author: Mr. Presiding Justice Soanlan

text:
    Joseph Boucek (Complainant), Appellee, v. Bessie F. Pondelicek et al., Defendants. Bessie F. Pondelicek, Appellant.
    Gen. No. 34,271.

      Heard in the second division of this court for the first district at the April term, 1930.
    Opinion filed October 14, 1930.
    E. R. Elliott and John L. Robinson, for appellant.
    David K. Tone and Henry Pollenz, for appellee.
   Mr. Presiding Justice Soanlan

delivered the opinion of the court.

Joseph Boucek, appellee, filed his hill to impress certain property in Wilmette, Cook county, Illinois, with an equitable mortgage and to foreclose the same. James W. Pondelicek, Bessie F. Pondelicek et al. were made parties defendant. During the pendency of the litigation James W. Pondelieek died and the administratrix of his estate, Bessie F. Pondelieek, was made an additional party defendant, but the bill was thereafter dismissed as to the administratrix. Subsequently certain additional parties, not necessary to name, were made parties defendant. The case was tried before the chancellor and a decree was entered that found that complainant had an equitable lien upon the land to the extent of his claim, superior to the rights of all of the defendants, and ordered the premises sold, if the amount found to be due complainant was not paid him within 30 days. Bessie F. Pondelieek is the sole appellant.

Appellant states that “there was but little dispute between the parties regarding the facts, most of which were stipulated to in open court at the trial, and the controversy was really almost entirely upon the legal principles involved, and as to whether or not the complainant was entitled to any relief in view of the facts admitted and proved at the trial.” The material facts are plain and undisputed. In February, 1922, James W. Pondelieek, the then husband of appellant, had contracted to purchase a vacant lot in Wilmette. He required $2,000 to complete the purchase and asked complainant to advance him that amount in order that he might consummate the deal, and he promised complainant that if the latter would advance to him that sum he would, upon acquiring title to the property, give him a note for $2,000 and a mortgage on the property to secure the same, the note to be payable in five years with interest at 5% per cent per annum. In consideration of the promises and agreements of Pondelieek, complainant gave him $2,000 and received from him his note for $2,000, dated February 1,1922, and payable in five years, with interest thereon. On February 15, 1922, after the receipt of the $2,000, the purchase of the land was consummated, Pondelieek and appellant taking title as joint tenants. Pondelicek applied the $2,000 in the purchase of the land. Thereafter complainant made numerous demands upon the Pondeliceks to execute and deliver to him the trust deed or mortgage upon the premises in question. Pondelicek was at all times apparently willing to carry out his agreement, but appellant, who was entirely familiar with the agreement between complainant and her husband from the time of the making of the same, refused to sign the necessary trust deed or mortgage. In 1925 divorce proceedings were pending between the Pondeliceks and in a written agreement dated August 11, 1925, they settled their property rights. In this instrument they acknowledged the indebtedness to complainant, and appellant, in consideration of Pondelicek quitclaiming to her all interest in the real estate in question, which they valued at $11,000, the payment by him to her of $50 per week as alimony for the maintenance of herself and minor child, and the payment by him to her of $2,000, agreed that she “will make a new arrangement with reference to said $2,000 indebtedness due, whereby a mortgage can be made secured by said Wilmette real estate, to take care of said note. ’ ’ On August 19, 1925, a consent decree was entered in the divorce proceedings. It recited, inter alia, that the parties had adjusted their respective property rights and that Pondelicek had conveyed to his wife by quitclaim deed all his title and interest in the property in question, valued at $11,000; “that the defendant has heretofore borrowed the sum of $2,000 on a judgment note from one Joseph Boucek, due "in approximately one year from this date, said moneys having been used to make the initial payment on the purchase price of said lot, and that the complainant agrees to assume said indebtedness and to secure the said Joseph Boucek, either by giving him a mortgage on said real estate, or by negotiating a new loan and paying said indebtedness; . The court finds . . . that said arrangements are equitable, accordingly it is so ordered, adjudged and decreed.” The decree was approved in writing by the Pondeliceks and their respective solicitors. On November 6, 1925, appellant filed a sworn petition in the divorce proceedings in which she stated that complainant had a first lien on the property in question, and that by the provisions of the decree she agreed to give a mortgage on the premises or to negotiate a new loan on the same for the purpose of paying the $2,000 indebtedness. After the commencement of the present proceedings defendant conveyed the property by quitclaim deed to her sister.

It has been held in a number of cases that where one advances money for the purpose of buying a specific tract of land, on the oral promise of the borrower to secure its repayment by a mortgage upon the property when title thereto is obtained, and, after the conveyance has been procured by the use of the money, the borrower refuses to execute the mortgage, equity will regard that as done which the borrower agreed should be done, and which ought to be done, and will treat the transaction as creating an equitable mortgage upon the land in favor of the lender. (See Grigaitis v. Gaidauskis, 214 Ill. App. 111, and cases therein cited; Foster Lumber Co. v. Harlan County Bank, 71 Kan. 158; Cole v. Cole, 41 Md. 301; Murphree v. Countiss, 58 Miss. 712; Sprague v. Cochran, 144 N. Y. 104; Hughes v. Mullaney, 92 Minn. 485; Williams v. Rice, 60 Mich. 102; Floyd v. Hammond (Tex. Comm. App.), 268 S. W. 146.) In Cole v. Cole, supra, it was held that there was nothing in the statute of frauds, if pleaded, to prevent the application of this equitable principle, since courts of equity would not allow its provisions to be perverted and made instrumental in the accomplishment of fraud, but would decree a specific execution of agreements where there had been a performance on the one side, as the refusal to perform on the other side would amount to a fraud. In Foster Lumber Co. v. Harlan County Bank, supra, the court, in arriving at the same conclusion, stated that they would not permit the Statute of Frauds, designed to prevent fraud, to be made an engine of fraud. (See also Sprague v. Cochran, supra.) “The statute, of frauds ... is designed to prevent fraud but not to prevent the exercise of equitable jurisdiction by a court of equity for the enforcement of an oral contract, where failure to do so would amount to- a fraud upon such promisee. ’ ’ (Mayo v. Mayo, 302 Ill. 584, 589.)

Appellant pleaded the statute of frauds and now argues that because of it the present proceedings are barred as against her. She concedes, apparently, that the general rule is that the statute cannot be interposed as a defense where the contract is fully performed on the part of a plaintiff and that that rule would prevent her former husband, if he were alive, from interposing the defense of the statute, but she argues that complainant “is seeking to enforce against her a contract made, not with her, but with the deceased husband; hence, the rule that the statute 'of frauds does not apply where the contract is fully completed on one side has no bearing on this case. Since Boucek. never had a contract with Mrs. Pondelieek, it cannot be said that he fully performed any contract on his part, thus to take the case out of the statute of frauds. ’ ’ At the time of the transaction between complainant and James W. Pondelieek, appellant was the wife of the latter and she was fully -cognizant of the agreement between Boucek and her husband, and she took title,.with her husband, to the premises knowing that complainant had advanced the $2,000 and that the same was used in the purchase of the property, and that complainant was entitled, under the agreement, to a mortgage upon the property. After signing the agreement of August 11, 1925, and the consent decree of August 19, 1925, in. both of which complainant’s right to a first lien upon the premises was affirmed, she acquired the quitclaim deed from her husband upon her agreement to give complainant a mortgage on the premises “or by negotiating a new loan and paying said indebtedness.” In her verified petition to the court, on November 6, 1925, she stated that she had promised to give to complainant a mortgage on the premises and that he had a first lien against the same. In the very short testimony given by her upon the trial, she conceded, in effect, that by the terms of the agreement between herself and her then husband, and also by the provisions in the decree in the divorce case, she was to negotiate or arrange for a loan on the Wilmette lot to secure complainant for the $2,000 he advanced to her husband, and she gave as an excuse for her failure to do so that by the terms of the agreement she was given a year in which to carry out this obligation and that the present suit was started before the expiration of that period. Even this excuse was a pretense, as it appears that the present proceedings were not started until May 3, 1927. As has been well said, equity will never allow the provisions of the statute of frauds to be perverted and made instrumental in the accomplishment of fraud. Under all the facts and circumstances of this case it may be fairly said that appellant stands in the shoes of James W. Pondelieek. A like contention to the instant one raised by appellant was made in Cole v. Cole, supra, and it was there held: “And it being proved that the borrower’s wife, who was made a party defendant, had notice of the complainant’s equitable defense at the time the property was conveyed to her by her husband, any rights she acquired therein must be held subject to that of the complainant, and the deed to her should be vacated so far as it interfered with the complainant’s equitable rights.” The record in this proceeding presents several equitable reasons why-appellant should not be allowed to interpose the statute that were not present in the Maryland case. In Foster Lumber Co. v. Harlan County Bank, supra, it was held that the lender’s equitable mortgage would be given precedence over a mortgage on the land taken by a party who had notice of rights of the lender. The decree in the present proceeding provides merely for a foreclosure. In other words, complainant looks solely to the land and does not seek to hold appellant personally liable for the debt.

It appears from the property settlement between the Pondeliceks that Pondelieek agreed to pay appellant $2,000 within a certain period and that he did not carry out this part of the agreement, and appellant contends that if Pondelieek were living and were to bring an action against her to force her to pay Boucek the amount due him or to give him a mortgage on the Wilmette property, such action would be defeated because Pondelieek had not paid the $2,000 to her, and appellant argues, as we understand it, that complainant for the same reason is also barred from relief in the present proceeding. It is a sufficient answer to this contention to say that the right of complainant to relief does riot depend upon his ability to prove that Pondelieek lived up to his agreements in the matter of the property settlement with his wife.

