author: Mr. Presiding Justice Matchett

text:
    Personal Home Mortgage Company, Appellee, v. G. E. Seegrin, Appellant.
    Gen. No. 37,115.

      Opinion filed June 15, 1934.
    Rehearing denied June 28, 1934.
    Joseph Fisher, for appellant.
    Reginald C. Darley, for appellee; Oscar Gt. Wahlgren and. J. Clyde Stewart, of counsel.
   Mr. Presiding Justice Matchett

delivered the opinion of the court.

Seegrin, defendant in a suit in forcible entry and detainer, appeals from a judgment entered in favor of plaintiff upon the finding of the court. The premises in controversy are known as No. 2540 Morse avenue in Chicago and are improved by an eight-room brick bungalow. No affidavit of merits was required or filed in the case. There is practically no dispute as to the facts.

September 30, 1930, Frank H. Thie and Louise L. Thie, then the owners in fee simple, conveyed the premises to the Central Trust Company of Illinois, as trustee, to secure their indebtedness in the sum of $2,500, as evidenced by their promissory note, payable to bearer, in instalments. The premises were registered under the Torrens law and the trust deed was filed in the office of the Registrar of Titles in Cook county October 2,1930. On the date that this note and trust deed were executed and delivered, Frank H. Thie and Louise L. Thie executed and delivered to plaintiff, Personal Home Mortgage Company, a writing described as an assignment, which recited the execution of the trust deed by the Thies and stated that the Personal Home Mortgage Company was the owner of it and the note secured thereby and that in order to further secure the indebtedness and as a part of the consideration of the transaction they “hereby sell, assign, transfer, let, demise and set over unto said Personal Home Mortgage Company the possession of all the rents, issues and profits now due and which may hereafter become due under or by virtue of any lease, whether written or verbal, or any letting of, of any agreement for the use or occupancy of any part of the premises hereinbefore described, which may have heretofore or may hereafter be made or agreed to, or which may be made by the assignee herein under the power herein granted, it being the intention to hereby establish an absolute transfer and assignment of all such leases and agreements and all the avails thereunder unto the assignee herein.” The agreement further provided that plaintiff was irrevocably appointed the agent of the Thies for the management of the property; that it might let and re-let said premises according to its own discretion; that it might bring or defend any suits in connection with the premises in its own name or in the name of the Thies; that it might make such repairs to the premises as it considered expedient, and that it might do anything in and about the premises which the grantor Thies might do, thereby ratifying and confirming everything that the attorney should do. The writing further provided:

“Said assignee and attorney-in-fact shall apply the proceeds of said building first in payment of the taxes and operating expenses and then on account of the principal and interest of indebtedness as they consider expedient.

“In the event of the exercise of this assignment the said Frank H. Thie and Louise L. Thie, his wife, agree to pay rent for the apartment or apartments occupied by them at the rate of Twelve Dollars per month for each room, and a failure on their part to promptly pay said rent on the First day of each and every month shall in and of itself constitute a forcible entry and detainer, and said assignee may in their own name, and without any notice or demand, maintain an action of forcible entry and detainer and obtain possession of said apartment or apartments.

“This assignment and power of attorney shall only ' be operative in the event of a default' in the payment of the principal or interest secured by said Trust Deed, or in the event of a breach of any of the covenants in said Trust Deed contained.

“And this assignment and power of attorney shall continue in full force and effect until the indebtedness secured by said deed, including interest and advances, have been duly paid at which time this assignment and power of attorney shall terminate.

“This agreement shall be binding upon and inure to the benefit of the heirs, executors and assigns of the parties hereto, and shall be construed as a covenant running with the land.” The instrument was on September 30, 1930, acknowledged by the grantors to be their free and voluntary act for the uses and purposes therein set forth, and it was filed in the office of the Registrar of Titles October 2, 1930.

The certificate of title of the Registrar of Titles of Cook county in evidence shows that on October 21, 1932, Hanna Karlquist, a spinster, became the owner of this land in fee simple, subject to incumbrances, easements and estates appearing as memorials thereon, including the trust deed, the written assignments of rents, issues and profits, power of attorney, etc., heretofore described, and that on March 21, 1933, Hanna Karlquist executed and delivered a deed under seal, by which she conveyed and warranted the said premises to Ellen Rose Seegrin for a consideration of $200. This deed was acknowledged but not recorded or filed in the office of the Registrar of Titles. The stipulation shows that Ellen Rose Seegrin resides upon the premises in controversy, and that defendant, G-. E. Seegrin, her husband, resides there with her. The evidence indicates that default was made in the payment of instalments falling due upon the note after January 5, 1933, and that on March 25, 1933, plaintiff mailed to defendant Seegrin a notice stating in substance that he was advised that all further rent for the property occupied by him at 2540 Morse avenue, in accordance with this assignment of rent should be paid at the office of plaintiff on April 1, 1933. This notice was received by defendant Seegrin March 27, 1933. Defendant and his wife were then and up to the time of the trial in possession of the premises.

April 4, 1933, plaintiff caused a landlord’s five-day notice to be served on defendant. The notice stated that $50 rent was due for the premises; that payment was demanded, and that unless payment was made before the expiration of five days after service of the notice, the lease of the premises would be terminated. It was stipulated that this notice was served on defendant more than five days before the institution of this suit, which was begun April 12, 1933.

It is argued by defendant in the first place that by the terms of the assignment it was to become operative only in the event of the existence of a default in payment of the indebtedness evidenced by the note, and that plaintiff has failed to prove that any default existed.

This contention cannot be sustained. The instalment note for $2,500 was produced by plaintiff and received in evidence. Indorsements thereon indicated payments up to January 5, 1933, and no payments thereafter. This was supplemented by the testimony of Frank V. Gilmore, who said in substance that he was acquainted with the facts; that no payments had been made upon the instrument after January 5, 1933, and that plaintiff was the owner of the note, the mortgage and the assignment. There was no evidence to the contrary, and we think this was prima facie sufficient to show a default in payment and give validity to the assignment.

Defendant also says that the provision of the assignment purporting to impose a liability on himself to pay rent failed to fix a definite time when such rent should become payable and that there was therefore no default in the payment of rent at the time of the filing of the suit. This contention is, we hold, without merit. The assignment specifically provides for the payment of rent at the rate of $12 a room, and that payment should be made promptly on the first day of each and every month. The provision is not indefinite as we read it. Defendant objects that the writing does not state when the payments of rent should commence. As we construe it, such payment would begin on the first day of the month following any default after proper notice and demand by plaintiff. Here, the demand was made for $50 rent a month which was not as much as the total rent reserved in the written agreement but the amount per month which was due and payable each month according to the terms of the note and written assignment. The notice and demand were, we think, sufficient to fix the obligation of defendant and to inform him when the same should be performed.

Defendant contends in the next place that forcible entry and detainer will not lie because the facts do not bring this case within any one of the classes of cases described in section 2 of the forcible entry and detainer statute. Cahill’s St. ch. 57, if 2. (Smith-Hurd’s Ill. Rev. St. 1933, ch. 57, sec. 2, p. 1525.) It is urged that this section is all inclusive and that such an action will not lie in any case unless within one of the provisions of this section. That is not an.accurate statement of the law as we understand it. Three sections of the Landlord and Tenant Act, Cahill’s St. ch. 80, 1HÍ 5-8 (Smith-Hurd’s Ill. Rev. St. 1933, ch. 80 secs. 5, 6, 7 and 8, p. 1771) • describe circumstances under which the proceeding of forcible entry and detainer may be maintained. Section 14 of the same act extends the remedies “by entry action or otherwise” to grantees, assignees of the lessor and his heirs or personal representatives, and section 15 extends the same rights to lessees. These sections have widely extended the cases in which the proceeding of forcible entry and detainer is applicable.

Defendant relies on Cody Trust Co. v. Dittmar, 272 Ill. App. 167. In that case the third division of this court said it was unable to agree with the reasoning contained in the case of West Side Trust & Savings Bank v. Gerstein, 270 Ill. App. 250, and laid down this broad dictum:

“ 'The person entitled to the possession of lands or tenements may be restored thereto in the manner hereafter provided: ’ From this provision it appears that the Forcible Entry and Detainer Act was intended to provide a means of securing possession for some party who had previously been in possession. The clauses 1 to 5 inclusive of paragraph 2 relate to the right to repossession by a party who had previously been in possession. The 6th clause, however, appears for the first time to provide for possession by forcible entry and detainer for those who were not originally possessed of the land.” Again, referring to the Ger-stein case, the opinion continues:

“We are of the opinion, however, that the court overlooked the proposition that forcible entry and detainer is an original action to repossess, rather than an action to obtain possession and that clauses two and four cited in that opinion under section 2 of the Forcible Entry apd Detainer Act, clearly are provisions for the repossession of property where the plaintiff at one time had possession and possession unlawfully withheld.”

We cannot agree that the above is a correct statement of the law. However, it should, in the first place, be noticed that the instant case is clearly distinguishable from both these former cases. Indeed, the former cases are also distinguishable from each other. In the Gerstein case the question of possession arose between a tenant of the grantor in the trust deed and the trustee to whom the grantor had conveyed and also assigned the rents, issues and profits of the premises. The grantor had defaulted. The tenant refused to pay rent to the trustee. The question at issue was whether as between this tenant and the trustee the action would lie. In the Cody case the suit was brought against the grantor debtor by the trustee upon default in payment. In the instant case plaintiff bases his action upon an instrument in writing, under which it is claimed the relationship of landlord and tenant exists between plaintiff and the parties in possession, and it is claimed that the action will lie under clause 4 of section 2 of the forcible entry and detainer statute and section 8 of the Landlord and Tenant Act, which are in pari materia. Of course, if the sweeping dictum stated in the Cody case as to the nature of the action is correct, plaintiff could not recover in any one of these cases, and it is therefore necessary that the opinion in that case should be given careful consideration.

