Court Opinion

ID: 6971063
Source: CourtListenerOpinion
Date Created: 2022-07-24 02:02:33.029995+00
Date Added: 2024-06-11T16:08:48.072479
License: Public Domain

Mr. Justice Ricks delivered the opinion of the court: Appellant Bouton contends (1) that whatever might have been the original purpose of the execution of the $11,000 note and trust deed, the note became accommodation paper when thé Camerons authorized Gehr to use them for his accommodation, and that the liability of appellees herein is to be measured by the rules of law applicable to accommodation paper; (2) that his loan to Gehr upon the $11,000 note and trust deed having gone (to the extent of $3000) to pay off the prior loan from Straus upon such note and trust deed, and the same having been thereby released, he is entitled to be subrogated to the rights of Straus to the extent of such payment; (3) that if the circuit court was right in only decreeing a foreclosure for the amount that was decreed, then, even in that case, he is entitled to a personal decree against Robert Cameron for the balance due on the $11,000. Addressing ourselves to the first proposition, ■ our opinion is that such contention is not well taken. There seems to be no question as to the well established rule of law that the assignee of a trust deed in the nature of a mortgage takes it subject to all defenses which the grantor could make against the grantee, and that if the assignee would protect himself he must make inquiry of the grantor whether he has any defenses that could be interposed against the grantee. (Olds v. Cummings, 31 Ill. 188; McAuliffe v. Reuter, 166 id. 491; Buehler v. McCormick, 169 id. 269.) Neither of the appellants is shown to have exercised any diligence whatever to protect himself upon the taking of these securities. Cameron lived in Chicago and was accessible to them, as shown by the fact that he received Tod’s letter shortly after its date. But appellants contend, that the note of appellees was made accommodation paper by the writings of May 3 and July 27, and that the above rule does not apply, and the case of Miller v. Larned, 103 Ill. 562, is cited as sustaining this position. We think the evidence set out in the statement preceding this opinion makes it clear that the note in question was not intended or given as an accommodation note, arid such was the finding of the chancellor in the trial court, but it was given as mere security to Gehr against loss by reason of his undertaking to purchase the property on Barry avenue for appellees. The original purpose of the note and trust deed is too clear for dispute. The chancellor found, and we think properly, that the writing of May 3 was for but a limited purpose,—that of enabling Gehr to borrow .$1500 for ninety days,—and we do not see how that paper, given under the circumstances and for the purpose disclosed by the evidence, can now be construed as a general authority making appellees’ note accommodation paper to its full face value, and how its protection can be invoked by persons who were never deceived by it and unaware of its existence. When the authority given under the papers of May 3 arid July 27 was exhausted by the first loan obtained from Straus, the note and trust deed existed only for the purpose for which they were originally given, viz., security to Gehr against loss,— especially so far as all persons were concerned who were in no way misled or deceived by the papers of May 3 and July 27. We do not accede to appellants’ contention that the case of Miller v. Larned, supra, has application to the facts of this case and is controlling of it. In that case the court said (p. 569): “A recognized definition of accommodation paper is, either a negotiable or non-negotiable bill or note.'made by one who puts his name thereto without consideration, with the intention of lending his credit to the party accommodated,” and the court in that case held that the notes there in question were accommodation notes ab initio, and were so understood by the parties to them. There is no contention that Bouton, or his agent, Tod, ever saw or heard of the paper of May 3 before he made the loan to Gehr, and it is equally clear that neither of them saw the paper of July 27 until after they had given Gehr the money which they loaned him, and even then, when Tod did receive the paper of July 27, he almost immediately returned it to Gehr, thus indicating that even after he saw and possessed it he attached no, or but little, value thereto, and certainly it had no place in his calculations about the loan he had just made to Gehr. The decree of the circuit court finds, and we think on ample grounds, that Gehr used fraud and