Appellant contends that complainant is not entitled to relief because it appears “that he has exercised and asserted his remedy at law when he filed and procured the allowance of his claim against the estate of Mr. Pondelieek as he admits having done.” It is a sufficient answer to this contention to state that the proof shows that complainant merely filed a claim against the said 'estate. There is no evidence that the same was ever allowed or even pressed. However, if the claim had been allowed, but not collected, that fact would not bar complainant from relief in the present proceeding.

Appellant contends that the present proceeding is barred by the five-year statute of limitations, but she will not be heard to raise the point in this court, as it appears from the record that such a defense was not raised by plea, answer or demurrer in the trial court.

Appellant contends that the decree is improper as to defendant Hynous in that it finds that the lien of the trust deed made to said defendant is inferior to the lien of complainant. That defendant has not appealed from the decree and it is unnecessary to cite authorities to the effect that a party cannot assign error upon a part of the decree which in no wise affects him.

One of' the points made in appellant’s brief is that “when a note is sued on and reduced to judgment, the note is extinguished by the judgment, ’ ’ but this point is not argued and we would be justified in disregarding the same. However, we assume that the point is intended to apply to the fact that complainant, prior to the commencement of the present proceedings, had taken judgment upon the $2,000 note. It is admitted that this judgment has not been satisfied, and the law is that a judgment on a note, without satisfaction, is no. bar to a proceeding in equity to foreclose.

The equities are all with complainant and it would be against good conscience to allow the defense of the defendant to prevail. The decree of the circuit court of Cook county is affirmed.

Affirmed.

Gridley and B arses, J J., concur.


source: Caselaw Access Project

author: Mr. Justice Barnes

license: Public Domain

text:
    Michael E. White, Plaintiff in Error, v. Central Trust Company of Illinois, Consolidated with Greenebaum Sons Bank & Trust Company, Defendant in Error.
    Gen. No. 34,201.

      Heard in the second division of this court for the first district at the April term, 1930.
    Opinion filed October 14, 1930.
    Barrett, Barrett & Wermuth, for plaintiff in error.
    Fisher, Boyden, Bell, Boyd & Marshall, for defendant in error; Thomas L, Marshall and David A, Watts, of counsel,
   Mr. Justice Barnes

delivered the opinion of the court.

The judgment under review was entered against the plaintiff to the suit for want of prosecution after his motion to strike defendant’s amended affidavit of merits was denied. The sole question presented is the sufficiency of the defense set up in said affidavit.

The declaration consisted of the common counts, to which was attached a statement of the claim and an amended affidavit of claim. The defense consisted of the plea of general issue supported by the said amended affidavit of merits.

The nature of plaintiff’s claim, as set forth in his affidavit, is for the sum of $752,633.84, with interest, alleged proceeds from a foreclosure sale of certain premises under a trust deed to Greenebaum Sons Bank & Trust Company, a corporation, as trustee (to which defendant in error, Central Trust Company of Illinois, has become successor in trust), for the benefit and use of White, the owner of all the bonds secured by said deed.

Plaintiff’s affidavit of merits sets forth the decree with the usual findings and orders of such a decree for sale of the premises in default of payment, at public vendue “for cash in hand,” etc., by the master in chancery, with usual provisions for delivery of the certificate of sale and disposition of the proceeds to the trustee for the benefit of said White.

The affidavit then sets out that the sale was made to one Charles A. Pfingsten (not a party to this suit) for the sum of $757,088.07 (a sum less than the aggregate indebtedness), and that the master’s certificate of sale was issued to him, and a duplicate thereof recorded in . the office of the recorder of deeds, which recited that in pursuance of the decree the master duly advertised and sold the premises “for cash,” and that said Pfingsten made the highest bid therefor of said sum “in cash.”

The affidavit further sets forth in substance the master’s report of sale and distribution, reciting that he had paid out of the proceeds to said trustee, the sum of $752,633.84, for which the trustee receipted, and that after the usual notices the report was confirmed finding that the master had complied in all respects with the terms and conditions of the decree of sale. The affidavit then alleges that a demand was made upon the trustee to pay the last mentioned sum with interest from the date of sale and was refused.

The nature of the defense set up in the affidavit of merits is as follows:

That about March 1, 1926, plaintiff White had numerous conferences with the officers of Greenebaum Sons Bank & Trust Company, and its subsidiary, Greenebaum Sons Investment Company, and stated that he was desirous of obtaining title to the property conveyed by the trust deed and for that purpose desired to purchase all of the outstanding bonds secured by it; that in pursuance of said desire said bonds were purchased for him and he paid the purchase price therefor; that shortly thereafter he directed said Trust Company as trustee, because of existing defaults, to institute in his name for his benefit, foreclosure proceedings under said deed, and to use the amount found due under the decree of sale, so far as necessary, to purchase the property at the sale; that thereupon said Trust Company, pursuant to his directions and the terms of the deed, instituted and prosecuted the foreclosure' to a sale as aforesaid, at which, pursuant to plaintiff’s directions to bid in the property, it bid in the same in the name of said Pfingsten, and caused him immediately after receiving the master’s certificate of sale to indorse the same in blank and deposit it for plaintiff White in safe-keeping with said Investment Company, which immediately gave its receipt for the safe-keeping thereof and delivered the same to plaintiff, which he has ever since retained; that the bonds became merged in the decree of sale and were represented by the amount found due to the Trust Company as trustee, and pursuant to plaintiff’s instruction to use said amount, as far as necessary, to purchase said property at the sale, it did, after paying the master’s fees, etc.,.apply so much of the amount found due, as necessary to complete such purchase, “by receipting to said master as trustee for the amount thereof to be applied as a credit on the amount due under said decree, pursuant to the universal practice and custom followed in courts of chancery in this State in similar cases”; that no cash was received by the master or Trust Company on account of said sale (except that said company paid'the master the expense of sale), and that the certificate so held by plaintiff represents and is the proceeds of the bid made at said sale.

It is first urged that said amended affidavit of merits does not comply with the requirements of section 55 of the Practice Act, Cahill’s St. ch. 110, H 55, because the affiant does not swear to the truth of the matters set forth as constituting a good defense. The contention is somewhat technical and goes to matter of form instead of to the merit of the affidavit, on which alone, as appears from the record, the motion to strike was argued and denied. Objection to a formal defect should be made specially and not by a general motion to strike. (American Hard Rubber Co. v. Howe, 280 Ill. 431.) While plaintiff cites Hunter v. Troup, 226 Ill. App. 343 (2d Appellate District), as sustaining his contention, the form of the affidavit in question has frequently received approval in other Appellate Court cases. (Wolfort v. David Lipsey Co., 189 Ill. App. 34; F. N. Matthews & Co. v. Lilienthal, 215 Ill. App. 160; First Nat. Bank of Hayward, Wis. v. Gerry, 195 Ill. App. 513; Cooper v. Anderson, 246 Ill. App. 1.) The affidavit is in the language of the statute, which prior to the amendment of 1907, adding the words, “and specifying the nature of the defense,” was held sufficient. And in Harrison v. Rosehill Cemetery Co., 291 Ill. 416, the court said that that being the only change in the statute, the construction to be given to it is the same, except that the defendant “must specify the nature of his defense,” and that that requires stating “the ldnd or character of the defense,” and necessarily a legal defense. Apparently the purpose of the amendment was to apprise the plaintiff of its nature that it might appear from the statement of it whether the defense so believed to be meritorious is in fact a legal defense, instead of leaving the defense undisclosed and resting solely on the defendant’s sworn belief of its merits. The statute does not require that the defendant should specifically swear to the truth of the facts upon which the nature of the defense rests, although we think it may be said that the affidavit in such form fairly implies that they are true. If the legislature intended otherwise, direct and appropriate language to make such intent clear could, and probably would, have been employed. If, therefore, it can be said that the question of form has been preserved for review we think neither a proper construction of the statute nor that placed on it in previous practice and decisions supports plaintiff in error’s contention.

The question, then, is, does the affidavit of merits state a legal defense?

The contention that it does not rests mainly on the theory of judicial estoppel. The argument in effect is that plaintiff’s affidavit of claim sets up in substance a judicial record that imports verity and cannot be collaterally contradicted, varied or explained, stressing the facts that the master’s report recites that the sale was “for cash,” and the order confirming it was upon that theory.

The principles underlying the doctrine of judicial estoppel are not questioned, but their application to this record is. This is an action on the common counts for money had and received, not one on pleadings specially setting up a former adjudication, as is necessary to raise the issue of res adjudicata. (Consolidated Goal Co. v. Peers, 166 Ill. 361; People v. Oakridge Cemetery Corp., 328 Ill. 53.) The nature of the defense stated in the affidavit of merits is that of an estoppel in pais, and could be availed of under the general issue. (Arnold v. Hart, 176 Ill. 442; Guter v. Security Benefit Ass’n, 335 Ill. 174, 180; Puterbaugh Common Law Pl. and Pr. [10th Ed.] p. 240.) There is no collateral attack here on the record of foreclosure. It is simply a question of whether the matters set up in the affidavit of defense are available as a legal defense to an action which purports to be for money (cash) had and received.

As ground for estoppel in pais it sets forth not only that the very course of procedure by which the property was bid in for the benefit of White, the owner of the entire bond issue, by using his claim thereunder in lieu of cash and handing the cash back — concededly a useless formality — was induced and directed by said White, and that defendant acted both as trustee under the deed and as his express agent to use his claim in that manner to secure title for him to the property, but that he ratified and confirmed the same by accepting the certificate of sale as evidence of the title and fulfillment of the agency.

