taken in the cause, in July, 1877, November, 1878, September, 1879, November, 1879, December, 1879, and February, 1880. Samuel H. Fox gave a deposition in July, 1877, a second in September, 1879, and a third in December, 1879. I. Willard Fox gave a deposition in November, 1878, a second in November, 1879, and a third in February, 1880. Robert B. Merritt, who had been the book-keeper and cashier of I. Willard Fox from May, 1867, till the summer of 1869, gave a deposition in September, 1879, and a second in December, 1879.
In July, 1880, the cause was heard on pleadings and proofs; but before any decision was made, and on November 13, 1880, the plaintiff, by leave of the court, amended her bill by inserting an averment to the effect that the agreement of February 20, 1869, contained a recital that I. Willard Fox had sold and conveyed to Samuel H. Fox the La Salle Street lot, the proceeds thereof to be applied towards payment of the indebtedness from I. Willard Fox to Fox & Co.; that by such agreement that lot was not in any event to be reconveyed to I. Willard Fox; that the plaintiff has sold and conveyed the lot; and that, being willing to do what was just and equitable, she offered to credit and allow to I. Willard Fox the amount for which she had sold the lot, or otherwise its value, in reduction of the sum due to her from I. Willard Fox.
On the 23d of November, 1880, the defendants filed an answer to the amended bill as amended on November 13, 1880. This appears to be a full answer, not only to the amendments of November 13, 1880, but to the amended bill filed October 26, 1877. This answer avers that, on February 20, 1869, I. Willard Fox and his wife executed to Samuel H. Fox a deed conveying the Lake Zurich farm, and another deed conveying
the La Salle Street lot; and that at the same time the agreement of February 20, 1869, was executed by Samuel H. Fox and I. Willard Fox, and the memorandum appended was executed by Samuel H. Fox. The answer also avers, that prior to 1857, Samuel H. Fox and I. Willard Fox were partners in business in the manufacture of glass, in the State of New York; that I. Willard Fox sold out his interest in the business to Henry W. Fox and retired; that, thereupon, Samuel H. Fox and Henry W. Fox, who were brothers of I. Willard Fox, became partners and conducted the business under the name of Fox & Co., and I. Willard Fox removed to Illinois; that the affairs of the firm in which I. Willard Fox was such partner, and his business transactions with the new firm, had never been settled; that in the year 1865, I. Willard Fox, at the request of Fox & Co., undertook to act as their agent for the sale of glass in Chicago, and was to receive as compensation a certain commission; that he received from them large amounts of glass and remitted the proceeds to them from time to time, and the business was thus conducted until about the 1st of January, 1869, when he became embarrassed, and, under a judgment and execution against him in favor of the First National Bank of Chicago, his goods, and the glass then on hand, belonging to Fox & Co., for sale on commission, were seized, and the store was closed; that Samuel H. Fox then came to Chicago and acted for Fox & Co.; that by agreement with I. Willard Fox, Fox & Co. assumed the payment of the debt to the First National Bank, and the goods were released, and Samuel H. Fox, for Fox & Co., took possession of the goods belonging to I. Willard Fox, and of those belonging to Fox & Co.; that Samuel H. Fox also undertook to satisfy the other creditors of I. Willard Fox; that the latter was unable to pay more than fifty cents on the dollar, and, for the purpose of doing so, and also of placing Fox & Co. in a situation whereby they could make it appear to their creditors that they had large assets in Illinois, Samuel H. Fox prepared a statement of the account of Fox & Co. against I. Willard Fox, showing an apparent indebtedness of about $68,000, besides an apparent mortgage of $15,000 from him to them, and demanded
