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    Lilla M. Breed, Executrix of the Will of Otis S. Lyman, deceased, et al. v. George K. Baird.
    Gen. No. 13,433.
    1. Chancery practice—where “unknown owners” are made parties. Where “unknown owners” are made parties defendant, and they are non-resident or their addresses are unknown, two affidavits are imperatively required—the first affidavit for the purpose of procuring issue of process, and the second affidavit to authorize the clerk of the court to cause notice by publication to such defendants to be made, as directed by other statutory provisions. Substantial compliance with these provisions of the statutes is essential to clothe the court with jurisdiction to proceed to adjudicate the rights of such persons and cannot be dispensed with.
    2. Decrees—when recitals do not aid defects in service. Recitals in a decree of due service do not aid defects of service appearing from the manner of service specifically shown by the record—the attack being direct, not collateral.
    3. Decree—how far binding upon party. A decree will bind a party with respect to all his interests, personal or representative, regardless of the manner in which he was named or served as a party.
    4. Foreclosure—who necessary parties to. All persons interested in the subject-matter of the trust deed as note owners or claiming title or interest in the land conveyed, are not only necessary but are indispensable parties to a foreclosure proceeding, and they will not he bound by the decree, or cut off from the right of redemption, if such they possess, unless brought within the jurisdiction of the court, so that the decree may operate upon and determine any rights which they may possess.
    5. Fobeclosube—who not necessary parties to. Beneficiaries who have no rights or claims separate or distinct from those which are represented by a trustee, and who have no independent rights of redemption, are neither necessary nor proper parties to a foreclosure proceeding in which such trustee is a party.
    6. Fobeclosube—duty of trustee as party to. It is the duty of the trustee named in a trust deed sought to be foreclosed to see to it that every reasonable and available means are exerted to protect the rights of the note owners in accordance with the conditions of the instrument under which he acts.
    7. Usury—when note representing compounded interest, .not tainted with. Where there are no countervailing equities or conduct smacking of fraud, a note which represents a voluntary settlement, arrived at through a computation of interest upon the compound method, will not be held tainted with usury.
    8. Variance—rule with respect to, in chancery. In chancery, as well as at law, the proofs and allegations must correspond, and a material variance between the averments of the bill and the essential findings of the decree will result in reversal.
    Foreclosure. Error to the Superior Court of Cook County; the Hon. Axel Chytraus, Judge, presiding.
    Heard in this court at the March term, 1907.
    Reversed and remanded.
    Opinion filed October 28, 1907.
    Statement of Facts. This writ of error is sued out to reverse a decree foreclosing a trust deed in the nature of a mortgage conveying real estate in Cook county to secure an indebtedness aggregating $30,000, evidenced by twenty notes for $1,500 each, dated December 5, 1893, made by Ótis S. Lyman, payable to his own order three years after date, with interest at 6 per cent per annum, payable semi-annually, and with interest at the annual rate of 7 per cent after maturity. The notes were indorsed in blank and delivered to sundry persons, among others, five to defendant in error, George II. Baird, and five to the plaintiff in error, Oliver E. Chapman. The notes are numbered consecutively from 1 to 20, those held by George K. Baird being numbered 5, 7, 9, 11 and 20, and those held by Oliver E. Chapman 6, 8, 10, 12 and 14.
    Otis S. Lyman and Prentice C. Baird were born and reared in the same part of blew England and were lifelong friends. Baird continued to reside in the place of his birth until his death, but Lyman came west and at the time of his death and of the transactions out of which the matters in which his estate is here involved, resided at LaGrange, Cook county, Illinois. These parties had many mutual transactions, and on February 1, 1878, Otis E. Lyman owed Prentice C. Baird the sum of $3,873.07. They had a settlement on that date, and Lyman and his wife, Lizzie E. Lyman, made and delivered the following note to Baird in settlement, viz.:
    “$3,873.07. Chicago, Eeby. 1st, 1878.
    One day after date we promise to pay to the order of P. C. Baird three thousand eight hundred seventy-three and 07/100 dollars, for value received, with interest at the rate of 8 per cent per annum.
    Otis S. Lyman,
    Lizzie E. Lyman.”
    Subsequent to the date of this note, and on January 1, 1881, Otis S. Lyman was discharged as a bankrupt in the District Court of the United States for the Second District of Alabama, and the foregoing note scheduled as a liability. With the foregoing note Lyman made a conveyance of some real estate in LaGrange and assigned a policy upon his life in the Connecticut Mutual Life Insurance Co. for the sum of $2,500 to Baird, both as collateral security. On January 10, 1884, Lyman made a payment of $500, which was indorsed upon the note. Thereafter, and on October 6, 1890, Prentice C. Baird died testate. C. C. Benton and defendant in error were the executors of his will. Baird in his lifetime had made no effort to collect the note, but after his death defendant in error pressed for payment and placed the note in the hands of an attorney at Chicago named Wilson Ames for adjustment. Lyman agreed with Ames upon a settlement and in furtherance thereof he and his wife gave a note dated August 1, 1891, payable to the order of George K. Baird, etc., for $7,731.73, one day after date, with interest at “six per cent.” This amount was arrived at by calculating interest upon the principal sum at six per cent and compounding it annually. Ames Wrote to Lyman before the making and delivery of this note, “I have figured the interest at six per cent compound to Aug. 1, ’91, and make it $7,731.73. Let me know if you make it the same.” This amount was $477.56 more than the amount due, calculating interest at 8 per cent, called for by the terms of the note. In other words, this excess resulted from the agreement to compound at 6 per cent. An agreement indorsed upon the back of the note provided that upon its payment the La-Grange property conveyed to P. 0. Baird when the original note was given was to be reconveyed by quit-claim deed.
    On November 15, 1892, the note for $7,731.73 was surrendered and a new note given of that date by and to the same parties for $8,330.90, and on December 5, 1893, this latter note was surrendered and in its place a new note executed by Lyman and his wife for $8,860.33 was delivered to George K. Baird, payable to his order July 5, 1895, with interest at six per cent per annum. With this note there were delivered four notes of $1,500 each, secured by the trust deed foreclosed, and thereafter on October 24, 1895, a fifth note of the same series.
    The consideration of the two last recited notes was the note for $7,731.73 first given to defendant in error in settlement of the note of February 1, 1878, for $3,873.07. The interest was compounded but once, and then in the manner described.
    After the making of the trust deed securing the 20 notes of $1,500 each, Lyman and his wife conveyed the mortgaged property to the plaintiffs in error, Henry N. Qooper and Albert O. MacLauchlan, trustees of the Shawmut Avenue Land Association. Cooper and MacLauchlan paid to Baird in principal and interest upon the five notes of $1,500 each held by him as collateral to the note of the Lymans for $8,860.33 the sum of $1,949.01. The death of Otis S. Lyman was suggested December 12, 1901, and Lilla M. Breed substituted as executrix. Upon the indebtedness to Baird there is also a further credit of $861.54, being the net proceeds received by Baird from the $2,500 life policy after deducting premiums with interest thereon advanced by Baird to keep the policy in existence.
    The owners of all the notes, other than those owned by Baird, were made defendants under the designation of “unknown owners and holders of the several promissory notes described in said trust deed as numbers 3, 4, 6, 8, 10, 12, 13, 14, 15, 16, 17, 18 and 19.” An affidavit of non-residence of the defendants, “unknown owners,” etc., was made by George W. Stanford, solicitor for Baird, and publication against said unknown owners made, and a certificate of such publication filed. This was the only affidavit filed. Under this notice the plaintiff in error Chapman came in and answered the bill.
    The decree finds the amount due Baird upon the five notes held by him secured by the trust deed set out in the bill to be $8,921.10, the master having found the amount due at that time on the note for $8,330.90 to be $10,824.62. By the amended decree the court finds that plaintiff in error Chapman is the owner of five of the notes secured by the trust deed in question, numbered 6, 8, 10, 12 and 14, and that there is a total of principal and interest due him of $12,081.25. The decree further finds that by the terms of the trust deed all of the notes are payable in the order in which they are numbered. The decree, as amended, orders that in default of payment within one day of the amounts due Baird and Chapman, that the mortgaged premises he sold, etc., and out of the amount realized from such sale there be paid to Baird and Chapman the several amounts due on their respective notes in the order of their respective numbers.
    Objections were filed by plaintiffs in error to the master’s report, and upon being overruled were by leave of court refiled as exceptions. (R. p. 214.) The latter order failed to appear of record because the clerk failed to transcribe the order in the record. This omission was supplied by a sufficient nunc pro tunc order entered May 24, 1907, as found in the record.
    The trust deed provided for partial payments with releases of aliquot parts of the mortgaged premises, the amounts so received from partial payments to be applied to the extinguishment of the indebtedness created by the notes in their numerical order. The trust deed also contained the following, among other provisions: That in case of default in payment of any of the 20 notes, or any part thereof, or interest thereon, or in case of waste, non-payment of taxes, or other breaches, “then, in such case, the whole of said principal sum and interest secured by the said twenty promissory notes shall thereupon, at the option of the legal holder or holders thereof, become immediately due and payable.” After providing for the entry of the trustee upon the mortgaged premises on the occurrence of any of the defaults enumerated, the collection by him of rents, etc., and the right to file a bill for foreclosure and to obtain a decree for a sale and conveyance of the mortgaged premises, directs that the proceeds of the sale shall be applied, first, to the payment of costs, including solicitor’s fees and other expenses, etc., “then to pay the principal of said notes, whether due and payable by the terms thereof or the option of the legal holder thereof.”
    Plaintiffs in error, Lilla M. Breed, executrix, etc., Henry N. Cooper and Albert C. MacLauchlan, assign and argue as reversible error: First, that the unknown owners of certain notes set out in the bill have not been brought into court in the manner provided by statute; second, that the trustees of the Shawmut Avenue Land Association were not made parties, neither was the association brought into court by service of process; and third, that the note of the Lymans for $7,731.73, of date August 1, 1891, is tainted with usury, and that Baird consequently, if entitled to any decree at all, is limited in his recovery to the principal sum of the note of February 1, 1878, viz.: $3,873.07; and plaintiffs in error, David B. Lyman, trustee, Chicago Title and Trust Company, and Oliver E. Chapman assign and urge in argument as error: First, that the statute requires two affidavits to be filed to make “unknown owners” parties defendant, and that the filing of but one failed to give the court jurisdiction of such “unknown owners,” and that consequently the decree is void; and second, variance between the averments of the bill and the findings of the decree.
    Lymart, Lymart & O’Coitrtor and W. E. Burleigh, for plaintiffs in error.
    Chauwcey W. Martyw and Willard D. Eortort, for defendant in error.
   Mr. Presiding Justice Holdom

delivered the opinion of the court.

