text:
    Sarah Pinneo et al. v. Francis Goodspeed et al.

      Former Adjudication — Restatement of Account — Administration—Mortgage — Subrogation—Interest—Insurance.
    Upon appeal from a decree based on a restatement of an account in a case remanded by the Supreme Court for that purpose, the principal parties being a divorced wife, to whom had been decreed the title of a tract of land fraudulently obtained from her by her former husband, and the widow of the latter, it is held: That the purchaser of an outstanding mortgage as trustee for the widow was not bound by the former proceedings; that the manner of estimating the rents, whether according to the reasonable value or actual receipts, was open for the court below to adopt any legal method; that it was proper to fix the rental value on the basis of actual receipts, which is all the executor and executrix, the widow, in possession under the mortgage, should be required to pay; that the divorced wife was properly charged with certain sums paid to her on account of alimony in the course of administration from the rents of said land, said payments having been made prior to the establishment of her title to the land and while the estate was believed to be solvent; that she should not be allowed a dividend of forty per cent, on the amount secured by said mortgage merely because such dividend has been paid through mistake on the other seventh-class claims against the estate; that the widow is entitled to be subrogated to all the rights of the original holders of the note and mortgage, she having purchased them with her own funds; that the divorced wife is not entitled to the benefit of the small discount allowed; and that she is chargeable with ten per cent, interest on the principal of said note until the date of settlement, and with the amount paid for insurance.
    [Opinion filed December 11, 1886.]
    Appeal from the Circuit Court of Will County; the Hon. Charles Blanchard, Judge, presiding.
    Statement by Lacey, J. This is the same case which will be found reported in 87 Ill. 290, and also again in 104 Ill. 184, and which opinions are r^'" srred to for a full statement of the -facts.
    It will not be necessary to again recite the facts in the case further than to state in brief the nature of the supplemental cross-bill. When the case was taken back to the Circuit Court in pursuance to the remanding order, and the supplemental cross-bill of appellants, which had been dismissed by the former decree, and for which dismissal in part the decree was reversed, was duly eliminated and amended as ordered by the Supreme Court, it was refiled February 12,1884. The amended supplemental cross-bill after being refiled contained the same allegations in substance that it did at the time it was stricken from the files, as will appear by reference to it in the opinion of the Supreme Court (104 Ill. 184). It averred that Orange T. Fargo, November 3,1874, died possessed of the 300 acres of land in question, holding it as a tenant by the courtesy at the time of his death subject to the reversionary interest of his former wife, appellant; that he gave directions in his will as shown by the record that the executor and executrix of the will, Francis Goodspeei and Elizabeth E. Fargo, administered the estate under the will, rented the said farm and received the rents from the time of their appointment and from Fargo’s death; that the account of rents ought to be taken according to said opinion; that a large amount of other property, real and personal, belonged to said estate; refers to the proceedings of the County Court for a partition of such personal estate received; * * * that Elizabeth Fargo purchased the §2,000 mortgage given by Fargo in his life to Mrs. Haff for the extinguishment of her dower, and for which deceased had given his note and appellant Sarah and he had given their joint mortgage on the said land to secure with money belonging to the estate, and that she ought to satisfy it; that in violation of her duty as executrix she purchased it and ought not to be allowed to profit by it, and interest should stop from the day of purchase; that Augustus M. Knox had purchased it for her and held it as her trustee, and had commenced action on said note and mortgage, and had obtained judgment in said court, and it ought to be consolidated with this suit, and he perpetually enjoined from foreclosing the mortgage. That a large amount was due her on decree in the Cook County Circuit Court (alimony decree in divorce proccedings) ; and that the executors should have paid her the ratable proportion of Fargo’s estate. Then follows prayer for full, true and particular answer upon their several corporate oaths to each allegation, with several intern gatories in regard to the amount óf rents on said farm received by him, and this one: “Do not the whole amount of rents of said farm received amount to the sum of $3,975.35, and were-not the rents of the farm received as the property of the estate, and does he not still hold them as assets ? Why were other debts paid in preference to the mortgage ? On what account was the $1,125 paid by said Goodspeed to orator (this was on her alimony)?
    Answer of Goodspeed under oath, completely and specifically answering as to all tli e charges and questions. It shows that he and Mrs. Elizabeth Fargo were appointed executor and executrix, October, 1877, and continued to act and collect rents till January term, 1879, of Will County Circuit Court, when a receiver was’ appointed; shows net amount of rent received of $3,549.18; after paying $391.92 for taxes, and $34.25 for insurance on buildings on the land in question. That twenty per cent, of this amount should be deducted for rent of an eighty-acre tract of land other than the 300 acres, and that this eighty acres was of like rental value with the 300 acres. And making other and complete answer not necessary fully to recite. Mrs. Elizabeth Fargo and Knox also answered, all under oath. ¡Replications were filed by leave of the court, after striking from the files .exceptions to answer of Goodspeed for the reason that they were filed without leave, and that appellant had failed to comply with the order of court to reply, which was still in force, and time limited by the rule of court had expired.
    The cause was then referred to the master by the court, who in the order of reference was required to state an account between the executors and the estate of said deceased from the answers and exhibits of the said executors to said supplemental cross-bill, filed February 12, 1884, and that he charge the total amount of assets that came into their possession, 1st, from personal estate, including interest exclusive of rent; 2d, rents from real estate, exclusive of said 300 acres, and money arising from sale of real estate to pay debts, if any; that he credit them with all sums paid out by such executors exclusive of sums paid on account of said 300 acres, etc.; to find aggregate amount of claims allowed against the estate of each class, and of payment on claims, and on each class, when, and rate per cent, paid, and total amount unpaid in each class, etc.
    The master’s report was presented, and decree rendered in accordance. The decree ordered that the executors pay said Knox or to E. M. Fargo, §1,629.07, to be applied in her decree of foreclosure on the 300-acre tract of date December 7, 1880; that complainant in cross-bill, Mrs. Pinneo, pay to same parties §2,445.38, with six per cent, interest from December 7, 1880, in thirty days; that in default, the master sell the 300 acres, or so much as necessary to pay said last mentioned sum, the balance due on the decree of December 7, 1880. From this decree this appeal is taken.
    Mr. B. E. Barber, for appellants.
    The executors were trustees under the will and in the discharge of the duties of their office. As such they were not at liberty to deal in the matter or things with which they were charged to their personal advantage or profit. Thorp v. McCullom, 1 Gilm. 614, and cases cited; R. & M. R. R. Co. v. F. L. & T. Co., 49 Ill. 331; Ogden v. Larrabee, 57 Ill. 389; Nelson v. Hayner, 66 Ill. 487; G., C. & S. R. R. Co. v. Kelly, 77 Ill. 426.
    The executors were trustees to pay the note and mortgage in controversy, not alone under the duties of their office, but especially charged thereto by the will and by the obligation of the testator in said agreement of October 25,1870. Being trustees to pay that note, they were not at liberty to purchase it to their personal 'advantage or profit. Sarah Fargo, now Pinneo, was the cesíui que trust for the faithful discharge by the trustees of their duty to pay that note. Bnder this relationship of the trustees and cestui que trust, on April 15, 1875, the executor purchased said note and mortgage of the payee and mortgagee more than four years after their maturity for the sum of $2,800, when at same day there was due and unpaid on the note $2,944.95, thus getting an abatement by the payee of $144.95 from the face of the note.
    The executrix paid $2,840 for the note and mortgage. Thus in the purchase the executors took and received $40, and the executrix $104.95, as their respective personal profit in the item of the purchase. The full sum of $2,944.95, from said date, of purchase, was carried into the account stated by the master and into the final decree. If the purchase was made with funds which should be accounted assets of the estate, then it was a payment and satisfaction of the note and mortgage.
    If made with funds which were personal funds of the trustees, then it can not he, to their personal profit, gain or-ad vantage. Between maker and payee the note was a ten percent. obligation. In this purchase by trustees to the use of cestui gue trust, a new phase of the obligation is created as between the purchasers, being trustees, and cestui que trust, and only equitable remuneration to trustee as between trustee and beneficiary could be thereafter charged and enforced. The trustees and their trustee, Knox, come into a court of equity to enforce collection of the note out of Sarah Pinneo’s land. They must do equity in every particular connected with it.
    The trustees, said executors, were the agents of the estate and of Sarah Fargo (now Mrs. Pinneo), for paying that note and mortgage. If, in making the payment or in any way adjusting it with the payee, they obtained an abatement of the sum due upon the note, then the beneficiaries and not themselves are entitled to the benefit of the abatement. Phelps v. Feeder, 39 Ill. 172.
    The order of reference to the master, of October 13, 1885, was restrictive in all its directions, was in conflict with the opinion and directions of the Supreme Court in this case, and with the pleading and evidence herein. The Cook County Circuit Court decree provided for the payment of $500 annually, in quarterly payments of $125, “during her natural life,” by said Orange to said Sarah.