Even if there were a basis for the doctrine of judicial estoppel in the record in reciting that the sale was “for cash,” plaintiff, by inducing the trustee to act for his benefit in such manner and by accepting as the result thereof the certificate of sale, is in no position to assert estoppel by the record simply because of such recital. As said in Kamm v. Rees, 177 Fed. 14 (0. 0. A. 9), where one was held bound'in a similar line of conduct, “he is himself estopped to allege estoppel.” The principle is of ancient origin. (4 Comyn’s Digest [4th Ed.] p. 84; Coke on Littleton, 352b; 2 Smith’s Leading Cases [12th Ed.] pp. 772-3.) In the language of Coke, “estoppel against estoppel doth put the matter at large.”

A somewhat analogous application of the doctrine may be found in Chicago Title & Trust Co. v. Prendergast, 335 Ill. 646, and Duffner v. Bowyer, 40 T. L. P. (K. B. Div.) 700. Other cases, not inapplicable, in which the law of estoppel in pais has been successfully invoked to prevent injustice might be cited, among them those referred to in the Prendergast case, and in Reiss v. Hanchett, 141 Ill. 419, 428. „

We think, therefore, that upon the ancient principle stated, defendant was not precluded from setting up in explanation of the adverse recitals of the record relied upon by plaintiff, his instructions to the trustee as his agent and the latter’s compliance therewith, whereby he acquired by the foreclosure proceedings precisely what through such instructions he set out to obtain.

But, as said in Illinois Steel Co. v. Industrial Commission, 290 Ill. 594, quoting from Greenleaf on Evidence, “there is a material difference between proving the existence of the record and its tenor, and using the record as the medium of proof of the matters of fact recited in it.” A judgment may be offered in evidence against one who was neither party nor privy to the suit in which it was rendered “for the purpose of establishing the fact of its own rendition and those legal consequences which would result from that fact,” but it cannot be introduced in evidence to establish the facts upon which it has been rendered except against parties to the suit or their representatives or privies. (Illinois Steel Co. v. Industrial Commission, supra; 34 C. J. p. 95; 2 Freeman on Judgments [5th Ed.] Sec. 1040.) Strangers cannot be bound by nor take advantage of recitals in the record. (Black on Judgments, Sec. 600; Bigelow on Estoppel [6th Ed.] p. 36.) White was not a party to the foreclosure proceeding. For a former adjudication to be a bar there must be, as between the actions, an identity of parties, of subject matter and of cause of action. (Hoffman v. Hoffman, 330 Ill. 413, 416.) Such is not the case here.

’ Nor is the doctrine of estoppel by verdict available. To operate as such there must not only have been a finding of a specific fact in the former'judgment or record material and controlling in that and the subsequent case but it must have been so in issue that it was necessarily determined by the court rendering the judgment interposed as a bar. (People v. Chicago & Eastern Illinois Ry. Co., 336 Ill. 506, 511; Hoffman case, supra.) To be bound by a former judgment, the parties must not only have been adversary parties in the original action but there must have been an issue or controversy between them. (1 Freeman on Judgments [5th Ed.] sec. 422.) Not only were the parties here not adversaries in the foreclosure suit but the issue whether the trustee is liable to pay money to White was not involved, adjudicated, nor raised in that suit. And as a privy, if so regarded, White was on the same side of the controversy in that suit as the trustee. There was no issue between them.

Nor was there an issue of payment of money referred to the master to be determined by him. True, he reported a sale “for cash” and his report was confirmed. But the confirmation of a master’s report of sale, or for paid money, was held in Cruger v. Daniel, 16 S. C. Eq. 157, to be not a judicial act but an administrative order. It was said that the object of the confirmation order is not to determine the truth of the fact reported, but to approve of it, and to protect the master in what he has done, the court adding: “And if the fact be incorrectly reported, parties are not estopped to show the truth.” The court cited Messervey v. Barelli, 2 Hill’s Ch. (S. C.) 433, where it was said confirmation of the report of having paid the plaintiff in that case her share of the estate “was not the object.” This theory of the ministerial character of the master’s report of sale seems to have been applied in Grubb v. Crane, 4 Scam. 153, where a commissioner was appointed to sell lands in vacation in the event of nonpayment of money, and it was held his determination of the nonpayment was a ministerial act.

We think that defendant in error’s point that there was no material issue in the confirmation proceedings as to the payment of cash or between the parties hereto as adversary to each other, is well taken, and as “the only parties concluded by a decree are adversary parties” (Renfro v. Hanon, 297 Ill. 353), defendant was not precluded from setting up the truth with respect to such payment, and it constituted a legal defense.

In short, plaintiff seeks to have defendant pay cash for what he has already received and retains as the equivalent under his own express directions. He got what he bargained for, and should not now be permitted to claim something else.

It has frequently been held that where a person entitled to the proceeds of a judicial sale becomes a purchaser, his receipt to the agent of the court for the amount due him, less any expenses that must be paid in cash, is deemed the equivalent of cash and has been upheld by the courts as a proper medium of payment. (See 73 Am. & Eng. Ann. cases, p. 998, and cases there cited.) Among the cases there cited is Kenley v. Bryan, 110 Ill. 652, where on a sale of land of a decedent to pay debts the purchase by the widow paid for in part by her receipt to the administrator for her separate allowance owed to her by the estate, was claimed to be a fraud that justified setting aside the sale. The court said: “It is true, she did not count out the actual cash,” but it held that her receipt operated to relieve the estate of so much debt, and was a full, fair and legal discharge of the estate of that amount of the indebtedness. In Glemser v. Glemser, 5 Ohio Dec. 267, it was said where a party interested in a particular proceeding, either personally or as trustee, “becomes a purchaser and is bound to pay over money, which under distribution and order of court would be received immediately by him as such trustee or in his individual capacity, that the law does not contemplate that he should actually pay over in cash the full amount,” but that if he acknowledges receiving the amount either in his personal capacity or as trustee, the receipt given therefor “is the same thing as though he had actually paid the money in cash. ’ ’' Other cases cited are to the same effect treating receipts for the proceeds of a judicial sale to a purchaser who is entitled thereto, as cash. As said in Blum v. Rogers, 71 Tex. 668, 669, 9' S. W. 595: “To require actual money to be paid over that is to be returned at once is an idle ceremony. ’ ’

Nor is there any sound reason for a different rule where a dummy is used as a bidder, as indicated in Pearson v. Morrison, 2 Serg. & Rawle, 20, and Fishburne v. Smith, 34 S. C. 330.

In Reinhardt v. Seaman, 208 Ill. 448, 454, it was said:

‘ ‘ The report made by the administrator that he had sold the premises for cash was not rendered fraudulent by the fact that he only received the receipt of the widow acknowledging payment of the award to her. The receipt discharged the indebtedness of the estate to the same extent that it could have been paid in money.”

In Koerner v. Gauss, 57 Ill. App. 668, the decree provided for a sale for cash (p. 670). It was urged as error that complainant was allowed to purchase without paying in cash the amount bid. The court said the purpose of the proceeding was to pay the debt with the proceeds of the sale on the mortgaged premises and that purpose was effected by complainant taking the property at the price paid instead of money.

We think the affidavit of merits stated a legal defense.

Affirmed.

Scahlah, P. J., and Gtridley, J., concur.


text:
    Birger Peterson, Appellee, v. Charles A. Swanson, Appellant.
    Gen. No. 34,231.

      Heard in the second division of this court for the first district at the April term, 1930.
    Opinion filed October 14, 1930.
    Rehearing denied October 27, 1930.
    William: L. Howard, Louis Bresler, Max Haleff, Charles G. Hendricks and Jacob H. Cohn, for appellant.
    Joseph Gr. Sheldon, for appellee.
   Mr. Justice Barnes

delivered the opinion of the court.

This is an action on a promissory note, tried before the court without a jury. The finding was against defendant in the sum of $5,824, and from the judgment entered thereon this appeal is brought.

The action is based on the theory of defendant’s liability as a maker of the note. The theory of the defense is that he was an indorser and as such not liable because of failure to give him .notice of default of payment. It is conceded that the notice required by law to be given an indorser was not given defendant, and that if he placed his signature on the note in that capacity he is not liable.

The note, dated May 6,1927, was originally executed by Charles Bidwell and Esther K. Bidwell, his wife, and was made payable to ‘ ‘ bearer ’ ’ in instalments. It was taken by defendant Swanson, his wife and one Axel L. Johnson, as part payment of certain premises sold by them to Mrs. Bidwell and secured by said trust deed, signed by said Charles Bidwell and his wife, and referred to on the face of the note. Subsequently (June, 1928) said holders negotiated the sale of the note and. mortgage to plaintiff Peterson, each at that time signing the note underneath the signatures of the Bidwells under the following circumstances as disclosed by oral evidence received without objection.

Sometime in May, 1928, Swanson came to the office of one Bnrgeson, a broker, and told the latter’s employee, one Sundell, that he had a note and mortgage for sale, describing the same and the building mortgaged. As described to him (not having the papers) Sundell submitted the matter to Peterson. When told “Mr. Bidwell” was owner of the mortgage building Peterson said he “would not buy any of Bidwell’s mortgages” unless Swanson was willing to “guarantee the mortgage, ’ ’ because he knew him, to be reliable. Afterwards Peterson and Swanson were brought together on two occasions. On the second one the deal was closed, at which they and Burges on, only, were present.