We will dispose of the points involved in the order in which we have named them; but before proceeding so to do will set at rest a point of practice raised and urged by defendant in error in argument.

It is contended that* no exception to the master’s report is found in the record, and no order that the objections filed before the master stand as exceptions before the court. That in this condition of the record, under our holding in Beck v. Stoddard, 118 Ill. App., 370, we have no jurisdiction to review the errors assigned. Did the record sustain this averment, the point would be well made. But while the facts as herein above recited show that by omission of the clerk to spread the court’s order that the objections stand as exceptions, the original record lacked this necessary order, yet the record was corrected by the court below and duly certified to this court seven days after the counsel filed their brief raising the question. The order of May 24, 1907, destroys the force of the objection made and makes our further consideration of it unnecessary.

First. It is not seriously disputed but that under the provisions of sections 7 and 12 of the Chancery Act, R. S., that where “unknown owners” are made parties defendant, and they are non-resident, or whose addresses are unknown, two affidavits are imperatively required—the first affidavit for the purpose of procuring issue of process, and the second affidavit to authorize the clerk of the court to cause notice by publication to such defendants to be made as directed by other statutory provisions. Substantial compliance with these provisions of the statute is in our opinion essential to clothe the court with jurisdiction to proceed to adjudicate the rights of such persons, and cannot be dispensed with. Werner v. Thornton, 98 Ill., 156, is a case so akin to this in reasoning and by construction of a similar statute, that it must control. The court said: “The statute contemplates there shall be two affidavits filed, one under section 41, to authorize the proceeding against persons by the name and description of unknown persons, and another under section 8, to justify publication of notice to defendants, in a suit.” Hartung v. Hartung, 8 Ill. App., 156. But defendant in error, most strenuously, and with some plausibility, insists that while agreeing with the authority of Werner v. Thornton, supra, it has no application because by the recitations of the decree the court finds (R. p. 11) that the unknown owners and holders of the notes in the affidavit filed set forth “to have been duly notified of the pendency of this cause by publication of notice pursuant to the statute in such case made and provided,” and that such recitation and finding in the decree is conclusive evidence of the fact stated, and cannot be impeached or reviewed from anything appearing in the record dehors such finding. Many cases are cited to sustain such contention. A painstaking examination of these cases discloses that where the holding of the court was in the line of counsel’s present contention, following the statement in Tompkins v. Wiltberger, 56 Ill., 385, that “it is again urged that there is not sufficient service by publication against the other defendants to sustain the decree. A careful examination of the record fails to show that there was filed in the court below an affidavit of non-residence of these defendants. But the clerk in the notice states that an affidavit was filed, and the court finds that publication was duly made as required by the statute. This is sufficient under the former decisions of this court,” were cases where the attack made upon the verities of the decree impugned was not a direct attack as here, but collateral. The line of distinction between direct and collateral attack has not in many cases been made clear, and there are in some of the opinions statements which tend to confusion if not carefully analyzed with the particular facts in each case well in mind. The case of Matthews v. Hoff, 113 Ill., 90, cited by defendant in error, is fairly illustrative of its misleading effect unless it is borne in mind in analyzing its reasoning and judging of its force, that the attack made against the findings of the decree was not direct in the cause under review, but collateral as being an attack upon the findings of a decree in another and different cause. In this case it is said, “All reasonable presumptions are in favor of the jurisdiction of the court, and the law will presume prima facie, at least, from the finding of the court, that such was the fact, that such summons, with the proper return on it, was before the court, and may have been abstracted or lost from the files.” If the attack had been direct, in the cause on review, any lost summons could have been supplied by order of the court below on proper application. The doctrine of presumptions, so far as they can be indulged, as to facts recited in a decree or judgment of a court of general jurisdiction, is environed with the limitation that it will only prevail where there is nothing in the record to rebut, impeach or contradict it.

The ruling of Law v. Grommes, 158 Ill., 492, to the effect that a presumption that there was another and a different summons from that appearing in the record, does not arise, on appeal, where the record shows only an illegal or insufficient service, although “due service” was recited in the judgment. So here the recitation, 'unsupported by the record, that due publication was had to the “unknown owners,” etc., fails of imparting any fact to the record contrary to the fact found in the record, that one affidavit only was filed, where two were required by the statute. These statutory affidavits are the basis of jurisdiction, and lacking both of them, jurisdiction of such defendants is not obtained. Law v. Grommes, supra, is a very instructive case of sound reasoning, and clearly defines the distinctions between direct and collateral attack. It was there said: “If the attempt here were to attack the judgment below collaterally, the proposition would have force. We think, however, with the Appellate Court, that even then, under the facts of the case, it could not prevail. But upon what principle it can be availed of in this direct proceeding, we are at a loss to perceive.” The court then proceed to recite that the record is certified as complete, that the rule of that court requires the process to appear in that record, from which they find evidence of the fact of defective, service, and then a recitation in the judgment of the court of “due service,” an erroneous legal conclusion, as in the case at bar, from uncontroverted facts found in the record. When asked in that case to presume regularity of service, in the face of the record to the contrary, and to accept the erroneous finding of the nisi prius court as overcoming the record facts, the court said: “The statement of this proposition is sufficient to refute it. In our decisions on the question as to when and how far presumptions in support of recitals of service of process in judgments and decrees will be indulged, the distinction between direct and collateral proceedings has not always been strictly observed. We think, however, the true rule applicable to appeals and writs of error is that whenever it affirmatively appears from the record brought up that the service is illegal or insufficient, and nothing appears to the contrary, the error is not cured by a mere recital of ‘due service’ on the presumption that there was another and different summons and return from that appearing in the record.” Neither can we indulge in any presumption, from the recitals in the decree, something which the record affirmatively shows did not exist. It is further said that if the point here discussed is well taken, none of the defendants interested are here complaining. It is sufficient to say that the regularity of this proceeding affects the title to real estate, and all interested in the title thereto have such an interest, which vests them with the right to object to and challenge any irregularity which in any measure imperils their security.

All persons interested in the subject-matter of the trust deed as note owners or claiming title or interest in the land conveyed, are not only necessary but indispensable parties to a foreclosure proceeding, and they will not be bound by the decree, or cut off from the right of redemption, if such they possess, unless brought within the jurisdiction of the court so that the decree may operate upon and determine any rights which they may possess. McBurney v. Carson, 99 U. S., 567; Conwell v. Watkins, 71 Ill., 488.

The evidence in this record shows that this rule of law has not been complied with; not only that the unknown owners of notes secured by the trust deed have not been brought within the jurisdiction of the court, but that the rights of all other interested parties, save Baird and Chapman, have been ignored.

Second. Subsequent to the giving of the trust deed here attempted to be foreclosed the Lymans conveyed their equity in the land to the plaintiffs in error Cooper and MacLauchlan, “Trustees of the Shawmut Avenue Land Association.” Mo attempt was made to bring the “Land Association” or its officers or stockholders, if any it had, into court; but Cooper and MacLauehlan, the grantees in that conveyance, were made parties, appeared, filed their answers, were heard as to their rights, and are now here in an effort to have this court reverse the decree of the chancellor. Cooper and MacLauchlan cannot be allowed to complain because they have not been brought into court in some other capacity than as individuals. Harris v. Lester, 80 Ill., 307. In legal intent they are in court for all purposes, whether as individuals or trustees, and a decree will bind and conclude them and the interests which they may happen to represent. It might be sufficient to rest on the fact that they have made no disclosures, either by answer or proof, indicating that others are so interested in the res involved in this litigation that the decree will not operate to conclude them. The title to the equity was in Cooper and MacLauehlan. They were the parties entitled to redeem from either a sale made under the trust deed, or by paying the indebtedness secured, freeing the land from the lien created by the trust deed, subject to which they took whatever title the Lyman deed conveyed to them. They are parties for all purposes as individuals or in a representative capacity. Their cestui que trustant have no rights or claims severed from them. They have no right of redemption as beneficiaries. Whatever right they may have to redeem would result from the right to do so in the name and for and in behalf of the trustees on their failure to make redemption. The benefit flowing from such act would be such as would accrue to them as beneficiaries of the trust vested in Cooper and HacLauchlan, whatever it might be. Neither the trustees as such, nor the Land Association, were necessary or proper parties.