deceit in the procurement of both of these papers and used them in a manner that he had no authority to do. This element of fraud, alone, is sufficient to distinguish the present case from all of those cited by appellants as furnishing precedents for the decision of this case and as laying down rules for the government of accommodation paper. It is next contended that appellant Bouton should be subrogated to the rights of Straus, inasmuch as $3000 of the money obtained from Bouton went to the re-payment of the Straus loan. We do not think the doctrine of subrogation can be applied to the facts in this case. Bouton was a mere volunteer. The money he paid to Gehr was not an advancement for the protection of any interest held by him, for at that time he possessed no interest. He was under no obligation whatever to loan his money to Gehr, and if he did so, it was a business transaction of such a nature as affords him no right to invoke the doctriné of subrogation. In Beach on Modern Equity Jurisprudence (sec. 801) the author says: “But one who is only a volunteer cannot invoke the aid of subrogation, for such a person can establish no equity. He must have paid on request or as surety, or under some compulsion, made necessary by the adequate protection of his own right. * * * The loaning of money to discharge a lien does not subrogate the lender to the rights of the lienholder.” The law of subrogation is declared in the following language in the American and English Encyclopedia of Law, (vol. 24, p. 281,) and the rule sustained by the citation of numerous cases from this and other States: “One who advances money to pay the debt of another, in the absence of agreement, express or implied, f of subrogation, will not be entitled to succeed to the rights and remedies of the creditor so paid unless there is some obligation, interest or right, legal or equitable, on the part of such person in respect of the matter concerning which the advance is made, as otherwise he is a stranger, a volunteer, an intermeddler, to whom the equitable right of subrogation is never accorded.” It is next contended that appellant Bouton is entitled to a personal decree against Cameron for the amount of the $11,000, less the amount found to be due from him by the trial court. The court found that Gehr had no authority to pledge the note and trust deed as collateral security, and we are unable to see on what ground Bouton would, in equity, be entitled to such a decree. If Bouton cannot foreclose this trust deed for the full amount of his claim he has no standing in equity. It is only by virtue of the statute that a money decree can be rendered by a court of equity in a foreclosure proceeding, and the statute only provides for a deficiency decree for the balance remaining due after a sale of the property has failed to produce the full amount found to be due. That a money decree can be rendered, in a foreclosure suit, for a deficiency only, has been decided by both this court and the Appellate Court. In Cotes v. Bennett, 183 Ill. 82, it was dedared (p. 85): “It is only in virtue of power conferred by the statute a money decree can be rendered by a court of chancery in a foreclosure proceeding against the mortgagor or other person liable for the mortgage debt. (8 Am. & Eng. Ency. of Law, 264.) Section 16 of chapter 95 of the Revised Statutes, entitled ‘Mortgages, ’ authorizes courts in this State to render such decrees ‘for any balance of money that may be found due to the complainant over and above the proceeds of the sale or sales’ of the mortgaged premises, and provides -that such a decree may be conditionally rendered at the time the decree of foreclosure and sale is entered, or that it may be entered after the sale and ascertainment of the balance due. It is to be noted this statute authorizes such decrees to be rendered only ‘for any balance of money that may be found due to the .complainant over and above the proceeds of the sale or sales’ of the mortgaged premises.” In Phelan v. Iona Savings Bank, 48 Ill. App. 171, the rule is declared in the following language (p. 175): “Decrees upon such bills [foreclosure] rested upon purely equitable principles and were solely for the purpose of foreclosing this right of redemption. The courts rendering them were without power or jurisdiction, in such proceeding, to render personal decrees for the indebtedness secured by the mortgage, or even for a part of such indebtedness remaining unpaid after the sale of the mortgaged premises. * * * The mortgagee might, if he desired a judgment in personam, bring his action at law upon the indebtedness, and might at the same time file a bill in chancery for the foreclosure