At the time of consummating the deal Peterson saw the papers for the first time. Noting that the additional signatures were on its face underneath the signatures of the Bidwells, he asked about “the guarantee on the note” and Swanson pointed to the additional signatures. He then inquired whether a “guarantee” should appear on the front or back of the note. Burgeson thought it made no difference, and Swanson said nothing. The exchange of check and note was then made.

Prior to the consummation of the deal neither Peterson nor Bnrgeson had seen the note or mortgage, and Bnrgeson had told Swanson that Peterson refused to buy unless the note was “guaranteed,” and Swanson testified that Bnrgeson told him Peterson wanted some one else “to take care of the note if Bidwell did not.” He also told his co-owner, Johnson, that he wanted him to sign his name “on the face of it, otherwise he couldn’t sell it,” and thereupon Johnson signed it. Mrs. Swanson signed the note before the deal — just when is immaterial for she did so at the request of her husband who seems to have acted for both her and Johnson in negotiating and closing the. deal.

Appellee urges that so far as the evidence relates to the intention of the additional signers it should not be considered as it violates the well-known rule against the-admission of an oral contemporaneous agreement that makes a note payable only on a contingency. But whether so or not, we do not think the evidence on that subject has any tendency to change the construction that would otherwise be given to the instrument as a matter of law.

As bearing on the construction to be given the instrument appellant refers to sections 17, 31 and 63 of the Negotiable Instruments Law of this State, Cahill’s St. ch. 98, Hjf 37, 51 and 83. It is too apparent for discussion that the last two sections have no application to the instant state of facts. Section 17 recites the rules of construction where the instrument is ambiguous. The particular rule referred to is found in par. 6. It reads: “Where a signature is so placed upon the instrument that it is not clear in what capacity the person making the same intended to sign, he is to be deemed an indorser.” But there is no ambiguity here as to the location or placing of the signature, or in fact in any other respect on the face of the instrument. From its face one conclusion only is deducible, namely, that appellant and his cosigners signed the note in the capacity of joint makers, and there is nothing in the proof regarding their intention that justifies a different conclusion. We might say, as said by Mr. Justice Winslow in Germania Nat. Bank of Milwaukee v. Mariner, 129 Wis. 544: “To say that, where it conclusively appears from the instrument that the signer intended to sign as a maker, the statute (referring to a like paragraph of the Wisconsin Negotiable Instrument Act) is intended to make him an indorser, would be little short of ridiculous.”

It was also there said that said section applies only when a doubt fairly arises from the ambiguous location of the signature. There is no room for any such doubt here. The additional signatures are placed where one usually signs his name whether he intends to be bound as principal, surety or absolute guarantor. It was held in Bank of California v. Starrett, 110 Wash. 231, 188 Pac. 410, 9 A. L. E. Ann. 177, where a party placed his name on the left side of the bottom of the note, instead of on its right side, that he was not an indorser under said section 17, par. 6, but a maker. No case with an identical state of facts has been cited to us. Cases somewhat analogous, cited by appellee, are Partridge v. Colby, 19 Barb. (N. Y.) 248; Freeman v. Clark, 3 Strob. (S. C.) 281, and Dusenbury v. Albright, 31 Neb. 345, in each of which the holder of the note subscribed his name as maker before negotiating it. Bach was payable to “bearer,” the former to said holder or “bearer.” The additional signer was in each case held liable to “bearer” as a maker. Appellant cites a different ruling in Gibson v. Powell, 6 How. (Miss.) 60. Cases cited presenting a different state of facts or where the note was payable to a designated payee and not to “bearer,” and in transferring the note was signed by him on its face, are not applicable. If they do not present an ambiguity such as is referred to in the Negotiable Instruments Law above cited, yet it has been held in jurisdictions before the adoption of said law that a payee might in transferring title make his indorsement on the face of the note. While we are cited to no. case with an identical state of facts, so far as the doctrine under the Law Merchant has been applied to somewhat analogous facts the general trend of authorities, we think, indicates that where a holder of a note payable to “bearer” is signed by him on its face on .negotiating it he becomes liable as a maker thereof.

The preliminary talk about having the note “guaranteed” is not controlling. While a “guarantee” may be in the nature of a secondary obligation, requiring notice on default of the principal, yet the obligation may be direct and primary notwithstanding the employment of that term. The nature of the obligation, whether primary or secondary, is the determining element. (28 C. J. sec. 6, p. 891.) The evidence on the subject discloses no discussion at or prior to the signing and delivery of the note, on which to base a claim of contingent or secondary liability, either as a guarantor or an indorser. In fact the subject of indorsement was not referred to. If the character of the guaranty may be inferred from the evidence with regard thereto it was to be a guaranty of payment, and that is an absolute guaranty. (Arnold Suretyship & Guaranty, sec. 23; McMurray v. Noyes, 72 N. Y. 523; Cowan, McClung & Co. v. Roberts, 134 N. C. 415, 46 S. E. 979, 980, 65 L. E. A. 729.) The place where appellant signed the note implies an absolute guaranty, and there is nothing in the oral evidence with regard to it that changes that implication. As said in section 1769, Daniel on Negotiable Instruments (6th Ed.): “If A guarantees, expressly or by implication, to pay the note of B to C, provided B does not pay it, he becomes absolutely liable for its payment immediately upon B’s default, and is, therefore, deemed an absolute guarantor of the due payment of the note by B to C. ” Where the guarantee is absolute it is the duty of the guarantor to see to the payment of the money. In such a case no demand or notice of nonpayment is required, but the holder may institute suit at the maturity of the debt without taking any other steps. (Dickerson v. Derrickson, 39 Ill. 574.

It is also said in Daniel on Negotiable Instruments, sec. 1763, that “where one who sells a note guarantees its payment, the guaranty is an original undertaking, and need not be written. ’ ’ Such is the holding also in Gage v. Mechanics’ Nat. Bank of Chicago, 79 Ill. 62, where the payees indorsed the note guaranteeing its payment at maturity. It was held that they undertook to pay at all hazards at its maturity and that it was a primary undertaking.

We think, therefore, that in the absence of any ambiguity or of any provision in the Negotiable Instruments Act changing the Law Merchant on the subject, the construction of the instrument must be determined from the location of the signature, placed, as it was, where a maker usually signs such an instrument. Certainly no question of ambiguity could be raised had the note passed into the hands of a third party. Section 191 of the Negotiable Instruments Act, Cahill’s St. ch. 98, If 214, states “the person ‘primarily liable’ on an instrument is the person who by the terms of the instrument is absolutely required to pay the same, ’ ’ and by the terms of the instrument here all signers are joint parties to the promise to pay, and from such promise would be deemed jointly and severally liable. (Par. 7, sec. 17, supra.) The liability of the additional signers would'appear to be the same as sureties or as if they as comakers had executed a new note for the consideration Peterson paid therefor. (Cook v. Brown, 62 Mich. 473, 29 N. W. 46.) We are not concerned whether the change of the note affected the liability of the original makers, or with either their liability or Swanson’s as joint makers.

Construing like language of said section 192 in the North Carolina statute, it was held in Roberson-Ruffin Co. v. Spain, 173 N. C. 23, 91 S. E. 361, that both principal and surety (comaker) are primarily liable on the note. If Swanson intended merely to be secondarily liable, either as guarantor or indorser, neither the instrument nor the evidence indicates any such intention. He must be held, we think, from the very language of the note and the location of his signature thereon, as primarily liable as a surety comaker, regardless of the oral terms used with respect to obtaining his signature.

Affirmed.

Scahlah, P. J., and G-ridlby, J., concur.


text:
    P. J. Claussen Company, Appellant, v. Illinois Central Railroad Company, Appellee.
    Gen. No. 34,292.

      Heard in the second division of this court- for the first district at the April term, 1930.
    Opinion filed October 14, 1930.
    Rehearing denied October 27, 1930.
    O’Connell, McGlinn & O’Gallagher, for appellant.
    Fred H. Montgomery and Herbert J. Deany, for appellee; Vernon W. Foster, of counsel.
   Mr. Justice Barnes

delivered the opinion of the court.

Plaintiff brought this action to recover for alleged loss and damage to a carload shipment of tomatoes moving in interstate commerce. It was tried without a jury, and at the close of plaintiff’s evidence defendant’s motion for a finding in his favor, on the ground that plaintiff had failed to make out a prima facie case, was sustained. From the judgment entered thereon this appeal was taken.

The statement of claim is predicated upon defendant’s alleged liability for said shipment from Anna, Illinois, to Montreal, Canada, alleging that defendant failed to transport and deliver said goods safely, etc., and furnished faulty equipment for such purpose and that the damage, to the extent of the difference between the value of said goods in good condition at the time they were due to arrive in Montreal and their value when they did arrive there, is $2,028.10.

In its affidavit of merits defendant denied agreeing to transport to Montreal and claimed it contracted to transport to Philadelphia only; that it did so safely, etc., without negligence or breach of its contract, and tendered at Philadelphia the goods for delivery to the consignee in the same condition as when received by it (with the exceptions of natural and antecedent causes which neither it nor its connecting carrier could by ordinary means prevent); that it did not furnish faulty equipment, was not guilty of carelessness or negligence, and none of plaintiff’s goods was lost by reason thereof; that the loss and deterioration were due to the fact that the goods were not in good shipping condition for shipment to a distant point when delivered to defendant ; that delivery was not accepted when tendered to the consignee at Philadelphia; that .thereafter the agents of the plaintiff caused a reshipment by another carrier from Philadelphia to Montreal; that the damage complained of occurred after such reconsignment and after the shipment had passed from defendant’s control, and that it was not a party to the contract of reconsignment.