      There is no contingency in that decree upon the life of Orange. The period of the time of payment can only be determined by the death of Sarah.
    Under the decision of the Supreme Court in Pinneo v. Goodspeed, 104 Ill. 184, 198, it was the duty of the executors to make payment as provided by the Cook County Circuit Court decree; and yet those payments by the executors to Sarah are now charged to her as and for rents and profits of her lands, and as such rents are carried into the master’s report and final decree to the sum of $1,125, notwithstanding they were explicitly paid to her as and for her alimony, “ as provided for in divorce proceedings” — they are now wholly repudiated as payments under said divorce decree.
    The executors were advised by the Supreme Court of the ownership of the rents and profits, by its opinion at the September term, 1877 (87 Ill. 290). And yet they persisted in the dividend of forty per cent, to seventh-class claims, and abide by it yet.
    And with that dividend of forty per cent, paid on all seventh-class claims (except said mortgage claims) was paid 100 per cent, of the seventh-class claim of one Cyrus Coplantz; and the executors abide by those payments still, notwithstanding the Supreme Court direct that “ if the estate is insolvent, as is claimed by the executors, this debt must be paid pro rata with other debts of the same class. If other creditors have already received more than their shares upon a pro rata basis, then a sufficient amount should be paid on this claim to place it upon the same footing with other claims of the same class.” Pinneo v. Goodspeed, 104 Ill. 184, 196.
    Tet nothing of that kind has been done for the mortgage claim, and the partiality of the executors as between claims of the seventh class still remains uncured, even though the rents and profits which belonged to Mrs. Pinneo composed a part of the fund from which that forty per cent, dividend was paid; and that, too, when the executors were wrongdoers in taking the possession of her lands and renting the same and receiving the rents thereof, and as tort feasors are chargeable according to the rule of the law in torts.

      She was entitled to receive the possession of her lands as soon as Fargo died, and thereafter to manage them and receive the rents.
    Messrs. Gabnsey & Knox, for appellees.
    The opinion of the Supreme Court must he read in connection with the pleadings as they stood at the time of the hearing. Griggs v. Gear, 3 Gil. 2; Burkett v. Wabash R’y, 98 Ill. 205, 213; Pinneo v. Goodspeed, 104 Ill. 184, 194, 195; Marvin v. Collins, 98 Ill. 510, 517.
    The doctrine of res adjudieata, here invoked, does not at all apply. A judgment is conclusive upon the parties to it, only in respect to the grounds covered by it, and the law and facts necessary to uphold it. Bigelow on Estoppel, 22; Davis v. Kennedy, 105 Ill. 300, 306.
    A judgment to be binding must be about the same subject-matter as well as between the same parties. Miller v. McManus, 57 Ill. 126; Williams v. Walker, 62 Ill. 517; Jessup v. Jessup, 102 Ill. 480, 486; Kingsbury v. Buckner, 70 Ill. 514; Russell v. Epler, 10 Ill. App. 304.
    And to determine the question the pleadings must be looked to to see whether the matters insisted on as res adjudieata could have been inquired into. Bentley v. O’Bryan, 111 Ill. 53, 60.
    The executors took the estate as they found it, and were bound to endeavor to fairly uphold it in the condition it was in. They are only chargeable with the amount of rent actually received, they acting in good faith and with reasonable pru.dence and diligence. McConnell v. Holobush, 11 Ill. 61; Mosier v. Morton, 83 Ill. 519; Clark v. Finlon, 90 Ill. 245.
    The credit to the executors of §1,125, paid by them to Mrs. Pinneo, was proper. If it was alimony it ceased on her hus-„ band’s death. Lockridge v. Lockridge, 3 Dana, 28; S. C., 28 Am. Dec. 52; Lenahan v. O’Keefe, 107 Ill. 620; O’Hagan v. O’Hagan, 4 Clarke, 509. If it was a payment under Fargo’s will the fund out of which it was to ,be paid, by the terms of the will, was destroyed by the case of Pinneo v. Goodspeed, 104 Ill. 189. The full amount of the mortgage must be paid by somebody; the purchase by Mrs. Fargo, with her own funds, subrogated her to Mrs. Hafi’s (the mortgagee’s) rights. King v. Cushman, 41 Ill. 31, 38; O’Halloran v. Fitzgerald, 71 Ill. 53, 58; Stinson v. Anderson, 96 Ill. 373. And to collect ten per cent, interest on it to the date of foreclosure. Condict v. Flower, 106 Ill. 105, 117.
    Having actually no funds to pay with, the executors are not obliged to pay anything on this mortgage, even if they did by mistake make a dividend on c’aims of the seventh class in Fargo’s estate. Brandon v. Brown, 106 Ill. 519.
    The Circuit Court can not in this case adjudicate and settle Fargo’s estate. It can only determine that, as to seventh-class claims, the estate is insolvent, and this it has done.
   Lacey, J.

The appellants ask the reversal of the decree for the following reasons: The court below erred in charging against her in the accounts^ of rents and profits coming to her on the 300-acre tract of land, certain payments made by the executor Goodspeed, to her, of sums o f money in the aggregate amounting to §1,125, which had been receipted for by her as payments on her life decree of §500 per annum allowed in the divorce proceedings against her late husband, Orange Fargo; for not allowing the abatement of §144.95 which Elizabeth M. Fargo and Goodspeed got deducted from the amount of accrued interest on the said mortgage against the 300 acres of appellants’ land, at the time they purchased it of Mrs. Haff; and for allowing ten per cent, interest to Mrs. E. M. Fargo on her note secured by the same mortgage, from its purchase to December 10, 1880; and for not allowing her rents to her on the said 300 acres of land while managed by the executors at the same rate allowed by the former master, upon which the decree was based, reversed in part by the Supreme Court, reported in 104 Ill. 184, to wit, at §3 per acre per annum, instead of on the basis of the actual receipts, as was done by the master at this hearing, under the direction of the court; and for not crediting this note with a dividend of forty per cent., the same as had been paid by the executors on other seventh-class claims. Lastly §34 was wrongfully allowed to Goodspeed, executor, for money paid as insurance on the buildings on the 300-acre tract of land while he managed it.

These are the only objections urged against the justness of the decree.

It will be seen that the supplemental cross-bill on which this trial was had was the only one to which Knox was a party, and of which the Supreme Court say, “most of these complications and changes of interest accrued after the filing of the original and cross-bill, and we are of the opinion it was proper to bring all the parties interested in the settlement of the account before the court, and this could only be done by a supplemental billand they say Knox “ was not bound by the statement of the account or any of the proceedings.”

The scope of the supplemental cross-bill was sufficiently broad to require an answer from the executor, Goodspeed, and the executrix, Mrs. Fargo, and Knox, as to the amount of the rents received. In fact the executors were directly questioned as to the amount, which Goodspeed answered in full, specifically showing the exact amount received and the amount paid out for taxes and insurance. It is strenuously insisted by counsel for appellants that the question of the manner of estimating the rent, and in fact the amount of it, was a matter fully settled by the Supreme Court in its decision and remanding order; that the entire question was res adjudioata. If what the Supreme Court says is correct, that Knox was not bound by the statement of account or any of the proceedings, it can not be that the court would undertake to conclude Knox by forever settling the account before he had had an opportunity to be heard. In fact the court did not do so, nor attempt to do so. It says that “the statement of the account by the master is not sufficiently specific or comprehensive, nor does it seem to have been prepared with reference to the legal rights of the parties affected by it.” In the order of the court reversing the case, it is said: “ So much of the decree, therefore, as directs a dismissal of the supplemental cross-bill and approves of the report of the master, and directs the accrued rents and profits of the premises to be paid to Knox, is reversed, but is in all other respects except so far as it may be modified by what we have already said, affirmed, and the canse .remanded with directions to the court below to refer the cause again to the master for the purpose of restating the account, and for other proceedings in conformity with the views here expressed.”

There was no order in the opinion or decree of reversal to state the account on the same evidence. The master’s former report and statement of account was nullified and a new account was ordered, and on this reversed report the decree of the Circuit and the opinion of the Supreme Court was based. There was no order not to offer new evidence before the master, and from the fact that an issue was to be formed on the allegations of the supplemental cross-bill it was more than probable new evidence would be taken, as Knox was not bound by the former proceedings. Nowhere in the opinion is the manner of estimating the rent indicated, whether according to the reasonable value of the actual receipts. This question not having been settled it was open for the court below to adopt any legal method it desired, and where there is proof as to what the actual receipts were, it-is the legal method to fix the rental value on such basis. McConnell v. Holobush, 11 Ill. 61; Mosier v. Norton, 83 Ill. 519. The Supreme Court say, 104 Ill. 195 : “ The mortgage having been assigned to Good-speed for the use of Mrs. Fargo on the 14th April, 1875, she should from thence until the appointment of the receiver be treated as mortgagee in possession, and should account for the rents and profits accordingly, and they should be applied from year to year as they accrue, less the. taxes, necessary repairs, etc., upon the mortgage indebtedness.” So there can be no dispute as to what position Mrs. Fargo and her agent, Goodspeed, occupied in the eyes of the law after the latter purchased the mortgage. In the master’s report the rents were accounted for which accrued on the said land of Mrs. Pinneo from the time of the death of her late husband, Fargo, in 1874, to the time the receiver was appointed, in 1879, on the basis of what was actually received. This was a correct legal basis, and all in equity and good conscience the executor and executrix, or Mrs. Fargo, in possession under the mortgage, ought to he required to pay; and the court helow, not having been concluded by any action of the Supreme Court in the manner of computing the accrued rents, was not in error in ordering the master to compute it on the basis adopted, and as upon the sworn ans wers o.f the executor and executrix the master was justified in doing. There is no evidence appearing in this record, or at least none is shown by the abstract, to show what evidence was before the master on the former hearing, and we therefore can not determine whether there was sufficient basis in that evidence to justify the master in -the present case in fixing the rent on the basis of the actual receipt or not, but certainly the sworn answers were sufficient. We therefore hold that the point made by counsel for appellants under this head is not well taken.

