text:
    The Woodford County National Bank of El Paso, Illinois, Appellant, v. Eugene L. Conklin, Executor of the Last Will and Testament of Evaline Mooberry, deceased, Thomas V. Pinkham and Royal Pinkham, Appellees.
    Gen. No. 9,052.

      Opinion filed October 15, 1937.
    William A. Potts and Alfred W. Black, both of. Pekin, and B. H. Heuring, for appellant.
    W. J. Reardon and Barnet Kahn, both of Peldn, for appellees.
   Mr. Justice Riess

delivered the opinion of the court.

On April 20, 1933, appellant, a judgment creditor of the defendant Thomas V. Pinkham, filed its bill in chancery in the circuit court of Tazewell county against Thomas V. Pinkham and Royal Pinkham, brothers, to set aside a certain assignment by Thomas V. Pinkham to Royal Pinkham of a legacy provided for in the will of one Evaline Mooberry, deceased, on the ground that the same was fraudulently made to hinder and delay creditors. Eugene L. Conklin, executor of this will, was also made a party defendant. The plaintiff, The Woodford County National Bank of El Paso, Illinois, has appealed from the decree entered therein dismissing its bill of complaint for want of equity.

The bill alleges in' substance that on January 13, 1926, Thomas V. Pinkham was indebted to the plaintiff appellant for principal and interest due on a promissory note in the total sum of $1,128.32, and that on said date, the plaintiff recovered a judgment therefor in the circuit court of Woodford county; that a number of executions were issued and returned not satisfied, and that no payment had been made on the judgment.

It is also alleged that on April 4, 1932, Evaline Moo-berry, an aunt of the defendants, Thomas V. Pinkham and Royal Pinkham, died testate and bequeathed to each of said defendants an undivided one-nineteenth interest in her estate, alleged to be of an approximate value of $1,800; that on June 8, 1932, Thomas V. Pinkham, one of the defendants, assigned all of his right, title and interest in and to his legacy to his brother, Royal Pinkham; that at the time of said assignment Royal Pinkham had no pecuniary responsibility; that the assignment was made without consideration, and with the intention and design of aiding, assisting and abetting Thomas V. Pinkham in defrauding, hindering and delaying the plaintiff from collecting its judgment.

The bill prayed that the said assignment be set aside; that Royal Pinkham be enjoined from collecting the legacy in question and that Eugene' L. Conklin, executor, be enjoined from paying the legacy to Boyal Pinkham and ordered to pay plaintiff therefrom sufficient to satisfy its judgment and costs.

Thomas V. Pinkham failed to answer the bill and a default and decree pro confesso was entered against him. Boyal Pinkham filed an answer admitting the assignment, but denying that it was made for the purpose of defrauding the plaintiff, or of hindering and delaying the collection of its judgment against Thomas Y. Pinkham as alleged.

The answer further averred that Thomas Y. Pink-ham was indebted to Boyal Pinkham in the sum of $1,765 on account of a certain promissory note given by Thomas Y. Pinkham on November 28, 1921, to the First National Bank of El Paso and paid by Boyal Pinkham on July 15, 1922, as cosigner and security thereon and that the assignment was given for the purpose of repaying this bona fide pre-existing indebtedness.

Eugene L. Conklin, executor, by his answer admitted the assignment of the legacy of Thomas Y. Pinkham and that Boyal Pinkham had made demand on him for payment of the legacy by virtue of the assignment.

The cause was referred to the master in chancery, whose report and supplemental report overruling objections thereto were approved and the objections, standing as exceptions, were overruled by the court, the suit dismissed for want of equity, and the appeal herein was taken.

It appears from the approved report and from the evidence that the defendant Thomas Y. Pinkham became indebted to the plaintiff on February 18, 1921, in the sum of $1,178, and gave his note, payable to the plaintiff on June 18, 1921. He did not pay the note, and judgment was entered against him on January 13, 1926. The evidence fully establishes the fact that he was insolvent in 1921, and continued to be insolvent up to the time of filing the suit in question.

