Court Opinion

ID: 9859625
Source: CourtListenerOpinion
Date Created: 2023-09-24 22:12:58.47725+00
Date Added: 2024-06-11T10:59:01.232859
License: Public Domain

Niemeyer, J., dissents. The claim that the warranty deed is a mortgage, upon which the majority opinion is based, and the claim of abuse of a confidential relationship, upon which the decree of the trial court was entered, are afterthoughts, unsupported by proper pleading or sufficient evidence. When the complaint was filed defendant answered under oath “that said deed was signed by her under threats of bodily injury, and when she signed said deed she did not know what it contained, being excited and under fear.” Issue was joined and a hearing had before a master, but no testimony was offered in support of these allegations. The master reported, finding that the deed was an absolute conveyance and recommending a decree in accordance with the prayer of the complaint. Defendant procured new counsel and, having obtained leave, filed an amended answer and counterclaim under oath in which she abandoned her former position and alleged that the deed was executed by herself and husband pursuant to an oral agreement and that it was understood and agreed between the parties at and before the execution of the deed that “such deed was not intended to be an absolute conveyance or gift, but instead that it was intended only as security in the nature of a mortgage to secure the plaintiffs for such sums as plaintiffs should advance for the payments made in (on) the mortgage on such premises, less a reasonable rental of the plaintiffs for the occupancy of the first floor apartment of said premises.” Issue was joined, the case re-referred to the master and further testimony was heard. Davidson was examined by defendant under section 60 of the Civil Practice Act [Ill. Rev. Stat. 1949, ch. 110, par. 184; Jones Ill. Stats. Ann. 104.060]. He testified, without contradiction, that about 1938, defendant’s husband began talking with him about taking over the property, saying that his boys did not want the place, that it cost between $75 and $100 a month to keep the place up; that he, Davidson, told him he thought it was a poor idea and that he, Iwanowski, should sell the place; the subject was brought up three or four different times in the next couple of years and each time Davidson told him he should sell the property; that in early June 1940, Iwanowski said “I am going to give you one more chance, ... It is either now or never. ... I have got to get rid of my property”; that shortly thereafter Davidson asked Iwanowski what he meant by “turning the property over,” and he said he would give Davidson a deed and he would have the right to live upstairs; that at Davidson’s request they went to see an attorney, who later drew up the deed and lease in evidence; that he, Davidson, never loaned Iwanowski any money; that in an amended and additional answer filed in a suit brought by defendant (the exact nature and disposition of this case is not shown) he, Davidson, said that if the deed should be set aside the plaintiff in that suit (defendant here) would owe him about $1,540; that neither defendant nor her husband had promised to pay him that money. This testimony is of the same probative force as the uncontradicted testimony of other witnesses (Woodham v. Miller, 319 Ill. App. 388) and is binding on defendant. The master reported, finding that no confidential relationship existed between Davidson and defendant’s husband; that Davidson never acted as an agent of or in any fiduciary capacity for defendant’s husband; that in consequence of proposals made by defendant’s husband to Davidson, commencing in and about 1938, Davidson agreed to take over the premises, pay all outstanding obligations, including the obligations on the mortgage and taxes, and give defendant’s husband a lease of the second floor at $1.00 per year for ten years, with an option for an additional ten years; that the deed and lease were executed pursuant to that agreement; that the transaction was a bona fide sale of the premises, supported by considerations which were adequate at the time when the transactions took place. The trial court sustained exceptions to this report and entered an order finding that a confidential relationship existed between plaintiffs on the one hand and defendant and her husband on the other at the time of the transactions culminating in the execution and delivery of the deed and lease; that the deed and lease do not express the understanding between the parties; that the confidence placed by defendant and her husband in plaintiffs has been violated by the plaintiffs since the time of mating and entering into the transaction; that plaintiffs were not guilty of any fraud or misrepresentation of fact at the time of the making of the transaction in question; that because of the trust and confidence reposed by the defendant and her husband in the plaintiffs the latter were able to secure substantial interests in the property for which they paid no consideration other than $10; that plaintiffs are not entitled to retain the benefits obtained through their confidential relationship with the defendant and her husband; that the defendant is entitled to have the transaction set aside and to have a reconveyance from the plaintiffs upon payment of the amount found due. An indispensable requisite to a fiduciary relation “is confidence reposed on one side and resulting domination and influence on the other.” Staufenbiel v. Staufenbiel, 388 Ill. 511; Fisher v. Burgiel, 382 Ill. 42; Seeley v. Rowe, 370 Ill. 336. Defendant alleges only that Davidson and her husband “became very close confidants and very fond and close personal friends.” The evidence shows that they were very friendly and that Iwanowski had great confidence in his friend. There is no evidence that he ever consulted Davidson about any business transaction or had any business dealings with him other than the matter now under consideration, or that Davidson ever advised or attempted to influence him in any business transaction. In respect to the deed and lease, the uncontradicted evidence is that, so far as Davidson and Iwanowski are concerned, the proposals came from Iwanowski over a period of several