The two following objections, raised by the appellants’ counsel, we will consider together, to wit: The charging against her in her rent account by the executors the sum of §1,125, paid to her at different times between May 31, 1875, and May 21, 1877, as on her alimony accoxmt on the Chicago decree; and the other objection that the executors should have paid forty per cent, dividend on the decree of foreclosxxre in favor of Knox, against the said 300-acre tract of land, so that such deex-ee should be reduced to that extent, the estate of Fargo being bound for it, and the said amount of forty percent. having been paid by the executors on some other seventh-class claims. As the two objections are clearly allied, and the reasons for allowing or rejecting them being nearly identical^ they can more conveniently be considered together. It will appear, upon examination of the foregoing opinions of the Supreme Court in this case and the evidence herein, that at the time of the death of the said Orange T. Fargo, November, 1874, this suit was pending against him in the Supreme Court on the appeal of his former wife, one of the appellants herein, the Circuit Court having rendered a decree in his favor on his original bill. The cause xvas continued in the Supreme Court till after the September term, 1877, when an opinion was filed in the Supreme Court, in the case reversing the decree of the Circuit Court and holding that Mrs. Pinneo was the rightful owner of the 300 acres of land in question. The executrix thereupon filed a petition for a rehearing which was afterward, in Maicli, 1878, denied.

Fargo’s will provided that if the appellant Sarah Fargo lived, the farm in Troy (the 300 acres in question) could not; be sold, and the quarterly installments to her must be paid from the rents of the said farm; but if she should die, then the said farm may be sold at the option of the executors of the will as in their judgment should seem best. The proceeds of the sale of the said farm and all such other property as the testator should die possessed of was to be divided equally among his four children or as many of them as shall be living.

The executor and executrix undertook the work of executing the provisions of the will and during several years pending the first appeal in the Supreme Court proceeded to collect the rents of the land in question and pay the appellant her quarterly installments out of them, and to settle up the affairs of the estate generally under the orders of the County Court. The §1,125 in question was paid out of those rents as the will directed, and a considerable sum of money remained over, arising from the rents. The estate of Fargo aside from this tract of land was hopelessly insolvent — with it there was plenty of assets to pay all the debts. There was a large amount of claims of a class or classes that took precedence of the seventh-class claims and was entitled to be first paid, allowed against the estate, and also a large amount of seventh class was allowed; the mortgage in question, and also the Chicago so-called alimony decree of appellant, Mrs. -Pinneo, as claims against the estate of Orange T. Fargo, were only entitled to be allowed as seventh class.

In March, 1876, the executor, Goodspeed, having collected a large amount of assets and received rents from the rea,ltyi obtained an order from the County Court to pay a dividend of forty per cent, on the seventh-class claims, and made such payments on certain of them to the amount of §1,389.07, which the executors reported to the County Court, which was approved; but no portion was paid on the Chicago decree other than the §1,125, and none on the mortgage debt.

The answers of appellees clearly show that without the rents accruing on the tract of land recovered by appellant from the estate there were not enough assets to pay the proper costs and charges against it, and the first, second, third, fifth and sixth-class claims, and the exiDenses of administration, and that there was no fund to pay any part of the said seventh-class claims. The land in question was recovered by Mrs. Pinneo, together with all the rents and profits arising from it from the date of Orange T. Fargo’s death, and the two executors have been required to account for it to her in the accounting. There is no doubt that in' all these transactions the executors acted in- the utmost good faith, believing that the decree of the Circuit Court confirming the title in the land to the deceased Fargo would be sustained by the Supreme Court; but it turned out that they were mistaken. In case they are net able to recover the amount of money paid out on the seventh-class claims from the creditors to whom it was paid, they will be compelled, personally, to stand the loss. There certainly can be no equity in any other seventh-class creditor who has not .received such dividend, demanding it after the true state of the case has been developed.

It is insisted that because such dividend has been paid to a portion of that class of creditors in order to create equality, others should receive the same. This would be a good rule where there is as much or more equity in establishing an equality than in not doing so. It could not be just that appellees, who paid this money out to a class of creditors not entitled to it through mistake and misconception, should be compelled to still pay to others something which, but for such mistake, no one would contend they ought to be required to do. Mor could any technical rule against going behind the executors’ report to the County Court, which shows that they had this money in their hands belonging to the estate, avail. appellant. That was made under the same mistake and was not in fact true. Any reasoning that would establish a liability in law against appellees in favor of the seventh-class creditors not having received such dividend would establish a rule that would do great injustice, which it is the boast of the law it never does. Brandon v. Brown, 106 Ill. 519, establishes a rule broad enough to cover this case. The administrator’s report in that case was not held so sacred that the administrator was held bound by it when circumstances were such as to make it unjust to bind him by it; this is in a court of equity where the appellant is asking equity, and she ought to be required to do equity. The appellant has taken to herself by force of the law the identical assets out of which appellees expected to pay their seventh-class claims, leaving nothing more in their hands, and ought to be content.

For the same reason the appellant was properly charged with the §1,825. It was received from the rents of this land which she had a right to claim as her own, and has received it; but in paying it to her the appellées were under the same mistaken views as to their rights or their ability to pay as they were in paying 'out the forty per cent, dividend, and took the receipts as though it were paid on the alimony decree.

Admitting that the alimony decree did not cease at the death of Fargo, a point we do not decide, it was only a seventh-class claim, and not entitled to any payment, as we have shown. As appellant Pinneo actually received the money, and equity requires that it should be charged to the rent account, it ought to be so done, and the court below in doing so did pot err.

The only remaining errors assigned are the ones arising out' of the court below allowing to Mrs. E. M. Fargo, or to Knox, the full amount of the note and ten per cent, interest, which she, through Goodspeed, purchased of Mrs. Half, and the §34 item for the insurance of the buildings on the land in question.

That the appellee, Mrs. Fargo, is entitled to be subrogated to all the rights of the original holders of the note and mortgage there can be no question. Not having any funds in her hands belonging to the estate of Orange T. Fargo applicable to the payment of seventh-class claims, such as this was, she furnished her owm money and purchased in the mortgage debt and relieved the estate of the pressure. The estate was notin the least injured by .this, and should be required to pay to appellee the same as it would have been obliged to do in ease she had not purchased it. There was some $944 accrued interest on the note at the time of its purchase and the note of $2,000 and this interest was purchased in for $2,800. The note has run for over ten years since that time and before final adjustment, the $800 drawing no interest whatever, interest being only allowed on the principal. It would not be inequitable, but highly equitable, to take no notice of the small discount, hut to allow the entire interest due just as it was when purchased, and the principal sum and ten per cent, on that sum up to the time of settlement. King v. Cushman, 41 Ill. 31, 38; O’Halloran v. Fitzgerald, 71 Ill. 53, 58; Stinson v. Anderson, 96 Ill. 373; Condict v. Flower, 106 Ill. 105, 117.

Another consideration is that as to Mrs. Pinneo, the appellee, Mrs. Fargo, by. reason of being the executrix of the estate of Orange T. Fargo, deceased, never stood in the relationship of trustee or in any fiduciary relation. And as the executors never had any money, as it appears, to pay any por.tionof said note as a se\ euth-elass claim against the estate, she was under no duty to pay any portion of the note at the time she purchased it, and as the matter was indifferent, so far as the estate was concerned, whether the amount of the note was large or small, Mrs. Pinneo.ought not to claim any discount through any supposed equities of the estate.

We see no error in the computation on said note and interest thereon.

As to the small item of $34 for insurance, we think it was properly allowed. The appellant assumes that the insurance was not taken for the benefit of the inheritance; but for the executors; but we think she is not justified in this, for Good-speed’s answer shows this insurance was paid out of the rent for the benefit of the farm, and under such circumstances the insurance money in case of loss would be in equity payable to the owner of the title, whoever he or she might be. As far as we can determine from the answer, we see no error in that particular. We have noticed all the objections we'regard of any importance, and think the decree is eminently just to all parties and in accordance with the opinion of the Supreme Court and therefore the decree of the court below is in all things affirmed.