of the mortgagor’s equity of redemption. The remedies are concurrent. (4 Kent’s Com. 184.) The powers and jurisdiction of the courts of Illinois have been increased in respect of such matters by statutory enactment, but with this statutory power added, the courts of our State are yet without jurisdiction to render judgments or decrees for the payment of the mortgage indebtedness against defendants in foreclosure proceedings. The only addition to their power is such as is given by section 16 of chapter 95 of the Revised Statutes, which authorizes the rendition of a personal decree ‘for the balance of money that may be found unpaid’ after the mortgaged premises have been sold and the proceeds applied upon the indebtedness. A decree against the defendants in a foreclosure proceeding for the whole debt would, therefore, be wholly extra-judicial. In the case at bar the court did not attempt to exercise the statutory power, and it had otherwise no authority to render a money decree against any one.” In this case the trial court found that only $193.39, principal and interest, with $15.47 solicitor’s fees, can be collected out of the mortgaged premises under .the foreclosure of the trust deed. A deficiency decree is not asked because a sale of the mortgaged premises will not produce the amount found to be collectible, but for an entirely different purpose. Appellants having failed to recover the amount they claim to be due in this foreclosure -proceeding, they ask to have a judgment upon the note, which we do not think is proper. Appellant Wright makes the further contention that he is the equitable assignee of the Cameron note and trust deed, and that by the writings of May 3 and July 27 the Camerons are estopped from asserting any equities against him. The assignment to Wright was by a separate instrument, and was not such an assignment as is contemplated by section 4 of chapter 98 of our statutes, which is by endorsement on the note. The assignment could be no more than an equitable one, and Wright, as such equitable assignee, would take subject to any defenses which Robert Cameron, the maker of the note, might have against Gehr. “The only assignment which will cut off the equities of the maker of the note is an assignment made in conformity with the "statute.” Peck v. Bligh, 37 Ill. 317; Haskell v. Brown, 65 id. 29; Melendy v. Keen, 89 id. 395. What has already been said with reference to the papers of May 3 and July 27 will also apply to the question of estoppel, which principle is sought to be invoked by appellant Wright. The evidence disclosed that Gehr and Wright, Jr., met appellant Wright, Sr., on the street, when Gehr solicited the loan of $7700 from him, proposing to put up other security not involved in this litigation, together with his equity in the Cameron note, which he informed him was pledged to Bouton for $5000. Wright, Sr., after a short conversation, went to the bank and drew his check, payable to Wright, Jr., who was the son of appellant J. G. Wright, with instructions to examine the papers, and if the securities and papers were satisfactory to make the loan and deliver the check. The same day Wright, Jr., did deliver the check and received the securities and the writing signed by Cameron of date July 27, 1893. We think Wright, Sr., made Wright, Jr., his agent to pass upon this loan. The son had full knowledge of all the facts and knew that Gehr’s interest in the note was merely for the purpose of indemnity. He and Gehr were operating together, willing, if not active, agents in the attempt to defraud the Camerons, and Wright, Sr., was chargeable with the knowledge of his agent. It is quite certain that if Wright, Jr., lacked full knowledge of the real relation of Gehr and Cameron he had sufficient knowledge to put him upon inquiry, which, if made, would have prevented the transaction, if it was an honest one," in its inception. Numerous assignments of error are made as to the findings of facts by the trial court. Concerning those findings we need only say that they do not appear to us to be clearly and manifestly against the weight of the evidence, and according to our practice we are not authorized to disturb them. It is the established rule of this court that in a chancery cause in which the chancellor, as here, heard the witnesses testify in open court, the findings of fact are not to be disturbed unless clearly against the evidence. Burgett v. Osborne, 172 Ill. 227; Delaney v. Delaney, 175 id. 187; Blomstrom v. Dux, id. 435; Elmstedt v. Nicholson, 186 id. 580; Mayrand v. Mayrand, 194 id. 45; McCormick v. Miller, 102 id. 208. The judgments of the Appellate Court are affirmed. Judgment affirmed.