Court Opinion

ID: 6963291
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:49:17.817708+00
Date Added: 2024-06-11T16:08:30.761821
License: Public Domain

Mr. Justice Scholfield delivered the opinion of the Court: By the terms of the written agreement entered into on the 1st day of May, A. D. 1881, between Preston, Kean & Co., on the one hand, and Gilbert A. Colby, on the other, there was no connection between the leasing and the sale of the property in controversy, farther than when the terms in regard to the sale were complied with, the lease, would expire. There was no stipulation, expressly, or in effect, that a failure to ¡iay rent according to the terms in regard to the rénting should bar or impair the right of Colby to purchase, or that any arrears for rent should be a charge upon the land as for so much purchase money. On the contrary, the sale was to be effected simply by paying and giving notes for the stipulated sums, as agreed upon as the price, within the time specified. Nor was the agreement that the sale should be at the end of three years, from the 1st day of May, A. D. 1881. The language is: “Colby further agrees, within three.years from the date hereof, to purchase the above described premises, and Payne” (who acted in behalf of Preston, Kean & Co.,) “to convey, or to cause to be conveyed, to Colby, at the sum of $15,000, to be paid as follows, to-wit: $5000 cash, and $5000 in one year and $5000 in two years from the date of said cash payment, with interest oh said deferred payments at the rate of six per cent per annum, payable annually, and said deferred payments- to be secured by a mortgage or trust deed on said premises. * * * Colby also agrees to buy, and Payne” (who acted in behalf of Preston, Kean & Co.,)' “to convey, or cause to be conveyed, to Colby, lots 6, 7 and 8, of block 4, of Day’s subdivision, * * * for the sum of $1300, and interest thereon, at the rate of six per cent per annum, from date, and to pay the same, principal and interest, within one year from date. ” Gorham’s judgment became a lien on Colby’s interest in these lots. (Breed v. Gorham, 108 Ill. 81). The judgment having been obtained, and an execution having been issued thereon, within a year after its date, before the agreement was entered into, the lien attached the moment that Colby obtained his interest,—i. e., the moment that the agreement was made; and when that lien, was enforced by levy and sale, and the execution of a deed pursuant thereto, by the sheriff, {there having been no redemption,) Gorham’s title related back to the commencement of the lien, and embraced the interest that Colby then had in the property. Elder v. Derby, 98 Ill. 232; Hart et al. v. Wingart, 83 id. 284. Since, as to the eight lots, comprising block 4, of Hubbard, Crocker & Stone’s addition, the agreement was, that Colby was to buy, and Preston, Kean & Co. were to convey, within, and not at, the termination of three years, it must follow, that it was competent for Colby to make the payment, and the promissory notes, and deed of trust securing them, for the deferred payments, and Preston, Kean & Co. to make the conveyance on the 1st day of October, A. D. 1881; and since it was competent for Colby, in order to protect his title,' or Gorham, in order to protect his lien, to pay off one or all of the promissory notes at any time after their execution, it is impossible that the substitution of promissory notes, running for the times those run which were executed on the 1st day of October, A. D. 1881, for the cash payment, and for promissory notes for the deferred payments, running for the times those were to run, as provided by the agreement of May 1, A. D. 1881, can have denied or impaired any rights which Gorham had by virtue of his lien. But the lots wrere, by the contract of May 1, to be charged only with the payment of the purchase money,—those in each block for their own cost, respectively; and the deferred payments were to bear only six per cent interest. To add, therefore, to the burden of these lots, $3000, for money borrowed by the firm of Colby, Gardner & Co., and $200 for back rent due from Colby, and to require the payment of seven per cent interest, instead-of six per cent, upon the deferred payments, was, to that extent, to impair and destroy Gorham’s lien, and was inadmissible; and the circuit court, therefore, properly held, that while the execution of the deed on the 1st day of October, A. D. 1881, by Preston, Kean & Co., to Colby, and the taking back by them, from him, of a mortgage, at the same time, did not enlarge the rights of Colby in the lots, beyond what they were under the contract of May 1, A. D. 1881, it was not admissible, since Gorham’s lien had attached before that time, to destroy or sensibly impair Colby’s interest in the lots as it was fixed by the agreement of May 1, A. D. 1881. But the mortgage or deed of trust executed on the 1st of October, A. D. 