Deoree affirmed.


source: Caselaw Access Project

author: Lacey, J.

license: Public Domain

text:
    Atlas S. Stout et al. v. Daniel Sower et al.

      Mechamos Lien — How Construed — Detached Premises not within— Note Payable “ in Twelve Months ” — Days of Grace — Lien Attaches from Date of Contract and is Superior to Subsequent Mortgage — Extension of Time — Jurisdiction of Circuit Court after Assignment of Owner of Premises — Destruction of Building.

    1. While the, Mechanics’ Lien Act should be strictly construed, its construction should not be so illiberal and artificial as to impair the remedy thereby created. Thus the statute should not be construed to exclude a contract providing for the giving of a note payable “ in twelve months ” on the ground that such contract necessarily extends the time of payment, including three days of grace, beyond one year.
    2. The lien for material and labor to be expended on a lot is fixed by the contract and attaches from its date, and it is superior to a mortgage lien acquired subsequently and before the labor and material are so expended.
    3. An extension of time for the completion of the work, or of the time of payment, does not forfeit the lien as against the claim of the mortgagee where the petition is filed within six months from the expiration of the time of payment, fixed by the original contract.
    4. The Circuit Court has jurisdiction to enforce a mechanics’ lien upon premises, the owner of which has made an assignment, where the lien is for a larger sum than the value of the premises and the title of the assignee extends only to the equity of redemption.
    5. In the case presented, it is held: That the lien does not extend to certain lots situated across a street from the lot on which stood the mill, in connection with which the lien arose, although said lots were used to some extent in operating the mill.
    The cases of Freydendall v. Baldwin, 103 Ill. 325, and Hanchett v. Waterbury, 115 Ill. 220, distinguished on the question of jurisdiction.
    [Opinion filed December 11, 1886.]

      Appeal from the Circuit Court of Bureau County; the Hon. Dobrencb Dibell, Judge, presiding.
    Statement by Lacey, J." This was a petition to enforce a mechanic’s lien, commenced in the Circuit Court by appellants, against Sower Brothers, the appellees, to recover the sum of $1,600, balance for remodeling and changing the mill of Sower Brothers into a roller mill, situate on lot 29, in Stoner’s Addition to the Town of Princeton, Illinois, and to subject parts of lots 7 and 8, in subdivision of lot 13 of Stoner’s first addition to Princeton, which joined on the south the said lot 29 to payment of said sum.
    The petition was filed March 13, 1885, and it appears from the petition, answers and evidence that on the 30'th of June, 1883, the appellants and Sower Brothers gntered into a written contract by which the appellants were to remodel and change the latter’s mill into a roller mill, they furnishing the material and wright work and to complete the mill, and appellants were to have the right to use all the old shafting, gearing and pulleys, belts, buckets and lumber that might be found suitable to the work in the construction, of the roller mill. The mill was warranted to be first class, etc. The mill was to 'be completed and started in successful running order by the 15th September, 1883, consideration $6,600, $2,500 to be paid by Sower Brothers on July.10,1883, and $2,500 when the-mill was finished and started to successful and satisfactory results. For the balance, $1,600, the Sower Brothers agreed to give their notes, bearing seven per cent, interest, payable-in equal payments, payable in six, nine and twelve months from the date of starting the mill. Sower Brothers were to take out all the old machinery and put the building in proper shape to receive the new work, and send such old machinery as might be necessary to the shop of Stewart, Mills & Temple, to Dayton, O., to be refitted, and to pay all freight and deliver the machinery in the mill.
    Sower Brothers, at the time of making the contract, were the owners of said lot 29, on which was their mill, run for the purpose of manufacturing feed, and also the owners of parts of said lots 7 and 8, lying south of and contiguous to lot 29, on which the mill was situate, only separated by a street thirty feet wide, and purchased by Sower Brothers some years after the mill was built in order to have an open space south. These lots were used somewhat in connection with operating the mill for the purpose of having cribs on them to hold corn to be grbund in the mill for feed, and for the purpose of having a shed on it tu put delivery wagon, horses and buggies while working at the mill. These lots are claimed to be part of the mill property, and subject to the lien, but this is objected to by appellees.
    All of the material and labor which had been furnished by appellants was paid for by Sower Brothers before the filing of the petition, save the last §1,600. There was some delay on the part of appellants in completing the contract, and instead of finishing the work by September 15, 1883, it was not completed and finished till the 15th of October following. This delay is charged by appellants to be on account of the fault of Sower Brothers in not shipping the old material in time for appellants to refit it and return it in time to fill their contract; but this is denied by Sower Brothers, who claim that it was finished in time. It is hard to tell who is right, but probably it was somewhat the fault of each, and as we do not regard it as material we will not notice the question further.
    It is certain, however, that Sower Brothers did not attempt to take advantage of the delay, but accepted the mill and gave their notes, dated November 1, 1883 due in six, nine and twelve months from date, in the manner provided in the contract except as to date. It appears that the notes were not taken in satisfaction of the appellants’ claim, and are offered to be surrendered. In April, 1884, the mill was consumed by fire, and the said Sower Brothers becoming insolvent made a deed of assignment to one Eugene 0. Bates, as assignee, in due form of law under the Insolvent Debtor’s Act of 1877, of all their property and effects, for the benefit of their creditors; and said Bates accepted the trust and took possession of the assigned estate. This was all done prior to the filing of the petition. Bates sold a pair of scales which had been attached to lot 29 for §50, and some iron, remains of the mill and detached by the fire, realizing a total net amount of §265.75, all of which was done by consent of appellants, Mrs. Paddock and the assignee, and the money was to be paid out under the order of the court in this case. The notes above described, given to appellants after the assignment, were placed in the possession of the assignee for payment, and the appellants Bad received a dividend on them of §197.58. The opposing claim of Mrs. Anne G. Paddock, a non-resident, originated from the loan of money by her to Sower Brothers, for which the latter gave their notes to her and Eliza Skinner, dated July 2, 1883, and also a deed of trust given at the same time by Sower Brothers on said lot 29 and mill, machinery and fixtures to George S. Skinner, as trustee, to secure the same, and the same was duly recorded July 7, 1883. All these notes were paid except something over §1,000 due to Mrs. Paddock and §150 attorney fees in case of foreclosure, all of which it is insisted is a superior lien on said lot and mill fixtures to the claim of appellants for mechanics’ lien. The appellee, Mrs. Paddock, took this trust and without notice of the contract with appellants, and did not consent to any change in appellants’ contract with Sower Brothers.
    Lot 29 was not worth to exceed §500 with the engine and remains of the mill, and §300' is a fair valuation for lots 7 and 8.
    All of the appellees, including the assignee, Bates, objected to the jurisdiction of the Circuit Court on the grounds of the existence of the assignment and what had been done under it.
    The court, it appears, after taking default of Sower Bros., and duly considering the evidence and argument of counsel, dismissed the petition for want of jurisdiction of the Circuit Court, and from this decree this appeal is brought to this court.
    Mr. Bobert Farwell, for appellants.
    When the material man agreed to furnish and did furnish materials and they were placed in the mill, his claim for the price thereof became a lien upon the property from the time of making the contract. 3STo notice was necessary, etc. Clark v. Moore, 64 Ill. 273, 279. A deed of trust made and delivered before, but not recorded until after the making of a contract for the building of a house, will not have priority over the lien of the material man, but the latter will have priority over the trust deed. Thielman v. Carr, 75 Ill. 385. The lien is not affected by the burning of the mill. A material man furnished boilers for a mill; afterward the mill was destroyed by fire. The boilers were saved and sold under a prior trust deed. Held, that the material man had a first lien on the boilers, and was entitled to the money they brought at-the sale. Gaty v. Casey, 15 Ill. 189.
    It is not true that by the contract the time of payment is beyond a year from the time stipulated for the completion of the work. The fact that a suit could not be maintained on the note until the days of grace had expired, does not affect or change the terms of the notes. The notes would still become due by their terms on the days named, and if tender should be made on those days of the amount then due, the holder would be hound to accept it or lose his interest thereafter in case the tender should be kept good. Should a suit at law be brought on such notes the declaration describing them as falling due in six months and three days, nine months and three days and twelve months and three days, the notes would be excluded on the ground" of variance. The notes offered in evidence would not be the notes described in the declaration. Roberts v. Corby, 86 Ill. 182.
    Days of grace, as the words imply, are intended as a favor —grace—to debtors, to give them a chance to turn themselves, to give them a “ breathing spell ” and to meet their past due paper. A promissory note, indorsed after the date of its maturity, but within the days of grace, would be signed after due, so as to let in any just defense the maker might have. The note becomes due for the purpose of payment on the day named for its maturity. If not paid on that day it becomes past due paper, and the person taking an assignment the next day would not be regarded as an innocent purchaser, but it would not be due for the'purpose of bringing suit upon it till the days of grace had expired.