We find ourselves unable to agree with the emphasis placed by the opinion in the Cody case on the use of the word “restore” in the introductory clause of section 2. The phrase “restored to the possession” appears to have been first used in this statute in the act of July 1, 1872 (Public Laws of Illinois, 1871-2, p. 458). The fact that in that statute it was made applicable to cases such as described in clauses 3 and 6, in which a prior actual possession was not necessary, indicates that there was no intention to give to this word any narrow and restricted meaning. Indeed, the fact that this word was used rather than a phrase with the verb “restitution”- in it, indicates an interpretation different from that put upon it by the opinion in the Cody case. That we may arrive at the intention of the legislature it may be well to recall the circumstances under which the action of forcible entry and detainer had its origin. It arose in England under a feudal order of society in which lands were held and conveyed by livery of seizin. The first statute was that of Northampton, 2 Edward 3rd, chap. 3, followed by 5 Richard 2nd and 15 Richard 2nd. These statutes were purely criminal. They denounced the entry then known as a “chivcmcher” which was a trespass “manu forti,” as distinguished from a trespass “vi et armis.” These statutes provided for the punishment of these acts as criminal but gave to the person disseized no remedy. Bacon’s Abridgment, Vol. 4, p. 321.

The later act of 8 Henry 6th, chap. 9, for the first time granted to a party thus disseized a remedy by way of restitution of possession with an action for treble damages known as an action “by assize of novel disseizin or action of trespass.” 11 R. O. L. pp. 1136, 1137. These statutes were all strictly construed because they were supposed to declare a limitation on the right of a party recognized by the early common law to enter by forcé, if necessary, his own possessions. Of course, under such statutes, actual disseizin was an essential element of the offense denounced. The Cody case states the law as it then existed in England.

In some of the early English colonies these statutes were substantially re-enacted. In Illinois the first forcible entry and detainer statute became a law February 24, 1819. Public Laws of Ill. 1819. The title of the act shows how wide was the departure from the English statutes of the same name. It was entitled, “An Act as to proceedings in ejectment, distress for rent and tenants at will holding over.” It was repealed by the later act of June 1, 1827. Revised Laws of Ill. 1827, p. 228. So far as we are aware, it was construed by the Supreme Court but once. Bloom v. Goodner, Binmore’s Breese 35 [Beecher’s Breese, 63] and notes there cited. The opinion in that case distinguished clearly between the force necessary to constitute forcible entry and the peaceable holding over which might constitute a detainer, also covered by the statute. The opinion in the Cody case relies upon the statement of the law in 26 Corpus Juris, sec. 43, p. 816, from which it quotes at length. The language of that section must be construed in the light of the historical development of the action of forcible entry and detainer as above recited. It will be noticed that the author there carefully limits the statement made therein by the phrase “unless otherwise expressly provided by statute.” Indeed, in section 74, p. 834 of the same volume, the author refers to Illinois as “a jurisdiction where prior possession is not essential as a basis for actions of this character.” Dudley v. Lee, 39 Ill. 339; Allen v. Webster, 56 Ill. 393, are cited.

The present statute of forcible entry and detainer represents a continuous development of the act of June 1, 1827. That act in substance provided that if any person made an entry except where the right was given by law or entry by force or held over after the determination of the time for which the premises were let to him, “or to the person under whom he claims” after demand “by the person entitled to such possession,” such person shall be adjudged guilty of a forcible entry and detainer, or of forcible detainer, as the case may be, within the intent and meaning of the act. Revised Laws of Ill. 1827, p. 228.

This act was construed in Atkinson v. Lester, 1 Scam. 407. There, the defendant requested the trial court to charge that to constitute a forcible entry the person must enter with strong hand, or force and violence; that a mere trespass was not sufficient. The court refused to so charge and told the jury that the Forcible Entry and Detainer Act was distinguished from the English law, in that if defendant wrongfully entered and without lawful right and kept plaintiffs out, it was sufficient, and that actual force as spoken of in the English statutes was not necessary. The opinion stated that under the statute the action would lie for (1) a wrongful or illegal entry, (2) a forcible one by violence, and (3) a wrongful holding over by a tenant.

In Mason v. Finch, 1 Scam. 495, the court again pointed out the distinction between the civil action in Illinois and the criminal action in England and said that the action in Illinois was more comprehensive, in that it authorized the action to be maintained against a lessee who holds over after the determination of his lease, whether he holds by force or not, provided the lessor has given written notice to quit.

To the same effect are Ballance v. Curtenius, 3 Gil. 449, and Beel v. Pierce, 11 Ill. 92.

The act of 1827 was substantially re-enacted in 1845. By the act of April 24,1861 (Public Laws of Ill. 1861, p. 176) the statute was extended to all cases between vendor and vendee where the vendee had obtained possession of lands under a contract and before obtaining a deed refused to comply with the contract “and to all cases where lands have been sold under a judgment or decree of court in this state, and the party to such judgment or decree, after the expiration of the time of redemption, refuses after demand in writing by the purchaser under the same to surrender possession thereof.”

The amendment of 1861 is construed in Jackson v. Warren, 32 Ill. 331, where the court stated that this amendment had not been called to its attention in the prior case of Steiner v. Priddy, 28 Ill. 179, where the case's in which the action would lie were stated substantially to be those enumerated in Atkinson v. Lester, 1 Scam. 407. The court stated that the amendment of 1861 brought within the action two other classes of cases, namely, (1) where the vendee under a contract to purchase has entered into possession and before obtaining a deed refused to comply with the contract, and (2) where lands had been sold under judgment or decree and the party to the decree upon expiration of the time of redemption-, after demand in writing by the purchaser, refused to surrender possession. The court there said that the Act of 1861 was remedial in its nature and should have a liberal exposition, so that the assignee of the vendee, or a pendente lite purchaser from the mortgagor, could maintain the action. This provision of the Act of 1861 seems to have been incorporated in the Act of 1874, as the sixth clause of section 2. See Revised Statutes of Ill. 1874, p. 535.

By section 4 of the act of February 16, 1861 (Public Laws of Ill. 1865, p. 108) the first section of the act was amended by stating that it should be construed as embracing “all cases where any person shall make any forcible or other entry into any vacant and unoccupied lot or premises, without color of right or title thereto, or shall hold over against the lessor, his heirs or assigns, after the term of the tenancy has expired; and where the covenant of a lease has been violated by the non-payment of rent when due, it shall be sufficient for the landlord, his agent or attorney, to make demand for payment of rent due on any day prior to the commencement of Ms action of forcible detainer; and in the case mentioned in this section it shall only be necessary to give the person in possession ten days’ notice to quit.”

By the act of July 1, 1873, Cahill’s St. ch. 80, fif 5-8 (Hurd’s Ill. Rev. St. 1874, ch. 80, secs. 5, 6, 7 and 8) the right to bring the action of forcible entry and detainer or ejectment seems for the first time to have been provided for in the statutes relating to landlord and tenant. At the same time sections 14 and 15, extending remedies in favor of grantees, lessees, etc., were enacted.

By the act of July 1, 1881 (Cothran’s Anno. Ed., Revised Stats, of Ill., 1882, p. 734) clause 6, section 2, of the Forcible Entry and Detainer Act was amended and extended to a grantee as against a grantor in possession.

No case is cited (and after some search we have not been able to find any case) in which it has been held (the relation of landlord and tenant existing) that the landlord may not avail himself of this action unless he has been theretofore in possession of the premises. On the contrary, it has been expressly held in Fisher v. Smith, 48 Ill. 184, that the grantee of the landlord may bring the action. It has also been held that where premises have been leased to a prospective tenant, who is unable to obtain possession by reason of a former tenant holding over after Ms term expired, the right to bring the action is vested in the lessee alone, who presumably has never before been in possession of the premises. Gazzolo v. Chambers, 73 Ill. 75; Walsh & Co. v. Taylor, 142 Ill. App. 46; Jinkinson v. Owens, 180 Ill. App. 122.

It is undoubtedly true that this action in its origin was in substance one for repossession by a party who had been disseized. We have no doubt that such in essence is the action provided by clause 1 of section 2 of the Illinois Act. It by no means follows that a similar construction should be placed on the other clauses of that section. Illustrative, is the case of Thompson v. Sornberger, 59 Ill. 326. There the complaint in substance averred forcible entry on May 1, 1866. In the Supreme Court the case turned on the sufficiency of proof that plaintiff was in possession of the premises when disseized. The court said there must be an invasion of actual possession; that constructive possession was not sufficient, and cited McCartney v. McMullen, 38 Ill. 237. An examination of that case discloses that plaintiff there brought an action alleging a forcible entry, but the proof showed that the premises were vacant and unoccupied. The case was brought prior to the amendment of the statute in that particular respect. The opinion cites five cases construing the forcible entry and detainer statute of Kentucky, and says:

“But they do not intimate that anything short of a pedis possessio can be held to support this action. And it is believed that no well considered case can be found which announces such a rule. Tested by these cases the evidence fails to support the verdict in this case.” It is interesting to note that plaintiff in this case thereafter recovered a judgment which was affirmed in the Supreme Court. Thompson v. Sornberger, 78 Ill. 353.

In the later case of Cairo & St. L. R. Co. v. Wiggins Ferry Co., 82 Ill. 230, the Supreme Court pointed out the distinction between the class of cases where the entry was by force upon actual possession and the class of cases where the relation of landlord and tenant was found to exist. The opinion stated :

“In an action of forcible entry and detainer, as has been held in Thompson v. Sornberger, 59 Ill. 326, and other cases in this .court, it is necessary to aver and prove that the plaintiff was in possession of the premises, and that the possession was invaded hy the defendant; but in an action of forcible detainer it is sufficient if the complaint shows the relation of landlord and tenant to have existed; that the time for which the premises were let has expired, and that the tenant persists in holding the premises after demand made in writing for the possession thereof. Smith v. Killeck, 5 Gilm. 293; Dunne v. Trustees of Schools, 39 Ill. 578.”