If plaintiff had a cause of action for damages against defendant, it made no proof of them or their amounts. While it attempted to make proof of damages — thereby seeming to recognize the necessity of it — it relies here on the alleged failure of defendant to deny the amount of damages as alleged in its statement of claim, claiming that the amount was thereby admitted.

If to meet this contention it were not enough to point out that defendant in its affidavit of merits averred “plaintiff was not damaged in the manner and to the extent claimed” which ■ averment plaintiff by offering proof of damages presumably regarded as putting their amount at issue, yet as indicated in its statement of claim the damages were unliquidated in character. Rule 15 (1) of the municipal court of Chicago, of which we take cognizance (paragraph 58, Cahill’s St. ch. 51), provides: “Allegations of unliquidated damages, special or general, need not be specifically denied, but shall be deemed to be put put in issue in all cases unless expressly admitted.” Appellant’s contention, therefore, that the amount of damages was admitted is not tenable.

But while failure to make proof of the amount of damages, if any, may be enough to require affirmance of the judgment, the question of whether there is any proof of liability on the part of defendant is the main issue.

Plaintiff’s case rests mainly on documentary evidence. It consists of the bill of lading, the tariff rates from Anna, Illinois, to Philadelphia, Pennsylvania, and also'from Anna to Montreal, on file with the Interstate Commerce Commission, and certain correspondence in the nature of a recital of the shipment movements which has no particular value in determining the question of liability.

Appellant contends that because defendant’s bill of lading recites that it is “subject to the classifications and tariffs in effect on the date of the receipt by the carrier, ’ ’ and under the tariff schedule of both defendant and that of the Pennsylvania Railroad Company, which received the shipment at Philadelphia, plaintiff was entitled to the privilege of diversion and reconsignment, these tariff provisions for reconsignment constituted a part of the contract, and that on reconsignment the shipment became one of a “through rate” from Anna to Montreal.

It is appellee’s contention in substance that whether that be true or not under the Interstate Commerce Act, as amended July 3, 1926 (which was subsequent to the shipment in question) where the initial carrier becomes a party to the reconsignment, yet in the absence of any proof here connecting defendant with the reconsignment the bill of lading constitutes the sole contract, and defendant performed its obligations thereunder when, without any agreement for reconsignment to which it became a party, the goods were delivered in good condition at Philadelphia, the point of destination named in its bill of lading.

The only proof on the subject disclosed that after the car was delivered to and placed on the tracks of the Pennsylvania Railroad Company at Philadelphia it remained there some 35 hours available for delivery to the consignee, before any order of reshipment to Montreal was received by the Pennsylvania Railroad Company. There is án entire absence of any proof from whom the order came or to whom it was given. The inference is that it was given by the shipper or consignee to the Pennsylvania Company. Under such circumstances appellee contends that it was not shown to have been connected with the order of reconsignment, and hence the movement under its bill of lading was a distinct and separate movement from that from Philadelphia to Montreal.

These movements took place under the Interstate Commerce Act as it stood before the said amendment of July 3,1926. Prior to that time the said act imposed liability on the initial carrier for loss, damage or injury, to goods caused by it or any connecting common carrier when the goods were transported on “a through bill of lading. ’ ’ The transportation here, however, was not on a through bill of lading to Montreal but by one to Philadelphia where the shipment was reconsigned. Under the amendment of the Act of July 3, 1926, the liability of the initial carrier' was extended “in the case of property reconsigned or diverted in accordance with the applicable tariffs filed, as in this Act provided.” (49 USCA, sec. 20, par. 11.) But said amendment is not applicable to shipments before its passage. (Gentile Bros. v. Atlantic Coast Line R. Co., 96 Fla. 228, 117 So. 890; Gulf, C. & S. F. R. Co. v. Mars [Tex. Civ. App.], 14 S. W. [2d] 877; Chicago, R. I. & P. R. Co. v. S. L. Robinson & Co. [Ark.], 23 S. W. [2d] 976.)

The fact that the shipment was subject to the classifications and tariffs then on file for rate making purposes which afforded the privilege of reconsignment, we deem unimportant to the issue unless the shipper availed itself of such offer by timely direction, request or notice to defendant or its agent before defendant completed the act of delivery under its bill of lading. The mere fact that subsequently the Pennsylvania Railroad Company, after holding the shipment available for delivery to the consignee, accepted an order for reconsignment to Montreal, without defendant’s knowledge or acquiescence, as we must infer from lack of proof on the subject, cannot in our opinion, be deemed to change or transform defendant’s bill of lading into a “through bill of lading” to Montreal so as to render defendant liable for loss, damage or injury after its delivery in Philadelphia under its bill of lading.

It is not questioned that where the initial carrier takes the order of reconsignment, or agrees to it, it is liable for loss, damage or injury incurred on the route of diversion. (Gulf, C. & S. F. R. Co. v. Texas Packing Co., 244 U. S. 31.) But in the case at bar, as before stated, there was no proof of any such agreement or that defendant or any agent of it received or gave the order of reconsignment.

In somewhat similar cases decided before passage of the amendment of July 3, 1926, the reconsignment was held to be a new contract. In Southern Produce Co. v. Norfolk S. R. Co. (Va.), 132 S. E. 360, cabbages were delivered to the initial carrier at Norfolk, Virginia, for shipment to Edgemoor, Delaware, a station on the line of the Pennsylvania Railroad Company a connecting carrier. Before the shipment reached Edgemoor the Pennsylvania Railroad Company received an order from the shipper to divert to Boston and conformed to the direction. In the suit to recover damages from the initial carrier under the Carmack Amendment, the court held that its contract was evidenced by the bill of lading and performed when the shipment reached Edgemoor, and that the movement from that point to Boston “was in effect a reconsignment of the shipment under a new parol contract between the plaintiff and the Penn. Railroad.” The court said :

“It seems to us, then, manifest that it is essential, in order to recover of the initial carrier, to show that the injury is caused by some agent of the initial carrier whom it has engaged to aid it in the performance of its contract, for that is the purpose of the statute, but that its responsibility cannot be further extended so as to hold the initial carrier liable for the defaults of the shipper’s own agents under other contracts to which the initial carrier is not a party.”

A somewhat similar state of facts appears in Chase & Co. v. Florida Fast Coast R. Co., 94 Fla. 1143, 115 So. 825. The shipment was delivered in good condition to Waycross, Georgia, on a bill of lading from Perrine, Florida, to that destination. About two hours after arrival of the shipment, the Atlas Coast Line Railroad Company received instructions .from the shipper to divert to Potomac Yds., Ya. Under these instructions the goods moved on the latter company’s line to Richmond, Ya., and thence by connecting carrier to Potomac Yds., Ya. While the shipment was there on the tracks of the Penn. Railroad Company it received an order for reconsignment to Wilkes-Barre. On arrival at the latter point the shipment was in such a deteriorated condition it was refused. The freight was paid to the final or delivering carrier and was equivalent to the tariff provided for a through rate from the point of origin to actual final destination. Affirming a judgment for defendant the court said that defendant’s liability on the “through bill of lading” issued by it terminated at Waycross, Oa., and there were no facts adduced independent of or in connection with the bill of lading to render it liable for loss, damage or injury beyond Waycross, Oa.; that the movement beyond that point was directed by the shipper, “defendant in no way. participating in such directions or transportation after the tomatoes reached Y7aycross, Oa.,” and that the liability of the initial carrier was regulated by the “through bill of lading” that was issued or should have been issued by it. The court deemed that to be the interpretation put by Congress when it enacted the amendment of July 3,1926, and said while the payment of a through rate from the origin to the actual final destination may have been proper, it did not control the liability of the initial carrier.

In reversing the judgment against the initial carrier in another case, where there were two subsequent diversions after the shipment had reached the destination fixed by the original bill of lading, the court in Chicago, R. I. & P. Ry. Co. v. S. L. Robinson & Co. (Ark.), 23 S. W. (2d) 976, a case where the rights of the parties accrued before the amendment of 1926 (Act of July 3, 1926, c. 761, 44 Stats. 835), referred to the fact that the initial carrier did not accept the diversion or reconsignment and was not consulted in the matter and did not know anything about the diversion or re-consignment until some time after it had been made.

And under a somewhat complicated state of facts the forwarding of a shipment to another point after the car had reached the destination named in the bill of lading was held in Pere Marquette Ry. Co. v. French, 254 U. S. 538, to be a new transaction and it was said that “in turning over the car for this new shipment the railway made a disposal of it in assumed termination and discharge of its obligations, which was, in legal contemplation, a delivery.” (p. 543.)

But appellant contends that the agreement is shown by the tariff provision referred to, to which appellee, the initial line, was a party, and that this tariff provision makes the number of movements under diversion or reconsignment one continuous shipment. The only case cited in support of this contention is Sparr Fruit Co. v. Southern Pac. Co., 220 Ill. App. 180. Some language in the .opinion (p. 185) might warrant that construction, where the reconsignment is with the knowledge, or under the direction of the initial carrier or its agent. It would appear that that case was decided on certain stipulations to which the language in said opinion referred to may have been applicable. However, it was said by Mr. Justice McReynolds in Bracht v. San Antonio & A. P. R. Co., 254 U. S. 489, where the interstate tariffs permitting reconsignment were offered in evidence by plaintiff and rejected, “we are unable to say as a matter of federal law that tariff schedules for interstate shipments . . . constituted part of the agreement.” In view of this holding and the tenor of the authorities above cited where the re-consignment was held to be a new transaction, we deem the contention untenable.