      The County Court has no power except as given by the act providing for assignments for benefit of creditors. That act gives the County Court no power to entertain a bill in chancery. No power to make publication to get jurisdiction of a non-resident defendant is given in such case. No machinery is provided by which the County Court can exercise any of the powers given and created by the lien law. The record shows that one of the defendants, Anne Gr. Paddock, one of the mortgagees, was a non-resident and was brought in by publication. No way is provided by the Assignment Act by which the County Court can get her within its jurisdiction in a proceeding to enforce a mechanics’ lien. Provision is made in case a creditor wishes to except to her claim. That is all, but nobody ever denied Sower Bros.’ indebtedness to her. There is an entire absence of power in the County Court to exercise any of the rights given and created by the lien law. It never had any jurisdiction or right to exercise jurisdiction in this ease. It never had concurrent jurisdiction with the Circuit Court in a mechanics’ lien case. Such jurisdiction has never been conferred upon the County Court and it can exercise only such jurisdiction as is conferred by the Constitution or by general law. The County Court certainly has no greater jurisdiction under the Assignment Act, than it has under the Constitution in relation to matters of probate and- settlement of estates of deceased persons. All persons having claims against the estate of a deceased person are required to present them in the County Court for adjudication at the time fixed upon by the administrator. Yet the Supreme Court held that a creditor of an estate was not bound to do so, but could maintain assumpsit in the Circuit Court, notwithstanding the County Court had full and complete jurisdiction expressly given by the Constitution and was in the exercise thereof, and the administrator was acting as such, under the supervision of the County Court, at the time of instituting the action of assumpsit. Darling v. McDonald, 101 Ill. 370.
    Art. 6, Sec. 12, of the Constitution, give's the Circuit Court original jurisdiction of all causes in law and equity. Yet the claim is made that such jurisdiction is taken from the Circuit Court and given to the County Court by mere implication _ that by the mere act of Sower Bros, in making a deed of as . signment, the Circuit Court is deprived of, and the County Court given, jurisdiction to enforce a mechanics’ lien.
    This is a proceeding to enforce a lien specially given by statute upon real estate. The interest that appellants have in the real estate, never passed to the assignee by the deed of assignment. It was not within the power of Sower Bros, to convey such interest, and neither the County Court nor the assignee had any power or supervision over such interest. All the interest Sower Bros, or the assignee had was a mere equity of redemption. Sower Bros, could only assign what they had and that was all the assignee could take.. Colburn v. Shay, 17 Ill. App. 289.
    Messrs. SimmsE Brothers, for Anne G. Paddock and George S. Skinner, appellees.
    A mechanics’ lien given by statute is in derogation of the common law, is secret in its nature, and the statute should therefore receive a strict construction. Brady v. Anderson, 24 Ill. 110.
    The lien should not be extended to cases falling within the reason but not provided for by the language of the statute; it. is opposed to common right and should be strictly construed. Brady v. Anderson, 24 Ill. 110; Stephens v. Holmes, 64 Ill. 336.
    A statute which gives a mechanic a lien is in derogation of the common law, and must be strictly construed, and no person can obtain. a lien under it unless a clear compliance is shown with the provisions of the statute. Canisius v. Merrill, 65 Ill. 67; Carney v. Tully, 74 Ill. 375; Belanger v. Hersey, 90 Ill. 70.
    Mortgagees and others acquiring interests in property against which a mechanics’ lien is sought to be enforced have a right to call for strict proof of all that is essential to the creation of the lien. Davis v. Alvord, 94 U. S. 545.
    If the contractor can preserve his lien as against a trustee or mortgagee by continuing the' contract a month after the time of the completion of the work has expired, without the knowledge, assent or authority of said trustee or mortgagee, then he may extend the contract a year, or for a period of several years, and still preserve his lien even to the injury of the trustee or mortgagee.
    The evidence shows that neither the trustee nor the cestui que trust had any knowledge of appellants’ contract when Sower Bros, made the trust deed, and further shows that the $5,000 which said trust deed secured, was all paid by said Sower Bros, to appellants. ¡Notwithstanding appellants have received all the money which Mrs. Paddock loaned to Sower Bros., they herein ask the chancellor, as a conscionable act, to make their claim for a balance due them superior to the trust deed given to secure Mrs. Paddock for furnishing the very money which they received, although by their own negligence they failed to complete the work they agreed to perform within the time and in the manner agreed upon.
    The fact that the contract required the notes to be given and that such notes were given, and that the note last maturing was by the contract to be made payable twelve months after the time stipulated for the completion of the work, is in legal effect contracting that the time of payment was beyond one year from the time stipulated for the completion of the work.
    At an early period days of grace were in fact what the words imply, an indulgence or respite granted as a matter of favor; but they have at length ripened into a right as clear and definite as any conferred by the positive stipulation of the parties ; so there is now no idea or notion of favor connected with them, and interest is charged and allowed for them just the same as if they formed a part of the note or bill itself; and for all practical purposes a note entitled to days of grace becomes due at the same time and in the same manner as if these days were added to the time it had to run and the note drawn without grace. Edwards on Bills and Notes, Secs. 517 and 518; Bank of Utica v. Wager, 2 Cow. 712.
    The days of grace on negotiable notes constitute a part of the original contract, and the negotiability of the note is as perfect and unrestricted during those days as before their commencement. The Savings Bank of New Haven v. Bates, 8 Conn. 505.
    By the act of 1861 days of grace on notes are made to exist as a right. The mortgagee in a chattel mortgage is not required to take possession of the mortgaged property, in order to hold it against creditors and subsequent purchasers of the mortgagor, until the expiration of the days of grace on the note which the mortgage is given to secure. Reese v. Mitchell, 41 Ill. 365; Arnold v. Stock, 81 Ill. 407.
    The condition of .a mortgage on real estate given to secure the payment of a note is not broken until the expiration of the three days of grace which is allowed on the note. Coffin v. Loring, 5 Allen, 153.
    It now seems to be well settled that in cases of assignment for the benefit of creditors the County Court is invested with complete and full jurisdiction over the trust fund and the assignee, until the property is disposed of and the proceeds distributed to those entitled to share therein, and has power to determine the priority of the liens of the several creditors; and that both the property and fund involved is in the hand of the law and under the jurisdiction and supervision of said court. Freydendall v. Baldwin, 103 Ill. 325; Mersinger v. Yager, 16 Ill. App. 260; Colby v. O’Donnell, 17 Ill. App. 473; Hanchett v. Waterbury, 115 Ill. 220.
    Messrs. Eckels & Kyle, for Eugene C. Bates, assignee of Sower Bros., appellee.
    In cases of concurrent jurisdiction the court which first obtains it will have precedence. Hanchett v. Waterbury, 115 Ill. 220; Whitney v. Stevens, 97 Ill. 482.
    A mechanic’s lien only extends to the lot or parcel of land on which the building is erected. Chap. 82, R. S. 1874, Sec. 1, 665; Parmelee v. Hambleton, 19 Ill. 615; Tracey v. Rogers, 69 Ill. 662; Bayard v. McGraw, 1 Ill. App. 134.
   Lacey, J.

It appears from the foregoing statement of the case that there are three main and impoi tant questions pro-sen ted for our determination before we can arrive at the end of this investigation.

First, Is the appellants’ claim for mechanics’lien paramount and precedent to that of Anne G-. Paddock created by her trust deed ? Second, Has the appellant any lien on lots 7 and 8 for material furnished and work done on lot 29 ? Thwd, Did the Circuit Court have jurisdiction to try or hold the case ?

We will take up the questions in the order above presented, and in so doing first consider the several objections raised by attorneys for appellees to the existence of the claimed lien embodied in the first proposition in the manner therein claimed by appellants.

It is first urged by the appellees that by the very terms of the appellants’ contract with Sower Bros, for the remodeling and changing the mill, no lien under the Mechanics’ Lien Act could attach for the following reasons, viz.: The statute under which the lien was created, if at all, provides “ that the time of completing the contract shall not be extended for. a longer period than three years, nor the time of payment beyond the period of one year from the time stipulated for the completion thereof;” that the contract was in writing, dated June 30,1883, and the mill was to be completed and in running order by the 15th of September of the same year; that as to $1,600 of the amount to be paid to appellants, Sower Bros, were to give their three notes in equal amounts due respectively in six, nine and twelve months from the starting of the mill; that the last note by the terms of the contract, which must alone govern in the case, in legal effect would extend the time of payment by means of the three days grace allowed by law in the payment of such instruments, beyond the statutory limit of one year from the time stipulated, September 15, 1883, for the completion of the contract.'