The rule announced in Jones on Mtgs., vol. 2, section 1399, is reasonable and controlling here, viz.: “It has been held * * * that as the trustee and cestui que trust really represent but one interest, and the trustee is the holder of the legal interest, he alone should be made a party to the suit, as he would be the party entitled to redeem. This is especially the case where the trust is for the benefit of creditors.” Willis v. Henderson, 5 Ill., 13. And Jones supra again writes, section 1059: “A trustee who holds the legal estate, or some interest in it, is the proper party to redeem; though the person beneficially interested may redeem upon refusal of the trustee to do so.” Rose v. Walk, 149 Ill., 60; Walker v. Warner, 179 Ill., 16.

Third. The taint of usury charged as resting in the method of fixing the amount of the note for $7,731.73, given by the Lymans to Baird, of the date of August 1, 1891, is involved in the third assignment of error argued with some collateral features as to the effect of Lyman’s discharge as a bankrupt prior to giving the latter note for the amount due on the note of Lyman for $3,873.07, from the payment of which the bankruptcy proceedings had relieved him.

The discharge in bankruptcy of Otis S. Lyman operated to relieve him from the burden of his debts, and thereby to give him the un trammeled opportunity to retrieve his financial fortune. It made him again an active factor in the world of business. However, he was not thereby relieved from the moral obligation resting upon him to pay his debts. So to do, in his own way, in such time as he could, of which he must be the sole judge, was the measure of his moral responsibility, which the discharge in bankruptcy had in no way curtailed. This moral obligation he might discharge at a convenient season. The record indisputably shows that this he did by an agreement satisfactory alike to himself and his debtor and evidenced it by the note in evidence of $7,731.73, which was subsequently merged in the note of $8,860.33, as collateral to which the five $1,500 notes secured by the trust deed here in dispute were given, together with other security. Whether or not this revival and settlement of the old debt is in any way repugnant to the law of the land is the pertinent inquiry. If it is contrary to the law, the settlement must fail; if in accord with it, the agreement of the parties must be upheld and allowed the force and effect which the law gives to contracts of such a character.

The payee in the note for $3,873.07 and Baird were close, warm, personal friends, founded in their boyhood in their Hew England birthplace. This friendship and mutual confidence continued as staunch and uninterrupted as the rugged mountains of their early Hew England home. They had many mutual business transactions, extending over many years. They seem to have all rested in mutual confidence and trust. While Lyman seems to have been the debtor of Baird at the time of the latter’s death, such indebtedness resting in the note of $3,873.07, yet, notwithstanding the legal obligation to pay had been discharged and nothing but the moral obligation remained, Baird never pressed Lyman for payment. After Baird’s death his personal representatives, for the first time, pressed for a settlement, and it was made—made voluntarily, freely and understandingly. The settlement was made by figuring interest upon the $3,873.07 note, with annual rests, adding the annual interest thus determined to the principal and again computing interest and again adding to the principal until the amount of $7,731.73 was obtained August 1, 1891—a method known in law and commerce as compounding interest. This, it is claimed, is denominated in law as usury and illegal. The interest, it will be observed, was compounded but once—that simple interest only was added to the subsequent notes given in extension and renewal of the debt. The original note provided for interest at the rate of eight per cent per annum, without specifying any time for its payment. The interest was compounded at the rate of six per cent per annum. The interest in the original note under these conditions became due and payable with the principal, so that at the time the note for $7,731.73 was given the principal and interest of the note for $3,873.07, dated February 1, 1878, payable one day after date, was due and payable. At the date of the latter note eight per cent interest was allowed by law, and on August 1, 1891, the date of the interest compounded renewing note, the maximum annual rate of interest allowed by law was seven per cent. It is conceded that the method adopted of compounding the interest produced $477.54 more than calculating simple interest at the rate of eight per cent.

While it is undoubtedly true that the law does not look with favor upon such method of compounding interest, and at times such method has been condemned and avoided by courts of equity, yet in a fair case, where there are no countervailing equities or conduct smacking of fraud, it has been recognized and upheld as not usurious in law. True it is that there is neither moral nor legal obligation to pay interest by the compound method, and courts will neither enforce nor permit its exaction against protest, still the law of the free right of contract is so hroad in its practical effect and operation that a voluntary agreement to pay interest upon interest is not only sanctioned by the law, but will be enforced by the courts. In Gilmore v. Bissell, 124 Ill., 488, the court say: “The mortgagors had agreed to pay the interest on the mortgage debt annually, and it was their duty to observe that agreement, but they had failed to pay as the interest each year became due. When the time, however, came to renew the debt, the mortgagors had the right, if they saw proper, to redeem their agreement and pay interest on the interest; and their agreement to pay that interest was not illegal, „ nor did it render the transaction usurious. What was done was but the performance of a contract made by the parties, which they had a right to do.”

Here Lyman’s note was payable one day after date. lie was free to contract to pay compound interest upon the settlement of that indebtedness in the way he did. The extreme length to which a court of equity will go in denying an enforcement of compound interest is along the lines stated in Higgins v. Lansing, 154 Ill., 301, that where a contract challenges, by reason of the method of its making, strict examination, the watchful care of a court of equity will set it aside if for any reason it appears to be inequitable. Peddicord v. Connard, 85 Ill., 102, is well illustrative of this point. There the rests for compounding were arbitrarily made every 60 days—a grossly inequitable and oppressive exaction. It was in its ultimate analysis usury of the most flagrant character; for that reason it was both condemned and denied.

The case of Bowman v. Neely, 151 Ill., 37, is leading and controlling on the question under discussion. It is there said: “Appellant contends that this provision in the note” —for compound interest—“rendered the contract usurious, and that it was error to allow appellee any interest whatever, that the judgment should only have been for the principal of the note less the amount of the several endorsements endorsed thereon. In our opinion the case at bar does not come within the purview of section 6, chapter 74, of the Revised Statutes, 1874. The decisions of this court bearing on this question may be divided into two general classes: First: Where a greater rate of interest is sought to be recovered than is allowed by law. This is usury. * * And, Second: Where interest upon interest, or compound interest, is sought to be recovered in the case, if no more 'than the legal rate of interest is charged there is no usury within the meaning of our statute. From motives of public policy, however, the law will not allow the recovery of compound interest. There are but two exceptions to this latter rule. First, in respect to interest bearing coupons attached to bonds or other securities for the payment of money. * * * The second is in cases where, the interest having become due, and remaining unpaid, the debtor then agrees to have the accrued interest added to the principal and become interest bearing.”

The case at bar clearly falls within the second exception to the general rule announced in the case last cited. The interest on the Lyman note was due at the time of compounding, and the debtor agreed fully and understandingly, as evidenced by the Ames letter to him, to have the accrued interest added to the principal and to become interest bearing. It consequently follows that the calculations made by the master and embodied in the decree of the amount due upon the note, for which the five notes for $1,500 each, secured by the trust deed in question, were given as collateral security, was correct. The agreement of the parties must prevail. This conclusion certainly violates no interest or contract in virtue of "which plaintiffs in error, Cooper and MacLauchlan, hold title to the mortgaged property. They took with actual notice of the lien of the trust deed. They in fact and in law took title subject and subordinate to that lien for the payment of the notes secured by it. It does no violence to credulity to assume that the amount of the trust deed lien entered into the calculation of the parties in arriving at the amount paid for such title to the land as Lyman owmed. There is no equitable principle justifying the court in relieving them of their contract obligation to pay the price agreed, or no lawful reason why the note owners should not receive either the amount due them from those claiming the subordinate title, or enforce through a court of equity a sale of the land for that purpose. They recognized the lien by paying installments upon the indebtedness to Baird.

Fourth. The first assignment of error made by plaintiffs in error, David B. Lyman, trustee, Chicago Title & Trust Company and Oliver E. Chapman, is disposed of and embraced in that part of our opinion in which we discuss the first assignment of error made by their co-plaintiffs in error, to which we will but add that while the error there indicated is fatal to the integrity of the decree, and which error, if none others existed, would impel a reversal of the decree of the court below, yet we are not prepared, because in the present condition of the case it is not necessary, to hold that the decree is void. Time lends no curative aid to a void decree or judgment, but has many healing virtues to such as are voidable only.