We deem it unnecessary to discuss the cited cases not involving the fact whether the initial carrier was in any way connected with the reconsignment order. The absence of proof on that subject we deem'fatal to establishing the claim of defendant’s liability.

We think the judgment should be affirmed.

Affirmed.

Scanlan, P. J., and Gridley, J., concur.


author: Mr. Justice Gridley

text:
    O. A. Christensen, Complainant and Defendant in Error, v. Walter W. Niedert et al., Defendants. Theodore F. Decker, Plaintiff in Error.
    Gen. No. 34,209.

      Heard in the second division of this court for the first district at the April term, 1930.
    Opinion filed October 14, 1930.
    Joseph G. Sheldon, for plaintiff in error.
    McFarland, Morgan, Partridge & McFarland, for defendant in error; James H. McFarland and Frank H. Partridge, of counsel.
   Mr. Justice Gridley

delivered the opinion of the court.

By this writ of error, Theodore F. Decker seeks to reverse a deficiency decree, entered in a foreclosure proceeding on August 26, 1929, wherein it was adjudged that “complainant, O. A. Christensen, have and recover from the defendants, Walter W. Niedert, Elsie Niedert and Theodore F. Decker, the sum of $12,936.77, with interest thereon from August 21, 1929 (the date of foreclosure sale), and that said complainant have execution therefor against said defendants as upon a judgment at law.”

On September 10, 1926, the two Niederts (husband and wife), being the owners of improved premises in Chicago subject to a first trust deed of $19,000, executed their 16 promissory notes, numbered 1 to 16 inclusive, payable to bearer. Each also indorsed them. Notes 1 to 15 were each for $250, and note 16 was for $12,500. As security for the notes they on the same day executed and delivered a second trust deed on the premises. to the Chicago Title & Trust Co., trustee, which was duly recorded. Note No. 1 became due on December 10, 1926, and notes 2 to 16 at three months’ periods thereafter, No. 16, for $12,500, maturing on September 10,1930. All notes bore interest at the rate of 6 per cent before maturity and 7 per cent after maturity. The trust deed contained the usual covenants, among which were that, in case of default for three days in making payment on any note when due, either of principal or interest, then the whole of the principal sum secured should, at the option of the holder of the notes, become immediately due and payable, without notice, and he should have the right to immediately foreclose the trust deed, and that in case of foreclosure reasonable sums should be allowed for solicitor’s fees, stenographer’s fees, necessary costs, etc. After the • Niederts had executed the notes and trust deed they conveyed the premises to one Kate W. Clarke, and she became the owner thereof subject to said two trust deeds. Theodore F. Decker had formerly owned the premises. He was a relative of the Niederts, and Walter W. Niedert was an employee of his in his business. In June, 1927, one Albert Beinhardt negotiated with Walter W. Niedert for the purchase of such of the notes as had not matured. At Beinhardt’s request Niedert went to Decker and procured the latter’s indorsement on all of the unmatured notes. The indorsement, as “T. F. Decker,” is immediately below the indorsements of the Niederts. Thereupon Beinhardt purchased the notes from Niedert. Thereafter Beinhardt sold the notes to one Walter G. Larson, and thereafter Larson sold them to complainant. In February, 1927, notes Nos. 1 to 7, inclusive, had been paid and canceled, and all interest due on the entire indebtedness had been paid up to June 10,1928, but notes Nos. 8 and 9, maturing respectively on September 10 and December 10,1928, had not been paid, nor had any quarterly interest been paid since June 10, 1928. By reason of this default and the further default in the payment of the general taxes levied against the premises for the year 1927, complainant, as holder of all unpaid notes, elected to and did declare the entire indebtednedness due, and on February 27, 1929, filed the present bill. He made the Niederts, Decker, Kate W. Clarke, certain tenants in possession, and others, parties defendant. All of them, including Decker, were personally served with process, and-all were defaulted except Kate W. Clarke, who filed an answer, and the cause was referred to a master to take proofs and report his conclusions of law and fact. On the hearing before the master only testimony offered by complainant was introduced.

Among the allegations in the bill are that “Decker, for the purpose of negotiating and selling said trust deed and the notes secured thereby, and solely for his own accommodation, under the name and style of T. F. Decker, indorsed, each of the notes owned and possessed by your orator”; that “Decker, at the time of indorsing said notes, guaranteed payment of them, as they should become due, subject to all the terms and provisions of the trust deed owned by your orator; and that, although default has been made in the payment of the notes, said Decker has not paid them, or either of them, or any part thereof.” There are no allegations in the bill to the effect that* when said notes (due respectively on September 10, and December 10, 1928) were not paid, Decker, as the indorser thereof was given due notice of their dishonor. The prayer of the bill, in addition to praying for an accounting, etc., is: ‘ ‘ That a decree for said sums may be entered against the defendants, Walter W. Niedert and Elsie Niedert; that upon the failure of said defendants to pay said decree within a short day to be fixed by the court, the premises may be sold, etc.; that in the event that said premises do not sell for a sufficient sum to pay the amount of the indebtedness due, your orator may recover a deficiency decree against the makers (i. e., the Niederts) of said notes; . . . that a judgment may be entered herein against the defendant, Theodore F. Decker, for the amount due secured by your orator’s trust deed, together with interest thereon; that execution may be issued upon said judgment against his property; and that your orator may have such other and further relief in the premises as equity may require.” etc.

On the hearing before the master no testimony was introduced tending to show that the liability of Decker was other than that of an indorser on the notes, or showing that any demand had been made on the Niederts, or that due and timely notice of the dishonor of the notes had been given to Decker to charge him as an indorser, as required by the provisions contained in Article VII of our Negotiable Instruments Law (Cahill’s St. 1929, ch. 98, jf 110 et seq., pp. 1809-10.) The only testimony as to notice to him is that on January 10, 1929, after default in the payment of the said notes due on September 10 and December 10, 1928, had been made, said Walter G-. Larson called Decker on the telephone and told him he would be held responsible for their nonpayment, and that, prior thereto, on January 3, 1929, he (Larson) had written Decker a letter, advising him of said nonpayment, and stating that “if payments are not met at once we will have to call on the indorsers as well as the makers on this mortgage, as we have only been getting extended excuses from Mrs. Kate W. Clarke.” All unpaid notes were introduced in evidence before the master. There is nothing on the notes to indicate that Decker is a guarantor thereof, nor on them are there any provisions providing for "the acceleration of the due dates under any conditions. Reinhardt testified in substance that in June, 1927,- when Fiedert asked him to purchase the notes, he told him that he (Reinhardt) “would take that mortgage if it was signed by Decker, ’ ’ as he then “would feel safer about the mortgage”; that “it was my understanding and intention, at the time I bought the notes, that in case they were not paid I would collect the money from Decker”; that “if' Decker’s name had not appeared on the notes I would-not have taken them”; and that, thereafter, when the witness sold the notes to Larson, “I told him (Larson) about the conversation that I had at the time Decker indorsed the notes.” Larson testified in substance that he was in the mortgage loan business; that he bought the notes from Reinhardt about March 10, 1928, and sold them to Christensen (complainant) on March 15, 1928; that when he purchased them from Reinhardt, the latter told him how and for what purpose he “had gotten the indorsement of Decker”; and that “it was on the strength of Decker’s signature on the back of the notes” that he (Larson) had purchased them. The complainant, Christensen, president of a bank, testified in substance that he purchased the notes from Larson for cash “at a discount”; that after he purchased them only one note was paid — the one maturing on July 10, 1928, for $250; that at that time he knew of the financial responsibility of Decker; and that “it was entirely on account of Decker’s indorsement on the notes that induced me to purchase them.”

The master, in his report properly found that at the date of his report (June 27,-1929) there was due on the indebtedness, evidenced by said unpaid notes, the total sum of $16,160.07, including interest, solicitors’ fees of $1,000, and other costs and charges. He recommended that a decree of foreclosure be entered in accordance with the prayer of the bill. On the same day the report was filed (July 24, 1929) the court entered a decree of foreclosure, confirming the master’s report, and adjudging that complainant, by virtue of said second trust deed, had a valid and subsisting lien, subject to said first trust deed of $19,000, on the premises .for said total sum of $16,160.07. In addition to the usual findings the court found that Decker had previously owned the premises and had previously owned and held said trust deed; that “Decker, for the purpose of negotiating and selling the trust deed and the notes secured thereby, and solely for his own accommodation, under the name and style of T. F. Decker, indorsed each of said notes owned-and held by complainant”; that “notice of the default in the payment of the note due December 10, 1928, was given to said Decker (court does not state when such notice was given) and that said Decker has not paid the notes, of any or either of them, or any part thereof”; that on September 10, 1926, the legal title to the premises was held by the two Niederts, but that the beneficial title thereto was in Decker; that on said date the two Niederts executed said second trust deed and “as an accommodation for Decker and for the sole purpose of aiding said Decker in negotiating a sale of the trust deed and notes”; and that “The defendant, Theodore F. Decker, at the time he indorsed said notes, guaranteed the payment of the same as they severally should become due, subject, however, to the terms and conditions of the trust deed securing said notes; and that said Decker by said indorsement guaranteed the payment of interest, costs and solicitor’s fees, in addition to the principal amount of said notes and each of them. ’ ’

We do not think that the last mentioned finding of the court is sustained by the evidence or the law. The evidence discloses that Decker’s signature on the notes is that of an indorser as distinguished from that of a guarantor. And, as he did not sign the trust deed, he could not in any event be held for solicitor’s fees, etc.