It is argued that in legal effect and reality a note is not due until three days after the time fixed by its terms to become due. But it may be answered that by the terms of the contract itself, the last note was to be payable, that is due, twelve months from the time the mill was running. Did not the contracting parties have this matter of the “ days of grace ” in contemplation when the contract was executed, and was it not the intention that the note should be so written that with the days of grace added it would fall due past twelve months from September 15,1883 ? The parties must be presumed to know the law and to contract with reference to it, and when the contract was so written as to require the last note to be payable in twelve months, it meant what its terms expressed and must be considered with reference to the law on the subject of “ days of grace.” If three days of grace are' to be added at the end of twelve” months when the last money is payable, then, of course, the last note would not be payable in twelve months, as the contract declares it shall be. It would be twelve months and three days. It is only by assuming that the true interpretation of the contract is that the expression payable “ in twelve months after the mill is running,” means that the note should he written in terms when given “ due in twelve months ” from such date, that the point contended for by appellees can be maintained in any event. But the contract is not expressly so written and if the words “ payable in twelve months after September 15, 1883,” are to be given an interpretation to make the day of payment fulfill the words of the contract and the rule of law in regard to the days of grace is to operate thereon, the note must in its terms be written for three days shorter time of payment than without the application of such law; otherwise the terms of the contract would not be strictly and logically true.

Whether the contract in question should be so construed as to require the note to be written for the full twelve months, and by operation .of the rule of law in regard to “ days of grace,” the time for its falling due would be twelve months and three days, or not, we are clearly of the opinion that the statute ought not to be so construed as to render the contract void as being in violation of'law.

The Mechanics’ Lien Act no doubt should be strictly construed, as it has been so held by our Supreme Court, which is binding on this court, yet we do not understand by such holding that the construction should be so illiberal and artificial as to impair the statute or to prevent relief being granted under it freely by the courts. A court of high authority has indeed held that the statute giving liens to mechanics and laborers for their work and labor, is to be liberally construed so as to afford the security intended.” Davis v. Alvord, 94 U. S. 545.

This contract then, we hold, was capable of having a mechanic’s lien created under it by the furnishing of the material and labor therein mentioned to the contractees, Sower Brothers, on the lot in question.

Again, appellees contend that as to Mrs. Anne G. Paddock, the holder of the balance of the unpaid notes secured by her trust deed, amounting to $1,000, the lien claimed by the appellants, if any ever existed, was lost by reason of the contract not having been completed within the time fixed by it, to-wit} by the 15th day of September, 1883, it not having been completed and the mill accepted and set to running till the 15th of October following, and because the notes instead of being given according to contract, bearing date September 15, 1883, and running six, nine and twelve months, they were by agreement between appellants and Sower Brothers dated November 1, 1883, and ran respectively six, nine and twelve months from that date, and that this was done without the knowledge or consent of the appellee, Mrs. Anne G. Paddock, or her agent or attorneys.

The appellants’ contract with Sower Brothers was dated June 30, 1883, and the trust deed from Sower Brothers to George S. Skinner, trustee for Anne G. Paddock, and the notes to her security by said trust deed, were dated July 2, 1883, and the deed recorded in the proper office July 7, 1883. It is not contended nor could it be successfully argued that Mrs. Paddock could acquire a superior lien on lot 29 to the lien claim of appellants on the same lot by reason of her trust deed having been dated and recorded prior to the time of the furnishing by the appellants of the greater part of the labor and material and placing them on the lot, although she may have accepted such deed without notice of the existence of the latter’s prior contract for changing and altering the mill. The entering into the contract by the lot owner with the material men, fixes the lien from the date of such contract for the material and labor subsequently expended on the lot, superior to any subsequent trust deed or mortgage acquired, even though the material or labor be put on the lot after the ■ trust deed or mortgage be executed and recorded.

Although the trustee or mortgagee had no notice of the contract or the furnishing of such material, such contract or claim for the material need not be recorded, nor need the agreement, under the first section of the Act of 1861, be made for any specified amount with the owner of the lot if the material was required for the use in the progress of the building.

“ When the contract to perform the labor is entered into the lien attaches. ” This is the clear and obvious meaning of this (the first) section. The court by its decree neither creates nor confers the lien. “ It existed and attached to the lot from the time the contract was made to make the improvement.” It only remains after the contract, to place it on the lot. These liens, are secret, attaching simply by furnishing the labor or materials in constructing the building.” Clark et al. v. Moore et al, 64 Ill. 273: Theilman v. Carr, 75 Ill. 385; Brown v. Moore, 26 Ill. 425. From these citations it will be seen that the appellants had a valid lien on said lot 29 for the balance of the unpaid price of their material and labor put into the mill, unless, by the extension of the time of completion of the work, or the extension of time as to the payment of the notes, or some one of them, their lien as against the mortgagee’s (Mrs. Paddock’s) claim, has been forfeited.

Whether this has been done, as is contended by appellees’ counsel, will be our next inquiry. The contract provided a less time for the completion of the mill than three years, and also the time added by way of extension to the original time for completion would not make three years from the time of commencement, so the statute was not violated in that particular. But the time to which the last note was extended, to wit, from September 15, 1883, the time, by the provisions of the original contract, the mill was to have been completed, to November 1, 1884, the time to which the payment of the note was extended, was more than one year or even more than one year from October 15, 1883, the time the building was completed, and to which the extension was made by consent of Sower Brothers.

It is insisted as to Mrs. Paddock, for whose benefit the trust deed was taken, there could be no change of the original contract that would affect her interest and if one were made the mechanic’s lien as to her would be forfeited. This is no doubt true in a measure, but we think not to the extent claimed. In Simon v. Block, 16 Ill. App. 450, it was held, “ that the remedy to enforce a mechanic’s lien is exclusively the creature of the statute, deriving its existence only from positive enactment and not arising out of, or the issue of, the contract for labor, or dependent on the motives which suggests its being enforced.” It is further said, “that the question of lien or no lien depends on the contract as made originally and not what may happen in the execution of it.” In the case of Cook et al. v. Heald et al., 21 Ill. 425, the court says in regard to the statute above quoted, “this provision absolutely requires that the time for its performance and the payment of the money shall be determined at the time when the contract is entered into and not by alterations and changes which may he made in the agreement after it is entered into.”

Where the time for the payment is extended by taking notes on time, the claim for the amount due under mechanic’s lien is extended thereby. Cox v. Keiser, 15 Ill. App. 432. In the case of Nibbe v. Brauhn, 24 Ill. 268, it was held that if the parties deem it necessary further time for the completion of the work be given the contractor, the time may be extended, and by allowing the work to proceed without objection by the owner of the lot it is extended. But in such case only the time of performance is changed, not the contract otherwise.

In the above cases the contract was between the original parties to the contract and there were no other creditors or incumbrancers whose rights were affected. As between the original parties there is no limitation as to the time of commencement of the suit, but as to other creditors and incumbrancers the suit must be commenced within six months after the last payment for labor and material shall become due and payable. (See Sec. 24 Mechanics’ Lien Act.)

According to the principles above referred to, the character of the lien as between the parties to the original contract and also as between appellants and subsequent incumbrancers, became fixed by the signing of the original contract, and the only thing remaining to complete it was the furnishing of the labor and materials on the lot by appellants, which was done. The extension of the time for completion could not affect the lien thus created, neither could the extension of the time of payment, at least as between appellants and Sower Brothers. The question now arising is, could such extension be made as against the appellee, Mrs. Paddock?

The only light we have by any decision of our Supreme Court in a case like this, is obtained from the opinion in the case of Brown v. Moore, 26 Ill. 481. By the contract in that case the work was to be completed by June 1, 1857, and the last payment was to be made by December 1, 1857. But the work was not completed till April 23, 1858. The rights of mortgagees were involved the same as here. The court had grave doubts whether the six months Statute of Limitations did not commence to run from December 1, 1857, the time when the last money was due. It was unnecessary to decide that point in the case, but it decided that the debt was due and the statute began to run in favor of the mortgagees on April 23, 1858, and an extension given by agreement between the contractor and owner of the building and mortgagor for the payment due under the lien from April 29, 1858, for one year and four- months, could not be made to stop the running of the statute which, at least, commenced to run from April 23,1858, six days before the extension was given. By this extension the six months limitation expired before the suit was or could be brought, counting even from April 23, 1858, saying nothing of December 1, 1857, the time fixed in the contract for the last payment.

In reference to the question the court say: As between themselves the parties to the contract could modify as they chose, but not in such a way as to affect the rights of others. Other parties had a right to take security on this land with reference to this lien and the'time when it should expire, and these could not he cut out by any agreement between other parties which would have the effect to extend the time when the lien should expire.”

In the case at bar, the giving the appellee, Mrs. Paddock, the benefit of all she.could claim with reference to the Statute of Limitations as fixed by the last payment, she could not complain. By the original contract the work was to be completed September 15, 1885, and in twelve months from that time the last note was to be paid, which carried it to September 15, 1884, and six months from that time would be March 15,1885, and March 18th, if days of grace be added; but the petition in this case was filed March 13, 1885, in apt time to save the Statute of Limitations the same as if everything had been carried out according to the terms of the original contract.