Fifth. There is a material and incurable variance between the averments of the bill and the essential findings of the decree. The bill sets up the fact that the trust deed was given to secure 20 notes' for $1,500 each, numbered from 1 to 20, both inclusive, and the decree fails to find the number of these notes which are unpaid, or the amount remaining unpaid on the notes secured by the trust deed.. The decree also orders the mortgaged land to be sold for the payment, among others, of notes 3 and 4, which the proof, not disputed, shows are paid. By the decree as amended the land is ordered sold for the payment of the notes held and owned by defendant in error and plaintiff in error Chapman, and orders the proceeds of the sale, after the payment of costs and expenses, to be applied to the liquidation of the amount due on the latter notes in the order in which they are numbered. It is said by defendant in error that Chapman is estopped from now disputing that which he caused to be done, and in the doing of which he acquiesced. We are not unmindful of the pertinency of the contention. But, so conceding, the plaintiff in error, David B. Lyman, trustee, urges the point as trustee in behalf of all those beneficially interested, and who are not before the court as parties, and of whom the court has no jurisdiction. We consider the attitude of trustee Lyman as in accord with the duty cast upon him by the law, to see to it that every reasonable and available means are exerted to protect the rights of the note holders in accordance with the conditions of the instrument under which he acts. To his objection the court will give heed. That all the note holders, with the exception of Baird and Chapman, are ignored in this whole proceeding is patent, and that, without any right of priority and in the teeth of the express provision of the trust deed that the proceeds óf the sale under foreclosure proceedings after payment of expenses should be applied “to pay the principal of said notes, whether due and payable by the terms thereof, or at the option of the legal holder thereof.” There is no provision anywhere, either in the notes themselves or the trust deed securing them, giving one note priority over the other in the event of a foreclosure or nonpayment. The property had been divided into lots, and the terms of the provision for partial payments and releases simply provided a convenient method of disposing of the money thus received, without necessitating the finding of all the note holders every time a payment was anticipated and distributing the amount received among them in equal parts. This was no evidence of an intention to discriminate in favor of the holders of notes with the earlier numbers, because while the unpaid note holders had less land after a release on anticipated payments, they likewise had less debt to pay in case of the necessity of subjecting the remaining land to sale in a foreclosure proceeding. The bill in praying and the decree in ordering payment of the notes of Baird and Chapman in their numerical order violated the express terms of the trust deed securing them. The consequence of such erroneous proceeding uncorrected would be to deprive note holders to the amount of $9,000 of principal, besides accrued and accruing interest, to be defeated from payment of their contract portion of the price received at a foreclosure sale. For while it is trae that the decree orders the overplus remaining after paying Baird and Chapman to be brought into court to abide its further order, which theoretically might produce enough to pay the remaining note holders, still, in practice, under the condition of the law which tends to discourage purchases at judicial sales, no “overplus” could be consistently anticipated.

For the errors indicated the decree of the Superior Court is reversed and the cause remanded for further proceedings not inconsistent with this opinion.

Reversed and remanded.


source: Caselaw Access Project

author: Mr. Presiding Justice Holdom

license: Public Domain

text:
    John E. Lancaster, William Wallace, John T. Wallace, Laura Wallace, Thomas Wallace, Emma Wallace, Edwin Wallace, Bessie G. Wallace (now Bessie Wallace White), Frank P. White, Helen E. Guard, Mary F. Guard, Martha C. Guard, Thomas H. Guard, Eugene B. Guard, Mrs. Thomas H. Guard and Paul L. Guard, for use of Leslie A. Needham, v. Eugene E. Prussing, as Trustee, and Illinois Trust & Savings Bank, a corporation.
    Gen. No. 13,448.
    1. Decebe—how far subject to review in the absence of objections and exceptions to the master’s report upon which it is predicated. Where no exceptions or objections have been interposed to a master’s report upon which a decree is predicated, all questions of law raised which do not find warrant or support in the facts found are, nevertheless, subject to review.
    2. Extension of time of payment—what does not establish valid agreement for. While payment of interest in advance is a sufficient consideration to support an agreement of extension, yet, in the absence of any evidence to support the agreement, it is neither prima facie proof nor presumptive evidence of such agreement where the anticipated period consisted of one-half holiday and two days which were dies non juridicus.

    3. Extension of time of payment—when agreement authorizing not revoked by death. An agreement contemporaneous with the contract of suretyship, by which a surety authorizes renewals from time to time, is a power coupled with an interest which the death of the surety does not terminate.
    4. Principal and surety—burden of proving release. The burden of proving the release of the surety primarily rests upon such surety.
    5. Foreclosure—when rents accruing during the period of redemption properly applied in extinguishment of deficiency decree. Where the trustee pledges as well the rents as the land, it is proper for a court of chancery to appoint a receiver to collect the rents accrued from the property foreclosed and to order their application in ex-tinguishment or in reduction of the deficiency decree ancillary to the sale.
    6. Res ad judicata—when Hen of trust deed is. Where the rights and interests of all the parties in the land were made the subject of a partition proceeding, and in that proceeding the status of a trust deed was determined, the validity of such trust deed and the efficacy of its lien cannot subsequently be questioned by those who were parties to such partition proceeding in a proceeding to foreclose such trust deed.
    Foreclosure. Error to the Superior Court of Cook County; the Hon. Axel Chytbaus, Judge, presiding.
    Heard in this court at the March term, 1907.
    Affirmed.
    Opinion filed October 28, 1907.
    An order of severance pursuant to the directions of the statute has been entered, in which all plaintiffs in error other than those named in the title of this cause, have been severed and forever barred from impeaching either the decree or any of the proceedings of the Superior Court. The review of the case will therefore be restricted to such matters which affect only the rights and interests of the plaintiffs in error, who by the same order of severance have been allowed to prosecute this writ of error alone.
    Before proceeding to make a statement of facts the motion of plaintiffs in error to strike from the record the indorsement on the trust deed by Nimrod Lancaster authorizing an extension of payment from time to time of the Springer debt secured by the trust deed, reserved to the hearing, .will be denied.
    Statement by the Court. The defendants in error filed their bill August 1, 1898, to foreclose a trust deed dated January 5, 1892, given by one Nimrod Lancaster and Charles E. Springer, conveying to Eugene E. Trussing as trustee certain unimproved real estate in Chicago, to secure an indebtedness of $58,500' of the grantor, Charles E. Springer, to the Illinois Trust & Savings Bank, and evidenced by the note of Charles E. Springer for that amount, payable five years after date, with interest at six per cent per annum, payable half-yearly, the interest being further evidenced by ten coupon interest notes, payable each succeeding six months until the maturity of the loan. Lancaster owned the fee of the mortgaged property, which he had leased to Springer by an indenture of date January 13, 1892, for a term ending Hay 1, 1913, at an annual rental of J>1,200. The lease was made subject to the lien of this trust deed. In. accordance with an agreement attached to the lease made between Lancaster and Springer thirteen three-story dwelling houses were erected upon the leasehold mortgaged premises. Both the trust deed and the lease were executed on January 13, 1892, by Lancaster and Springer before Monroe Johnson, a notary public, at San Diego, California. On the back of the trust deed ¡Nimrod Lancaster signed, before Monroe Johnson as a witness, the following agreement under seal:
    “I hereby agree that the said Charles E. Springer may have the loan mentioned within this trust deed, or any part of said loan, renewed from time to time, as he may see fit, and this trust deed will still act to secure the said loan and the principal note or notes in case of the renewal of the same, or any part of it.”
    Indorsed on the principal note is the following:
    “July 1, 1897.
    Interest paid to July 5, 1897.
    Interest paid to Jany. 5, 1898.”
    Among other provisions of the trust deed is one for entry in case of default in payment of the debt, and a waiver of all right to retain possession of the mortgaged premises during the period of redemption.
    The thirteen houses were in due course erected at an expense of $83,608.32, the money loaned by the Illinois Trust & Savings Bank to Springer forming a part of such outlay.
    The last installment of rent paid by Springer under the Lancaster lease was on May 1, 1897, and on February 1, 1898, he surrendered possession of the premises to the lilinois Trust & Savings Bank, for the purpose of having the income applied to the payment of necessary charges and applying what might remain thereafter to the payment of interest on the indebtedness.
    The trust deed contains the following covenant affecting, as it is claimed, the • application of the income of the mortgaged property during the period of redemption:
    “And the said party of the second part, or the persons appointed by the court to execute this trust, may, in case of default or breach of covenant, take immediate possession of said premises, and collect the rents and profits as above provided, until the time of redemption shall expire, under any sale that may be made by virtue of this trust deed, and the said party of the first part hereby expressly waive and release to tiie said party of the second part, his successor or person appointed by the court to execute this trust, all rights, which they now have or may hereafter have, under any law of this State, to retain possession of said premises after any such default or breach of covenant as aforesaid,. until the time for redemption expires