1881, contains this clause, ■ among others: “That in case of default in the payment of the said notes, or any or either of them, or any part thereof, or in case of the breach of any of the covenants or agreements therein mentioned, it shall then be lawful for the said party of the second part,” (i. <?., John Farson) “or his successors in trust, on application of the legal holders of said notes, or either of them, to enter into and upon, and take possession of, the premises thereby granted, or any part thereof; and to collect and to receive' all rents, issues and profits thereof, and in his own name, or otherwise, to file a bill in any court, ” etc. And the bill here alleges, that Frederick W. Hayes is the owner and holder of the notes secured by the deed of trust; “that none of said notes, or any part thereof, nor any interest, has been paid by said Colby, and that the said Frederick W. Hayes, who is now the holder and owner of all of said notes, has, by virtue of the terms of said trust deed, declared all of said notes, and the interest thereon, due and payable, and has requested your orator” (John Farson,) “to foreclose said mortgage.” These allegations are all disproved. The complainant, John Farson, testified, that he never had any conversation with Frederick W. Hayes about this trust deed, nor about the notes that it was given to secure. He repeated this more than once, and he also testified that he had no recollection of eyer having seen the trust deed before it was presented to him upon his examination as a witness. Samuel Kean, a member of the firm of Preston, Kean & Co., testified, in substance, that the property of the notes never went out of Preston, Kean & Co.; that the notes were simply transferred to Hayes in trust, in fact, for a purpose that was never-consummated,—the real ownership, all the time, remaining in Preston, Kean & Co.,—and they were, before the hearing, re-transferred to Preston, Kean & Co. The decree, without any amendment having been made to-the bill, or any cross-bill having been filed, found that Preston, Kean & Co. were the owners of the notes, and decreed payment to them. There was' clearly such a variance between the allegations and proofs, and. the allegations and the decree, as renders it erroneous. Parkhurst v. Race et al. 100 Ill. 558 ; Hall v. Towne, 45 id. 493; Randolph v. Onstott, 58 id. 52. The bill should either have been amended after it was ascertained that Preston, Kean & Co. were the owners of the notes, and' the parties at whose instance the immatured indebtedness was declared due, or a cross-bill should have been filed setting up such facts. Jenkins v. International Bank et al. 111 Ill. 470; White et al. v. White, Jr. 103 id. 438; Purdy et ux. v Henslee et al. 97 id. 389. But we are of opinion that it was not competent for Preston, Kean & Co. to declare the last note due, and have a bill for foreclosure filed on the 3d day of May, A. D. 1884, when this bill was filed. The evidence is uncontradicted, that in February, A. D. 1884, the attorney and agent of Gorham applied to Preston, Kean & Co., on behalf of Gorham, to ascertain what amount, included in the notes secured by the deed of trust, was due from Colby to them on the original purchase of the lots, and which Gorham was, therefore,-bound to pay. They refused to converse with him upon the subject, but referred him to their attorney, Mr. Culver. Mr. Culver informed him that the amount was $19,500, and $3125 interest thereon, and soon afterwards, Mr. Culver, in another conversation with the attorney and agent of Gorham, in regard to the amount that Gorham should pay to Preston, Kean & Co. on account of Colby’s original purchase of the lots, repeated the demand that he should pay $19,500 principal, and $3125 interest thereon, and informed him that Preston, Kean & Co. would not accept any less sum. At no subsequent time, before filing the bill, did they indicate that they would accept any less sum than that thus demanded by their designated agent—for the purpose of declaring the amount of their demand—Mr. Culver ; and that demand is repeated in this bill. It has been seen that that amount included $3200, and one per cent per annum of interest on the amount actually due, besides seven per cent per annum interest on the $3200, which Colby was not obligated- to pay by the terms of the agreement between him and Preston, Kean & Co., of May 1, 1881, and which, therefore, was not chargeable against Gorham. Where a creditor, in advance of an offer to pay, or in response to such offer, informs the party under obligation to pay, that he will not accept the amount actually due, in discharge of the indebtedness, the party under obligation to pay is relieved of the duty of tendering the amount actually due. Wight v. Gardner, 66 Ill. 95; McPherson v. Walker, 40 id. 371; Dwen v. Blake, 44 id. 136. Gorham, then, not having been in the wrong in not having paid or tendered