years, commencing in 1938, and that Davidson did not seriously consider them until in June 1940. After Iwanowski stated that he meant to give Davidson a deed and keep a right to live upstairs, Davidson took Iwanowski to a lawyer. An investigation was made as to the balance due on the mortgage, the condition of the taxes and absence of other liens before Davidson accepted Iwanowski’s proposal. The essential element of domination and influence of Davidson over Iwanowski is wholly lacking. As said in Pfaff v. Petrie, 396 Ill. 44, 51: “A fiduciary relationship must be based on something more than the fact that the parties are neighbors and that a friendship exists between them.” In Johnson v. Lane, 369 Ill. 135, plaintiffs sought to set aside a deed from a father to his son. The court said (p. 148): “While John was frequently with his father the last few weeks of his life, there is nothing in the record to indicate any relation of confidence or trust between them other than would ordinarily exist between a father and his son. There is no evidence that the defendant acquired a dominion over his father or any control of his business, or that he exercised or attempted to exercise any influence in the conduct of his business. His presence at the time the deed was made did not raise any presumption of a fiduciary relationship, as such is known in the law. . . . Where it is sought to establish a fiduciary relation by parol evidence, the proof must be clear, convincing and so strong, unequivocal and unmistakable as to lead to but one conclusion. (Neagle v. McMullen, 334 Ill. 168; Winkelman v. Winkelman, 307 id. 249; Pillsbury v. Bruns, 301 id. 578.)” (Emphasis added.) By her own testimony, Davidson and defendant were opposing bargainers, dealing at arms’ length. Mrs. Davidson was not an active factor in the transaction. The trial court and the majority of this court agree that the consideration was grossly inadequate. This must be shown by clear and convincing evidence, and burden is on defendant. The trial court found that plaintiffs secured “substantial interests in the property for which they paid no consideration other than $10.00.” This finding ignores the admissions of the counterclaim and the uncontradicted evidence that plaintiffs undertook to and did pay the taxes and the unpaid and future monthly payments on the mortgage, keep the premises in repair and give defendant and her husband a 20-year lease to the second floor, with heat and water, for the nominal rental of $1.00 a year. The majority opinion of this court says, “The undisputed evidence is that in 1940 the reasonable value of the property was $9,000 and that at the time of the trial in 1946 it could be sold for $15,000.” The only basis for this statement is the testimony of Dickinson, a witness for defendant, who stated on cross-examination, “My opinion as to the value of the property, was for the entire property, as is. I have no opinion what the property would be worth subject to a 20 year lease to the second floor, because I don’t get into those things at all.” (Emphasis added.) As the deed and lease were parts of a single transaction, plaintiffs took the property incumbered by the HOLC mortgage and the 20-year lease to defendant and her husband. We must take judicial cognizance of the fact that the lease was a burdensome incumbrance on the property, greatly reducing its value and salability. There is no evidence of the value of the property, subject to this incumbrance. The remaining question is whether the deed and lease were intended to be a mortgage securing an indebtedness of defendant and her husband for advances made by Davidson in payments on the HOLC mortgage, taxes and maintenance of the premises. Defendant’s case must be judged by the case made by her counterclaim (Trust Co. of Chicago v. Sutherland Hotel Co., 389 Ill. 67) and proof supporting the counterclaim. (Leitch v. Sanitary District, 386 Ill. 433.) Her first contention, stated in her sworn answer, was that she signed the deed “under threats of bodily injury,” and “did not know what it contained, being excited and under fear.” By her amended answer and counterclaim, also under oath, she alleges that she and her husband signed the deed pursuant to an oral agreement and that it was intended as security in the nature of a mortgage for moneys to be advanced by Davidson, it being understood at and before the execution of the deed that “defendant and her husband would be permitted by plaintiffs at any time to pay to the plaintiffs the moneys so advanced by the plaintiffs, less a reasonable rental, and that upon such payments the plaintiffs would reconvey the premises to defendant and her husband, or the survivor.” (Emphasis added.) She alleged further that “for some years prior to June, 1940, the defendant’s husband suffered from declining health and was unable to carry on his occupation as a carpenter with sufficient regularity to enable him to support his family and meet the payments, taxes and expenses on the above described property. During the same period there was a scarcity of carpenter work which together with his declining health made it very difficult for the defendant’s husband to earn sufficient money to meet his obligations. As a result the defendant and her husband were for some time in embarrassed financial circumstances and found it necessary to borrow moneys from friends, and children, to enable them to keep up the mortgage payments on the property and to pay taxes thereon. The plaintiff, Lawrence A. Davidson, for a long time knew of the failing financial circumstances of the defendant and her husband and offered to advance to the defendant and her husband the sums of money necessary. ...” Defendant testified that Davidson told her, “Any time you wish to get your home bach, you pay me what I spend on that and you could have it.” (Emphasis added.) Her daughter testified that Davidson said, “In the event you feel you are able to get back on your feet and make the payments I will be more than glad to give you the deed back to the house whenever you are ready to do that. ’ ’ (Emphasis added.) By her allegation and proof defendant and her husband were to be permitted, not obligated, to pay any time defendant wished to get her property back, or in the