    The Illinois Trust & Savings Bank bought the note secured by the trust deed from the Cold Storage Warehouse Fire Belief fund trust, the then owner of it, after its maturity, while default in payment existed and the interest to January 5, 1898, had been paid and indorsed upon the note. The bill alleges that the interests of the defendants in the premises sought to be foreclosed were acquired subsequent to and are subject to the lien created by the trust deed.
    By a decree entered in a partition suit December 22, 1900, in which plaintiffs in error were parties, or those from whom they assert their claim of title, the trust deed in question was decreed to be a first and valid lien, paramount to the claim of title of all parties to the partition, suit, and the title thereto was decreed to the several parties subject and subordinate thereto.
    On June 14, 1895, Nimrod Lancaster died testate, and plaintiffs in error claim title either as devisees under his will, or as personal representatives of George Wallace, one of said devisees, since deceased, namely, John E. Lancaster, William Wallace and John T. Lancaster as devisees, and Thomas Wallace, Walter Wallace, Edwin Wallace and Bessie Wallace White as heirs at law of George Wallace, deceased.
    The answers filed in the main neither admit nor deny the material averments of the bill in relation to the indebtedness claimed or the lien of the trust deed, but as to these matters calls for strict proof. Ownership by Nimrod Lancaster of the mortgaged premises is admitted at the date of the trust deed, also the making of the lease to Springer; admit also the filing and pendency of the bill for partition as alleged. By a supplemental answer filed July 23, 1901, the Guards admitted that a decree in partition had been entered in the partition suit March 14, 1901; that the mortgaged premises had, by order entered in that cause, been divided in lots, and a" plat thereof made, with the consent of defendants in error, and asked that in any decree of sale entered the mortgaged premises be ordered sold in lots according to the plat of such subdivision, a copy of which was attached to that answer. The agreement of Eimrod Lancaster on the back of the trust deed as to renewals of the loan is challenged in these words: “that as to the alleged agreement indorsed on said alleged trust deed, they have no knowledge, and therefore neither admit nor deny the allegations with respect thereto, as contained in said bill of complaint, but put complainants upon proof thereof.”
    One Sills was, on March 8, 1900, appointed receiver of the mortgaged premises, with the consent of the answering defendants, the Wallaces and Whites being then defaulted, and the bill resting as confessed by them. The Illinois Trust & Savings Bank was at this time in possession, but acquiesced in the appointment and surrendered the property into the hands of the receiver.
    March 20, 1902, a decree of foreclosure and sale was entered, the master’s report confirmed, $69,254.69 being found due the Illinois Trust & Savings Bank after deducting moneys received from rent of the mortgaged property, also finding $1,500 to be due for reasonable solicitor’s fees contracted in the prosecution of the foreclosure suit. The decree has this finding, viz.: “That by virtue of said trust deed complainants, Eugene E. Prussing and Illinois Trust & Savings Bank, have a first and valid lien upon the premises described in the bill and upon the rents, issues and profits for the amounts due as above determined; and the court further finds the rights and interests of all defendants to this suit in and to said premises are subject and subordinate to the lien thereon in'favor of said bank for the amounts due it as aforesaid.”
    On April 24, 1902, the report of the sale of the mortgaged premises by the master under the decree to John J. Mitchell for $66,000 was approved and a deficiency decree against Charles E. Springer' for $5,598.44 entered, and the receiver ordered to continue in possession and apply the rents to be collected on such deficiency.
    This writ of error is sued out by plaintiffs in error for the use of their solicitor of record, Leslie A. Needham, to reverse the decree of the Superior Court—the title of Mitchell as purchaser at the master’s sale not being attacked —and also to enter a money decree, with interest, against the defendant in error, the Illinois Trust & Savings Bank, for the following sums:
    Interest indorsed on note as paid to Jany. 25, 1898 ..................................$ 1,755.00
    Moneys received from rents under decree of March 20, 1902...............................$ 6,388.06
    And also the amount of the bid at sale of April 17, 1902, of................................ 66,000.00
    Making a total money decree asked exclusive of interest................................$74,143.06
    The errors assigned are that the decree of March 20, 1902, is contrary to and inconsistent with the law and the evidence, and not supported thereby, that it is for an excessive amount, that the conclusions of law in both the master’s report and the decree declaring the trust deed to be a lien, and in decreeing a lien on the rents during the period of redemption, are contrary to the findings of fact in the decree, and that as to the lien on the rents during redemption, the decree is erroneous and inequitable.
    Jacob Yerburg and Leslie A. Feedham, for plaintiffs in error.
    James G. Hvtchihs and Max Baird, for defendants in error.
   Mr. Presiding Justice Holdom

delivered the opinion of the court.

The arguments of counsel for plaintiffs in error are more ingenuous than appealing or convincing. Every proposition advanced for reversing the decree is fraught with extreme legal technicality, and much of the argument made in an attempt to solve these legal technicalities and adapt and make them applicable to the facts in the record, are sophistical, strained, and unnatural, and not at all in keeping with the conscionable administration of justice, or the application of equitable principles governing and controlling courts of conscience, akin to the forum whose jurisdiction and equitable doctrine environed the parties and the subject-matter of the contention between them.

Two contentions are deducible from the errors assigned and the arguments made in support of them:

First, that the time of payment of the principal note was extended without the consent of Fimrod Lancaster, whereby the lien of the trust deed was discharged; and

Second, that rents of the mortgaged premises during the period of redemption were the property of the owners of the equity redemption, and not subject to be applied towards the extinguishment of the deficiency decree against Charles E. Springer. On the contrary, defendants in error argue, with some plausibility, that no extension of time of payment, was either, in fact, made or proven; that if such an extension was made as claimed, it was done under the express written authority of Lancaster; that the decree in the partition proceeding is res adjudicata as to all the claims of plaintiffs in error; that the lien of the trust deed, and all the rights and interests of all the parties here, were settled and declared by that decree, and finally that the rents of the mortgaged premises during the period of redemption are pledged by the very terms of the trust deed as security for the payment of the debt which it was made to secure.

Ho objections or exceptions were filed to the master’s report. It is contended by defendants in' error that in this condition of the record it is not open to our review. This contention is not, in its broadest aspect, tenable. All parties, however, are concluded in this condition of the record from questioning the findings of fact either in the master’s report or the decree of the court. But the record is open for our review on all questions of law raised, not finding warrant or support in the facts found—and within these limitations we will confine our review and opinion. There are found upon the back of the principal note, in the same handwriting, the following indorsements written on the lines as here quoted, viz.:

“July 1, 1897,

Interest paid to July 5, 1897.

Interest paid to Jany. 5, 1898.”

We have the principal note before us, and have critically examined these indorsements, and we are of the opinion from such inspection that the last line “Interest paid to Jany. 5, 1898,” was written subsequent to the prior portion of the indorsement.

It is insisted that these indorsements of interest were made, and the two installments of interest actually paid at the same time, July 7, 1897; that the first payment was four days before maturity, and the second a six months’ advance payment of interest; that an advance payment of interest, however short, operates to extend the loan and to discharge the land from the lien of the trust deed, when done without the consent of the surety owner of the land; that such presumption conclusively arises, as a matter of law, from the indorsement, without proof of the fact, or the intention of the parties; that a purchaser, subsequent to maturity and such indorsement, takes the note with notice that the lien of the security is discharged.

The assumption, from the indorsement upon the note, that the time of payment was extended, is a most violent one in the face of the facts in the record. More especially is the contention that payment of interest on July 1, due July 5, would presumptively, in law, discharge the surety.

While the payment of interest in advance is sufficient consideration to support an agreement of extension, yet in the absence of any evidence to support the agreement, it is not, as in the circumstances environing this ease, either prima facie proof or presumptive evidence of such an agreement. It is fairly inferable that the payment of interest due July 5, on July 1, was merely a matter of convenient anticipation, in the light of the fact that July 2 was a half holiday, and the two following days, a Sunday and “July Fourth,” dies non juridicus.

New York Life Ins. Co. v. Casey, 178 N. Y., 381, is so analogous' on fact and principle as to constitute an authority of controlling effect. The court there held, reversing the decision of the Appellate Division of the Supreme Court of New York in the same case, that a valid extension of the time of payment of a bond and mortgage, such as will discharge one standing in the relation of surety for the payment of the mortgage debt, is not established as a matter of law, by the mere receipt from the grantee of the premises of interest three days in advance, -when there is no other proof of an agreement, express or implied, for such an extension, and two and a half days of the three were legal holidays. Especially is this reasoning most cogent here, in the entire absence of evidence as to who paid the interest, or of any agreement for the extension of the time of payment being granted. For can we, contrary to the only evidence found in the record that the interest paid to January 5, 1898, was paid from rents collected by the bank on July 20,1898, adopt the fallacious reasoning of counsel for plaintiffs in error, that the same was paid July 1, 1891, because that date is the only one appearing over the two indorsements of interest pay-' ments. After the payment of the last interest, defendant in error, Illinois Trust & Savings Bank, bought the note.

It logically follows, from what we have heretofore said, that the record does not disclose any evidence of an extension of the time of payment of the Springer note. But, were we wrong in this holding, there is sufficient evidence in the record authorizing an extension of the time of payment by Lancaster, the surety. That authority is contained in the agreement indorsed on the back of the trust deed, executed under seal at the same time the.trust deed was acknowledged before Johnson, the notary, at San Diego, California, and in his presence, as his attestation thereof undisputably establishes. But it is said because this indorsement on the trust deed was not separately offered in evidence, it has no place in the record as proof. We are unable to agree with this contention. To so hold would necessitate, by parity of reasoning, the exclusion of the indorsements of payments of interest'on the principal note, relying upon which plaintiffs in error contend the lien of the trust deed was presumptively released. To do so would automatically operate to take from under plaintiffs in error the foundation stone upon which they have builded a very insecure structure of defense.

It is next insisted that the death of Lancaster revoked the agreement of consent, if such it may be termed. The agreement was set up in the bill in hcec verba, and its legal effect as a consent to an extension of payment declared. The instrument being before the court, the court would declare its legal effect.

Hone of the answering plaintiffs in error denied the making of the agreement, or sought by any averment to avoid it. They called for proof, and that proof was forthcoming and passed unchallenged. Ho direct issue was made as to the legal effect of this agreement contradictory of the aver- meats of the bill. If the question was material as raised, which we are inclined to doubt, still the authority of Benneson v. Savage, 130 Ill., 352, is decisive against the contention here made. The court there held that the power was coupled with an interest and was not revoked by the death of the party making it; so the agreement here was coupled with an interest and is binding on the heirs and devisees of Lancaster.

Before leaving this branch of the case, we wish to point out that the statement of counsel for plaintiffs in error that in Beuter v. Dillon, 63 Ill. App., 517, the indorsement on the note, “Received interest to July 1, 1891, and $20 on interest due July 1, 1892,” was held sufficient evidence of extension to discharge 'a surety, belies the facts. There was ample evidence of an extension without the sanction of the surety, resting in oral proof and letters between the parties and the payment of a bonus of $5 for the extension. And so it will be found in nearly all of the cases, and certainly in those well considered cited by counsel for plaintiffs in error, that an indorsement in itself was not relied upon as presumptive proof, but was aided and supported by other evidence of a confirmatory character.