About the time that Thomas V. Pinkham was having these transactions with the plaintiff, the First National Bank of El Paso took a promissory note signed by both Thomas Y. Pinkham and Boyal Pinkham for the principal sum of $1,000 dated November 28, 1921, in renewal of a prior note due from Thomas Y. Pink-ham to the bank. Evidence on the part of the defendant establishes the fact that Boyal Pinkham signed this renewal note as surety and that he paid the note on July 15,1922, by surrendering to the National Bank of El Paso a certain mortgage note for the sum of $1,000 executed by one Anna B. Crowe, dated June 28, 1920, and the note so paid was surrendered to him uncanceled and remained in his bank box and in his possession until the time of the trial. The bank cashier (who was also a witness) at that time advised him not to cancel the note or mark it paid, but to hold it, which was done. Thomas Y. Pinkham never at any time made any payment of principal or interest on this note, and the master found the total amount due thereon from Thomas Y. Pinkham to Boyal Pinkham to be the sum of $1,560.67. Both of the Pinkhams were called by plaintiff and examined as witnesses under section 60 of the Illinois Civil Practice Act, Ill. Bev. Stat. 1937, ch. 110, § 184; Jones Ill. Stats. Ann. 104.060. They testified that the assignment was made in payment of the above pre-existing indebtedness and this testimony was not successfully rebutted.

The assignment of the legacy by Thomas V. Pink-ham was dated June 8,1932, and was filed in the office of the clerk of the county court of Tazewell county on June 23, 1932. The executor’s report filed in the estate of Evaline Mooberry showed the legacy and distributive share of Thomas Y. Pinkham to be the sum of $1,337.91, which was- less than the amount of the indebtedness for the payment of which the assignment was so made.

The primary question to he determined is whether or not Thomas V. Pinkham executed the assignment in question without consideration for the purpose of defrauding, hindering and delaying the plaintiff in the collection of said judgment or whether the assignment was made to Boyal Pinkham for a good consideration and for the purpose of paying his brother the amount of a bona fide pre-existing indebtedness.

When fraud is alleged, the burden is upon the plaintiff to prove this allegation by a preponderance of the evidence. Fraud is never presumed, but must be proved by such clear and convincing evidence as leaves the mind well satisfied that the allegations are true. The relationship of the parties is merely a circumstance which may excite suspicion, but will not, alone and of itself, amount to proof of fraud. Garrett v. Garrett, 343 Ill. 577, 580, 175 N. E. 772; Willson v. Labhart, 269 Ill. App. 93, 97; American Hoist & Derrick Co. v. Hall, 208 Ill. 597, 70 N. E. 581.

A debtor undoubtedly has the right to prefer one creditor, when he acts without fraud, even though he devotes all of his property to the preferred creditor, leaving nothing for the other creditors’ to resort to, and the fact that the alleged fraudulent action was between relatives does not change the rule that one alleging fraud in a creditor’s bill must prove it by a preponderance of the evidence, the relationship being merely a circumstance to excite suspicion. Third Nat. Bank of Mt. Vernon v. Norris, 331 Ill. 230, 234, 162 N. E. 829; American Hoist & Derrick Co. v. Hall, supra; First Nat. Bank of Flora v. Cunningham, 267 Ill. App. 430.

While the fact that the parties to the assignment were brothers subjects the transaction to closer scrutiny than if they were strangers, this fact does not of itself attain the dignity of proof as to third persons, as a brother may protect another brother who is a creditor if the transaction is in good faith, nor does the fact that the parties were brothers create a presumption that there was not a bona fide indebtedness. Byerly v. Byerly, 363 Ill. 517, 524, 2 N. E. (2d) 898.

The general rule is that where property is transferred in payment of a debt, fraud cannot be imputed to the creditor thus preferred, because of his knowledge that the debtor is insolvent or that the transfer is of all the debtor’s property. First Nat. Bank of Flora v. Cunningham, supra; 27 C. J. 269.

