Court Opinion

ID: 6969743
Source: CourtListenerOpinion
Date Created: 2022-07-24 02:00:15.83448+00
Date Added: 2024-06-11T16:08:45.317639
License: Public Domain

Mr. Justice Cartwright delivered the opinion of the court: Nora Behrend, being the owner of certain real estate in Chicago, on March 10,1891, together with her husband, Bernhard Behrend, conveyed the same by trust deed to Hermann Felsenthal, trustee, to secure a note of said grantor for $3000, due five years after date, payable to their own order, and the note became the property of Kaspar G. Schmidt. This trust deed was recorded March 12,1891, and was the first lien on the premises. On May 2, 1892, said Nora Behrend and husband executed a second trust deed conveying said premises to Peter Popp, trustee, to secure their note for $3500, payable on or before five years after date, to the order of appellant. This trust deed was recorded June 8,1892, and was the second lien. On May 9, 1893, Peter Popp, the trustee, executed a release to the Behrends of the trust deed made to him to secure appellant, and this release was recorded August 21,1893. On December 23,1893, Johanna Quilty purchased the premises and received a warranty deed therefor from said Nora Behrend and Bernhard Behrend, subject to the encumbrance of $3000 by the trust deed to Felsenthal, which was the only encumbrance of record. She was furnished with an abstract of title to the premises' and caused it to be examined by an attorney, and it showed title in Nora Behrend and that the trust deed to Felsenthal was the only encumbrance. The consideration was $5600, of which she paid $2600 in cash, and as the remainder of the consideration she assumed the encumbrance of $3000. She had no knowledge or notice that complainant’s note had not been paid, and she purchased and paid' for the premises in good faith, relying upon the public records, which showed the trust deed to Popp, securing appellant, to have been released and discharged of record four months previously. . The note of appellant was not, in fact, paid or surrendered to the makers. Bernhard Behrend continued to pay interest on the note until January, 1896, and appellant had no actual knowledge of the release until after that time. The note held by Schmidt, secured by the trust deed to Felsenthal, became due March 10, 1896, and Johanna Quilty took up the note, paying'$300 in cash and giving a new note for $2700, secured by a new trust deed upon the premises to Felsenthal, who thereupon released the first trust deed. On October 20,1898, appellant filed her bill in the circuit court of Cook county against said Nora Behrend, Bernhard Behrend and Johanna Quilty and others, to foreclose the trust deed made to secure her. Popp was dead, and Anton Mach, his successor in trust, was made defendant. Johanna Quilty, Felsenthal and the executors of Schmidt, who had died, answered, setting np the facts of the release and purchase and the payment of the first lien above stated. Johanna Quilty died, and her heirs were made parties and are appellees. Said heirs filed their cross-bill, praying to be subrogated to the rights of Schmidt under the first trust deed, which was released upon the payment of $300 and giving the note and trust deed for $2700 in renewal. The executors of Schmidt also filed a cross-bill. The cross-bills were answered and the facts were proved to be as before stated, whereupon the circuit court dismissed the original bill at complainant’s cost and also sustained demurrers to the cross-bills and dismissed them. Appellant removed the cause by appeal to the Appellate Court for the First District, where the decree was affirmed, and she prosecuted this further appeal to this court. The release of the trust deed securing the note of appellant, by Popp, the trustee, was unauthorized, for the reason that the note was not paid. The appellant and Johanna Quilty both acted in good faith and were equally inuocent, and the question is, who must suffer for the wrong of the trustee and Bernhard Behrend, who procured the release? The release of the premises without payment of the debt did not discharge the lien as between the original parties, and would not discharge it as to any subsequent purchaser or mortgagee with notice of the breach of trust. The rights of appellant would be superior to any person chargeable with notice that the trust deed was released in violation of its terms. The public records of conveyances and instruments affecting the title to real estate are established by statute to furnish evidence of such title, and a purchaser may rely upon such records in security unless he has notice or is chargeable in some way with notice of some title, conveyance or claim inconsistent therewith. In this case there was no actual notice or knowledge, but Johanna Quilty, the purchaser, acted in entire g'ood faith, and paid her money relying upon the record of the release made on May 9, 1893, and recorded August 21, 1893, showing the payment and the discharge of the lien. Having no such knowledge, she had a right to rely upon the record unless there was something to put a reasonable person upon inquiry whether there was some infirmity in the release. The only ground for claiming that she was affected with notice that the release was fraudulent is the fact that the note of appellant was payable on or before five years after date and five years had not elapsed after its date. Payment of the note could not be enforced against the makers until the expiration of the five years, when it would become due absolutely and at all events. The makers of the note, however, reserved the right to pay it before the end of that period, so that, as far as they were concerned, the note was payable at any time. Presumably, they reserved that right in view of some expectation or probability that they would desire to exercise it. The note being payable at any time at the option of the makers, and the record showing that the payment had been made and the trust deed regularly released, we do not see liow. it could be said that Johanna Quilty should either presume or suspect that the makers of the note had not exercised their right and option to pay it. It is to be remembered that Johanna Quilty was a purchaser whose only duty was- to ascertain the condition of the title, and she was under no obligation or duty to see that the note was paid or canceled. The recording laws are designed"to afford protection to parties acting in good faith and relying upon them, and in the absence of any notice or ground of suspicion it is not the duty of a purchaser to obtain an admission of payment from the holder of a note secured by a trust deed regularly released of record. There was nothing in this case to give notice to Johanna Quilty that appellant had any lien upon the property, and she was protected by the record. Ogle v. Turpin, 102 Ill. 148; Mann v. Jummel, 183 id. 523. It is alleged as error that the trial court admitted in evidence the abstract of title to the premises. It was admitted in connection with the testimony of the attorney who examined it, not to show title but to prove that Johanna Quilty relied upon the record and the written opinion of the attorney as to the state of the title, and it was competent to show good faith on her part. The only other ruling complained of is that the court excluded testimony of the appellant and held it incompetent as against the heirs of Johanna Quilty. Her counsel asked her only one question, and that was whose property the $3500 note was. The note was payable to her order and there was no dispute about her ownership. There was no offer to prove anything else by her, and, whether the ruling was right or not, appellant was not harmed by it. The judgment of the Appellate Court is affirmed. Judgment affirmed.