Court Opinion

ID: 6964522
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:51:25.732266+00
Date Added: 2024-06-11T16:08:33.424140
License: Public Domain

Mr. Justice Baker delivered the opinion of the Court: We are entirely satisfied, from the evidence in this cause, that L. C. P. Freer, the trustee in the trust deed of 1874, when he advertised and sold the premises in controversy, under the power contained therein, in fact struck off and sold the same to himself; that he was the real purchaser, and his son, Nathan M. Freer, only the nominal purchaser. It is also manifest, from the proofs, that it was intended by all parties concerned that such sale should not bar the equity of redemption owned by Jeremiah Seanlan, but that it was made simply for the purpose of freeing the equity of redemption from the liens of certain judgments that had been theretofore recovered against said Jeremiah, and that it was the understanding, both before and after the sale, that, notwithstanding such sale, and the deed made in pursuance thereof, said Jeremiah might redeem by paying the amount due upon the several notes and mortgages, together with taxes, expenses and interest. The effect, therefore, of the trustee’s deed to Nathan M. Freer was merely to put the legal title in the latter, to be held under the same trusts that it was subject to'while vested in the original trustee, and the equity of redemption was not cut off, but still subsisted. We furthermore think that the proofs conclusively show that the appellee, Timothy H. Seanlan, took his quitclaim deed from Nathan M. Freer, and paid the indebtedness due to L. C. P. Freer, with full knowledge of the rights and equities of his brother, Jeremiah, in the premises conveyed, and that he did so at the special instance and request of Jeremiah, and for the express purpose of affording the latter a better opportunity than it was feared the Freers would allow for either clearing the property from the incumbrances which were upon it, or for disposing of it in such manner as would realize a pecuniary benefit to Jeremiah over and above the incumbrances. The fact that appellee and Jeremiah were brothers, and that the former had," a short time prior to the transactions here involved, loaned the latter $1000 to apply on interest and taxes; the fact that immediately before the execution of the two quitclaim deeds Jeremiah had again applied to him for pecuniary assistance and for a loan, and that in response to such application he had come all the way from Galveston, Texas, to Chicago; the fact that the consideration money paid L. C. P. Freer ($7033.56) for the conveyance from Nathan M. Freer was the exact amount due upon the incumbrances, and was grossly inadequate to the value of the land, it being admitted by appellee its value was $12,000;-the fact that the notes for $4000, for $1000, and for $1000, respectively, with the trust deeds securing them, were delivered to Timothy H.; the fact that Jeremiah and his wife quitclaimed to Timothy H. without the payment of any consideration therefor; the fact that Jeremiah continued in possession of the house and premises without paying or agreeing to pay rent; and the admission of appellee, in his answer, that on October 29 following he “had an accounting and settlement with Jeremiah,” that he then paid to Jeremiah and his wife $2100, in. consideration of their relinquishing to him “all claim to said land,” and that they did then “release and quitclaim * * * all their interest in said property, by writing subscribed by them, and for full consideration,”—are circumstances which conclusively establish that the conveyances to appellee, although absolute upon their faces, were in fact a mortgage, and conveyed the legal title to appellee in trust, to pay out of the proceeds of the property his advances to Jeremiah and to the Freers, with interest, and account to Jeremiah for the residue, or, in case of full payment to him by Jeremiah of the amount due him, to reconvey to Jeremiah. A deed absolute in form, if intended as a security, is, in equity, but a mortgage, and will be treated and enforced as such, even though the agreement for redemption rests only in parol, and notwithstanding the Statute of Frauds. Union Mutual Life Ins. Co. v. White, 106 Ill. 67. A defendant to a bill in chancery may set up any number of defenses in his answer, but the defenses must be consistent with each other. (Stone v. Moore, 26 Ill. 165; 2 Danish's Ch. Pr. 815, 816.) The defenses here interposed by appellee to the original bill were inconsistent with each other; but then, no'exceptions were filed thereto oh that account. We take it, that where inconsistent defenses .are set up in an answer, and such answer is not excepted to, and on the hearing one of the defenses pleaded is found to be untrue and the other is established by the proofs, the decree will not be reversed on account of the interposition of such untrue and inconsistent defense. The denial by a trustee of the trust relation is a breach of trust and a flagrant fraud. Appellee has in his answer denied the trust relation which we find existed between himself and his deceased brother, and has sought, by pleading the Statute of Frauds, and in various other ways, to avoid the consequences of the existence of such relation. By falsely claiming he was not a mortgagee or trustee he has undoubtedly placed himself in an unenviable attitude, and one which has a tendency to justly arouse the suspicions of the court in respect to the merits of his case. We find, however, in the record, no evidence which would justify the conclusion, or even a reasonable suspicion, that appellee ever denied he was mortgagee or trustee, prior to the time he conceived it was expedient so to do in defense of this suit. In fact, the evidence tends strongly to show that he recognized and admitted the existence of an equity of redemption in his brother until after the arrangement of October 29, 1879, hereinafter mentioned. We understand the doctrine to be, that the. denial by a trustee of the trust