The burden of proving a release of the surety primarily rests upon him. Stearns v. Sweet, 78 Ill., 446.

In Shepherd v. May, 115 U. S., 505, the Federal Supreme Court said on this subject: “But even if it had been shown that Shepherd had become the surety of Walker, it was incumbent upon the former to show, as a part of his defense, that the indulgence given by May to Walker was without his assent,” citing in support thereof Sprigg v. Bank of Mt. Pleasant, 14 Pit., 201; Bangs v. Strong, 7 Hill, 250; Cox v. Mobile, etc., Railroad, 37 Ala., 320. “There was no proof of want of assent. The defense therefore failed.”

No issue was made as to the validity of the lien claimed in virtue of the trust deed by any answer filed by any of the parties now seeking to avoid the decree. Heither the ownership of the notes nor the indebtedness was disputed by the answers. The extremity of the defense was the call for strict proof of these matters by defendants in error. Such proof was made and is not challenged. ¡Nowhere was there a denial of the affirmative averment that the rights and interests of all the plaintiffs in error were subject and subordinate to the lien of the trust deed. ¡Nor did the answers, by any denials of charges, claim that the note had been extended without the consent of Lancaster and the lien of the trust deed thereby released.

As said in Mehan v. Mehan, 203 Ill., 180, “it is a well recognized principle of chancery that a defendant by his answer must set up the defense he relies upon.”

The defense set up was not of an affirmative kind in any. particular. ¡Reliance seemed to have been rested in the ability of defendants in error to make proof of the material averments of their bill. This they did. More, the state of thé pleadings did not require of them.

It was held in Amberg v. Natchtway, 92 Ill. App., 608, that where the proof showed an extension of the loan, a failure to set that fact up affirmatively as a defense precluded advantage being taken of it on appeal. Likewise, in Cole v. Shetterly, 13 Ill. App., 420, proof of failure of consideration was held to be abortive as a defense, it not being set up by way of answer. To a similar effect are Crone v. Crone, 180 Ill., 599; Home Ins. Co. v. Myer, 93 ibid., 271; Westlake v. Horton, 85 ibid., 230.

By reference to the statement preceding this opinion it will be seen from the covenants of the trust deed there set out, that the rents, issues and profits were pledged for the payment of the indebtedness secured thereby, and that the grantors waived all right and interest to the rents during the period of redemption. The decree of March 20, 1902, ordering the receiver to pay the rent in hand to the bank to apply upon the amount found due by that decree upon the indebtedness secured by the trust deed and the order of April 24, 1902, continuing the receiver in possession during the time of redemption, and directing the income from the mortgaged premises to be applied to the extinguishment of the deficiency judgment against Springer, were warranted by the terms and conditions of the trust deed.

We deem it a'sufficient expression of our opinion in this branch of the case to quote the language of Mr. Justice Adams in Krumwiede v. Riedel, Gen. No. 12,345 (not to be reported), and adopt it as decisive: “Counsel for appellees urge that the trust deed does not expressly pledge the rents and profits as security for the indebtedness, and therefore appellant has no lien on them. In the absence of a provision in the trust deed pledging the rents and profits as security for the debt, and where there is a deficiency of the proceeds of the sale to discharge the debt, a court of equity has power, in a proper case, to appoint a receiver of the mortgaged premises and apply the rents and profits thereof in payment of the deficiency. Haas v. Chicago B’g Society, 89 Ill., 498; First Nat’l Bank of Joliet v. Ill. Steel Co., 174 ib., 140; Boruff v. Hinkley, 66 Ill. App., 274; Christie v. Burns, 83 ib., 514; White v. Mackey, 85 ib., 282.

“In-this case the makers of the note and grantors in the trust deed, Gustav R. and Katherina Riedel, are both dead. Their heirs, Oscar and William E. Riedel, are not personally liable for the debt secured by the trust deed, and therefore no judgment could be rendered against them for the deficiency, and it is averred in appellant’s answer to Oscar Riedel’s petition, and not denied, that Gustav R. and Katherina Riedel left no estate from which the deficiency can be satisfied.

“Under these circumstances, we think this an eminently proper case in which to apply the rents and profits accruing during the period for redemption to the payment of the deficiency.”

Lancaster pledged the real estate for the payment of the Springer indebtedness, and to the liquidation of that indebtedness the property should be held to the full measure of the contract covenants securing it. All rights having been waived and relinquished during the time of redemption, this is also an eminently appropriate case where equity should interpose by a receiver for the application of the income of the .security to the payment of the deficiency decree. Haigh v. Carroll, 209 Ill., 576; Ball v. Harske, 202 ibid., 31.

The rents were pledged by the terms of the trust deed, and the receiver was properly appointed before decree, and afterwards continued in possession for the purpose of providing a means whereby the deficiency decree might be satisfied.

At the time of the appointment of the receiver, after the filing o'f the bill to foreclose, the defendant in error, the Illinois Trust & Savings Bank, was virtually in possession as mortgagee and rightfully so. Its surrender of such possession was predicated on the court’s appointing a receiver, to which action of the court the parties appearing consented, and those who were defaulted and against whom the bill was taken as confessed are likewise bound; and all are now precluded from objecting to the action of the court, which received their assent actually or in contemplation of law by suffering a default.

The money loaned under the security of the trust deed the record shows was used toward defraying the cost of the erection of thirteen dwelling houses on the land conveyed by the trust deed, which was under lease to Springer, the maker of the note evidencing the debt. Springer disbursed the total sum of $83,000 in the making of the improvements. The money was loaned from trust funds of the defendant in error, the Illinois Trust & Savings Bank. The benefit of these improvements inured to Lancaster, the fee owner, and on his death descended to his heirs and devisees, subject to the lien of the trust deed. Springer defaulted in the payment of ground rent and in the payment of his note. The heirs and devisees, by a legal proceeding, forfeited Lancaster’s lease to Springer for his default to them. The Savings Bank foreclosed the trust deed for non-payment of the debt which it owed. They were both within their legal rights in the steps which they each took. Springer afterwards conveyed, by quit-claim deed, his wife joining in its execution, his interest in the land and improvements. In equity and good conscience, in law and in morals, plaintiffs in error took whatever title they had, whether under Lancaster’s will, the forfeiture proceeding, or the Springer deed, or all three of them, subject to and burdened with the payment of the debt owing by Springer to the Savings Bank, secured by Lancaster’s trust deed, the money thus secured having been used by Springer in the improvement of the mortgaged land. Such is the covenant of the trust deed, and no legal quibbles or fine-spun hair-splitting legal technicalities will suffice to overcome the contract rights of the parties, or defeat a meritorious claim by an attempt to make callous the conscience of a court of equity.

All parties to this writ of error were joined in the partition suit of the mortgaged premises, with other property, under a bill filed August 1, 1898, by ¡Robert ¡H. Lancaster against his co-heirs and devisees and defendants in error. A decree of partition was entered December 22, 1900, fifteen months prior to the entry of the foreclosure decree. The partition decree was entered without objection on the part of plaintiffs in error, or any other party in interest. That decree found in direct terms that the interest of all the parties was subject to and charged with the lien of the trust deed here foreclosed. By the Partition Act it is made the duty of the court to ascertain and declare the interest of all the parties to the cause, and in pursuance of such statutory requirement, the court found and declared the interest of defendants in error under the trust deed as prior and paramount to that of all the other parties. In the partition suit a subdivision and plat of the land was made by the commissioners in partition and the foreclosure sale made in accordance with such subdivision at the request of certain defendants in error, who filed a supplemental answer so requesting the court to order.

It seems to us, beyond dispute, that the doctrine of res adjudicata- is an impregnable wall of defense against any attack upon the valid and binding force of the lien created by the trust deed. The lien of the trust deed was pertinent to the inquiry in the partition suit, made so by statute. The decree in this, as in all other respects, bound the parties to it.' Among those parties are the plaintiffs in error, and as to them it stands fast and firm, alike immune from either direct or collateral attack. The partition decree is in evidence and works an estoppel on plaintiffs in error either to attack, impeach or disturb its verities. Plaintiffs in error contend that this writ of error being a new suit, defendants in error, in order to avail of the doctrine of res adjudicata as a defense to this present attack, must plead that fact in bar of the errors assigned. We cannot assent to such a doctrine as applicable to this cause. Such pleading, in our opinion, is unnecessary and would serve no useful purpose. The record is here for review. We find that the decree in partition is a part of that record. Its legal purport and bearing upon the rights of the parties are subjects for our determination on such review. The finding that the partition decree was entered of record is a finding of fact which, failing of objection and exception, stands admitted.

Furthermore the decree was a record of the Superior Court, of which that court could take judicial notice.

Again it is contended that the lien of the trust deed had been discharged pending an adjudication in the partition cause and prior to the decree making partition and establishing the priority of lien of the trust deed, and that the decree in partition found and determined the rights of the parties as they existed at the date of the commencement of the partition suit, and not as of the date of the decree.

It will be observed that more than three years had elapsed between the time it is claimed the lien was released by an extension of the time of payment of the Springer note without the consent of Lancaster, and the entry of the decree in partition. In these circumstances it was incumbent upon plaintiffs in error to set up that fact by supplemental answer in the nature of a plea puis darrien continuance. Failing so to do, the decree concludes them from now availing of that defense, which we have clearly shown is without legal force or merit.