In the foreclosure decree the court, in addition to ordering a sale of the premises in the usual manner, further ordered that, if the proceeds of the sale of the premises be insufficient to pay the amount found to be due, “then the persons, firms or corporations to which such amounts shall be due and which shall not be satisfied as aforesaid, shall be entitled to a deficiency decree against the defendants personally liable therefor for the amount of such deficiency.”

The premises were sold after due advertisement on August 21, 1929. In the master’s report of sale, filed August 26, he states that he sold the premises for $4,000 to the complainant, Christensen, and that after payment of master’s fees and costs there was a deficiency of $12,936.77. On the same day (August 26) the court entered the deficiency decree, as first above mentioned, in which there was a finding that, as it appeared that personal service of summons in the cause had been had upon the two Niederts and Decker, they and each of them were personally liable for such deficiency.

We think it clear from the evidence, and under the provisions contained in* section 16 of the Mortgages Act (Cahill’s St. 1929, ch. 95, Ü17, p. 1773), that such deficiency decree was proper as to the two Niederts, but we do not think that under the evidence and the law it can be sustained as to the defendant, Decker. A similar case is that of Walsh v. Van Horn, 22 Ill. App. 170. From the opinion it appears that in 1882 Van Horn filed a bill to foreclose a mortgage mailing William Galligher, Bridget, his wife, and Walsh parties defendant; that he also asked for a personal decree against Galligher and Walsh and that for any balance unpaid after the sale of the premises he-have execution against both; that in Walsh’s answer he denied the right of Van Horn to have a personal decree against him for any such balance; that in March, 1875, Galligher had executed his promissory note for $560, due in five years and payable to Walsh; that Galligher and wife, to secure its payment, had given a mortgage upon the premises; that in April, 1875, Walsh had sold and assigned the note and mortgage to Van Horn; and that it was a matter of dispute between the parties whether in the transaction Walsh had assumed the liability of a guarantor, or only that of an indorser. On the hearing of the cause a decree of foreclosure was entered. Upon the coming in of the master’s report of sale, the court found that there was a deficiency of $589.06, and entered a personal decree therefor against both Galligher and Walsh, and awarded execution against them. From the deficiency decree Walsh alone appealed. In reversing that decree as to Walsh, the court said (p. 172, italics ours):

“It is only by virtue of an express provision of statute, or where there are facts giving equitable jurisdiction over the demand, that a third person liable for the mortgage debt can be joined as a party defendant in a foreclosure suit, and a judgment be recovered against him for a deficiency. In the absence of such statute and of circumstances giving jurisdiction to the court of chancery, there is a misjoinder of causes of action. (Citing 2 Jones on Mortgages, sections 1710 and 1711.)

“In this case there are no circumstances of equitable jurisdiction. Whether the responsibility of appellant (Walsh) for the payment of the note was that of an indorser or that of a guarantor, it was a purely legal liability and enforcible in a coiort of law. It does not change the case even if his contract was an original undertaking and one upon which he could be sued in the first instance and without reference to the maker. It would simply be a .promise distinct from those embodied either in .the note as originally given or in the mortgage, but one containing no element that would make it cognizable in the chancery court. . . .

“The only statutory provision that is claimed to justify the decree against appellant is Sec. 16 of Chap. 95 of the Revised Statutes. That section, as we understand it, does not in terms or by implication give the right to join in the foreclosure suit third persons who are legally liable for the payment of the mortgage debt, for the purpose of obtaining a decree against them for the residue of the debt remaining unpaid after all the mortgaged property has been exhausted. ’ ’

The Appellate Court of the Second District then proceeds to analyze said section of the statute and gives reasons for its opinion as to its proper construction.

We agree with the reasoning and conclusion in the opinion in the Walsh case and think it decisive of the present cause. Counsel for complainant here contend, as we understand them, that because Decker was personally served with process and the foreclosure decree was taken pro confesso as to him, the Walsh case is not here applicable. We cannot agree with the contention. Furthermore, there are not sufficient allegations in complainant’s bill warranting the entry of any deficiency decree against Decker. It is well settled that “a decree pro confesso concludes the defendant only as to matters alleged in the bill.” (Curley v. Ford, 168 Ill. App. 525, 528; Curlett v. Curlett, 106 Ill. App. 81, 85; Armstrong v. Douglas Park Building Ass’n, 176 Ill. 298, 300.) Furthermore, the evidence in the present cause discloses that Decker was an indorser of the notes as distinguished from a guarantor. In section 63 of our Negotiable Instruments Law, Cahill’s St. ch. 98, H 83, it is provided that “a person placing his signature upon an instrument otherwise than as maker, drawer or acceptor is deemed to be an indorser, unless he clearly indicated by appropriate words his intention to be bound in some other capacity.” There is nothing upon the notes in question indicating that Decker intended to be bound in any other capacity than that of indorser. And the notes, introduced in evidence by complainant, “control the allegations of the bill.” (Armstrong v. Douglas Park Building Ass’n, 176 Ill. 298, 300; Greig v. Russell, 115 Ill. 483, 489; Price v. Solberg, 269 Ill. 459, 462.) Furthermore, the evidence discloses that no sufficient notice was given to Decker of the nonpayment of such of the notes as had matured when complainant’s bill was filed. Furthermore, several of the notes, upon which Decker’s name appears as an indorser, including the note, No. 16, for $12,500, had not matured, as to him as the indorser, when the deficiency decree was entered, and which said notes were included in the amount of said decree.

For the reasons' indicated the deficiency decree of August 26, 1929, is reversed as to Theodore F. Decker, and the cause is remanded to the superior court with directions to' so modify the - decree as to eliminate Decker’s name entirely therefrom, leaving said decree standing as against Walter W. Niedert and Elsie Niedert only.

Reversed and remanded with directions.

Scanlan, P. J., and Barnes, J., concur. .


text:
    Edward E. Shinnick, Trustee, and Ella G. Mincer, Complainants, v. Jacob Goodman et al., Defendants. Appeal of William Zimmerman, Intervening Petitioner.
    Gen. No. 34,224.
    Heard in the second division of this court for the first district at the April term, 1930.
    Opinion filed October 14, 1930.
    Rieger & Rieger and Samuel M. Ash, for appellant; Samuel M. Ash, of counsel.
    Joseph Rosenberg, for appellee; Aaron L. Stein, of counsel.
   Mr. Justice Gridley

delivered the opinion of the court.

This is an appeal by William Zimmerman from an order of the superior court of Coolc county, entered in a foreclosure proceeding on February 8, 1930, wherein the court, following the recommendation of the master, directed that the Union Bank of Chicago, as receiver, pay over to Harry J. Fireman the balance of moneys in its hands, viz., $1,814.21, and that, subject to said payment, its final report and account be approved and it be discharged as receiver.

Harry J. Fireman prayed a separate appeal from the order but failed to perfect it. He has here assigned cross errors, claiming that said receiver should be required to pay to him certain other specified sums. In the printed brief and argument of his counsel, however, it is conceded that such cross errors cannot properly be considered by this court (Hindman v. Off, 246 Ill. App. 528, 532), and the same have been withdrawn.

The sole question involved in Zimmerman’s appeal is whether he or Fireman, the conceded assignee and owner of the equity of redemption, is entitled to said moneys in the receiver’s hands.

On October 29, 1925, Jacob Goodman and Lillian Goodman, the then owners of the premises improved by an apartment building, executed and delivered to Ella G. Mincer, one of the complainants, their promissory notes aggregating $15,000. To secure their payment they conveyed the premises to the other complainant, Edward E. Shinnick, as trustee, by a second trust deed, which contained the usual covenants and pledged the rents and profits as further security for the indebtedness. The first trust deed then on the premises amounted to $60,000. Subsequently the Good-mans sold the premises, subject to said first and second trust deeds, to Katie Forman and Joe Forman. In part payment of the purchase price the Formans executed and delivered to the Goodmans their promissory-notes, dated November 7, 1925, aggregating $13,500 and all payable within one year. To secure these notes they executed and delivered a third trust deed on the premises to Herman S. Lanfield, trustee, which deed contained the usual covenants and pledged the rents and profits as further security, etc. Subsequently, a fourth trust deed, held by the Liberty Loan and Mortgage Co. and securing notes aggregating $589, was placed upon the premises. Subsequently, the Formans, by deed dated April 3, 1926, recorded April 14, 1926, conveyed the premises to James Doyle.

Oh April 30, 1926, default having been made in the payment of certain of the notes held by Ella G. Mincer, complainants filed their bill to foreclose said second trust deed. Among the numerous parties made defendants was James Doyle, who was then the owner of record of the premises, subject to said four trust deeds. The bill prayed that Doyle and another be restrained from. collecting the rents and that a receiver be appointed, etc. The Union Bank of Chicago was appointed receiver to take charge of the premises and collect the rents, and it took possession and entered upon its duties. Such proceedings thereafter were had that on October 28,1926, a decree of sale to satisfy said second trust deed was entered and a sale of the premises was made by the master on November 22, 1926. It appearing that the total indebtedness due to Ella G. Mincer had not fully been satisfied, the court, on November 26, 1926, in addition to confirming the sale, entered a deficiency decree against the Goodmans for $5,763.09. Thereafter the receiver remained in possession and continued to collect the rents, and out of the same said deficiency decree was satisfied. Without, any order of court, the receiver thereafter remained in possession and continued to collect the rents. The fifteen months ’ period for redemption expired on Febrnary 22, 1928, and shortly thereafter a master’s deed of the premises was delivered to William Zimmerman, assignee of the purchaser at the foreclosure sale. On March 6, 1928, the receiver filed its report, showing that it had collected up to February 6 the total sum of $16,320, and had expended $11,531.28, leaving a balance in its hands on said date of $4,788.72, which report was approved by the court. On May 19, 1928, the receiver filed its final report and account showing receipts, including said balance, of $5,534.72, and disbursements of $3,720.51, leaving a balance in its hands of $1,814.21, the fund in controversy.