relation is a fraud, which taints with fraud all his dealings with his cestui que trust which transpire at the time of •such denial or subsequent thereto, and into which such denial ■enters. (Taylor v. Luther, 2 Sumn. 228.) But we can not see how a fraudulent denial, made after the institution of this suit in 1887, could possibly enter as an element into a settlement .and arrangement made in 1879, and fully completed and carried into effect at that time. Did appellee, on or about October 29, 1879, purchase from Jeremiah Scanlan his equity of redemption, and if so, was the arrangement then made such, that in view of the relations then existing between them it should be regarded as valid and .binding upon said Jeremiah and his heirs ? In respect to the question of fact involved, we have no doubt, from the evidence, but that appellee bought and paid for the equity of redemption. The testimony of Albert Archer and •others shows that in the summer and fall of 1879 Jeremiah was in poor health and in straightened circumstances, and was anxious to sell and dispose of the property. The testimony •of Nathan M. Freer shows that on October 29,1879, appellee was in Chicago, and came with Jeremiah to his office, and that he, at their request, drew a paper in the nature of a receipt for a settlement; that Jeremiah signed it there, and that it was taken by one of them for the purpose of getting Mrs. Scanlan to sign it. The testimony of Marcus Stearns shows that he presented the paper to Mrs. Ann Scanlan, and that she signed it, and that thereupon he handed her a piece of New York exchange. The testimony of appellee shows that said paper was destroyed by fire in 1882, and that it was a receipt, ■signed by Jeremiah and Ann Scanlan, for $2100, in full of all claims against the property. The New York draft, which is in evidence, shows that it was made payable, by the indorsement of T. H. Scanlan, to the order of Jeremiah Scanlan, and that it was by Jeremiah indorsed to J. M. Adsit, banker, and by Adsit collected through the National Park Bank. The testimony of Morris Salkey shows that he was tenant of a portion of the building on the land, and that Jeremiah introduced Timothy H. to him as the owner of the building. The testimony of Patrick Nolan and of Kate Scanlan shows that Jeremiah told them he had sold the property to appellee. And the testimony of Daniel T. and Clement J. Kinsella shows that they, as the agents of appellee, collected rents for the premises from January, 1880. In respect to the rule which obtains in the matter of a pur-, chase by a trustee, we understand it to be this: that a trustee can not buy from himself, but that he may buy from his cestui que trust, provided that he so deals with the cestui que trust that he shakes off the obligation which attaches to him as-trustee. Fox v. Macreth, 1 Lead. Cases in Eq. (4th Am. ed.) 188, and cases cited in notes; Ex parte Lacey, 6 Ves. 625. In West et al. v. Reed, 55 Ill. 242, it was held, that while-contracts "between mortgagor and mortgagee for-the purchase- or extinguishment of the equity of redemption are regarded with jealousy by courts of equity, and will be set aside if the mortgagee has in any way availed himself of his position to obtain an advantage over the mortgagor, yet this principle does not preclude any bona fide agreement between the parties, which should operate to vest the entire estate in the premises, in the mortgagee, and that mere inadequacy of consideration will not, of itself, deprive such agreement of its binding effect.. In that case, however, while the conveyance from the mortgagor was an absolute deed, yet the assignor of West had executed to the mortgagor a separate instrument of defeasance, while here the defeasance rested solely in parol, and without any writing to show it. So we think a somewhat stricter rule-should be here applied, as against the mortgagee and trustee, than was held in West v. Reed. Here, the mortgagor is dead and the mortgagee is not a competent witness; but, as we have already stated, the circumstances in evidence indicate that the mortgagee, at the date of-the transaction, fully admitted the equitable rights of the mortgagor. It is also manifest that the mortgagor, who was living upon the premises, knew much better than the mortgagee, who was a resident of a distant State, the value of the property. There is no ground, then, for any surmise that there was any concealment, or advantage taken of information acquired in the character of trustee. The only room there was for fraud was that appellee repudiated the position of mortgagee, and thereby fraudulently forced his brother to a settlement on his own terms. If the price given was inadequate, it might afford occasion for a claim such was the case. But we do not find that there is evidence to reasonably justify a conclusion the price was inadequate. Jeremiah himself knew better than any one else the value of the premises, and he was, in the summer or early fall, entirely willing they should be sold for $11,500, subject to the State street assessment and the taxes of 1879. L. 0. P. Freer, whose only security for some $7000 was his liens on the property, considered it then worth about $12,000, and “possibly a little more.” George M. Bogue places the then value at $12,400. J. H. Gray, agreeing with all the other witnesses except Kerfoot, values the land at $300 a foot. Archer offered $11,500, and considered it a bargain, but expected to pay, in addition, the taxes and assessments, making a total of $12,639. S. H. Kerfoot makes the valuation altogether higher than the other witnesses do. He bases his opinion upon an examination made in 1888, and thinks the land'was in 1879 worth $350 per foot, and the buildings worth $10,000, making a total of $18,025. The weight of the evidence, as a whole, would put the then value at some $12,500. The amounts settled by appellee with Freer, the taxes and assessments paid and assumed, the amount paid for finishing the upper floor, the $1000 loaned to Jeremiah, and the draft for $2100, form