In Whitehill v. Cooke, 140 Ill. App. 520, a suit was brought by the heirs at law of the deceased owner against a defendant who had been in possession of the premises for many years. It was argued in behalf of the plaintiffs that by analogy of the construction of the fourth clause of the statute, the sixth should be held to include heirs at law and personal , representatives of the deceased owner. The court refused to hold, stating by way of obiter, that it was only a possessio pedis, which may be restored “under the first cmd second clauses of section 2 of the act.”

In Thomasson v. Wilson, 146 Ill. 384, it appeared that a Mrs. Laddness was in possession of the premises under a lease from Julia Wilson; that one Bell, a son of Mrs. Laddness, moved into the house with her. During the absence of Mrs. Laddness, Bell moved out and defendant Thomasson immediately moved in, claiming to enter and hold under a lease from a Mr. Clark. Rent was due from Mrs. Laddness and plaintiff gave notice terminating the lease and demanded possession from Mrs. Laddness and Thomasson. Upon the trial defendant asked the court to hold that plaintiff could not as the devisee or grantee of the lessor maintain the action without showing an attornment from the lessee. The court refused to so hold, and the Supreme Court said that the holding was correct, “for the reason that the same right of entry, by action or otherwise, is given by the statute to the grantee of the lessor as the lessor might have had. (Rev. Stat., chap. 80, sec. 14.)” The court further said:

“It is undoubtedly true that the entry was made upon the possession of the tenant, and the right of action for forcible entry and detainer became complete in her at the moment of entry by appellant. (Dudley v. Lee, 39 Ill. 339.) But the same right to terminate the tenancy, and upon its termination to proceed for the unlawful detention of the premises, existed in the grantee as the original landlord might have exercised. (Fisher v. Smith, 48 Ill. 184; Allen v. Webster, 56 id. 393; Gazallo v. Chambers, 75 id. 56; Dudley v. Lee, supra.)Thomasson, however, urged that he had entered peaceably and without force under claim of right, and the court said that the question was sharply presented, whether, assuming his entry was without collusion with the tenant or those holding under her, the right of action against him was given by the statute. After reciting provisions of the Act of 1845, the court said:

“By the act of 1874 (Rev. Stat., chap. 57, sec. 2) the cases in which forcible detainer will lie were much enlarged. The second clause of section 2 of that act provides that persons entitled to the possession of lands or tenements may be restored thereto in the manner prescribed by the- act, ‘when a peaceable entry is made and the possession unlawfully withheld.’ That this does not apply to tenants holding over, after the determination of the lease under which they entered, is made apparent by a consideration of the subsequent clauses. The third clause authorizes the action where the entry is made into vacant or unoccupied lands without right or title. The fourth relates to the holding over by a lessee of lands or tenements, or by any person under him, after the termination of the tenancy by its own limitation, ‘or by notice to quit, or otherwise.’ The fifth, to the relation of vendor and vendee, and the sixth, to cases where land has been conveyed, or sold under decree or judgment, etc.” The court added that “by the fourth clause every right given by the former statute to maintain forcible detainer, where the relation of lamdlord and tenant existed, is retained in the present statute”; that the fifth and sixth clauses gave the right where specified contractual relations existed or the title had passed by deed, or by operation of law; that those who acquired possession by open violence or by intrigue with those who had possession from the landlord, all stood in the shoes of the tenant (Ballance v. Fortier, 3 Gil. 291; McCartney v. Hunt, 16 Ill. 76; Wall v. Goodenough, 16 Ill. 415); that therefore when Thomasson refused to surrender possession after demand in writing, the detention was unlawful. The judgment against defendant in favor of plaintiff was affirmed.

In Fitzgerald v. Quinn, 165 Ill. 354, plaintiff sought to recover under the third clause of section 2 upon the theory that defendants, or their remote grantors, had entered upon the premises when the same were vacant without authority. He obtained judgment before a justice of the peace and also upon appeal to the circuit court'. Defendants appealed to the Supreme Court which reversed the judgment, saying that the plaintiff lost sight of the true intent and scope of the act. Analyzing it, the court said that it provided for three general classes of cases: (1) where the original entry was forcible or unlawful, (2) where the original entry was lawful but the detention had become illegal, and (3) where the entry was peaceable but the possession unlawfully withheld.

The court said that the first and third clauses of section 2 made provision for the first class of cases (forcible or unlawful entry); that the fourth, fifth and sixth clauses made provision for cases that have their origin in contract and constituted the second of the general classes mentioned, and the cases specified in the second clause of the statute constituted the third class, where the entry was peaceable but possession unlawfully withheld. The particular case, the -court said, concerned the first of the three classes of cases. In such case, the forcible entry offense was consummated the moment entry was made, and the right of action would vest at once, in the one case (where the entry was by force) in him whose actual possession toas invaded, “in the other in him whose constructive possession ... is invaded.” Such rights of action would not pass to the assignee. Dudley v. Lee, 39 Ill. 339; Thomasson v. Wilson, 146 Ill. 384. In these cases the action would lie only against the person who made the entry or persons in privity with him. A person entering in good faith could not be put out by this action. Clark v. Barker, 44 Ill. 349. Plaintiff argued that he had a remedy under the second clause, but the court said that under a somewhat similar statute of 1845 it was held there must be an entry “upon the actual possession of another.” Atkinson v. Lester, 1 Scam. 407; Whitaker v. Gautier, 3 Gil. 443. The court then cited Thomasson v. Wilson, and held that the effect of these decisions was that under the second clause of the section there was no right of action except where there was a peaceable entry upon premises in the actual possession of plaintiff, “or of those to whose rights he has succeeded.”

The Cody Trust Co. case cites Aurner v. Pierce, 106 Ill. App. 206. That was a proceeding* under the sixth clause of section 2, and a judgment for defendant was affirmed. Having decided the case on other grounds, the court went on to say that plaintiff could not maintain the suit because he was not in possession of the premises, nor did he allege that grantees obtained possession from him. Haskins v. Haskins, 67 Ill. 446, was- cited. The Au,rner case however was between a vendor and a vendee brought under the fifth clause of section 2 of the statute. The distinction between that case and one where the relationship of landlord and tenant exists was pointed out in a later opinion of the same court written by the same Justice. Orthwein v. Davis, 140 Ill. App. 107. The court there said that in the Aurner case “the relation of landlord and tenant did not exist.”

Knox v. Hunter, 150 Ill. App. 392, also relied on in the Cody case, was decided by the Appellate Court of the Second District upon a record where no motion for a new trial was preserved in the bill of exceptions. The court said that the only clause of section 2 of the forcible entry and detainer statute “possibly applicable” was the sixth.

In the last analysis the question is one of statutory construction. It is settled in Illinois that forcible entry and detainer is a special statutory proceeding summary in its nature and in derogation of the common law. Chicago v. Chicago Steamship Lines, 328 Ill. 309. The court in this proceeding derives its power wholly from the statute. Burns v. Nash, 23 Ill. App. 552; French v. Wilier, 126 Ill. 611.

We hold that only in cases brought under clause 1 of section 2 of the act is actual prior possession by the plaintiff indispensable. Only in such cases is the action essentially one for repossession where proof of a former “pedis possessio” by the plaintiff is necessary. For the sources from which section 2 of our act was derived, Mr. Addington’s notes in Illinois statutes, Anno. Jones &' Addington, 1913, vol. 3, chap. 57, sec. 5843, pp. 3141 — 3155, have been found accurate and helpful.

The instant suit is based on clause 4 of section 2 of the Forcible Entry and Detainer Act, Cahill’s St. ch. 57, H 2, and section 8 of the Landlord and Tenant Act, Cahill’s St. ch. 80,1Í 8, which are in pari materia. After an extended search we find no case in the books in which an action based on these two sections, or any one of them, is held to be limited to plaintiffs who theretofore had been in actual physical possession of the premises. We hold that plaintiff is not precluded by that fact from maintaining its suit, and the judgment of the trial court is therefore affirmed.

Affirmed.

O’Connor and McSurely, JJ., concur.


source: Caselaw Access Project

license: Public Domain

text:
    A. N. Winnick, Plaintiff in Error, v. Aetna Acceptance Company, Defendant in Error.
    Gen. No. 37,256.

      Opinion filed June 15, 1934.
    Harold O. Mules and Lawrence J. Flynn, for plaintiff in error.
    William S. Kleinman, for defendant in error.
   Mr. Presiding Justice Matchett

delivered the opinion of the court.

August 29, 1933, plaintiff filed a suit in the municipal court of Chicago described as a “fourth class tort case.” The original statement and an amended statement thereafter filed were stricken upon the motion of defendant, for reasons which the record does not disclose. On October 20, 1933, plaintiff filed a second amended statement which on November 1st thereafter was on motion of defendant stricken from the files, for the reason as stated in the order that it was “insufficient in law,” and plaintiff electing to abide by this statement, suit was dismissed and judgment for costs entered against him which he asks us to reverse. The question for our determination is whether the statement was sufficient as a matter of law.

Section 40 of the Municipal Court Act, as amended by the act approved July 8, 1931, Cahill’s St. ch. 37, Tf 428 (Smith-Hurd’s Ill. Rev. St. 1933, ch. 37, fl 395, sec. 40, and Laws of 1931, p. 420, adopted Nov. 8,1932) provides that a plaintiff bringing an action of this kind should file “a statement of the nature of the plaintiff’s claim” and further, that “in all cases of the fourth class mentioned in said section two (2) of this Act, the Municipal Court may adopt such rules and regulations as it may deem necessary to enable the parties, in advance of the trial to ascertain the nature of the plaintiff’s claim or claims or of the defendant’s defense or defenses.” A note appended to this section in the Civil Practice rules of the municipal court of Chicago, 1933, p. 236, states that this section is superseded by the Municipal Court Civil Practice rules, “which abolish all distinctions in the modes of commencing and prosecuting actions of the first and fourth classes aside from the provisions of Rule 3 respecting the places of commencing actions.” These rules of practice were adopted by general order No. 900, which states that the same are to take effect and be in force on and after January 2, 1934, so that apparently section 40 as modified by the former rules of the municipal court was in force and applicable to these proceedings here to be reviewed. At that time rule 14 of the court provided in substance that pleadings in all cases of the first class should be the same as in cases of the fourth class, and rule 15, subdivision b, provided, “Every pleading shall contain a concise statement of the ultimate facts on which the party pleading relies for his claim or defense, as the case may be, but not the evidence by which they are to be proved.”