In the meantime two intervening petitions had been filed in the cause, one by said William Zimmerman on February 20, 1928 (two days before said period for redemption expired), in which, after making allegations, he prayed that the receiver, out of the rents and profits collected from the premises, less payments made on said deficiency decree and proper costs and expenses, pay to him “up to but not exceeding the sum of $8,000.” To the petition separate answers were filed by Lillian Goodman, Harry J. Fireman and the receiver. The other intervening petition, filed May 14, 1928, was that of said Fireman, alleging in substance that he, as assignee of the owner of the equity of redemption and holder thereof, was entitled to whatever balance was in the receiver’s hands (less its proper charges and expenses), plus certain payments to Zimmerman and others which, as he claimed, the receiver had improperly made. To the Fireman petition separate answers were filed by Zimmerman and the receiver. On June 1, 1928, Fireman filed objections to the receiver’s final report and account, and subsequently the court referred the two intervening petitions and answers thereto, as well as Fireman’s objections, to a master to take proofs and report his findings and conclusions. Considerable evidence, oral and documentary, was introduced before the master, and on May 13, 1929, his report was filed.

Among the master’s findings are in substance that, at the time of the filing of complainant’s bill to foreclose (April 30, 1926), James Doyle was the owner of the premises and was made a party defendant to the bill; that he was not personally served with process, though a notice by publication was given; that no order defaulting him ever was entered; that in the affidavit of complainants’ solicitor, upon which the notice by publication was based, his place of residence was stated to be at 4450 West Madison Street, Chicago; that the notice mailed by the clerk pursuant to the affidavit was addressed to Doyle at said address; that said number, 4450 West Madison Street, is a vacant lot; and that “Doyle had no notice of the foreclosure proceedings in which said decree of sale was entered. ’ ’

The master further found in substance that on April 13, 1926, Doyle executed and delivered his quitclaim deed, conveying all his right, title and interest in the premises to one Leonard F. Hammel, which deed was recorded on June 24, 1926; that on April 23, 1926, Hammel and wife executed and delivered their quitclaim deed, conveying all their right, title and interest in the premises to said Fireman; that on the same day Hammel and wife also executed and delivered to Fireman a written instrument, conveying and assigning to him all their right of redemption, and appointing him their attorney in their names, but for his use and benefit and at his own expense, to demand and take all lawful means for the recovery of the premises, and to demand an accounting of the rents, issues and profits of the building; and that Fireman, in his intervening petition of May 14, 1928, claims not only that he is entitled to be paid said fund of $1,814. 21, but also in addition certain other specified sums which the receiver had improperly disbursed and taken credit for as appeared from its reports. The master expressed the opinion that for reasons stated Fireman’s claim should be limited to said fund or balance of $1,814.21.

As to the claim of William Zimmerman for said fund or balance, the master found that it was based upon the following facts in substance, as alleged in Zimmerman’s intervening petition of February 20, 1928, and as shown by the evidence: That Zimmerman is the owner and holder of an unpaid note for $8,000, dated April 1, 1926, executed by Jacob Goodman; that as security for said note of $8,000 Goodman delivered to Zimmerman a certain trust deed, and notes secured thereby, aggregating $13,500, of Katie Forman and Joe Forman; that said trust deed was a third trust deed on the premises and was executed and recorded when the Formans were the owners of the premises, subject to said second trust deed of $15,000 to Edward E. Shinnick, which was foreclosed in the present proceedings ; that said notes of $13,500, and the trust deed securing them, were proven up in the present foreclosure proceedings as the property of said Jacolo Goodman and Lillian Goodman; that the same were found by said foreclosure decree to be a lien upon the premises, subject to said second trust deed being foreclosed; that when said foreclosure proceedings were instituted (April 30, 1926), Jacob Goodman was indebted to Zimmerman on said note of $8,000; that he requested Zimmerman to deliver to him (Goodman) the said notes of $13,500, and said third trust deed, so held by Zimmerman as collateral; that thereupon on September 21, 1926, said Goodman executed a written agreement, whereby he agreed to hold said notes of $13,500, and said third trust deed, as trustee for Zimmerman, but requested their use for the purpose of proving them up in said foreclosure proceedings; and that in the agreement Goodman also assigned to Zimmerman all rights, benefits, orders or decrees which might be entered in the Goodmans’ favor in said foreclosure proceedings. The master further found that Zimmerman claimed in his intervening petition that said notes of $13,500, and said third trust deed, so delivered to Goodman under said agreement, are Zimmerman’s property, and he for the first time prayed that he be substituted in said foreclosure proceedings in lieu of the Goodmans, as the otoner of said notes and trust deed, and as the owner of the indebtedness evidenced thereby, as found in the foreclosure decree.

The master further found in substance that Zimmerman never acquired title to said notes of $13,500; that they had merely been deposited with him as collateral by the Goodmans and as security for the payment of said $8,000 note; that no sale of said collateral had ever been made to Zimmerman; that Zimmerman had never, prior to the filing of his said intervening petition on February 20,1928, asserted any right, title, interest or claim to any balance in the receiver’s hands; that no order of court had been entered continuing the receiver in possession after the master’s sale under the foreclosure decree; and that no order of court had been entered appointing a receiver of the premises during the period of redemption, which expired on February 22, 1928. And the master concluded that the said fund or balance in the receiver’s hands should be paid to Fireman.

The several objections filed to the report by Zimmerman and Fireman were ordered to stand as exceptions, and subsequently there was a hearing before the chancellor, resulting in the entry of the order appealed from as first above mentioned. In the. order the court approved and confirmed the master’s report in all respects and made numerous findings which are in substantial accord with the findings of the master.

After reviewing the evidence, the findings of the court following those of the master, and the briefs and arguments of respective counsel, we are of the opinion that the order appealed from should be affirmed. We think that Fireman, assignee of the owner of the equity of redemption as shown, is entitled to said fund or balance of $1,814.21, as against the claim of Zimmerman thereto.

It is the general rule that the owner of the equity of redemption is entitled to the rents and profits of the premises until the expiration of the period of redemption. (Hindman v. Off, 246 Ill. App. 528, 530; Davis v. Dale, 150 Ill. 239, 243; Stevens v. Hadfield, 178 Ill. 532, 535; Standish v. Musgrove, 223 Ill. 500, 506.) If, however, the mortgagor pledges the rents as security and the premises fail to bring enough at the sale to pay the judgment, the mortgagee may take steps to subject the rents to pay the deficiency, and, if there is a receiver, he will be ordered to pay such deficiency out of the rents. (Hindman v. Off, 246 Ill. App. 528, 531; Straus v. Bracken, 242 Ill. App. 122, 127.) In Davis v. Dale, supra, it is said: “The possession of the receiver, and his receipt of the rents and profits arising from the property, would be for the benefit of the person entitled to the same, so that the parties acquired no additional right because the fund is in the hands of the receiver.” In the present case foreclosure proceedings were instituted by Ella G. Mincer, holder of the notes secured by the second trust deed on the premises, which trust deed pledged the rents as further security for the indebtedness. A receiver was properly appointed on her motion and it took possession and proceeded to collect the rents. Subsequently a foreclosure decree was entered in favor of Ella G-. Mincer and there was a sale, and, the property not bringing the amount of the indebtedness due to her, a deficiency decree was entered against the Goodmans. Before the period of redemption had expired the receiver out of the rents paid said deficiency in full and, without order of court, remained in possession and continued to collect the rents. It appears that the Goodmans, against whom said deficiency decree had been entered, were the owners and holders of certain notes secured by a third trust deed on the premises, which trust deed also pledged the rents as further security; that the Good-mans proved up the indebtedness due to them in said foreclosure proceedings; and that the court, in said foreclosure decree in favor of Ella G. Mincer, found that said third trust deed, securing said notes which the Goodmans owned and held, was a lien on the premises subject to said second trust deed being foreclosed. But it does not appear that the Goodmans, after said deficiency decree against them had been satisfied out of the rents, or at any other time during the redemption period, filed any cross-bill or petition, or took any steps whatever (see Eggers v. Adler, 248 Ill. App. 118, 124; Ruprecht v. Muhlke, 225 Ill. 188, 193), to have any of the rents remaining in the receiver’s hands, after the payment of said deficiency decree and proper costs and charges, applied in part satisfaction of the indebtedness due to them, as secured by said junior or third trust deed. Zimmerman’s claim to said fund in the receiver’s hands arises wholly through the Goodmans, and, as we do not think, under the evidence and for the reasons stated, they are in any position to claim said fund as against the owner of the equity of redemption, or the assignee thereof, Zimmerman is in no position to claim said fund. Furthermore, the court in the order appealed from properly found from the evidence that Zimmerman never acquired title to said notes, owned and held by the Goodmans and secured by said third trust deed; that he only held them as collateral to an indebtedness of $8,000 which Jacob Goodman, alone, owed to him; and that no sale of such collateral had ever been made to him. We think it clear, therefore, that he cannot be considered as the owner of notes secured by a junior trust deed, or entitled to any right to the fund in question, which the junior mortgagees, the Goodmans, might have had.

Accordingly, the order of the superior court of February 8,1930, is affirmed.

Affirmed.

Scanlan, P. J., and Barnes, J., concur.