event she felt able to get back on her feet and make payments. An essential of a mortgage— debt, legal liability or obligation — is lacking. Caraway v. Sly, 222 Ill. 203. In that case plaintiff asked the court to declare a deed made by him to be a mortgage. A demurrer was sustained and the bill dismissed. The striking similarity of the bill in that case and the counterclaim before us is evident from the statement of the court summarizing the allegations of the bill, as follows: “The facts stated in the bill and admitted by the demurrer are, that complainant, being indebted to Allen Sly in the sum of $3400, obtained a loan from him of $6200, and to secure said sums of money conveyed to him the real estate described in the bill; that complainant was to be permitted to redeem from said conveyance by paying said indebtedness when he became able to do so; that Sly knew complainant’s circumstances and that it would require much time for him to pay said indebtedness; that the conveyance was given to secure Sly and to give complainant sufficient time to pay said indebtedness; that the consideration was much below the market value of the land . . . . ” (Emphasis added.) In sustaining the action of the trial court, the Supreme Court said: “In this case the attempt is to have a conveyance absolute in form declared to be a mortgage to secure the payment of money, — or, in other words, to secure a debt,- — while the averments of the bill show that there was no indebtedness to be secured. . . . There was a mere option to pay at some time in the future if the complainant should be able to do so, and if he should become able it would be optional to pay, or not. Such an agreement would never be barred by lapse of time and there never could be any foreclosure. The right to redeem and the right to foreclose are reciprocal (Fitch v. Miller, 200 Ill. 170), but the bill shows that there was no debt which could have been enforced against the land by foreclosure, either by Sly in his lifetime or by defendants since bis death. An agreement giving the complainant a mere option to pay when he should be able and desire to do so, with an agreement to re-convey upon such a payment, did not constitute a mortgage, and the averments of the bill, if proved, would not entitle the complainant to any relief. ’ ’ In the earlier case of Knowles v. Knowles, 86 Ill. 1, where the court refused to declare the deed to be a mortgage, it said (p. 9): “If, as Matthew says, no time was fixed for the repayment of the money, but, as both he and his wife, Catharine, say, she was simply to have the right to have the property back whenever she repaid the money, it is not perceived the complainant could ever have enforced repayment by a suit at law on the loan, or by a bill to foreclose, treating the deed as a mortgage. The debt would only mature by her electing to extinguish it; and, before maturity, its payment could not be enforced.” To the same effect are Kelly v. Lehmann, 297 Ill. 33, 61; Third Nat. Bank of Mt. Vernon v. Norris, 331 Ill. 230, 236, 237; Lackey v. First Nat. Bank of Oblong, 309 Ill. App. 308; Williams v. Griffith, 310 Ill. App. 574; Harrison v. Harrison, 326 Ill. App. 678. The only witnesses -to the character of the transaction are plaintiff, on the one side, and defendant and her daughter on the other. No distinction can be made between them as to interest. However, the defendant is a totally discredited witness. The inconsistency of her sworn answer and the amended answer and counterclaim, also under oath, convicts her of having knowingly sworn falsely to one or the other. The transaction as testified to by plaintiffs is neither unusual nor unreasonable. Iwanowski initiated it. His declining health and inability to work and support his family and to carry the property with the mortgage and taxes except by borrowing from friends and children, is admitted by the counterclaim. The boys were not interested. After occupancy of a few months one of them moved out of the first floor shortly before the deed to plaintiffs was executed. Although the daughter had come home to help, Iwanowski feared, as she testified, that she might get married and put him back in the same place where he started from. Rightly or wrongly he feared the future — wanted to be relieved of the burden of the property and yet be assured of the right to live in it without cost or responsibility for its upkeep. The deed to plaintiffs and the lease to himself and defendant effectively accomplished his purpose. Defendant joined in the execution of both instruments. The transaction is the same in character and prompted by the same motives as a conveyance of property in consideration of the promise of the grantee to provide a home for the grantor. Such conveyances are common, and if the promise of the grantee is fulfilled the courts uphold them in the absence of actual fraud or undue influence in procuring the conveyance. The trial court expressly found that plaintiffs were not guilty of any fraud or misrepresentation of fact at the time of the transaction. No charge is made by defendant that plaintiffs failed to make the payments on the mortgage and taxes and keep the property in repair. Defendant’s version of the transaction makes an unreasonable and unattractive agreement for plaintiffs. As said by the court in Kelly v. Lehmann, supra: “If, as we understand complainants, they were simply to have the right to have this property conveyed to them whenever they re-paid the money defendant had invested, it is not perceived how defendant could ever have enforced re-payment by a suit at law on the loan or by a bill to foreclose, treating the deed as a mortgage. The debt would only mature by complainants electing to extinguish it, and before maturity its payment could not be enforced. It seems to us to be so clear that an arrangement of this character would be so undesirable to the lender that any degree of prudence would forbid it.” The presumption that the deed is what it purports on its face to be must prevail. Keithley v. Wood, 151 Ill. 566, 572. The decree should be reversed and the cause remanded with directions to overrule the exceptions to the master’s report and enter a decree in accordance with his recommendations and the prayer of the complaint.