of him that he should make an absolute conveyance of the Lake Zurich farm and the La Salle Street lot; that he denied the correctness of such account and at first refused to make the conveyances, but was induced to execute them, provided Samuel H. Fox would execute the instrument of February 20, 1869, as a condition of defeasance, and upon the verbal assurance of Samuel H. Fox that Fox & Co. would not insist upon the payment of the $70,000 named in it, or of any sum other than that which should be found to be due from I. Willard Fox to Fox & Co., on a just, fair and equitable settlement; that the defendants asserted at the time that there was nothing due on the transactions covered by the account; that, after the deeds and the agreement were made, Samuel H. Fox, for Fox & Co., retained possession of the goods, store fixtures, notes and accounts, and conducted the business in the name of I. Willard Fox until December, 1869, and during that time received the proceeds arising from the collections of the notes and accounts, as well as the goods; that at the time of such transfer to Fox & Co., there was in the store glass belonging to them, of the value of over $30,000, besides other goods of over the value of $30,000, and notes and accounts, good and collectible to the amount of about $15,000, belonging to I. Willard Fox; that, during the time the business was so being conducted by Fox & Co., in 1869, they paid the debt to the First National Bank, partly from the proceeds arising from the conduct of the business and partly from money borrowed upon the La Salle Street lot, which was afterward refunded to them by insurance money collected upon the building standing upon the lot, and which had been destroyed by fire; that they also paid to the other creditors of I. Willard Fox, in full satisfaction of the debts due to them, $10,971.40; that there had been no settlement of the matters between Fox & Co. and I. Willard Fox since February 20, 1869; that there is nothing due from him to Fox & Co.; that the La Salle Street lot was conveyed, like the Lake Zurich farm, as security; that, if such lot has been sold pending the suit, its purchaser has taken it with notice of the equitable rights of the defendants; that they claim a reconveyance of the Lake Zurich farm and the
La Salle Street lot upon the payment of the amount, if any, due to Fox & Co. from I. Willard Fox; and that Samuel H. Fox is a necessary party to the litigation.
On the 8th of December, 1880, the defendants, by leave of the court, filed a cross-bill against the plaintiff, who had then become Kate W. Goodwin by her intermarriage with Charles S. Goodwin, and against her husband, and against Sarah E. R. Smith, who had become the purchaser of the La Salle Street lot, and her husband, Charles M. Smith. The cross-bill sets forth the prior proceedings in the original suit, and prays that the original bill and the answer to it, and the amended bill filed October 26, 1877, and the amendment to it filed November 13, 1880, and the answer filed November 23, 1880, may be taken as a part of such cross-bill.
The cross-bill contains, in substance, the material averments of the answers before filed, with the further statement, that, in December, 1869, the remainder of the stock on hand in the store of I. Willard Fox was sold for the sum of about $28,000, and the money received by Fox & Co.; that the money received during the time the store was conducted by Fox & Co., from the time they took possession to the time it was closed in December, 1869, amounted to more than $50,000; that Fox & Co. were liable to I. Willard Fox for the amount of the glass returned to Fox & Co. at the time they took possession of the store, and also for the money received from the notes and accounts and the sale of glass during the time the business was conducted by Fox & Co.; that such amounts would more than pay any charges of Fox & Co. against I. Willard Fox; that, about the 1st of September, 1875, Samuel H. Fox and Henry W. Fox dissolved partnership, and the former conveyed to Henry W. Fox the said real estate, but the latter had full notice of the rights and equities of the cross-plaintiffs in the premises, and was not a bona fide purchaser thereof; that Kate W. Goodwin and her husband, on the 7th of April, 1880, conveyed the La Salle Street lot to Sarah E. R. Smith; and that she received the conveyance of it with notice of the rights and equities of the cross-plaintiffs to the premises, and pending the suit.
The cross-bill waives an answer on oath, and prays for an account of all matters between Fox & Co. and I. Willard Fox, and between Samuel H. Fox as surviving partner of Fox & Co. and I. Willard Fox, and for a decree against Samuel H. Fox as the surviving partner of Fox & Co., for the amount that may be due from him as such surviving partner to I. Willard Fox, and also for a decree against Kate W. Goodwin, requiring her and her husband to reconvey the Lake Zurich farm, and for a decree against Sarah E. R. Smith requiring her and her husband to reconvey the La Salle Street lot, and that, if it shall appear that there is any sum due from I. Willard Fox to Samuel H. Fox as surviving partner of Fox & Co., or to Kate W. Goodwin, a decree be entered requiring a reconveyance of such real estate on the payment of the amounts found to be due from I. Willard Fox; and for general relief.