If it be conceded that the change of the time for the payment of the notes might be an injury to appellee, Mrs. Paddock, it may be answered that if they were changed without her consent and such consent were necessary and she so desired, she might redeem the property by paying the amounts due, according to the original contract on the lien at any time when so due, notwithstanding the extension of time, she not being bound by such extension. As the case is presented, we can see no substantial injury done to appe.llee, Mrs. Paddock, by the change in the payments of the amount due under the original contract. So holding, the appellants had a valid lien for the amount of their claim on the lot 29 and the mill at the time it burned down, and the lien continued to the scales and mill remains after they were sever ed by the fife. Gaty v. Casey, 15 Ill. 189.

The next question raised, and as above stated is, have the appellants any lien on lots 7 and 8 for material furnished and labor done on lots 29? We think clearly they have none. Lots 7 and 8 were separated from lot 29 by a street thirty feet wide, and no part of the mill structure or any of its appurtenances were on or touched lots 7 and 8. The mere fact that the Sower Brothers had corn-cribs on these lots out of which they took corn to grind in the mill, or that they had a horse-shed on them under which they hitched their horses and'put their buggies that conveyed them to the mill while they were operating it, and other like circumstances, could have no effect to make those lots a part of lot 29 within the. meaning of the statute. Parmelee v. Hamilton, 19 Ill. 615; Tracy v. Rogers, 69 Ill. 662. Bayard v. McGrraw, 1 Ill. App. 134; see also Sec. 1, Chap. 82, R. S. 1874.

We will now consider the third and remaining question, did the Circuit Court have jurisdiction to try or to hold this case under its control ? The court below dismissed the petition, as the record states, for want of jurisdiction, and may not have considered the merits of the case. We have considered all the questions in the case, however, as the decree should not be reversed unless the petition has merits and the appellant a right of recovery and.all the questions have been fully argued by counsel on other side.

It appears that the ground relied on to justify the action of the Circuit Court in dismissing the petition is that Sower Brothers had become insolvent and had made an assignment for the benefit of their creditors to Eugene 0. Bates, of all their property and effects, under the act entitled, “An Act Concerning Voluntary Assignments and Conferring Jurisdiction therein on County Courts;” in force July 1, 1877. And that the assignee, Bates, had qualified, accepted the trust and had taken possession of the property of said insolvents and was proceeding to administrate the estate under the said assignment and the said act before the County Court. It is insisted by appellees, that under the law the appellants had no right to file their petition in the Circuit Court, and had no right to any relief therein; but that they must seek their remedy in the County Court, wÉich it is claimed has ample authority to adjust- all questions concerning the mechanics’ lien claim of the appellants and to give them the priority which they claim if they are entitled to it under the law. In fact that in all cases the jurisdiction of the County Court under the act is exclusive after it once acquires jurisdiction of the insolvent’s estate. Appellees rely principally upon the decision of the Supreme Court in the two cases of Freydendall v. Baldwin, 103 Ill. 325, and Hanchett v. Waterbury, 115 Ill. 220. The court in Freydendall v. Baldwin, 103 Ill. 325, hsed the following language in regard to the jurisdiction of the County Court in such case : Thus it is seen that- the whole management of the estate of insolvent debtors under voluntary assignments is committed to the jurisdiction of the County Court, and by Sec. 14, full authority and jurisdiction are given to such courts in regard to such matters. How the trust funds in the hands of the assignee are to be paid over and distributed are matters for the determination of the County Court where such proceedings are pending, and its judgments and orders in that respect can only be 'reviewed as the judgments and decrees cf others of competent and original jurisdiction are reviewed, by the Appellate Courts.”

“ A court of chancery will not assume jurisdiction on a bill to interfere and direct how a County Court shall distribute a trust fund over which it has complete jurisdiction, by positive statute, unless under special circumstances.”

These observations were made with reference to the facts in that case, which were, in substance, that the complainants in the bill, while recognizing the validity of the assignment," were asking the Circuit Court to declare certain confessed judgments by the debtor prior to the assignment, and execution levies on the property of the debtor also' prior- to the assignment, void as against the personal goods in the control of the assignee. This relief could be obtained in the County Court, especially under the 5th section, which gives one creditor the right to contest the claim of another, the County Court having the power to consider equitable rights, and the assignee himself might contest the question, under the 7th and 14th sections.

In the case of Hanchett against Waterbury, 115 Ill. 220, the assignee having in possession certain personal estate of the insolvent, it was sought to be replevied out of his hands by writ issued from the Circuit Court by one claiming title to the property. The County Court, as held, properly enjoined the Sheriff from the execution of the writ. The plaintiff should have gone to the County Court to contest the title. The authority of the County Court is plain enough, as above shown. The court, in passing on the case, calls the act in question, essentially in its framework and detail, a general insolvent law.”

The court says: To permit interference with the assignee in his duties after the County Court’s jurisdiction had attached would defeat the object of the law.” It is held that third parties, having real or pretended claims upon the trust estate within the jurisdiction of the County Court, cannot be allowed to sue in other courts for it.

“ The County Court has jurisdiction, and is possessed of all the property and estate of the debtor by means of the assignment, subject to all prior liens and just claims of third parties; and that the legal title is in the assignee, acquired by the voluntary act of the debtor, can make no difference, as a valid assignment can only be made under the statute, and it is but little matter where the legal title is, in so far as it affects the jurisdiction of the court. The possession is in the court, not the assignee. The position of the assignee in relation to the estate is analogous, in some respects, to that of a receiver or assignee in bankruptcy.”

In the per curiam opinion filed, on overruling the petition for rehearing, the court hold that while the Circuit Court has general chancery powers, it can not be permitted to interfere in respect to the property assigned after the jurisdiction of the County Court has attached, except under special circumstances; a court of equity may interfere to prevent a failure of justice.

The facts and circumstances of the case before us are widely different from the facts in the above two cases cited, and we think must come within the exception of the rule as above announced. We will consider them for a moment. The value of lot 29 is not to exceed §500. The unpaid claim due Mrs. Paddock, secured by the trust deed, is §1,000. The claim of appellants is' over §1,600. What title has the assignee in lot 29 ? Evidently only the equity of redemption; and the County Court only has possession of the same,'and that is nothing, and would still he nothing even if the lot were worth §1,000. It is evident that the assignee has no assets in this equity of redemption, and could not have under any circumstances.

If the County Court had jurisdiction at the suit or application of the assignee to summon the trustee of the trust deed-, and Mrs. Paddock and appellants before it, and having full jurisdiction, should order the sale of the lot free from all incumbrances, it would have to hand the money arising from the sale to the appellants or Mrs. Paddock, and no money would be available for the general estate, and this would be a pure expense for no beneficial purpose. But does the County Court have any such chancery jurisdiction?- Jurisdiction to remove clouds on title to real estate, to issue summons to all parties interested, including mortgagees ? Can it order notice to be given' to non-residents by publication ? Mrs. Paddock is a non-resident. We find no express warrant in the act for such proceedings, and we.can not see in the not very comprehensive language of the statute any implied power. The 5th section allows one claimant to contest the claim of another, but here Mrs. Paddock has not brought mortgage into question before the County Court. There is no question concerning it except with the appellants, and the holder of the note secured by the trust deed is not an adverse claimant before the County Court as to any property in which the assignee has any interest. The 7th section has no reference to a question like this. The 11th section authorizes the assignee to dispose of the estate the same as the assigning debtor could have done. The assignee could sell the equity of redemption, but he would receive nothing therefor. The 14th section only gives the County Court full power to carry out the provisions of the act, but none of the provisions of the act covers a case like this. As we understand the practice in bankrupt courts, where the court has full jurisdiction over all equitable claims and liens on real estate including mortgaged premises, it is, where the mortgage exceeds the value of the real estate, to never undertake to sell the mortgaged' property divested of the lien, but to refer the mortagee to his remedy on the mortgage in some other court; and the Bankrupt Court has largely more power than the County Court. See Sec. 5075, Bump on Law of Bankruptcy (9th Ed.).

In this case the only possible contest that can arise is between the appellants and Mrs. Paddock, claiming under the trust deed. Whatever the appellants may recover in the case it will be taken from Mrs. Paddock and not from Bates or the estate of Sower Brothers. The assignee is the mere nominal holder of the equity of redemption, not worth one cent to him or the estate. He could not possibly be impeded or interfered with in his duties as assignee in any degree by this suit. This suit was by the court below dismissed, and if that decree stands the appellants lose their lien because the six months limitation has run against it.

We are of opinion that whatever may be decided about the right of the appellants to proceed in the Circuit Court to final judgment and sale of the-lot before the assignee had settled the estate of Sower Brothers, the court should have held the case in court, simply staying proceedings till the County Court acted. The statute, Sec. 4, Chap. 82, provides “ That the lieu given by this act may be enforced by bill or petition in any court of record of competent jurisdiction in the county in which the land or lot or some part thereof lies.” By another section the suit must be commenced within six months as against other incumbrancers. How as the County Court has no jurisdiction to foreclose a mechanic’s lien as against a cestui que trust, and a trustee making no claim in the County Court to the property, the fee title to which is already in the trustee, how is the lien holder to preserve his rights except by bringing his petition in the Circuit Court? The trustee and Mrs. Paddock might rely wholly on their security and make no claim in the County Court and if they made any it might only be after exhausting the lot security. It might be years before the trustee foreclosed the trust deed and long after the bankrupt estate was settled up by the assignee.