The statement stricken alleged in substance that on May 20, 1932, plaintiff was the owner of a Studebaker coupe with equipment and accessories attached thereto, all of which was of the value of $750; that at that time he made application to defendant to borrow $175 for one year; that defendant “demanded, exacted and required” as a condition for making the loan that plaintiff “agree and promise to repay to the defendant a high, illegal, prohibited and excessive rate of interest in excess of the rate of 50% per annum . . . ; that in order to conceal the illegal, prohibited and excessive rate of interest so demanded, exacted and required, . . . defendant demanded, exacted and required that the plaintiff affix his signature to an instrument in writing denominated a ‘bill of sale’ which recited therein that the plaintiff had sold said automobile, said chattel, to the said defendant and also at the same time, that the plaintiff affix his signature to an instrument in writing, denominated a ‘conditional sales contract, ’ which recited therein that the plaintiff had entered into a contract to purchase said automobile from said defendant for the sum of $275 and had agreed to pay to the defendant said sum of $275 in 11 monthly installments of $25 each commencing the 20th day of June, 1932, and the said defendant also demanded, exacted and required that the plaintiff affix his signature to a purported promissory note for the sum of $275, payable to the defendant in 11 monthly installments of $25 each commencing the 20th day of June, 1932; that each and all of said documents, said purported bill of sale, said purported conditional sales contract and said purported promissory note were prepared by the agents, officers and employees of the defendant as a ruse and device to conceal the high, excessive and illegal rate of interest demanded and exacted by the defendant from the plaintiff.”

The statement also averred that defendant, its officers and agents, at all times retained possession of these purported documents; that the same are now in the possession of defendant; that defendant as a further condition of making this loan of $175 demanded, exacted and required the delivery to defendant of the physical possession of the automobile, and being so required to do in order to procure the loan, plaintiff surrendered said possession and defendant received the same from the plaintiff and retained said possession until it was illegally and wrongfully converted by defendant, its officers and agents.

The statement also averred that defendant never at any time received or obtained a license of any ldnd from the Department of Trade and Commerce of the State of Illinois to engage in the business of making-loans of money of $300 or less and receiving therefor rates of interest in excess of seven per cent per annum ; that defendant never at any time filed with the Department of Trade and Commerce a bond of any kind to be approved by said department running to the people of the State or for the use of any person or persons who might have a cause of action against defendant.

Paragraph 6 of the statement alleges “that by virtue of the premises and by virtue of the Statute of Illinois in such case made and provided, that the said loan so made by the defendant to the plaintiff was illegal, prohibited and void and in violation of the Statutes of the State of Illinois, and that said three purported documents and each of them, said purported bill of sale, said purported conditional sales agreement and said purported principal promissory note for the sum of $275 were and are each utterly null and void and destitute of legal effect.”

Paragraph 7 alleges that afterward on July 25,1932, defendant wrongfully and illegally sold and transferred possession of the automobile to one Phil Grauer, Inc., a corporation, and converted the proceeds thereof to its own use. Paragraph 8 states that by virtue of the premises the sale of the chattel and the delivery of the possession of the same to Phil Grauer, Inc., was illegal, wrongful and a conversion of the property of plaintiff; wherefore plaintiff brought suit for the sum of $750 and costs.

Summarizing, it may be said that the statement of claim purports to set up an action for the alleged conversion of personal property, and in connection therewith and in order to avoid the legal effect of the voluntary surrender of the property in question to defendant, avers that such surrender was made in connection with a purported loan, all of which was illegal and void by reason of the violation by defendant of the provisions of the so-called “Small Loans Act,” Cahill’s St. eh. 74, fü 27-33 (Smith-Hurd’s Ill. Rev. St. 1933, ch. 74, secs. 13-18, pp. 1723-1725.)

Defendant contends that the statement is insufficient, in that there are no averments that defendant exercised any improper influence or used any misrepresentation or compulsion in the transaction. It is urged that plaintiff’s actions in the matter as set up in the statement were voluntary; that the statement admits the receipt of $175 and makes no allegation that plaintiff returned the amount or tendered payment of it. It is urged that the statement avers the title to the property was placed in defendant.

These contentions, we think, disregard the theory upon which the statement of claim is framed and the suit brought, namely, that defendant contrived a device or plan to avoid the provisions of the statute designed to protect the people from oppressive exactions in transactions which have to do with the lending of money. A transaction of that kind from the standpoint of the law has in it the elements of duress, in that the lender takes an unlawful advantage of the necessities of the borrower. A usurious and unlawful lending of money may not have in it the quality of actual physical coercion or violence, but in the eye of the law it is so regarded. St. John v. Fowler, 170 N. Y. S. 666; Schroeppel v. Corning, 5 Denio (N. Y.) 236. Such an unlawful transaction is regarded as a species of coercion and extortion, and such conduct when practiced with reference to small loans of the kind described in the statute is denounced by it as a criminal transaction, which from its inception is therefore tainted with illegality.

If we assume the allegations of the statement to be true, the transaction described was ab initio unlawful and each of the purported papers and documents executed pursuant to the illegal plan void. No payment, tender nor demand was therefore necessary.

It is finally urged that the statement is insufficient to disclose an action based upon the statute, because, as it is said, it does not specifically aver that defendant at the time in question was in the business of making small loans such as are denounced by the statute. The original and first amended statements of claim which appear in the record contained such specific averment, but on defendant’s motion both were stricken, upon what grounds does not clearly appear. In support of the contention that such averment is essential and necessary defendant now cites Turk v. Bender, 273 Ill. App. 84, which reviews Raming v. Peyser, 259 Ill. App. 152, and People v. Stokes, 281 Ill. 159, and urges that the statute in question is not applicable to one transaction but only to persons who are engaged in the business of making small loans.

These three cases all hold that the “Small Loans Act,” Cahill’s 1933 Statutes, ch. 74, Hlf 27-33, pp. 1703, 1704, Smith-Hurd’s 1933 Statutes, pp. 1723, 1725, applies to one who is engaged in the business of making loans in sums of $300 or less*

In the Raming case, supra, it was contended that plaintiff, who was claiming $350 for a loan of but $250, had violated the Small Loans Act by failing to obtain a license as that act requires. Plaintiff, to obviate this contention, argued that the act did not apply to him because he had not obtained a license. We held this was wholly without merit. It was there assumed that the party making the loan was engaged in the business of making loans within the meaning of the Small Loans Act, and what was said in that opinion must be understood in view of the facts in the case. Where one is engaged in the business of making small loans of $300 or less, the act applies. This also was the holding in the Stokes case, supra, 281 Ill. 159. The court in that case said (p. 161): “It was admitted that plaintiff in error is engaged in the business of loaning money in the City of Chicago in sums less than $300 and that he had no license, as required by the provisions of said act.” And it was held the statute was violated although the defendant made but a single usurious loan. To the same effect is the holding in the Turk case.

In the instant case the statement of claim charges a violation of the provisions of the Small Loans Act. We think it is sufficient.

As already stated, the action is brought as a fourth class tort action. Section 40 of the Municipal Court Act as amended by the act of July 8, 1931 (see Cahill’s St. ch. 37, j 428, Laws of 1931, pp. 420-428) is applicable. Defendant cites Gillman v. Chicago Rys. Co., 268 Ill. 305, but fails to cite the later cases of Enberg v. City of Chicago, 271 Ill. 404, and Sher v. Robinson, 298 Ill. 181. Neither does defendant cite the prior cases of Edgerton v. Chicago, R. I. & P. R. Co., 240 Ill. 311, and Schultz v. Ericsson Co., 264 Ill. 156. These cases construe said section 40 as it was prior to the amendment. The present section 40 does not seem to require a statement to be made even with the particularity that was required by the former section, and the former section expressly provided that the plaintiff should not be required to state his cause of action “with the particularity required in a declaration at common law.” The provisions of the present section are apparently even much more liberal.

The “Small Loans statutes” have been passed in 36 States of the Union and express a fundamental change in the policies of the States which adopt them with respect to the subject of interest. See Report of the President’s Research Committee on “Recent Social Trends,” vol. 2, pp. 862 and 1436. The statute is remedial in its purposes and should be liberally construed to the end that the purposes for which it was designed may be accomplished. Wells v. Indianapolis Co., 88 Ind. App. 231, 161 N. E. 687; Westville & Hamden Loan Co. v. Pasqual, 109 Conn. 110; Nicotera Loan Corp. v. Gallagher, 115 Conn. 102.

We hold the statement of claim was sufficient under the provisions of section 40 of the Municipal Court Act and the rules of the municipal court in force and effect at the time the suit was filed. The statement fully made known to defendant the nature of the case it would be called upon to meet, and the court erred in striking the same from the files.

The judgment is therefore reversed and the cause remanded with directions to the trial court to enter a rule upon defendant to file an affidavit of merits.

Reversed and remanded with directions.

O’Connor and McSurely, JJ., concur.


author: Mr. Presiding Justice Matohett

text:
    Arthur E. Nelson, Plaintiff in Error, v. David M. Zemans et al., Defendants in Error.
    Gen. No. 37,316.
    Opinion filed June 15, 1934.
    Petit, Olin & Overmyer, for plaintiff in error; Roy E. Olin, Franklin R. Overmyer and Adelor J. Petit, Jr., of counsel.

      Sabath, Perlman, Goodman & Rein,-for defendants in error.
   Mr. Presiding Justice Matohett

delivered the opinion of the court.

By this writ, Nelson, complainant in a proceeding to foreclose a trust deed given to secure the purchase price of the premises described, seeks to reverse an order of the circuit court by which he was denied a judgment against certain defendants for a deficiency which existed after sale. The facts are not in controversy.