On the 20th of December, 1880, Kate W. Goodwin and her husband answered the cross-bill. Their answer contains the material averments found in the original bill and the amended bills, and in addition alleges, that the defendants in the cross-suit were not parties to the agreement of February 20, 1869, or to the transactions out of which the same arose; that it is incompetent for I. Willard Fox to show either a want of consideration or a failure of the consideration upon which such agreement was founded; that, as I. Willard Fox wholly failed to comply with the terms of such agreement, by making payment within the six months therein limited, and the property was thereafter conveyed to Henry W. Fox in consideration of his interest in the assets of Fox & Co. and the same was thereafter devised to Kate W. Goodwin, I. Willard Fox is estopped from denying that the $70,000 recited in the agreement was due at its date; that, when I. Willard Fox retired from his partnership with Samuel H. Fox, in August, 1857, he left the concern largely in debt, and left Samuel H. Fox to close up the old business, collecting what he could and paying the debts; that, in the meantime, the new firm advanced money to I. Willard Fox, until April, 1862, when the old matters were settled up, and I. Willard Fox acknowledged in writing an indebtedness to Fox & Co. of $5584.82, on his personal account,
besides between $7000 and $8000, which that firm had then advanced or were to advance to him, on security to be given on the Lake Zurich farm; that the glass shipped to I. Willard Fox by Fox & Co., in 1865, and for several years afterward, was sold to him, and was not shipped to him on commission; that, in 1869, I. Willard Fox was indebted to Fox & Co. in nearly $100,000 for glass sold to him by them, from 1865 to 1869; that there was no dispute about the amount due to Fox & Co. by I. Willard Fox, which was stated at $70,000 in the agreement of February 20, 1869; that, in fact, $20,000 more was due from him to them at that time, but which was given up to him; that he did not then dispute the amount due Fox & Co., and was not coerced into making the deeds and agreement; that Samuel H. Fox did not give at the time the reasons for making them alleged in the cross-bill; that the accounts of Fox & Co. were examined, and the amount agreed upon, and the deeds and agreement made, and six months allowed for I. Willard Fox to redeem, because he represented that he could do thenceforth a prosperous business by regaining his stock and store; that, between January and December, 1869, Fox & Co. shipped to him more than $12,000 worth of glass; that it was amicably agreed, in December, 1869, that the business should be closed; that $50,000 was not received from a sale of the stock of I. Willard Fox, between January and December, 1869, and whatever sum was received, was received and used by him; that the stock of goods was turned over to and taken possession of by Fox & Co., in December, 1869, and not before; that the best was done with it that could be done, and they realized from it only $27,343.07, which had been fully accounted for by glass furnished to and debts paid for I. Willard Fox by Fox & Co. between January and December, 1869; that such transaction did not materially reduce the amount due on the agreement; that when the store was finally closed no part of the glass was returned to Fox & Co., but the whole was sold and the total amount received is included in the sum before named; that I. Willard Fox is not entitled to be credited with any more money than the credit he has already received; that Sarah E. R. Smith paid full value for the La Salle Street
lot, and is entitled to be protected as a bona fide purchaser for value, without notice; that as Kate W. Goodwin has offered, by her amended bill, to allow to I. Willard Fox, upon her claim against him, the amount she received from the sale of the lot, the title should not be drawn in question in the suit; and that the lot was not involved in the pleadings at the time Sarah E. R. Smith purchased it, and therefore she was not a purchaser of it pendente lite.
On the 23d of December, 1880, a replication was filed to the answer to the amended bill.
On the 3d of January, 1881, Sarah E. R. Smith and her husband filed their answer to the cross-bill, averring that Sarah E. R. Smith took the conveyance of the La Salle Street lot, on her purchase of it from Kate W. Goodwin and her husband, without any notice of any rights or equities of the plaintiffs in the cross-bill, and paid therefor $6625 in cash, which was its reasonable value, and paid it before the cross-bill was filed, and before any notice that any one else than Kate W. Goodwin claimed any interest in it; that the title to the lot was in no way involved in the pleadings in the cause at the time of such purchase, nor was the agreement of February 20, 1869, set forth in the cross-bill, nor did she or her husband have any notice thereof; and that they cannot be compelled to reconvey the lot, nor can they be in any manner affected by the state of accounts between I. Willard Fox and Fox & Co.
Replications to the two answers to the cross-bill were filed on the 5th of January, 1881.
On the 7th of January, 1881, an order was made in the original and cross-suits, referring the cause to Mr. Henry W. Bishop, as a master, to take evidence, and to make and state an account between Fox & Co. and I. Willard Fox, and to report the same, with his findings, to the court.