the amount actually due, it was inequitable to declare a forfeiture and file a bill before the last note was due. Since the decree below must be reversed for these reasons, it is only necessary to speak of the form of the decree, to avoid repeating, in the future, what we deem to be erroneous therein. By the terms of the contract of May 1, A. D. 1881, the indebtedness incurred in the purchase of the eight lots constituting block 4, was to be charged against those lots, and the indebtedness incurred in the purchase of the three lots was to be a charge against those lots: It would, therefore, manifestly violate the rights of Gorham, under that contract, to charge, in any contingency affecting his right to redeem, the' indebtedness incurred in the purchase of the first mentioned lots, against the second mentioned lots, or the reverse. So, also, when Gorham’s title became perfected, no equity of redemption remained in Colby. He, thereafter, did not have, in any event, any further interest in the property. Preston, Kean & Co.’s right of foreclosure was, therefore, then limited to the amount fixed as the purchase price by the contract of May 1, 1881, and interest thereon at six per cent per annum. The evidence sufficiently proves that the value of the property is greater than the amount that Gorham is required to pay under that contract, and so there can be no strict foreclosure, under our practice. Gorham is therefore entitled to redeem by paying the amount chargeable against him, with current interest, at any time within twelve months from the day of sale. No one else having a right to redeem from the sale, the decree should" not direct the sale to be for an amount, chargeable against Colby or some one else than Gorham, greater than that which Gorham is required to pay. Gorham having a right to redeem by paying a certain amount, his property can not be subjected to sale for a greater amount. There may, undoubtedly, in foreclosing mortgages, often, in the same case, be separate decrees on account of the distinct indebtedness of different parties; but the distinct indebtedness of different parties can not all be charged against the mortgaged property, unless they are all liens upon the property, under the mortgage, prior to the title of the owner of the equity of redemption. The evidence showed some outstanding title or claim in Preston, Kean & Co. on account of taxes. It is not claimed that they have acquired a title, adverse to Gorham, in that way, and it is clear they could not. The amount, however, may be important in taking an account between the parties. The evidence shows that Colby, in October, A. D. 1881, turned over the possession of these lots to Preston, Kean & Co., informing them that he should have nothing more to do with them. They accepted this possession, and thereafter necessarily occupied the relation, to Colby, of mortgagees in possession, and, as such, it was their first duty to pay, from rentq, or profits derived otherwise from the use of the property, all claims for taxes. It is claimed, and evidence is given tending to support the claim, that this relation was subsequently destroyed by a decree of court, on bill filed by Gardner, who had been a partner of Colby, against the two, Colby and Preston, Kean & Co., to dissolve partnership, ordering thes'e lots to be placed in the possession of a receiver, and subsequently to be sold, as well as certain personal property, by the receiver, for the payment of the $3000 borrowed by Colby, Gardner & Co. from Preston, Kean & Co., and included in the deed of trust, as has been before seen. These lots were not the property of Colby, Gardner & Co., but the individual property of Gilbert A. Colby. Under no principle had a court of equity, at the instance and on behalf of the members of that firm, any right to interfere with the individual property of members of the firm, which had been, in good faith, previously devoted to the payment of the debts of the individual; and we are unable to comprehend how, if the facts had been presented to the court by Preston, Kean & Co., their possession could have been disturbed. The proof in this record is not satisfactory, because not full in this respect. Gorham was not made a party to the suit, and Gilbert A. Colby was not personally served with process, as we understand the record, but Preston, Kean & Co. were made defendants, and were personally before the court. If Preston, Kean & Co. failed, in that suit, to assert their rights to the possession, as seems apparent from the evidence before us-, they can not, as against the failure to perform their duty in relieving the property from any claim on account of taxes, allege this deprivation of possession of the property. The judgment of the Appellate Court affirming the decree of the circuit court, as also that decree, is reversed. Judgment reversed. Mr. Justice Magbuder did not take part in the decision of this case.