The bill of complaint was filed April 6, 1932. It alleged that on December 3, 1925, defendant David M. Zemans executed two notes for $10,000 and $40,000, due in one and two years after date respectively, with interest at six per cent, representing which he executed coupons; that to secure the payment of the indebtedness represented by these notes, Zemans on the same date executed and delivered a trust deed conveying the premises described to the Chicago Title & Trust Company as trustee.

The notes were given for the balance of the purchase price, Zemans taking title thereto from a member of the Nelson family. The $10,000 note and the coupons have been paid and canceled. February 27, 1928, $7,500 was paid upon the principal of the $40,000 note and Neis Nelson, then the owner, made an extension agreement in writing with Zemans, whereby the balance of $32,500 was extended for two years from that date, with interest at six per cent. Thereafter the interest of April 1,1930, was paid, and on the same date a further payment of $3,500 was made on the principal, leaving a balance due of $29,000. On the same date the executors of Neis Nelson by written agreement with Zemans extended the time of payment for two years with interest at six per cent represented by coupons. Two of these coupons were paid, and Arthur E. Nelson, owner by reason of default, elected to declare the whole sum due and filed his bill praying foreclosure and making defendants thereto David M. Zemans and Anna, his wife, Nathan Gumbin and Blossom, his wife, Herman Gumbin and Nettie, his wife, Harry Gumbin, a bachelor, and the Chicago Title & Trust Company.

David M. Zemans answered the bill, denying that he was indebted and admitting the execution of the notes, trust deed, extension agreements and coupons. He averred that all payments were made by Nathan, Herman and Harry Gumbin; that the notes, extension agreements, etc., were executed by him at the request of the Gumbins; that the real estate was conveyed to him at their request; that he had no real interest in the property but was the mere agent and instrument of the Gumbins for whose benefit he took title; that immediately after acquiring the title he made and delivered a quitclaim deed at the direction of Nathan Gumbin, conveying the land to an undesignated grantee. He averred that he ought not to be required to pay the notes as the same represented the valid and existing obligations of Nathan, Herman and Harry Gumbin, and he personally denied all liability.

The Gumbins filed an answer neither denying nor admitting the allegations of the bill but demanding strict proof thereof.

June 7, 1932, Zemans filed his cross-bill, setting up the prior proceedings and averring that at the time of the execution of the notes and trust deed he was an employee of the General Fiber Company, of which Harry, Nathan and Herman Gumbin were directors; that he obtained his sole means of livelihood from this employment, and was guided and directed by the Gumbins; that the Gumbins jointly undertook to speculate in real estate, and that a Mr. Feldman, another employee of the General Fiber Company, initiated negotiations for the purchase of the premises in question by direction of the Gumbins; that one Hartman, attorney for the General Fiber Company, had charge of closing the transactions; that Hartman prepared the warranty deed, by which Nelson conveyed the premises to Zemans; that Hartman was advised by Nathan Gumbin that neither he nor his brothers desired to become personally liable on the notes, and that Nathan Gumbin on behalf of himself and his brothers instructed and directed Zemans to execute the principal notes and interest coupons, together with the trust deed; that he received no consideration for making the notes; that Nathan Gumbin stated to him that the notes were not binding upon him, but that the Gumbins would pay the obligation at maturity; that after executing the notes and trust deed, Zemans was directed by Nathan Gumbin on behalf of himself and brothers to execute a deed to the property in question which did not contain a grantee; that the same was delivered to Nathan Gumbin after having been executed, acknowledged and delivered by Zemans; that the three Gum-bins paid the principal promissory note of $10,000 together with six interest coupons, to Neis Nelson; that no demand for payment was ever made upon Zemans but such demand was made on the Gumbins; that on February 27, 1928, $7,500 was paid on the second principal note by the Gumbins; that at that time Neis Nelson demanded payment of the balance from the Gumbins, who requested an extension, and that Nathan directed and instructed Zemans to execute the extension agreement, which he did; that it was not to evidence his personal obligation but that in executing the same he acted as the agent of the Gumbins, it being previously understood and agreed that the Gumbins were personally bound; that this oral agreement was evidenced by the fact that the Gumbins had previously made substantial payments and that Zemans was repeatedly assured that he would never be personally responsible; that the $3,500 paid April 1, 1930, was never demanded of him but that the payment was made by the Gumbins, and that the extension agreement made at that time was executed also by him at the direction of the Gumbins, he acting as their agent and it being orally understood and agreed that the Gumbins were personally bound to pay, and that he was induced to execute the instruments without stating on their face the capacity in which he acted because of the repeated promises and assurance of Nathan that he and his brothers would satisfy the indebtedness; that in consequence of his executing the principal note, coupons, trust deed and extension agreements he will be required to pay any deficiency arising in the event the proceeds of the sale of the property sought to be foreclosed and sold are not sufficient to satisfy the indebtedness due Arthur E. Nelson; that the Gumbins should and ought to be required to pay the balance of any moneys due and owing or to pay any deficiency judgment which might be entered by the court in the proceeding.

The cross-bill made defendants thereto Arthur E. Nelson, Nathan, Harry and Herman Gumbin, and the Chicago Title & Trust Company, as trustee, and prayed that there might be an accounting fixing the amount due by the Gumbins to Arthur E. Nelson, and that the court might find that the Gumbins were personally liable for the indebtedness and that they might be directed to pay Nelson any amount found due, and that in the event the proceeds of the sale were not sufficient to pay in full the amount found due, a deficiency judgment might be entered against the Gumbins and in favor of Arthur E. Nelson, and for other and further relief.

Arthur E. Nelson answered the cross-bill June 17, 1932, admitting certain paragraphs of the bill and neither admitting nor denying others, but demanding strict proof thereof.

The Gumbins having been ordered by the court to answer and having failed to file an answer, an order was entered that the cross-bill be taken as confessed by them. After slight amendments the cross-bill was put at issue and referred to a master, who reported finding the facts as recited in the bill with reference to the execution of the trust deed, extension agreements, notes and coupons, and that there was due to complainant Nelson $33,318.07, for which he was entitled to a lien and to a decree of foreclosure.

With reference to the transaction by Zemans, the master found that Neis Nelson held title to the property originally; that one Feldman entered into an agreement to purchase it; that Feldman was acting in behalf of the Gumbins, and that they gave him the earnest money to use in making the purchase, the price being $65,000; that Feldman executed said contract to purchase as agent for the Gumbins; that on December 3, 1925, the three Gumbins paid to Nelson $13,000, the balance of the cash consideration, and directed Nelson to deliver a deed to the property to Zemans; that Nathan Gumbin directed conveyance of the title to Zemans for the sole purpose of enabling him to sign the trust deed then executed and delivered to Neis Nelson as security for the two notes; that Zemans had no interest in the property at the time of executing the trust deed, and that he acted in accordance with the instructions of Nathan' Gumbin, on behalf of himself and his brothers; that Zemans received no consideration, and that in executing all these papers he was acting as the agent of the three Gumbins.

The master also found the execution of the quitclaim deed by Zemans as set up in his cross-bill and found the whole transaction was for the benefit of the Gum-bins, and that although carried on in the name of Zemans, the Gumbins were in fact the parties at interest, paying the entire consideration and holding the entire beneficial interest.

From all the evidence the master concluded that David M. Zemans, Nathan, Harry and Herman Gumbin were personally indebted to complainant in the sum of $33,318.07; that the material allegations in the bill of complaint and the cross-bill were supported by proofs and that the equities were with complainant and cross complainant; that if the proceeds from the sale of the premises foreclosed were insufficient to satisfy the indebtedness, complainant would be entitled to .a deficiency decree against these four who were personally liable, it being recommended, however, that should Nathan, Harry or Herman satisfy the deficiency, they would not be entitled to assert any rights or claims against Zemans. The master also recommended the decree of foreclosure as prayed.

The matter came up before the chancellor and the cause was re-referred to the master in order to permit the Gumbins to file objections to the master’s report, they not having theretofore filed-such objections nor offered any evidence on the hearing. They then filed objections to the effect that the evidence did not sustain the finding of the master and specifically objected to the recommendation of the master that in event of a deficiency they should be held personally liable. Upon the hearing the objections were overruled, and a decree of foreclosure and sale was entered November 4, 1932, in accordance with the report and recommendations of the master, with the exception that the decree provided that the amount received from the sale should constitute satisfaction in full as to Zemans and he should be discharged from further liability. Thereafter, on November 30th, upon motion of solicitors for the Gumbins, the court ordered that the decree of November 4th should be so modified as to direct in substance that if there should be a deficiency shown, the court retained jurisdiction for the purpose of determining whether or not the Gumbins, or any one of them, were personally liable upon the indebtedness for the deficiency and for the purpose of entering a deficiency decree against any or all the defendants who might be held .personally liable.

The master filed his report of sale December 2, 1932, and reported a balance due to complainant and unpaid of $20,216.46. The court entered an order approving the report of sale, the death of Harry Gumbin was suggested, and the court further ordered that it reserve jurisdiction for the purpose of determining the liability of the Gumbins with reference to the deficiency, and the matter was set down for hearing January 23,1933.

January 25,1933, the court entered an order in which it “finds that Nathan Gumbin, Herman Gumbin and/or the estate of Harry Gumbin, deceased, and/or the executor, executors, administrator or administrators of his estate, or the heirs at law of said Harry Gumbin, deceased, are not liable for such deficiency.”

We regret that the duty is again cast upon us of calling attention to the unfortunate use of the symbol “and-or” in a proceeding of a court in this jurisdiction, and we direct the attention of the trial court and its solicitors to the authorities which condemn the use of this and similar abominations, such as was/were. State v. Dudley, 159 La. 872; Clay County Abstract Co. v. McKay, 226 Ala. 394; American Bar Journal, July, August, September, October, 1932; Preble v. Architectural Iron Workers’ Union of Chicago, 260 Ill. App. 435; Carlin v. Millers Motor Corp., 265 Ill. App. 353; Tarjan v. National Surety Co., 268 Ill. App. 232; Thibodeaux v. Uptown Motors Corp., 270 Ill. App. 191.

