Court Opinion

ID: 6965815
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:53:43.289373+00
Date Added: 2024-06-11T16:08:36.688618
License: Public Domain

Mr. Justice Shope delivered the opinion of the Court: I. Numerous points are made in appellant’s brief, but we shall only notice such of them as merit discussion. Among other things it is insisted, that there was no evidence that the cestui que use applied to the trustee to commence the suit, the provision in the trust deed being, that on application of the lawful holder of the notes, it should be lawful for the trustee to file a bill. The bill in this case was brought by the cestui que use himself, jointly with the trustee. The objection is, as a matter of course, without merit. II. It is next objected, that there was no evidence of the execution of the notes. There being in this direct proceeding no denial of the technical execution of the notes, their execution was proved by their production in evidence. It, however, may be said that,the complainant testified, that the notes were given by Brown, as a consideration for the. purchase of the mortgaged premises. III. It is next objected, that the option to declare the whole sum due given by the trust deed to the cestui qua use was not sexercised before the filing of the bill. It is provided in the trust deed, that if default be made in payment of the notes, or of the interest, or any part thereof, in the time and manner specified, the whole of the principal sum and interest secured by said notes shall, at the option of the legal holder thereof, become immediately due and payable. It is to be observed, that no notice is required to be given to the debtor, of the exercise of the option to declare the whole of the indebtedness due. He, and all persons claiming under him, after the recording of the trust deed, were required to know that the whole sum might, at any time, be declared due, after there was default in payment, according to the terms of the trust deed. Not having provided in the deed for such notice, he, nor those claiming under him, with notice of the right of election, can be permitted to insist upon notice of the exercise of the option as a condition precedent to the right to file the bill. Princeton L. & T. Co. v. Munson, 60 Ill. 375; Heath v. Hall, id. 344; Harper et al. v. Ely, 56 id. 179; 1 Jones on Mort., sec. 1182. The option to declare the whole indebtedness due upon default in payment, is given to the legal holder or holders of the notes, to be exercised in their discretion, and without notice to the mortgagor. No formula is to be observed, nor particular form of expression necessary to be used for the purpose of declaring the maturity of the whole indebtedness. The formation of an intention in the mind of the person who has the option to exercise his election to declare the entire debt matured, accompanied by any affirmative act or declaration evincing such determination, will be sufficient. The evidence is not entirely satisfactory, but tends to show, that McKay, the legal holder of the notes, had on several occasions expressed a determination to declare the entire amount due and to foreclose the trust deed therefor, and gave notice thereof to the defendants, or some of them. And the point made could, perhaps, be determined upon this evidence adversely to appellants. But it is unquestionable, that, before the filing of the bill, McKay had determined to and did exercise his option to declare the whole indebtedness, secured by the trust deed, immediately due and payable, by the preparation of the bill and authorizing the same to be filed. By the bill filed at his instance, he ■not only alleges that he has declared the entire debt due and payable, but that it is, because of the default, due and payable. No notice of the election being required to be given, it can not be material that any particular time should elapse between the declaration and the filing of the bill. It could serve no purpose to require, that the declaration should be made a month, a week, or an hour before proceeding to foreclose the security. It therefore follows, that we are of opinion, that the determination on the part of the holder of the notes to file a bill for the foreclosure of the trust deed, for the entire indebtedness, and causing the same to be prepared and filed, in pursuance of such determination, was a sufficient election to declare the whole sum due, and to entitle him to maintain his bill. IV. It is next insisted, that there was an extension of the time of payment, after the indebtedness became due, and there was thereby a waiver of the right to accelerate the maturity of the notes. It appears, that on December 4, 1891, when the first principal note became due, McKay extended the time of payment of that note until June 4, 1892, when another installment of interest would become due upon all of the notes. No fair construction of the evidence even tends, as we think, to show an extension beyond that time, for payment of the interest falling due at the latter date. So that, if it should be held that McKay had waived his right to accelerate the maturity of the last two notes, because of default in payment of the first note, there was clearly no such waiver of default in payment of the interest falling due June 4, 1892. When all the evidence is considered, it satisfactorily appears, that it was not understood by the parties that any delay in payment was to be granted beyond the latter date. V. It is also urged, that the court erred in not decreeing that the indebtedness be so apportioned that an equitable part of it should fall upon the undivided one-fifth of the land purchased by Johnson; and, it is said, that the decree should have so provided, or that a sale should have been ordered, in the inverse order of alienation. That is to say, that the indebtedness should have been so apportioned that the Johnsons might release