, 1881-01-30
A BAD DEED.
A Warning to Insurance Companies on
the Subject Of Maxim. Loans

A Warning to Insurance Companies on
the Subject of Maxim. Loans.
An interesting decision, and one Of nournful
Importance to the Union Mutual Lite-lnsurance
Company. was delivered yesterday by Judge
Jamieson in the case of the Union Mutual Life
Insurance Company against Tnlmage E. spaids,
Susan Spaids, Kato E. spaids and Others This
was bill to foreclose a trust-deed for $lo0oo On
4 fine house and lot on the east side Of Michigan
avenue. near Seventeenth street. Inc iot anu
had previously peen o9s o%nGa n Is si
Se decided It spas II trust for his nge
gXtns him RewsT to but mortgage Is trust
for his children. There was an incumorance OF
$l00D on the property at the tlne u WIS A " @ sn
VT ths was ot'. o cntirev III IL free and
clear In February, 1915, Spglds oorro"Ga s!u,or
OF the Union Mutual Life Insurance C0mpanS
this trust properly Of his children. The pro-
cceds Of the loan be used in his own business.
and subsequently lost 1t ALL together With W pig
% to foreeiose i this trust-deed M given by spaids.
The defendants insisted that the mortgage was
made without authority. that Spn1ds hnd no
of of' tho objects l = Of the trust; that Boone,
the agent of the Company, Knew TOT
what purpose the, money was a, dcs!fEmeu; sif;n ~
either gross careicsness ovcrcontldcnce IN
Spuds, Or conniyancc with him, 80 TINT III any
event tho incu1nbrance was absolutely vola Us
night bc enforced personally against spaids.
The Judge, ufter reviewing the fncts ut some
length, held that while, by the general nature OF
was competent for tho trustee, spaids TO Hort-
gage the trust estate, yet it was cElacnI ~ tne
whole record that be had power 10 o,, Ike
tentions Of the donor, Mrs, Harris, and IN 1nr-
therunce OF the trust involving discretion 70
self tho trust estate, .o.s in Whoie tof ,vaa III
nor 1rrk+H n
'' to be ":i judsea pd"e By that alone. Tno com
platnant wis was moi bound to sec to the
application Of the money borrowed oy SpaaaS,
apprised Or cognizant Of I'm Intended breach Of Of
trust BY spatds and sea or con- ~
Committed bT spaids in his borrowing
the $4,000 on bis individual note and securing 1ta
IL BY tno aeed q tgst IN 1rpose of using the
money m viii IN bis m private M business The money So
invested by Spuids in bis starch~WorR WneFr ~ ~
was entirely lost. While it was true that the ne
trust deed gave Spaids powcr to sell tho trust
estate ut his discretion, and to invest me pro-
cecds in other property, or N sucn otnu. raf "
the ccstus que trust, still the evident purpose
OF the donor, US expressed ty the contract. WIS
that such investment should w ~ Piope'9
The question then was whether the Company,
the complainant, hnd actual notice oi tne et prSe+
posed breach of trust or or lacls "nGn ~.
f,,-
The fnct TINT the note Of Spatds was ssneu "
he secured it by deed Of trust on tho trust cs-
tate executed by him us trustee WIS one w1Gh ers
onght 10 have led the complainant 70 u c4.eIua ma
inquiry into the purpose Of the loan; Ut: .'.h
was agent Of the copalnand5 III ~ i aGnc"red
preponderanco Of evidence thai - the nfen Ten
ton OF Spads to use the process o. Inc lohu ~.
In his own business was made known oy
him to Boone at aud before its eonsumna,,o;n; no;
and the loan was accepted. ana the money @ pa,d pnd
over knowing such intention, ID the D nope ana
on Spaids' assurance that be would see IL lepaia,
As to tie claim Of Dr. Boone that he made the
loan spads assertion that be had o aaSanceo sna,
the snme amount ito take up pl1or a '1Gnd, 4.1ds
brance on the trust estate out OF big own lunds l
and wished the loan to replace ms s,,o,
evldeno was entirely Inadequate to proye suca
charge But bud made nd Az 3edi
recty reimburse himself. but snoula nave mHue
the loan directly for the oeuelI Or Ing ces,as a
que trust. On his own showing, It vas
hoone's duty 10 qd,ssa Inquire int phot the the
preteuecd advance by spaids was q A. tetlGn, %
Or that it you'd require Sej or Snli IN 4!
as it had ostensibly, been made by Mrs Harris.