In this court, notwithstanding the numerous defendants in error, briefs have been filed only in behalf of Herman and Nettie Gumbin. Complainant has not assigned error on that part of the decree which releases David M. Zemans from liability for the deficiency after sale. Complainant acquiesces in the decree of the court in that regard. His sole complaint is that the court failed to approve the finding of the master that the Gumbins were personally liable and to enter a deficiency judgment against them on that finding.

There are several reasons why we think this court may not find error in these respects., In the first place, the bill of complaint does not seem to be framed upon the theory that the Gumbins were personally liable. It is not so alleged anywhere in the bill. So far as the Gumbins are concerned, the bill simply alleges that they have or claimed to have some interest (the precise nature of which is unknown to complainant) in the premises “as purchasers,1 mortgagees, grantees, lien holders, parties in possession, judgment creditors, or otherwise, but such interests, if any, have accrued since, and are subordinate to complainant’s lien.”

The prayer of the bill is that a deficiency decree may be entered in favor of complainant and against David M. Zemans ‘ ‘ or the person or persons liable for said indebtedness to pay such deficiency. ’ ’ The allegations of the bill as above set forth, construed in the light of this prayer, are, we think, wholly insufficient to sustain a decree of deficiency against the Gumbins. (Brown v. Kennicott, 30 Ill. App. 89; Boisot v. Chandler, 82 Ill. App. 261; Reeve, Illinois Mortgages, p. 764, sec. 679; Rowan v. Bowles, 21 Ill. 16.) Moreover, complainant does not stand in any position to complain that defendant Zemans’ cross-bill was taken as confessed. Zemans is not here complaining. His cross-bill proceeded upon the theory that he, acting as the undisclosed principal of the Gumbins, had become liable for the deficiency, and his cross-bill prayed relief in that respect. The decree releases him from liability for any deficiency after sale and complainant has acquiesced in that finding. Plainly Zemans cannot be reimbursed when he has not been damaged. Brand v. Henderson, 107 Ill. 141; Otter Creek Lumber Co. v. McElwee, 37 Ill. App. 285; Walkof v. Fox, 153 N. Y. S. 27; Hidalgo Steel Co. v. Moore & McCormack Co., 298 Fed. 331.

The foregoing would seem to be determinative of the cause. However, complainant’s contention cannot prevail for another reason. The Gumbins were not parties to the notes which represented the indebtedness for the purchase price of this real estate. These notes were not ambiguous in any respect, and that being true (as we understand the law) defendants, who were not parties to the negotiable instruments, cannot be held liable thereon. Indeed, the evidence in this record indicates (and it is a fair inference from all of it) that both parties agreed that the obligation of Zemans should be accepted instead of that of the actual purchasers. Defendants cannot be held liable on unambiguous paper to which they are not parties. Cahill’s St. ch. 98, fí 38 (Smith-Hurd’s Ill. Rev. St. 1933, ch. 98, sec. 38, p. 1922). See also Restatement Agency, sec. 152, and Illinois annotations of the same section. Bartlett v. First Nat. Bank of Chicago, 156 Ill. App. 415; Towler v. Mt. Carmel Trust & Savings Bank, 206 Ill. App. 427; People ex rel. Bussell v. Michigan Ave. Trust Co., 229 Ill. App. 512; Metz v. Dionne, 250 Ill. App. 369; Foster v. Perry, 255 Ill. App. 635; Shiel v. Chicago Title & Trust Co., 262 Ill. App. 410.

Again, the trust deed also being in writing and under seal is subject to the same rule. One not a party to it cannot be held liable thereon. Restatement Agency, sec. 151, and Illinois annotations of the same section; Walsh v. Murphy, 167 Ill. 228; Chicago Title & Trust Co. v. Franklin, 187 Ill. App. 388; Tribune Co. v. Wendell, 192 Ill. App. 639; Gardner v. Shekleton, 253 Ill. App. 333. The Gumbins can therefore not be held on the theory that they were undisclosed principals.

Defendant argues, citing many cases from this and other jurisdictions, that the Gumbins are liable for the deficiency arising after the foreclosure sale on the theory that they assumed and agreed to pay the mortgage indebtedness; that their liability is therefore not based on the notes and other writings executed by Zemans, but upon their distinct and separate promise to assume and pay the indebtedness. The argument is not without force, but in the absence of any bill by them based on that theory, we think it unnecessary to decide that question.

The judgment of the trial court is affirmed.

Affirmed.

O’Connor and McSurely, JJ., concur.


author: Mr. Presiding Justice Sullivan

text:
    Chicago Title and Trust Company, Complainant and Appellee, v. James A. Bidderman et al., Defendants. Appeal of Louis K. Boysen et al., Appellants.
    Gen. No. 37,128.

      Opinion filed June 15, 1934.
    Robert F. Kolb, for appellants.
    Sabath, Perlman, Goodman & Rein, for appellees James A. Bidderman and Kate Bidderman.
   Mr. Presiding Justice Sullivan

delivered the opinion of the court.

Upon default in the payment of $10,000 principal and the fifth semiannual instalment of interest due January 1, 1932, under a $750,000 bond issue secured by a trust deed on property situated at 4425 Sheridan road, Chicago, Illinois, the trustee filed a bill to foreclose, naming James A. Bidderman and Kate Bidder-man, the mortgagors, as defendants. The original trustee, the State Bank of Chicago, having consolidated with the Foreman Trust and Savings Bank under the name of Foreman-State Trust and Savings Bank, the bill was filed in the name of the latter bank. A receiver was appointed for the Foreman-State Trust and Savings Bank, who resigned in its behalf as trustee, and the Chicago Title & Trust Company, as successor trustee, was substituted as complainant. February 14, 1933, an amendment to the bill of complaint was filed alleging that after the delivery to and certification by the State Bank of Chicago of all of the bonds of the issue, bonds numbered 1151 to 1250, both inclusive, for $1,000 each, together with interest coupons evidencing the interest thereon, were turned over and delivered back to James A. Bidderman, and that complainant was not advised of what the intention of the parties was with respect to the legal effect of the delivery of such bonds to James A. Bidderman. Bidderman filed an answer to this amendment alleging “that the bonds were purchased for resale at par and accrued interest by the defendant, James A. Bidderman, from the State Bank of Chicago, legal holders and owners thereof, with the specific understanding and agreement that same would be kept on a parity with all other outstanding bonds secured by the trust deed sought to be foreclosed herein, and might be negotiated to the public by said defendant, James A. Bidderman, in the same manner as all other bonds secured by said trust deed, and that they are entitled to share pro rata in the proceeds of any sale to be held pursuant to any decree entered in this cause.” Thereupon appellants, constituting a 1 ‘Committee for Bondholders,” sought and were granted leave to intervene and become parties defendant to the foreclosure proceedings. Their petition, which was ordered to stand as an answer, alleged that when said bonds and interest coupons were delivered to Bidderman, who paid the State Bank of Chicago $100,000, that “it was his intention by the payment of said money to pay said bonds,” and that “said bonds and coupons have been paid and are not entitled to share in the security conveyed by said trust deed.”

The master found and the chancellor decreed that the $100,000 bonds in question were acquired by James A. Bidderman, not with the intention of paying and canceling them, but, on the contrary, with the intention of purchasing the bonds as instruments continuing in validity and negotiability. Appellants seek by this appeal to reverse the decree which ordered that the “Bidderman” bonds, numbered 1151 to 1250, be considered on a parity with all of the other bonds in the distribution of the proceeds of the sale of the foreclosed premises.

Inasmuch as all parties to this appeal were defendants below, to avoid confusion the individuáis comprising the bondholders ’ committee have been and will be referred to as appellants and the Biddermans as appellees.

Although it was stipulated before the master that the title to the property was in joint tenancy in the names of Kate Bidderman and James A. Bidderman, when they signed the application and contract for the loan and executed the bonds and the trust deed securing them Bidderman testified that Kate Bidderman was the beneficial owner of the property and that his only interest in it was his inchoate right of dower. This $750,000 loan was made and the bonds representing same were executed, delivered and certified pursuant to the following application for the loan:

“Loan Application.
‘ ‘ B ond issue (Completed Building) Completed Building
Bond issue (Construction) X Construction
Vacant
"Chicago, March 11, 1929.

“To State Bank op Chicago

“We hereby apply to you for a loan of $750,000.00. (Here follows a description of the various maturities of the proposed loan, with interest at 6% per annum . . . .)

“As security for such loan, we will give bonds and trust deed in your usual form, conveying in fee simple, free of incumbrance, the Southeast corner of Sheridan Road and Galt Avenue. . . .

(State Bank of Chicago to place $750,000.00 fire insurance and give Bidderman half the line.)

“The trust deed is to be a first, valid lien upon the premises.

“The title to the property is in (or will be in) Kate Bidderman and James A. Bidderman.

“The note or bonds to be dated July 1, 1929, and signed by all ....

“We will furnish a complete merchantable Abstract of Title, continued so as to show said trust deed as aforesaid, or at your option will furnish a mortgage guarantee policy for the amount of said loan . . .

and will pay you a commission of 4% net on the amount of said loan for your services in negotiating the same, which commission shall be considered as earned upon the signing of this application.

“Within a reasonable time, at your request, we agree to execute and deliver to you the notes and trust deed . . . and if we fail to do so, we nevertheless, agree to pay you all the expenses incurred by you and to pay you said commission for your services hereunder.

“Memos: James A. Bidderman agrees to purchase $100,000.00 worth of bonds of this issue, commission to be rebated on the $100,000.00 only so purchased at the rate of 3%. Also completion bonds by the contractors to be furnished to Mr. Bidderman for completion of the building.

“Signed: James A. Bidderman
Kate Bidderman. ’7

The first 20 bonds aggregating $10,000 had been paid and canceled prior to the filing of the bill to foreclose, and it was stipulated further between the parties before the master that the intervening petitioners, Louis K. Boy sen, Walter L. Cohrs, Homer J. Livingston and John P. Hooker, have deposited with them under the deposit agreement in evidence, bonds secured by the trust deed in the sum of $638,500 par value, and that the only bonds not on deposit with the committee are bonds numbers 24, 25 and 26, totaling $1,500, and bonds numbered 1151 to 1250, both inclusive, aggregating $100,000. (The Bidderman bonds.)

