Case Name: Hubert A. Stevens et al. Hubert A. Stevens, Appellant, v. Andrew Pearson et al. Michael W. Cagney, Appellee
Court: Illinois Appellate Court
Jurisdiction: Illinois
Decision Date: 1916-11-14
Citations: 202 Ill. App. 22
Docket Number: Gen. No. 21,839
Parties: Hubert A. Stevens et al. Hubert A. Stevens, Appellant, v. Andrew Pearson et al. Michael W. Cagney, Appellee.
Judges: 
Reporter: Illinois Appellate Court Reports
Volume: 202
Pages: 22–29

Head Matter:
Hubert A. Stevens et al. Hubert A. Stevens, Appellant, v. Andrew Pearson et al. Michael W. Cagney, Appellee.
Gen. No. 21,839.
1. Mortgages, § 101 —when property is no longer subject to provisions of mortgage. Although by virtue of the lien created by a mortgage or deed of trust the mortgagee or cestui que trust has the right to a foreclosure and sale of the security and an application of the proceeds to the payment of the secured debt, yet when this has been done the mortgage or trust deed has expended its force and the property is no longer subject to its provisions, without regard to whether the mortgagee or cestui que trust is the purchaser at the sale or not, since by becoming the purchaser a new relation created by the statute exists, independent of any privity of contract between purchaser and mortgagor.
2. Mortgages, § 738*—who is entitled to rents and profits during redemption period. On foreclosure of a mortgage or deed of trust, where the mortgagors are not the owners of the equity of redemption, the owner of such equity is entitled to the rents and profits during the period of redemption, although there is a deficiency de cree against the mortgagors, unless the foreclosure decree makes such owner liable for the incumbrance or the deficiency.
3. Mortgages, § 514 —when provision for appointment of receiver is valid. A provision in a mortgage or trust deed that pending foreclosure proceedings and during the period of redemption a receiver shall be appointed to take possession or charge of the premises and collect the income thereof is valid and enforceable regardless of the insolvency of the mortgagors.
4. Mortgages, § 514*—when receiver may be appointed to take charge of mortgaged premises. On a bill to foreclose a trust deed containing a provision that pending a foreclosure and during the period of redemption a receiver shall be appointed to take possession or charge of the premises and collect the income, where there is a deficiency decree against the mortgagors, who are not the owners of the equity of redemption, it is within the discretion of the court to appoint such a receiver.
On Rehearing.
1. Pledges, § 2*—what does not constitute pledge of income from mortgaged property for payment of debt. A provision in a mortgage or trust deed that pending foreclosure and during the period of redemption a receiver shall be appointed to take possession or charge of the premises, collect the income and pay the same, less receivership expenses, to the purchaser at the foreclosure sale, cannot be construed as a pledge of the rents and profits of such property as security for the secured indebtedness.
2. Mortgages, § 738*—when provision for payment of rents and profits during redemption is inoperative. A provision in a mortgage or trust deed that in case of foreclosure the rents and profits of the property during the period of redemption shall be paid to the person entitled to a deed under the certificate of sale, or in reduction of the redemption money, if the property is redeemed, is inoperative, because the purchaser derives his title solely under the statute.
Appeal from the Superior Court of Cook county; the Hon. Denis E. Sullivan, Judge, presiding. Heard in the Branch Appellate Court at the October term, 1915.
Affirmed.
Opinion filed November 14, 1916.
Rehearing denied and additional opinion filed November 28, 1916.
George G. Otto, for appellant.
Michael W. Cagney, pro se.
See Illinois Notes Digest, Vols. XI to XV, and Cumulative Quarterly, same topic and section number.
See Illinois Notes Digest, Vola. XI to XV, and Cumulative Quarterly, same topic and section

Opinion:
Mr. Justice McDonald
delivered the opinion of the court.
The order herein sought to be reversed directed that the receiver of the rents and profits collected during the redemption period, from the premises involved in this foreclosure suit, pay to the appellee, as owner of the equity of redemption, the balance of the moneys in the receiver's hands.