their undivided fifth of the premises upon payment of one-fifth of the incumbrance; or, that the four-fifths in the hands of Reynolds should, have been treated as the primary fund, for the payment and discharge of the mortgage lien, and resort had to the fifth, in the equity of redemption, held by Johnsons, only after the exhaustion of the four-fifths remaining in Reynolds. It is alleged in the bill, that the purchasers of the equity of redemption purchased subject to the trust deed and assumed the indebtedness. That is, that Reynolds, on his purchase- from Brown, the mortgagor, assumed the whole of it, and that Johnson, in his purchase from Reynolds of an undivided one-fifth of the equity of redemption, took subject to the trust deed, agreeing with Reynolds to pay a pro rata share of the incumbrance. This is admitted in the answer of adult defendants, and is expressly conceded in this court by counsel on both sides. The purchasers of the equity of redemption were required to know that every part of the land was subject to the lien of the trust deed. And it is well settled in this State, that a purchaser of a part of mortgaged premises can not redeem the part purchased by him by paying a proportion of the mortgage debt. The mortgagee is entitled to retain his lien upon every part of the mortgaged premises until the whole ■ of the mortgage debt is paid. Meacham v. Steele, 93 Ill. 135; Davis v. Dresback, 81 id. 393. He will not be compelled, in equity, to release a portion of the premises upon payment of a proportionate part of the incumbrance upon the whole. It is not shown or pretended, that any equities arose in favor of the Johnsons, under any contract with the McKays, •or because of any conduct on their part, by which the John-sons were induced to purchase from Reynolds. It does not appear, therefore, that they have any superior equities, entitling, them to the relief asked. Moreover, the rule seems to be, that a mortgagee of an entire interest in land can not be required to make sale of it in undivided interests. 2 Jones on Mort., 1617; Frost v. Bevin, 3 Sandf. Ch. 188. Without, however, entering on this subject, or discussion of the reasons on which the rule is based, it is manifest that a court of equity, in the absence of equities arising between the purchaser of the equity of redemption and the mortgagee, before attempting an apportionment, or requiring the sale in undivided interests, would require it to be shown, that the mortgagee would not be prejudiced thereby. No evidence was offered showing, or tending to show, that the undivided four-fifths, if sold separately, would bring sufficient to satisfy the four-fifths of the indebtedness, and costs remaining after the payment of one-fifth by Johnson; or, that it would bring as much proportionately, when thus sold, as it would if the land was sold altogether. It is clear, therefore, in any view of the case, that the court decreed correctly, in sustaining the demurrer to the cross-bill of the Johnsons, and in refusing to so apportion the indebtedness upon the land, that the Johnsons could redeem a part of the premises, by paying a pro rata share of the incumbrance. And it follows, necessarily, from the same considerations, that the court decreed correctly, in not requiring the undivided interest retained by Reynolds to be first sold in satisfaction of the entire mortgage indebtedness. YI. The insistence, that the court should have marshalled the securities and subjected the portion of the land retained by Reynolds to the payment of the mortgage debt, before applying to the undivided interest of the Johnsons therein, can not be sustained, for the reason, also, that no equities existed in favor of the latter, that the entire debt should be paid by Reynolds, or, that his interest in the land should constitute a fund for the extinguishment of the mortgage lien upon the interest held by the Johnsons. The rule requiring the sale of land in the inverse order of alienation, and treating the portion of land retained by the mortgagor as the primary fund, out of which to satisfy the mortgage debt, rests upon the reason, that where the mortgagor sells a part of the mortgaged premises, relieved of the incumbrance, and retains a part himself, as between the mortgagor and such grantee the part held by the mortgagor, in equity and good conscience, should be first subjected to the payment of the mortgage debt. And the same principle would apply as between a purchaser of the equity of redemption, subject to the mortgage, as Reynolds here purchased, and a purchaser from him. But, as said in Briscoe v. Powers, 47 Ill. 447, it is evident that this reasoning has no application to a case like the present, where the first purchaser, insisting upon the rule, has taken subject to the mortgage. As we have-already seen, the court was powerless to apportion the debt and require the four-fifths remaining in Reynolds to be sold for four-fifths of the debt, and there were no equities existing, as between Johnson and Reynolds, that would require the latter’s interest to be sold for the whole debt, and thereby release Johnson’s interest from the lien of the mortgage., The right to compel resort to the interest of the mortgagor, presupposes that the debt has remained his, and that he is primarily liable for its payment. Hence, when he has paid it, either voluntarily, or his interest in the land has been thus applied, he would be entitled to no contribution from the portion of the land he had aliened. It is- manifest, that that would not be so here, for, under the conceded facts, if the interest of Reynolds was taken to pay the entire mortgage indebtedness, he would be entitled to a pro rata contribution from the Johnsons. Without extending the discussion, we are of opinion that the Circuit Court decreed correctly, and the judgment of the Appellate Court will, accordingly, be affirmed. Judgment affirmed. *