The .trust deed executed by James A. Bidderman and Kate Bidderman July 1,1929, conveyed the premises described in the decree to the State Bank of Chicago and recited that they were indebted in the sum of $750,000 evidenced by 1,250 bonds all substantially of the following tenor and effect, except as to distinguishing numbers, denominations and date of maturity: (Only pertinent portions are set forth.)

“The undersigned, James A. Bidderman and Kate Bidderman, for value received, promise to pay to bearer or the registered owner hereof, on the first day of January, .............. the sum of $500.00 with interest thereon from date, at 6% per annum, payable semiannually. . . .

“All of the bonds herein described and issued and authenticated, as aforesaid, and the interest coupons attached thereto, shall stand upon an equality as to the security and protection of said trust deed except as therein otherwise provided, without any preference or priority whatsoever of the lien thereof in favor of any one or more of said bonds or coupons over any one or more of the others, and without regard to the date of the actual issuance, authentication, delivery, sale, negotiation or maturity thereof. . . .

‘ ‘ The party of the first part reserves and shall have the right upon written notice to the trustee sixty days prior to the date of redemption and upon the terms and conditions set forth in said indenture (trust deed) to redeem this bond on any date at par and accrued interest thereon, to date of redemption, together with a premium of 2% on the principal amount hereof, provided, however, that all bonds so redeemed shall be paid in the inverse order of their numerical number, 1% % of which shall belong to the legal holders hereof, and %% to the State Bank of Chicago for its services.

James A. Bidderman.
Kate Bidderman.”

Then follow the provisions of the trust deed, of which the ensuing are material to this controversy:

“The lien and security of this indenture shall take effect from the day of the date hereof, without regard to the time or times of the payment or disbursements of the principal sum hereby secured or intended to be secured and without regard to the date of the actual issuance, authentication, delivery, sale, negotiation or maturity of said bonds and as though, upon the day of the date hereof, all of said bonds were actually authenticated, sold, negotiated and delivered and in the hands of innocent holders for value.”

“Article 2.

‘ Section 1. All bonds issued and authenticated hereunder shall stand upon an equality as to the security and protection of this indenture, except as herein otherwise provided, without regard to the date of actual issuance, authentication, delivery, sale, negotiation or maturity thereof.

“Only such bonds as shall have been authenticated by the certificate of the Trustee as aforesaid shall be entitled to the benefit of this indenture, . . . and no holder of any bond issued hereunder, which shall have been so authenticated, shall be under any duty to ascertain whether the same has been duly issued, authenticated and delivered according to the provisions hereof.

“Each bond hereby secured shall be negotiable and pass by delivery, unless registered for the time being in the name of the owner thereof on the books kept by the State Bahk oe Chicago as provided in said bonds. . . . The bearer of any bond hereby secured, which shall not be registered, as hereinbefore authorized, and the holder of any coupon for interest on any bond, whether such bond be registered or not, shall for all purposes of this indenture, be deemed and regarded as the absolute owner of such bond or coupon, as the case may be, for the purpose of receiving payment thereof and for all other purposes. ’ ’

“Article 8.

‘ ‘ Section 1. All or any of the bonds at any time outstanding hereunder, may, at the option of the party of the first part, (the intention to exercise such option to be evidenced by a writing filed with the Trustee) be redeemed from the holder or holders thereof on any date at par and accrued interest thereon, together with a premium of Two (2) per cent on the principal amount thereof; provided said notice of such intention to redeem, specifying the numbers of the bonds to be redeemed, if less than all, shall have been delivered to the Trustee not less than sixty days prior to the date therein specified when such redemption is to be made. . . . The bonds to be redeemed, if less than all of the outstanding bonds, shall in all cases be the bonds of the most remote maturity, then outstanding, and if less than all of the bonds of any one maturity shall be redeemed, then said bonds shall be redeemed in the reverse order of their numbers. All bonds so redeemed shall be cancelled by the Trustee and delivered to the party of the first part or to the then owner of the equity of redemption in said premises. (Note: The premium of 2% mentioned in Section 1 of Article 8 hereof shall be applied as follows, viz.: 1%% thereof to the legal holders of said bonds and % of 1% to the State Bank of Chicago for its services in arranging for said redemption.)

‘ ‘ Section 2. If the amount necessary to redeem any bonds called for redemption, . . . shall have been deposited with the trustee, for the account of the holder or holders of such bonds, on or before the date so specified for such redemption. . . . the party of the first part and the Trustee, and each of them, shall be privileged to consider such bonds redeemed from the holder or holders thereof, and the interest dn such bonds shall cease at the date so specified for such redemption and thereafter said bonds shall not be entitled to any rights or benefits hereunder, except to receive payment, as aforesaid, out of the redemption moneys so deposited, anything in said bonds or coupons or in this indenture to the contrary notwithstanding. . . . ”

It appeared that pursuant to the agreement in the loan contract the State Bank of Chicago, September 10, 1929, rendered a bill to Bidderman for $100,000, the price of the bonds numbered 1151 to 1250, plus $1,150.70, representing the accrued interest on them from July 10, 1929, and that on the same day Bidder-man paid the full amount by his check. Those bonds, with all of their attached interest coupons, were delivered to Bidderman and placed by him for safekeeping with the bank subject to his order.

Appellants contend that the payment by James A. Bidderman, one of the joint makers, to the State Bank of Chicago, the holder and owner of bonds numbered 1151 to 1250, of $101,150.70, the full amount of the principal and interest due thereon, constituted payment and discharge thereof, and that the bonds are no longer the debt or obligation of James A. Bidderman and Kate Bidderman, secured by their trust deed and entitled to share in the proceeds of the foreclosure sale on a parity with the other bonds; that there can be no purchase by a debtor of his own debt; that no matter what name the debtor and creditor endeavor to give to the transaction it amounts in law to a merger or cancellation of the debt; and that when a joint maker of negotiable instruments acquires them or some of them, even prior to maturity, the mere fact of such acquisition operates as an immediate and final cancellation and extinguishment of the instruments, regardless of the intent with which they may be acquired.

theory is that the bonds were acquired before maturity by James A. Bidderman by purchase with the intention of keeping them alive, and that, therefore, the instruments were not thereby discharged; and that they are entitled to share on a parity with the other bonds in the proceeds of the sale.

Under the contract for the loan, and as a condition thereof, Bidderman was required to purchase the $100,000 bonds under consideration. The performance of the contract contemplated the payment of a purchase price of par plus accrued interest, while the price at which the bonds might be redeemed prior to maturity under the terms of the trust deed was par and accrued interest plus a premium of two per cent. The bonds were delivered to Bidderman uncanceled and with the interest coupons attached soon after their issuance and prior to their maturity. Commission was charged and paid upon the full amount of the loan of $750,000. A guaranty policy was required from Bidderman and furnished for $750,000, the full amount of the loan. Insurance was taken out for the protection of the full issue of $750,000 bonds. Interest was paid and coupons evidencing the same clipped, surrendered and canceled upon every bond issued, including the bonds in question. Each bond and the trust deed recited that the issue was composed of 1,250 bonds, aggregating the principal sum of $750,000, all upon an equality and parity. The State Bank of Chicago, the lender and original holder of all the bonds, caused a circular to issue advertising that the bond issue was composed of 1,250 bonds, aggregating $750,000. Complainant’s evidence disclosed that at the time of the default and of the filing of the bill to foreclose all of the bonds numbered 1151 to 1250, inclusive, together with the interest coupons thereon, maturing on and after January 1, 1932, were still outstanding.

The provisions of the bonds and trust deed as to redemption or payment declare that to redeem any or all of the bonds of the issue the owners of the equity must, in addition to giving notice and paying par and accrued interest, pay a premium of two per cent on the principal amount of the bonds redeemed. The evidence conclusively shows that when Bidderman acquired the bonds in question the parties interested neither intended nor effected a redemption of them. It is undisputed that neither was any premium paid nor notice given of any intention to redeem. Redemption under the terms of both the bonds and the trust deed presupposes cancellation at the time of payment. These bonds purchased by Bidderman prior to maturity were never canceled and no other bondholder was damaged by his contract to purchase them, nor did his purchase of the bonds detract one iota from the security the other bondholders were rightfully entitled to. We are aware of no rule of law that precludes the making of a contract whereby one of the makers of the bonds agrees in good faith to purchase some of them when issued and before maturity, when such purchase does not operate to abridge the rights of other bondholders.

The evidence discloses that from the moment Bidder-man signed the loan application, including his agreement to purchase $100,000 of the bonds, until the actual purchase of the bonds by him long prior to their maturity, it was the intention of both himself and the State Bank of Chicago, the original holder and owner of the bonds acquired by Bidderman, that he was to purchase that amount of live, negotiable instruments, and that by such purchase he was in no sense paying them off for the purpose of redemption. This being so, and appellants must concede it because there is no evidence in the record to the contrary, we are met with appellants ’ contention that Bidderman could make no valid purchase of the bonds, even before maturity, since he was obligated on them as a joint maker and that his very act of acquiring them, even though he intended it as a purchase, by operation of law extinguished them. It does not appear whether Bidderman stilly is the holder of these bonds or whether he has negotiated some or all of them. We are called upon to determine solely whether a court of equity will recognize the right of the bonds purchased by Bidderman shortly after their issue and before their maturity, in the hands of whomsoever they may be, to share in the security of the trust deed on an equality and parity under the terms of said deed and the bonds themselves or whether they must be held to be extinguished and removed from the protection and security of the trust deed, thereby enhancing* the security of the other bonds.

It is of course elementary that if some of the bonds had been actually paid or redeemed the entire security would inure to the balance of the outstanding bonds, but that situation is not presented here. There i's not a scintilla of evidence that any bond of the issue except the first 20 was either paid or redeemed.