We are of the opinion that the finding of the master as approved by the judge that Boyal Pinkham had paid the note and indebtedness to the First National Bank of El Paso, Illinois, as security for Thomas Pink-ham is in accord with the preponderance of the evidence and that the same constituted a bona fide preexisting indebtedness prior to and at the time of the assignment of the legacy to Boyal Pinkham and that said assignment was made in recognition of and in payment of said indebtedness.

The appellant further urges that the payment of the indebtedness due the security on the Pinkham note was not a valid consideration for the assignment of the property in question since it is so alleged to have been barred by the statute of limitations.

The recognition of this indebtedness and the giving of the assignment was a clear admission of liability on the part of Thomas Pinkham and of his intent to pay the debt. Walker v. Freeman, 209 Ill. 17, 70 N. E. 595. Here we have the admission that the debt is due and unpaid coupled with the assignment in payment thereof, which was sufficient to remove the bar of the statute of limitations. Sneed v. Parker, 262 Ill. App. 333; Ross v. St. Clair Foundry Corp., 271 Ill. App. 271; West Pub. Co. v. Lasley, 165 Ill. App. 256; Walker v. Freeman, supra.

The lapse of time intervening did not affect the sufficiency of the consideration nor render the conveyance void as against creditors. Manchester v. Tib betts, 121 N. Y. 219, 24 N. E. 304. Moreover, the courts of this State have held that the plea of the statute of limitations is a personal privilege and defense, and that it can be availed of only by the person for whose benefit the statute inures, or such other person as stands in his place and stead. Cartwright v. Cartwright, 68 Ill. App. 74; Fish v. Farwell, 160 Ill. 236, 43 N. E. 367; Emory v. Keighan, 94 Ill. 543.

We have fully examined and considered all other alleged errors assigned by the appellant and find no reversible error in the record.

The decree of the circuit court of Tazewell county dismissing the appellant’s bill for want of equity will therefore be affirmed.

Decree affirmed.


source: Caselaw Access Project

author: Mr. Justioe Biess

license: Public Domain

text:
    In re Estate of Jerome Trost, Deceased. William E. Buracker and The L. B. Price Mercantile Company, Appellants, v. Albert C. Schlipf, Administrator of the Estate of Jerome Trost, deceased, Appellee.
    Gen. No. 9,062.

      Opinion filed October 15, 1937.

      Provine & Williams and Clark H. Milet, of Springfield, for appellants.
    Boscoe C. Boniean, of Springfield, for appellee; S. S. Du Hamel, of Springfield, of counsel.
   Mr. Justioe Biess

delivered the opinion of the court.

Appellants filed a motion in the probate court of Sangamon county on December 7, 1936, asking that letters of administration issued by that court on November 25, 1936, to the appellee as administrator of the estate of Jerome Trost, deceased, be revoked by the court and the order of appointment set aside. The motion was denied by the probate court and by the circuit court on appeal, and this appeal then followed.

Jerome Trost, a resident of the State of Ohio, was killed in an automobile accident in Sangamon county, Illinois, on the fifth day of September, 1936. On November 25, 1936, appellee Albert C. Schlipf, public administrator of Sangamon county, filed his petition in the probate court of that county praying that letters of administration be issued to him, and therein alleged that Jerome Trost died intestate, “leaving personal property in said County of the probable value of one hundred dollars, and a claim on behalf of his estate for his wrongful death, ’ ’ which resulted from injuries sustained by him in Sangamon county; that he left no heirs who are residents of Illinois, and that said deceased was a nonresident.

Letters of administration were issued to appellee, and he filed suit as such administrator against the appellants in the circuit court of Sangamon county for the benefit of the next of kin, alleging that the death of Jerome Trost was caused by the wrongful acts of appellants, and that the next of ldn of said deceased had suffered pecuniary damages for which the appellee sought judgment.