an aggregate of $11,974.26 that the property cost appellee. The borrowed moneys which he paid Freer were drawing ten per cent interest, and it is not unlikely the arrangement between the brothers was, that the amounts paid in cash by appellee should hear the same rate of interest, and if so, the interest to October 29 would make some $450 more, making the aggregate consideration less than $100 below the value of the property. Besides this, appellee was at the trouble and expense of two trips from Galveston, Texas, to Chicago, in looking after the property, and it is quite likely the arrangement, in the first instance, was, that he should receive some compensation for his trouble and expenses. It must also be borne in mind, that the parties made no record of the details of their settlement, and neither of them can testify in respect thereto, and that this suit was not brought until some eight years thereafter. After the settlement, Jeremiah informed Nolan, who was an old and intimate friend, that his brother had given him $500 more for the property than anybody else would give. Archer had offered, including taxes and assessments, the sum of $12,639, and $500 additional to this would make the consideration $13,139. This would indicate there was about $700 of consideration that entered into the accounting that is not identified by the testimony, and in what it consisted it is not possible, owing to the death of Jeremiah, now to ascertain. The evidence shows that in 1879, and prior thereto, there was but little demand for State street property in the vicinity of No. 424, and that it was depressed in value, but that since then it has very greatly increased in value. After a careful examination of all the testimony, and after giving due weight to the fact appellee was a mortgagee and trustee, and his conduct therefore to be regarded with jealous scrutiny, we are of opinion we could not, under all the circumstances of the case, fairly and reasonably say that the consideration for the equity of redemption was inadequate, or justly impute fraud to him. Here there was no marked under-valuation of the property, but, on the contrary thereof, the consideration would be deemed reasonable if the transaction had been between other parties. Two other circumstances are relied upon by appellants as warranting an imputation of fraud and compulsion. One of them is, that both of the parties, in the correspondence which passed between them, referred to the transaction of May, 1879, as a purchase by appellee of the property, instead of designating it as a mortgage thereof to him; and the other is, that appellee, before he left his home in Texas, made up his mind just how much he would give for the equity of redemption, as indicated by his then purchasing New York exchange for $2100. In respect to the first of these circumstances it may be said, it was the most natural thing in the world for the brothers to speak of the transactions of May, wherein absolute deeds were made to appellee, as a purchase, and it would be far-fetched and unreasonable to deduce therefrom an imputation of fraudulent intent. In respect to the other, it is of more weight; but in view of the facts that Jeremiah was willing to close out the property upon the offer made by Archer, that frequent letters passed between Jeremiah and appellee, and the latter presumably knew of such offer, and also knew of the state of accounts betw'een himself and Jeremiah, and that appellee admittedly gave $500 more than Archer would give, we think the circumstance in question would not indicate fraud or duress, but rather a willingness to give more for the equity than could be procured from others. The jealousy with which transactions between mortgagor and mortgagee, or trustee and cestui que trust, are regarded, should not be extended beyond the bounds of reason, and so as to unnecessarily and unjustly interfere with the common business transactions of men. Where a mortgage is in the form of an absolute conveyance, a Iona fide agreement between the parties to vest the entire estate in the mortgagee will be sustained, and the execution of a formal deed will not be required, provided the transaction is fair, and not attended with oppression or fraud or undue influence, and the mortgagee has not availed himself of his position to obtain an advantage over the mortgagor. West v. Reed, 55 Ill. 242; Carpenter v. Carpenter, 70 id. 457; Seymour v. Mackay, 126 id. 341. Although we would be better satisfied with the result if appellee had not denied in his answer (which, however, the oath being waived, was a mere pleading,) that he was mortgagee and trustee, and if there was within reach positive evidence of just'what the amount of the consideration agreed upon was, and an itemized statement showing with exactness how it was settled for in the accounting, yet we do not feel that sufficient appears in this record to justify us in upsetting the conclusion reached by the courts below. The circumstance that Jeremiah did not in his lifetime seek to impeach the settlement, and the further circumstance that appellants made no complaint until nearly seven years after his death, and until the property had very greatly increased in value, are also entitled to some weight. In respect to the cross-bill of Ann Scanlan, suffice it to say, that she waived her right of dower when she joined in the execution of the deed of May 2, 1879; that notwithstanding her denial, it sufficiently appears from the testimony of Nathan M. Freer, Marcus J. Stearns, and the receipt which she signed, and her subsequent conduct, that she released her inchoate right of dower in the equity of redemption, and that the consideration therefor was included’in the draft which was made payable by indorsement to her husband. In view of all the circumstances of the case we think it would be inequitable to allow a redemption from the mortgage. The judgment of the Appellate Court, and the decree of the circuit court dismissing the original bill and the cross-bill, are affirmed. Judgment affirmed.