“ A mechanic’s lien, which derives its existence wholly from a State statute, and the continuance of which is by such statute made dependent on the commencement of a suit within a prescribed period, is not preserved as a valid incumbrance on the property when no suit is commenced in the State Court, and no step taken in the Bankrupt Court equivalent to such suit, within the time limited by the statute for the preservation and enforcement of the lien, although proceedings in bankruptcy are commenced in that period.” In re Williams, 14 Bankr. Reg.

“Such lien claims may be filed in the State Court after the commencement of the proceedings in bankruptcy. These steps are necessary to keep the lien alive, and can not be deemed an encroachment upon the authority of the Bankrupt Court. Bo sale can be made during the pendency of the proceedings in bankruptcy. The State Court will order the suit to stand continued to await the result of the action in the Bankrupt Court.” Clifton et al. v. Foster et al., 3 Bankr. Reg. 656; S. C., 103 Mass. 333; In re Coulter, B. R. 64; Keller v. Demmond, 68 Penn. 449; see notes to Sec. 5075, and notes on page 599 Bump’s L. and P. of Bankruptcy, 9th Ed. So, at all events, if the same rule applies, and we see no reason why it should not, in the County Court as it does in the Bankrupt Court, it could not have been any infringement on the jurisdiction of the County Court by filing this petition in the Circuit Court, as the statute expressly requires.

The statute in this respect has certainly not been repealed or changed by the insolvent act in question. At all events, the petition should not have been dismissed.

But we think the court should have proceeded to final decree in the case. The $265.75 received for the scales and other remains of mill irons, etc., should be allowed appellants in the final decree, although this part might come under the rule of the above cases of Freydendall v. Baldwin, 103 Ill. 325, and the other as to the control of the County Court, yet as the assignee agreed to hold it subject to this decree, and as the Circuit Court holds jurisdiction on other grounds, it may go on and do complete justice and settle the entire matter. For the above reasons the decree of the Circuit Court is reversed and the cause remanded with directions to grant the relief as indicated by this opinion.

Decree reversed cmd ccmse remanded.


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    John R. Schnebly and Charles E. Rowcliffe v. Richard A. Culter.

      Partnership — Two Firms having a Common Member — Bill in Equity —Continuous Term of (Credit — Interest.
    1. Where one person is a member of two firms, a bill in equity lies by one firm to recover an indebtedness of the other.
    2. In the case presented, it held: That the members of each firm were not required to look to the common partner for the adjustment of the indebtedness; that the creditor was not bound by an agreement entered into by said common member to extend to the other firm a continuous credit of five years; and that interest was properly allowed from the date of an adjustment of the account. •
    [Opinion filed December 11, 1886.]
    Appeal from the Circuit Court of Peoria County; the Hon. T. ¡M¡. Shaw, J udge, presiding.
    Statement by Lacey, J. The appellee and one Cary E. ¡Robinson, on January 1,1883, entered into partnership, to be carried on in the city of Peoria, in general hardware and tin business, under the firm name of R. A. Culter & Company. On the 23d day of September, 1884, said Robinson also entered into partnership with appellants to carry on a hardware and tin business, in . which last mentioned firm the. said appellee had no interest. The last named firm was to continue five years, the appellants were to furnish a certain sum each, and said Robinson was to furnish $2,000 in cash and a credit of $3,000 in the first named firm of E. A. Culter & Company, which was to be paid out and used in the common trade.
    Appellants were to devote their entire time to the business. Eobinson was to receive one-fourth of the profits.
    In pursuance to the agreement, Eobinson asked his partner, the appellee, for his consent to the credit that he had agreed to furnish to the appellants’ firm out of the firm of E. A. Culter & Company, but did not inform him that it was to continue five years, and appellee did not know that fact till after the goods had been procured. The goods were procured of the firm of E. A. Culter & Company to the amount of $4,-079.12 above all credits, which the firm of Schnebly & Eowcliffe, of which Eobinson was a member, never denied, and in their testimony admit; but appellants insist $3,000 of the amount was not due for five years from the date of their partnership with Eobinson, by virtue of the terms of their partnership agreement.
    On July 8, 1885, the firm of E. A. Culter & Company was dissolved by mutual consent, and as appellee alleges in his bill he became the owner of all the assets by purchase by him from Eobinson, and Eobinson admits this in his answer. Appellee also testified that he was the owner at dissolution of the claim in question. The books of two firms were' compared by appellants and appellee about August 10,1885, and found to agree, and the balance due was $4,079.12. The appellee brought a bill in equity to collect this balance. Appellants’ answer sets up the partnership agreement with Eobinson, denies their liability with Eobinson to the firm of E. A. Culter & Company as to the $3,000, but admits it as to $1,079.12, and denies their liability to account. The Circuit Court upon the master’s report rendered a decree in favor of appellee against appellants for the sum of $4,225, the full amount of appellee’s claim, and six per cent, interest from about August 10, 1885, the time the books were compared, till the date of decree, March 20, 1886.
    Messrs. McCulloch & McCulloch and Geobge M. Johnston, for appellants.

      When one person is a member of two different firms, which have dealings with each other, a suit will not Tie by one firm against the other either at law or equity for an indebtedness of one firm to the other. Haven v. Wakefield, 39 Ill. 509; Hall v. Kimball, 76 Ill. 161.
    Neither can such common partner transfer to his co-partners in either firm a better right to bring suit in respect to the dealings of one firm with the other than he had himself, for in equity there can be ho assignment which will cut off equitable defenses. Olds v. Cummings, 31 Ill. 188.
    It follows that the members of each firm must look to their co-partners for the adjustment of the matters of accounting between the two firms, at least until their remedy against such co-partners is exhausted.
    Mr. M. N. Gish, for appellee.
   Lacey, J.

The objections made by the appellants to the decree are that “when one person is a member of two different firms which have dealings with each other, a suit will not lie by one firm against the other either at law or equity Ofor an indebtedness of one firm to the other.” We do not regard this objection as sound. This is true as regards suits at law but not in equity.

If a suit in equity could not be brought by one firm against another under such circumstances, the creditor firm would be without remedy. Haven v. Wakefield, 39 Ill. 509, and Hall v. Kimball, 77 Ill. 161.

It is also insisted that members of each firm must look to their co-partner for an adjustment of the matters of accounting between the two firms, at least until their remedy against such co-partner is exhausted; in other words, applying the supposed rule to the facts of tins case, it was the duty of the appellee to compel a final winding up and adjustment of the affairs of the firm of It. A. Culter & Company and if in such settlement, in which Robinson should be charged with appellants’ claim, the former was not indebted to appellee, then there could be no use of this suit, as appellee would be paid off, and this claim would he Bobinson’s own matter; but should Bobinson’s interest in the firm of B. A. Culter & Company prove insufficient to discharge this obligation, then appellee might pursue his remedy against the appellants and Bobinson, first seeking payment for Bobinson’s interest in the firm of appellants, and after the affairs of that firm is wound up, and it being ascertained that Bobinson had no interest in it, appellee might, perhaps, ask for decree against appellants, but not till then. In the first place there are no issues in this case warranting any such action. This bill is a plain, simple bill by one firm to collect a debt in equity from another firm, the appellee being forced into equity for the only reason that by the strict rules of law, Bobinson being a member of both firms, suit could not be brought at law. There are no facts or peculiar equities set up in any pleading to show to the court why it was necessary to wind up the affairs of both these firms in order to do justice. As between the two firms, Bobinson and appellee were strangers to each other. The firms dealt with each other as strangers — as two separate and independent individuals would.

This course is necessary on account of a part of the members of the respective firms not having any interest in but one.

There was no equity in the one firm to compel a winding up of the other simply because one firm becomes the creditor of the other and was seeking a decree fpr its claim. Bobinson’s equities between the firms so far as the facts in this case show, are equally balanced and he must be regarded asa neutral$through whom neither, party can claim any equities. The claim of appellants that the amount of appellee’s demand to the extent of §3,000 should be regarded as not due till five years from date of their partnership with Bobinson, is not tenable.

The facts fail to show that appellee knew of the contents of this partnership agreement, or that he ever assented to the agreement to furnish appellants’ firm a credit to the amount of §3,000 continuously for five years.

He was requested by Bobinson to allow the firm of B. A. Culter & Company to furnish the new firm a credit to the amount of §3,000. That was all. He would have to assent to the five years' contract to bind his firm, which we think the evidence fails to show. The a1lowi~g of interest was proper after the adjustment of the amount, which, as we gather from the abstract, was some time in the fore part of August, 1885. As to tile last point we think the evidence fails to show that this account belonged to Robinson. The decree is tlierefore afiirnied~

Dee~ree ajirined.