Paragraph 18, ch. 3, Ill. State Bar Stats. 1935; Jones Ill. Stats. Ann. 110.018; Smith-Hurd Ill. Rev. Stats., ch. 3, § 18, provides with reference to the public administrator as follows: That in all cases where the intestate is a nonresident, and in all cases where there is no widow, or next of kin, who, at the time of the death of said decedent is a bona fide resident of this state, administration shall be granted, to the public administrator. This paragraph further provides that when the heirs are residents of this state and the estate is solvent and without minor heirs and it is desired by the parties interested to settle the estate without administration, this law shall not apply.

Plainly, under the language of this section, it is the duty of the public administrator to act when a nonresident dies intestate, leaving property in this State, if there is no relative or creditor in the State entitled to administer. Dupee v. Follett, 304 Ill. 166, 136 N. E. 543.

Appellee contends that none of the heirs, next of kin, creditors nor persons interested in the collection and disposition of the assets are attacking the jurisdiction of the probate court or seeking revocation of the letters issued therein. Neither of the two appellants had any interest in the estate of Jerome Trost, deceased, that would authorize them to set aside the appointment of the administrator. They were alleged debtors, but that gave them no right to petition for the removal of the administrator.

This question arose in the case of Missouri Pac. Ry. Co. v. Bradley, 51 Neb. 596, 71 N. W. 283, under a similar state of facts, wherein the Supreme Court of Nebraska used the following language: “The decisions of the County and District Courts are right for the reason that the railway company possessed no such interest as to authorize it to move to set aside the appointment of the administrator. The corporation is not a creditor of the deceased, nor is it in any manner interested in preserving the assets, or in the settlement of the estate of Myers. The Company is a mere debtor of the estate and has been sued by the administrator for the recovery of money, but that gives no right to it to petition for the removal of the administrator.” In the ease of In re Stone’s Estate, 173 Iowa 371, 155 N. W. 812, the court, on this question, says: “ A person or party who fears he may be sued by the administrator has no interest which entitles him to demand the removal of the administrator. . . . ” No authority directly in point has been cited by appellants to the contrary. We hold that the debtors could not raise this question by a motion to revoke the letters.

Appellants expressly concede the well settled rule of law in Illinois that this question cannot be collaterally raised by a debtor in defense of a suit brought against him by the administrator for the benefit of the next of ldn. Bremer v. Lake Erie & W. R. Co., 318 Ill. 11, 22, 148 N. E. 862, 41 A. L. R. 1345; Balsewicz v. Chicago, B. & Q. Ry. Co., 240 Ill. 238, 88 N. E. 734; Keystone Steel & Wire Co. v. Industrial Commission, 289 Ill. 587, 124 N. E. 542; Wandschneider v. Wandschneider, 282 Ill. 286, 118 N. E. 486.

■ The appellants earnestly contend, however, that there was no necessity of administration in this estate by the public administrator. The right to administer upon the estate of a deceased person dying intestate does not depend upon the size of the estate nor the value thereof.

Although this question has not been directly passed upon by the courts of review in Illinois, the trend of authorities in other States where the question was at issue hold that the value of the estate left by the deceased does not control the jurisdictional power of the court to grant letters of administration unless a minimum value is fixed by statute. This view is in accord with the language of the Illinois statute above cited.

While authorities have been cited by respective counsel both for and against the proposition that a cause of action lodged by statute in the administrator to recover for personal injuries resulting in death is of itself a sufficient asset to justify the appointment of an administrator, we need not pass upon that mooted question in this case, for the reason that there were conceded to be personal assets of the nonresident decedent of a stipulated approximate value of $100 in the county in which letters of administration were granted.

In the case of Anderson v. L. & N. R. Co., 159 S. W. 1086, it was held that an administrator could be appointed in the estate of a nonresident where the only assets belonging to the estate were valued at $35 in addition to a claim under the Lord Campbell Act for damages for his wrongful death.