Under this order of reference, the master took proofs in February, 1881, May, 1881, and July, 1881, a third deposition of Robert B. Merritt being taken in May, 1881, and a fourth deposition of I. Willard Fox in July, 1881.
On the 30th of November, 1881, the master filed his report, as follows:
"This proceeding is brought for the foreclosure of a mortgage executed by I. Willard Fox upon certain real estate known as the Lake Zurich farm, in the county of Lake and State of Illinois, and lot two (2), in block twenty (20), in Bushnell's Addition to Chicago, which was given for the purpose of securing the payment of sums of money therein mentioned, which it is alleged had become due the firm of Samuel H. Fox & Co. as the result of certain business relations between them extending through a number of years, and which are set forth in detail in the bill.
"The answer of the defendant admits the execution of the mortgage and the agreement supplemental to it, but undertakes to explain the circumstances under which they were made, and denies that at the time of their execution any such sum as is therein claimed was due and owing from him, and that, by reason of what has since occurred, any such indebtedness whatever exists against him, and avers that, upon a proper settlement of account, there will be shown to be a balance in his favor.
"It is for the purpose of examining and stating this account that a reference was made to me by the court.
"It is not necessary for me to review the earlier relations between the parties, culminating in the establishment of the separate business of I. Willard Fox in Chicago, or to examine their accounts prior to their attempted adjustment in February, 1869, showing the sum of nineteen hundred and twenty-three and fifty-three hundredths dollars due upon the individual account of I. Willard Fox, and the sum of sixty-eight thousand two hundred and seventy-seven and fifty-eight hundredths dollars due upon the glass account.
"These debit sums are conceded to be correct, as well as the payment by Fox & Co. to the creditors of I. Willard Fox of the sum of ten thousand nine hundred and seventy-one dollars and thirty cents, making at that date a total sum of eighty-one thousand one hundred and seventy-two and forty-one hundredths dollars ($81,172.41) due from I. Willard Fox to Fox & Co.
"This was the state of the account in February, 1869, when
I. Willard Fox became embarrassed in business. The First National Bank, his largest creditor, having obtained a judgment against him, levied upon his stock of goods and closed his store, an arrangement was made between him and Fox & Co., resulting in the settlement by them of all the claims against him, except their own, at a compromise rate, and the business was resumed, with Ethan Allen Fox, the uncle of the defendant, and I. Willard Fox, in charge. After the settlement made with the creditors of I. Willard Fox, and the restoration of the property from the seizure of the First National Bank, and the resumption of the business, and between March 23d and November 5th, 1869, additional shipments of glass were made, amounting in the aggregate to the sum of twelve thousand nine hundred and ninety-nine dollars and sixty-three cents ($12,999.63); and it is insisted that these consignments were also made to I. Willard Fox, and that this amount should be added as a further indebtedness against him.
"Upon the other hand, it is contended that, in February, 1869, and before the receipt of these shipments, all the business and property was turned over to Fox & Co., and I. Willard Fox and Ethan Allen Fox placed in its management, under the direction of Fox & Co. and their control. Samuel H. Fox swears that these shipments were made to I. Willard Fox and formed part of his stock, the remnant of which was turned over to him in December following, at which time he insists that the final adjustment was made, while Ethan Allen Fox and I. Willard Fox, who were in charge and remained there until the stock was all disposed of, swear that the goods received after February were not billed to I. Willard Fox and not purchased by him; and I can find no entries in the books of Fox & Co. showing that they were ever charged to him, but they do show they were consigned to Samuel H. Fox.
"A. St. John Campbell and Robert B. Merritt, book-keepers and clerks at and after the change of possession, swear that it occurred in February, Samuel H. Fox assuming general charge and conduct of the business from that time; and there is no testimony contradicting it except that of Samuel H. Fox himself, who swears that the change did not take place until December following.
"The fact that an inventory was made of the stock in January preceding, and that none was made afterwards, seems to me to be a strong circumstance tending to show, in connection with the conduct of the parties and the testimony of Ethan Allen Fox and Merritt, that it was in February and not in December that the property was turned over.
"I can find nothing in the record, outside of the testimony of Samuel H. Fox, to justify any other conclusion, and I therefore disallow that item of complainant's claim, leaving due from I. Willard Fox at this date -- February 1st, 1869 -- the sum of eighty-one thousand one hundred and seventy-two and forty-one hundredths dollars ...