We do not regard it as necessary to our disposition of this cause to pass upon the question as to whether or not plaintiffs in error are in the position of a surety who has been indemnified. Whatever may have been the effect in law of their acceptance of the Springer deed, it certainly did not operate to relieve the mortgaged property from the lien of the trust deed given to secure Springer’s debt, the proceeds of which, with other money, was expended in improving the land and enhancing its value.

The learned counsel, the usee of certain plaintiffs in error in whose name, but for the counsel’s own use, this writ of error is prosecuted, not only seeks a reversal of the decree, but in his zeal, prompted, it may be, from the dual role in which he appears before us, as an advocate and the sole party beneficially interested, asks for a money decree of $74,143.06 with interest on the items entering into that gross sum at five per cent per annum, without offering to do equity or to abide by any order which this court might deem proper to make, based upon the legal rights and equities of defendants in error, if any, appearing from the record, and without any offer to pay any part of the money of the Savings Bank invested by Springer in building improvements upon the land mortgaged by the trust deed. We cannot but voice our astonishment, in view of the record, of this apparently unconscionable demand. The courts conserve rights; they do not piratically destroy them. Eight and justice has been attained by the decree of the Superior Court. It is therefore affirmed.

The cost of the additional abstract of record will be taxed against plaintiffs in error.

Affirmed.


author: Mr. Justice Adams

text:
    In the Matter of the Petition of Frank Staar for a Writ of Prohibition.
    Gen. No. 13,908.
    1. Writ or prohibition—to whom runs. A writ of prohibition does not run against a party in the trial court, nor against the judge of that court, but only against the court.
    2. Writ or prohibition—jurisdiction of Appellate Courts to issue. The Appellate Courts have no original jurisdiction to issue a writ of prohibition, but may only issue such a writ in aid of its jurisdiction, and even then only in cases of extreme necessity. In order that the Appellate Courts may issue such a writ in aid of its jurisdiction, there must be before those courts something on or with regard to which their jurisdiction may be exercised.
    Petition for a writ of prohibition.
    Denied.
    Opinion filed October 28, 1907.
    Statement by the Court. The petitioner, Frank Staar, has filed a petition here, entitled in the cause of Frank Staar v. Moy Tong Hoi et al., praying “that a writ of prohibition be issued out of this court to the Hon. Julian W. Mack of the Circuit Court of Cook county, and the Circuit Court of Cook county and the defendants Hoy Tong Tee Koon and Moy Tong Hoi.” It is averred, in substance, in the petition, as follows: Hay 10, 1907, petitioner commenced suit for the dissolution of partnership against the firm of Hip Lung Ying Kee & Co., which firm consists of Moy Tong Hoi, Moy Tong and Moy Chene, alias Hip Lung. April 28, 1907, petitioner recovered a judgment against Hoy Chene, alias Hip Lung, for $4,671, in the Hunicipal Court of Chicago; an execution issued on said judgment and was levied on the interest of Hoy Chene in the partnership effects of Hip Lung Ying Kee & Co., and at the sale of said interest, May 7, 1907, petitioner became the purchaser of the same. The petition then, without averring that any bill was filed, avers substantially as follows: The matter was heard before Judge Honoré of the Circuit Court, who referred the matter to a master, to report on the question of the application to appoint a receiver pendente lite. The master filed his report, and, August 26, 1907, Judge Gibbons of said Circuit Court ordered that a receiver be appointed of the property of said copartnership, and, August 27, 1907, the court appointed a receiver and he qualified as such and took charge and possession of such property of said partnership as he found at the firm’s place of business, 323 S. Clark street, Chicago. Hoy Tong Tee, one of said defendants, appealed from said order appointing the receiver, and executed a bond, with surety, in the penal sum of $200, which was approved by the clerk of said Circuit Court. Moy Tong Yee, after perfecting his appeal, served notice that he would appear before Judge Hack of the Circuit Court and move that the receiver appointed by Judge Gibbons be removed. Petitioner appeared before Judge Mack and objected to the removal of the receiver. Judge Mack is going to enter an order September 11, 1907, removing the receiver. Wherefore petitioner prays, etc.
    Louis Greenberg, attorney for petitioner.
   Mr. Justice Adams

delivered the opinion of the court.

The petition in question was filed here September 10,1907, and there was not then on the docket in this court, nor has there been since that date, any appeal cause entitled Moy Tong Hoi et al. v. Frank Starr on said docket. A writ of prohibition does not run against a party in the trial court, nor against the judge of the court, but only against the court. The People v. Cook County Circuit Court, 169 Ill., 201, 204. This court has no original jurisdiction to issue a writ of prohibition, but may issue such a writ in aid of its jurisdiction, and even then only in case of extreme necessity. People v. Cook County Circuit Court, supra. In order that the court may issue the writ in aid of its jurisdiction, there must be before the court something on or with regard to which its jurisdiction may be exercised. The petitioner has filed with his petition a transcript of record in a suit entitled Prank Starr v. Hoy Tong Hoi et al., showing an order of the Circuit Court, Judge Gibbons presiding, entered August 26, 1907, appointing the American Trust and Savings Bank receiver of the rights, credits, property, etc., of the partnership of Hip Lung kee & Co., and showing also an appeal bond executed by Moy Tong Koon, which name the petition avers was an alias of Moy Tong Hoi, with a surety, which bond is approved by the clerk of the Circuit Court. The order appointing the receiver was entered as above stated, August 26, 1907, and the statute in respect to appeals from interlocutory orders, such as the order appointing the receiver was, contains this provision: “Provided, that such appeal is taken within thirty days from the entry of such interlocutory order or decree, and is perfected in said Appellate Court within sixty days from the entry of such order or decree.” The last clause of this provision, commencing “and is perfected,” etc., can only mean the filing of the transcript of the record of the cause appealed in this court, and the appellant, Moy Tong Hoi, has until October 27, 1907, to file such transcript. The appellant has not yet filed a transcript of the record, and for aught we know, may never file one, and if he does not file a transcript hy October 27th next, the sole jurisdiction left to this court will he to dismiss the appeal for failure to file a transcript in apt time, on the filing of a short record and motion made to dismiss hy the proper party, and the docketing the appeal here. In short, we may never have occasion to pass on the merits of the appeal. The petition will he denied.

Denied.


author: Mr. Presiding Justice Baker

text:
    Chicago Junction Railway Company v. Louis Reinhardt.
    Gen. No. 13,659.
    1. Personal injuries—who not mere licensee. A person using a highway which the owner, tor a great number of years, has permitted the public to use as a public highway, is not a mere licensee to which the owner of such highway owes no other duty than to refrain from purposely or wilfully injuring him.
    2. Railroads—when owner of tracks liable for negligence of lessee company. The owner of tracks is liable for the negligence of a railroad company whom it has permitted to use such tracks.
    3. Ordinance—validity of, requiring ringing of bell. An ordinance is valid which requires the ringing of a bell within the limits of a city.
    4. Contributory negligence—when person driving upon railroad tracks guilty of. Held, that the plaintiff in driving upon the railroad tracks in question in this case, under the circumstances shown by the evidence, and with his knowledge of the tracks and of the fact that a train was liable to come on one of such tracks from either direction at any time, was guilty of such contributory negliligence as barred his right to recover for the injury sustained.
    Baker, P. J., dissenting.

      Action in case for personal injuries. Appeal from the Superior Court of Cook County; the Hon. Albert C. Barnes, Judge, presiding.
    Heard in the Branch Appellate Court at the March term, 1907.
    Reversed.
    Opinion filed February 14, 1908.
    Statement by the Court. This is an appeal by the defendant from a judgment for $12,000 recovered in an action on the case for personal injuries.
    The Union Stock Yards & Transit Company is, and has been since 1866, the owner of the east half of the section bounded by Thirty-ninth street on the north, Halsted street on the east, Forty-seventh street on the south and Ashland avenue on the west, in the city of Chicago. Through this tract no public street has ever been dedicated or laid out. More than forty years before the accident, the Stock Yards Company opened and since has maintained midway between Thirty-ninth and Forty-seventh streets a road or way known as Exchange avenue, from Halsted street to the west line of the half section. At a point some distance west of Halsted street said company erected, when Exchange avenue was opened, and since has maintained across said avenue, a gate under the control of a gateman. Pedestrians were permitted to pass through said gate and along said Exchange avenue at any hour of the day or night; in daytime vehicles, with certain exceptions, were permitted to pass; between six p. m. and six a. m. police patrol wagons, mail wagons and fire department wagons and apparatus were permitted to pass, but other vehicles were not permitted to pass without special permission.
    The Stock Yards Company put down and own six railway tracks crossing Exchange avenue, the west track near the west line of the half section and the other five tracks east of said track with the usual distance between tracks. These tracks were in the possession of defendant, under a lease from the Stock Yards Company, and the Baltimore and Ohio Bail-road Company ran certain trains over said tracks, under an arrangement with defendant.
    Plaintiff was the driver of a city police patrol wagon. About 8 o’clock in the evening his wagon was called to take an injured man to his home, and in the discharge of his duty plaintiff drove west in Exchange avenue from Halsted street, intending to cross said railroad tracks. When the wagon reached the first through track from the east, it was struck by a Baltimore and Ohio engine going north, and in the collision one of plaintiff’s legs was so injured that amputation was necessary.
    The cause was submitted to the jury upon the first and fifth counts of the declaration and the plea of not guilty. The first count set up the facts above stated as to the leasing and operation of said railroad tracks, averred that there was in force an ordinance of the city of Chicago requiring the ringing of the bell of the engine at all streets and public crossings in the city, and another ordinance that provided that the bell of each locomotive engine should be rung continuously while running in that part of said city where the accident occurred; that the said Baltimore and Ohio ¡Railroad Company, in operating its engine in approaching and crossing said Exchange avenue, negligently, etc., failed to ring its bell, whereby plaintiff, while exercising ordinary care in driving over said tracks, was injured, etc.
    The fifth count contained many of the allegations of the first count, but counted upon the breach, of said company of the common law duty to operate its trains with due care, and alleged that said company so negligently, etc., ran its engine toward and across said highway that as a direct result of its negligence plaintiff, while exercising due care for his own safety, was struck and injured.
    Winston, Payne,, Strawn & Shaw, for appellant; Silas IT. Strawn and John D. Black, of counsel.
    James 0. Me Shane, for appellee.
   Mr. Presiding Justice Baker

delivered the opinion of the court.