We are of the opinion that the position of the appellants is untenable and that the authorities clearly support the right of a joint maker or even a single maker of a negotiable instrument to purchase the same before maturity. If such right exists it necessarily follows that the acquisition by purchase does not ipso facto result in extinguishment by operation of law.

The Negotiable Instruments Act itself recognizes and pronounces the right of a maker of a negotiable instrument to purchase same and negotiate it in par. 70, eh. 98, Cahill’s (1933) Ill. Revised Statutes, which provides:

“Where an instrument is negotiated back to a prior party, such party may, subject to the provisions of this Act, reissue and further negotiate the same, but he is not entitled to enforce payment thereof against any intervening party to whom he was personally liable.”

Section 50 of the Tennessee Negotiable Instrument Law, which is identical with par. 70 of our act, was considered and construed in Horn v. Nicholas, 139 Tenn. 453, 201 S. W. 756, where the court, in holding that the acquisition by the maker of a negotiable instrument by purchase before maturity did not extinguish the instrument, enunciated what is now recognized as the correct rule in the following language:

“Where the maker before its maturity acquires his own note, the common-law authorities were divided as to his right to be treated as a holder for the purpose of reissuance. Some of the cases held that payment in such case extinguished the instrument, so that the maker’s subsequent transferee could not hold the other parties to the instrument liable. The doctrine of the other line of authorities is thus stated and approved in 8 C. J. 592, where the cases pro and contra are collected :

“ ‘According to, the better authority, such a payment operates as a mere purchase, and the payer may reissue the note before maturity, and his transferee may recover thereon against all parties to the instrument as a bona fide holder for value. ’

“The reasoning in support of the latter rule may be thus summarized: The intention of the maker to pay his paper before maturity is the more improbable. TTis undertaking is to pay at maturity, not before; ‘payment means payment in due course and not by anticipation’; before maturity he, as well as a third person, may discount the instrument, and the fact that the paper is in the maker’s possession should not import notice that it has been extinguished. Its negotiability which originally was for the full period up to maturity date is not cut short or destroyed by reason of the fact that it has come into the maker’s possession before maturity.

“In Morley v. Culverwell, 7 M. & W. 174, 151 Eng. Reprint 727, Lord Abinger, C. B., said:

“ ‘A bill is not properly paid and satisfied according to its tenor unless it be paid when it is due; and consequently if it be satisfied before it is due, by an arrangement between the drawer and acceptor, that does not prevent the acceptor from negotiating it.’

• “Mr. Daniel, in the last edition of his Negotiable Instruments (page 914), after quoting the language of the above decision, states that in the first edition he had stated the law to be in accord with the New York or minority rule, but that ‘ examination of the English authorities, and of the South Carolina case, has satisfied him of the error, and that the English view is correct. ’

“This, we believe, is also the conception of bankers and men of commerce as to the rights of such parties; and it evidently was the one acted upon in the instant case. The doctrine admits of convenient results in practical operation, as the facts of this case manifest. The maker was permitted to keep alive the lien securing the note by being allowed to acquire for reissue; whereas, if the note were to be treated as paid, it would be necessary to create a new lien to secure a fresh note.

“The Negotiable Instruments Law, it appears, is framed to accord with this view. By its section 119 (5) it is provided that ‘a negotiable instrument is discharged when the principal debtor becomes the holder of the instrument at or after maturity in his own right, ’ thus indicating that by acquisition before maturity a discharge, precluding renegotiation does not result. By section 50 it is provided :

“ ‘Where an instrument is negotiated back to a prior party, such party may, subject to the provisions of this act, reissue and further negotiate the same. But he is not entitled to enforce payment thereof against any intervening party to whom he is personally liable.’

‘ ‘ The privilege of acquiring in negotiation and of reissuing is thus broadly in favor of any. prior party. And by section 30 an instrument is negotiated when it is transferred from one person to another in such manner as to constitute the transferee the holder thereof. ’ ’

Construing the same section of the Negotiable Instruments Act, the Supreme Court of Arkansas in Harding v. Hagler, 176 Ark. 146, 58 A. L. R. 175, approving and adhering to the doctrine announced in Horn v. Nicholas, supra, held squarely that a negotiable instrument may be reacquired by the maker or one of the joint makers before maturity and reissued so as to carry the lien of the deed of trust or mortgage with it.

In Kipp v. McChesney, 66 Ill. 460, a promissory note executed by copartners came back into the hands of one of them and the only question presented for determination in that case, as in the instant case, was, Did the acquisition of the note by one of its joint makers work an extinguishment of it if it was not so intended? At page 461, the court said:

“The only question raised upon the record is as to the effect of the transaction between Dent, the payee and assignor of the note, and Davison, the assignee, the latter being one of the copartners who made the note. It is contended, on the part of the plaintiffs in error, that the transaction was a payment of the note by Davison, one of the makers, or if not a payment, that, as Davison, when he acquired title to the note by assignment, could not have maintained a suit at law upon it against the makers, he being one of them, neither could he have transferred a right to sue upon it to his assignee, the plaintiff, and that the assignment of the note to Davison was, by operation of law, an ex-tinguishment of it.

“We think the case turns entirely upon whether there was a payment of the note by Davison, or a purchase of it by him. If he paid the note as one of the makers of it, it was an extinguishment of the note, and he could not afterwards put it in circulation. The testimony of both Dent and Davison is unequivocal that it was a purchase of the note by the latter, and not a payment. . . .

“Davison testifies that he purchased the note of Dent, and gave him his individual note of $164 for it. Davison seems to have paid for the note with his individual means, and the unqualified indorsement in blank of the note by Dent favors the idea of a purchase. We perceive no satisfactory reason why such a transaction should be adjudged a payment if it were in reality otherwise, or why, by operation of law, it should work an extinguishment of the note if it was not so intended.

“One copartner may deal as an individual with his firm. He may invest his private means in the purchase of partnership securities, as well as any other description of securities, and we do not perceive why he should not be allowed to hold them as valid obligations, without their being accounted as paid or extinguished by his act of purchase of them.

“We think the court below was warranted by the evidence in finding that there was a purchase of the note by Davison, and not a payment of it.

“While the note remained in the hands of Davison, as assignee, he could not have enforced its payment by suit at law, for the reason that he could not have sued himself as maker. . . .

“But this is a difficulty attending the remedy only, not the right. ...”

It is urged that inasmuch as a copartnership was involved the conclusion reached in the Kipp case, supra, is inapplicable to the situation presented in this cause, but we see no reason on principle why a different rule should be laid down concerning partners as comakers than as to those who are not partners. The reasoning in the Kipp case is sustained by other decisions in this State. (Walker v. Chicago, M. & N. R. Co., 277 Ill. 451; Rogers v. School Trustees, 46 Ill. 428; Flagg v. Geltmacher, 98 Ill. 293.)

It would seem from the great weight of authority that if a note or bond is purchased or discounted by the maker or joint maker before maturity it is not only not extinguished but it retains its negotiability, and may be again put in circulation. (Rogers v. Gallagher, 49 Ill. 182.)

It seems to us that the legal effect of the acquisition of the bonds by Bidderman must be governed entirely by the intention of the parties to the transaction and the surrounding circumstances. We are aware that a debt once paid is extinguished, and that as a mortgage is but an incident of the debt it secures, if the $100,000 bonds purchased by Bidderman were extinguished by the very act of purchase, the mortgage is functus officio as to them. But we are convinced that under the weight of better authority, under the meaning of the contract for security expressed in the trust deed that the 1,250 bonds shall remain on a parity until redeemed and canceled in compliance with the terms of the deed, and in accordance with the intention of the parties, the $100,000 bonds purchased by Bidderman were not extinguished but continued to be valid, alive and negotiable. As to the other bondholders we are of the opinion that complete equity will be done them if, in the distribution of the proceeds of the sale of the mortgaged property, they are awarded shares to be ascertained by the proportion which their individual holdings of bonds bear to the whole amount. (Claflin v. South Carolina R. Co., 8 Fed. 118.)

It has heretofore been shown that the State Bank insisted as a prerequisite tb its making the $750,000 loan that Bidderman agree to purchase $100,000 of the bonds, and while there is no direct testimony to that effect it is reasonable to infer that Bidderman purchased the bonds with his individual funds. It has also been shown Bidderman testified that Kate Bidder-man was the beneficial - owner of the property and that his only interest in it was his inchoate right of dower.

To urge that when Bidderman paid $100,000 for the purchase of the bonds before maturity, he by his very act of payment of that amount regardless of his intention to purchase and of the intention of the State Bank to sell, divested himself of his $100,000 and extinguished the bonds he was obligated to and did purchase, is to advance a theory that cannot be afforded the sanction of a court of equity. Such an espousal appears to be just as unconscionable to us as it did to the chancellor.

Permitting the bonds purchased by Bidderman to share in the proceeds of the foreclosure sale on a parity deprives no other bondholder of any right for which he contracted and to which he is entitled by reason of the default and the foreclosure of the trust deed. We are familiar with no principle of equity or good morals that would countenance or sanction mulcting him of his investment or depriving the bonds purchased by him of their security for the benefit of the other bondholders.

No question is involved of .Bidderman’s right to sue himself at the time he acquired the bonds, or at the present time if he is still the holder of them or any of them, and the interests of all the parties and the right of the bonds themselves to share in the proceeds of the sale have been fairly and equitably determined.

Appellants cite a number of authorities which they insist uphold their position that the purchase of a negotiable instrument by its maker or one of its joint makers before maturity works an extinguishment of the instrument by operation of law. We have carefully examined and considered all of them. Most of them are not in point and the few that appear to be at all applicable are not in accord with the reasoning and conclusion reached by our Supreme Court in the cases heretofore cited and considered, nor with the weight of modern authority generally. As we consider. the decisions of the courts of review of this State conclusive on the question presented for our determination, it would serve no useful purpose to discuss or attempt to distinguish the cases cited.

It is our conclusion that the decree of the circuit court was in accordance with the law, and it is affirmed.

Affirmed.

Gridley and Scanlan, JJ., concur.