Appellant's bill to foreclose alleged, inter alia, that Andrew Pearson and Cynthia A. Pearson, his wife, were indebted in the sum of $2,000, which indebtedness was evidenced by their promissory note secured by trust deed conveying certain real estate situate in the City of Chicago, County of Cook, and State of Illinois, which note was due and unpaid; that said property was scant security for the amount due and owing under said note and trust deed; and prayed that an account be taken and the amount due appellant be fixed and established and on failure of defendants to pay the sum found due and owing appellant, that the premises in question be sold, and a receiver appointed to take possession thereof and collect the rents, issues and profits thereof.
A receiver was appointed in accordance with the prayer of the bill, and subsequently a decree was entered, confirming the master's report of sale and distribution, and finding that there was a balance of $552.43 due and owing to appellant over and above the proceeds of said sale, and decreed that appellant have execution against the said Andrew Pearson and Cynthia A. Pearson for said deficiency. Afterwards, order was entered by the court, approving the amended report of the receiver, and directing that the said receiver pay over within thirty days the balance of moneys in his hands to appellee, the owner of the equity of redemption in said premises.
It is contended by appellant, that the trial court erred in directing said receiver to turn over the balance of $99.13 to appellee, as owner of the equity of redemption; that said balance should have been ordered paid to the appellant, in payment of the deficiency decree rendered in his favor. In support thereof, appellant refers us to the trust deed itself, which contains the following provision:
"The grantors waive all right to the possession of, and income from said premises pending such foreclosure proceedings and until the period of redemption from any sale thereunder expires, and agree that a receiver shall be appointed to take possession or charge of said premises, and collect such income, and the same, less receivership expenses, pay to the person entitled to a deed under the certificate of sale or in reduction of the redemption money if said premises be redeemed."
This very provision was contained in the trust deed foreclosed in Schaeppi v. Bartholomae, 217 Ill. 105, wherein the court held, p. 112:
"By virtue of the lien created the mortgagee or cestui que trust had the right to have the security foreclosed and the property sold and the proceeds applied in payment of the secured debt. But when this has been done and the lien enforced by a sale of the property and the proceeds applied, the mortgage or trust deed has expended its force and the property is no longer subject to its provisions, (citing cases) Nor does it in any way affect the result that the holder of the secured indebtedness becomes the purchaser at the sale, whether he be the mortgagee or cestui que trust, or not. By becoming the purchaser a new relation created by the statute exists, in no wise dependent upon any privity of contract between the purchaser and mortgagor."
Appellee was not made personally liable for the incumbrance or the deficiency by the decree. Under such circumstances, he was entitled to the rents and profits of the premises during the period of redemp tion. (Standish v. Musgrove, 223 Ill. 500.) We are therefore of the opinion that the court properly directed that the funds in the receiver's hands be paid over to appellee as the owner of the equity of redemption.
Appellee complains, by way of cross error, that he should be awarded also the expenditures of the receiver, amounting in all to $23.87. This contention is based upon the claim that the receiver was not appointed according to the practice of equity. In support thereof, we are referred to Glennon v. Wilcox, 159 Ill. App. 42. That case, however, is not in point, inasmuch as the foreclosure proceedings there w;ere based upon a mechanic's lien, while in the case at bar, it will be seen from the foregoing provision in the trust deed, that the grantors agreed that a receiver should be appointed to take possession or charge of said premises and collect the income thereof. Such a provision has been held valid, and can be enforced without regard to the insolvency of the mortgagors. (Bagley v. Illinois Trust & Savings Bank, 199 Ill. 76, and cases there cited; Oakford v. Robinson, 48 Ill. App. 270.) Therefore, in view of the provision in the trust deed for the appointment of a receiver, and because of the fact that there was a deficiency of $552.43 after the sale of the premises, we are of the opinion that the court acted within its discretion in appointing the receiver.
Finding no reversible error, the decree will be affirmed.
Affirmed.