We think that the plaintiff was not a mere licensee to whom defendant owed no duty except to refrain from purposely or wantonly injuring him. The Stock Yards Company had permitted the public for forty years to use Exchange avenue as a public highway with certain restrictions which did not include or affect the use plaintiff was making of that avenue when he was injured. It constructed and for many years operated a railroad which crossed that avenue. Great numbers of pedestrians passed along said avenue over said tracks at all hours of the day and night, and certain classes of vehicles, including police patrol wagons, were permitted to pass along said avenue and over said tracks at any hour of the night. We think that the Stock Yards Company when it, at the same time, permitted the public to use Exchange avenue as a public highway and ran engines and trains upon its railroad tracks across said avenue, was bound to use reasonable care in the operation of its engines and trains in approaching and crossing over said avenue, to avoid injuring persons who were passing along said avenue over said tracks. When it leased its railroad to defendant the same duty rested upon defendant. Defendant permitted the Baltimore and Ohio ¡Railroad Company to run trains over said railroad, and its liability in this case is the same as it would be if the engine that struck plaintiff’s wagon had been run by its own servants.

The ordinances set up in the first count of the declaration and proved on the trial are as follows: “The bell of each locomotive engine shall be rung continuously while running within said city except” (in certain territory not including the crossing in question).

“Every engineer, fireman or employee of any person, firm, company or corporation owning or operating a railroad within the limits of the city of Chicago, in charge of any engine, shall be required to ring the bell of the engine at all streets and public crossings within the corporate limits of the city of Chicago.”

That the ordinance requiring the ringing of a bell on an engine running within the limits of the city is valid was decided in I. C. R. R. Co. v. Gilbert, 157 Ill., 354, where it was said, p. 367, that a compliance with such ordinance, “would tend to give notice of the approach of an engine on the track, and notice of its approach would tend to the protection of persons on or crossing such track.”

In P., C., C. & St. L. Ry. Co. v. Robson, 204 Ill., 254, the question was presented whether an ordinance prohibiting blowing off steam within a certain distance, “of any street or railroad crossing” applied to an engine crossing Laurel street, a road or way in the same half section of land owned by the Stock Yards Company, which street had not been dedicated as a street, but was used by all of the employees of the Stock Yards Company and those who frequented the stock yards on business, and it was said, p. 263: “The ordinance does not use the words ‘public street,’ but the word ‘street’ * * *. Although it may have been in a certain sense a private street, the traffic on it was so great that it was necessary to maintain a flagman at the crossing in question. Whether or not it was a public street in such a sense, as to make the ordinance applicable to it, was a question of fact largely for the jury. (Pittsburg, Ft. Wayne & Chicago Ry. Co. v. Callaghan, 157 Ill., 406; Chicago & Alton Ry. Co. v. O’Neil, 172 Ill., 527.) The ordinance was designed for the protection of life and jtroperty, and was as necessary at the street in question, whether public or private, as it was at any other street or crossing having the same amount of traffic.”

The ordinance first quoted by its terms applied to the engine in question. Whether the other ordinance applied was, under the rule announced in the case last cited, a question for the jury. Upon the question whether the bell on the engine was ringing as the engine approached the crossing, the evidence was conflicting and we cannot say that the finding of the jury, implied from the verdict, that the bell was not ringing, is not sustained by the evidence.

The question whether the defendant was guilty of negligence which directly contributed to plaintiff’s injury was, we think, under the evidence, a question of fact for the jury upon which their verdict must be held conclusive.

Exchange avenue is thirty to forty feet wide. East of the tracks on the south side of the avenue was, at time of the accident, a two story building called the Government building. Erom the northwest corner of this building to the east rail of the track on which the engine in question ran was, according to the testimony of plaintiff, who made his measurements after the Government building had been removed, fourteen feet and eight inches, and according to the testimony of a witness called by defendant who testified that he had made his measurements the day after the accident, nineteen feet two inches. West of the southwest corner of the Government building there were five tracks which bore slightly to the west as they ran north. About twenty-five feet south of Exchange avenue a lead track left the east main track and bore slightly to the east as it ran north. The engine in question ran across Exchange avenue on said east main track. At the south line of said avenue one rail of said lead track was east of the east rail of the east main track, and at the north line of said avenue both rails of said lead track were east of the east main track. At a point about twenty-five feet north of Exchange avenue a track left said east main track, curving to the west as it ran north and running into the track next west about one hundred and sixty feet north of Exchange avenue. On the north side of said avenue was a shed, the west side of which was about ten feet east of the east rail of said lead track. Partly in front of this shed in Exchange avenue was a flagman’s shanty about eight feet square. The east side of said shanty was directly north of the west end of the Government building. As plaintiff approached the crossing his view to the south was obstructed by the Government building and his view to the north by the shed and the flagman’s shanty.

Plaintiff testified that he had often passed over the crossing at night as well as in the daytime; that he knew how the tracks ran; that he had often seen trains pass over the crossing and knew this was likely to occur at any time ; that be was driving at a fast walk near the middle of Exchange avenue and fifteen or twenty feet north from the Government building: “when I was approaching the tracks I was looking and listening”; that he heard no bell or train; that he looked south as far as he could when he was six to ten feet east of the west line of the Government building and neither saw nor heard anything; that he then looked to the north and again to the south when his horses were about on the track, and then saw the train coming from the south, but it was so close to him that it immediately struck his wagon and he was thrown out and injured.

The only direct testimony as to the speed of the train was that it was running at the rate of five or six miles per hour, but appellee’s contention, based upon circumstantial evidence, is that its speed was ten miles per hour.

The conclusion reached by the majority of the court is, that the plaintiff, in driving upon the track in question, under the circumstances shown by the evidence and with his knowledge of the tracks and of the fact that a train was liable to come on one of said tracks from either direction at any time, was guilty of such contributory negligence as bars his right to recover for injuries he sustained.

In this conclusion the writer of this opinion is unable to concur. No doubt the engine might have been seen by plaintiff before he drove on the track and seen in time to permit him to stop his team before it went upon the track. But it is not contended that this fact alone is conclusive upon the question of his contributory negligence. In Chicago City Ry. Co. v. Fennimore, 199 Ill., 9, it was said, p. 16: “It has often been held by this court that it is not evidence of negligence per se that a person does not stop and look before crossing the track of a railroad, and it has been held a question for the jury whether the failure to stop and look is or is not negligence.”

That where a plaintiff has judgment for injuries sustained by him by being, struck by a car or engine and such judgment is brought before this court for review, the facts and circumstances shown by the evidence in the record may so clearly show that the failure of the plaintiff to look in the direction from which the car or engine was coming and to see such car or engine before going upon the track, constituted and was such contributory negligence on his part as to make it the duty of the court, notwithstanding the verdict and judgment, to find as a fact that the plaintiff was guilty of contributory negligence, has been often held by this court and the other Appellate Courts of this State. The question in such a case is, whether the conclusion of the jury, that the plaintiff exercised reasonable care for his own safety, is one they might fairly and reasonably reach from the evidence.

In this case, so far as is shown by the evidence, a train was liable to cross at any time from either direction on any track; was as liable to come from the north on the lead track, the east rail of which was ten feet west of the shed and about six feet west of the flagman’s shanty, as from the south on the east main track, the track on which it came, the east rail of which, according to appellant’s contention, was nineteen feet and two inches west of the Government building and was twelve or fourteen feet west of the flagman’s shanty. When plaintiff was far enough west so that his view of the lead track to the north was unobstructed by the flagman’s shanty, he again looked to the south, but his team was then going upon the east main track and the engine was so near that the collision could not be avoided. He testified that he heard no bell and, as has been said, the jury was warranted in finding from the evidence that the engine bell was not ringing. Plaintiff testified that he looked south when he was from six to ten feet east of the west end of the Government building; the west, end of the flagman’s shanty was eight feet west of the west end of the Government building, and plaintiff, according to his testimony, drove from fourteen to eighteen feet from the time he first looked to the southward until he looked in that direction a second time. Whether, with the bell on the engine not ringing, it was negligence on his part not to look to the southward between the first time he looked and the second time he looked in that direction was, in the opinion of the writer, a question for the jury upon which their verdict should he held conclusive.

The judgment of the Superior Court will he reversed with a finding of facts.

Reversed with a finding of facts.