In the case of Mercer v. Dobbyn, 91 Ind. 682, it appeared from the facts that the deceased was a traveling salesman residing in Peoria, Illinois, and that he was walking along Highway No. 50 in the State of Indiana when he was struck by an automobile and killed. At the time of his death, the decedent had in his possession “$25 in cash, one leather grip, one fountain pen, one Grillete Safety razor, one duplex razor, all of the value of $45,” in addition to the p.la.im against Charles Mercer for wrongful death of decedent. A motion was made to cancel letters of administration because of insufficient showing of an estate. The court held that the articles of personal property, although of small value, were sufficient to uphold the appointment of an administrator.

The question’ also arose in Missouri Pac. Ry. Co. v. Bradley, 51 Neb. 596, 71 N. W. 283, where letters of administration were issued to a resident of Missouri. The petition for letters showed that the decedent left an estate of $4 in money and also a claim to a right of action for damages against the railroad company for injuries occasioning the death of one Charles L. Meyer. A petition was filed to revoke letters- of administration. The court, in passing upon the question of the right to revoke such letters of administration, used this language: “It is true, exclusive of the claim against the Company they were not of great value, but that is wholly an immaterial consideration so far as the question of jurisdiction is concerned.”

The Kansas Supreme Court in the case of Cox v. Kansas City, 86 Kan. 298, 120 Pac. 553, sustained a grant of letters of administration upon the estate of a nonresident decedent where it was obvious that the primary purpose of the appointment was to provide a plaintiff for the prosecution of a death claim, where the only other property left by deceased in the State in addition to the statutory right of action was a suit of clothes worn by him and valued at one dollar and fifty cents, although the same court had previously held in Mallory v. Burlington & M. River Co., 53 Kan. 557, 36 Pac. 1059, that letters of administration were invalid when the apparent purpose for which they were issued was to enable the administrator to bring an action for the wrongful death of his nonresident intestate who left no property in that State.

To the same effect is the holding of the Federal Court that money found upon the body of an unknown person upon the high seas, which has come into the registry of the United States District Court, will give jurisdiction for administration by the public administrator of the county in which it is located. United States v. Tyndale, 116 Fed. 820, 54 C. C. A. 324.

The dictum of the court in Cotterell v. Coen, 246 Ill. 410, 92 N. E. 911, cited by appellant, is not applicable here since the deceased, Cotterell, was a resident of Illinois, owed no debts, all assets in his estate had been reduced to money, and it clearly appeared that all expenses of the last illness and burial had been paid and that all adult heirs and the guardian of the only minor had signed a written agreement dispensing with administration.

In the instant case, it is not alleged nor claimed that any action by the heirs or interested parties was taken to dispense with administration. Here, a specific showing was made of the existence of personal estate of substantial value together with an alleged cause of action brought under the statute which specifically provided that this action shall be brought by and in the name of the personal representative of the deceased for the benefit of the widow or next of kin of the deceased and that the amount so recovered shall be distributed to them in the proportion provided by law. Sections 1 and 2, ch. 70, Ill. Rev. Stat. 1937.

This court in the case of Mattoon Gas & Light Co. v. Dolan, 105 Ill. App. 1, held that: “It has been settled by frequent decisions that the action provided for by the statute is to be in the name of the administrator, that being construed to be the meaning of personal representative, the term used in the statute. ’ ’

The fact that the next of kin might settle or release such cause of action does not in the first instance affect the statutory right of the personal representative of the deceased to file this suit for their use and benefit,. although any such subsequent settlement or release might be shown in defense of any suit filed thereon. A release of damages executed by an administrator appointed in one county is admissible under a plea setting up that defense in an action by an administrator, appointed in another county, to recover damages for the death of the same decedent, Balsewicz v. Chicago, B. & Q. R. Co., supra.

Primarily, the purpose and object of requiring administration to be had on the estates of persons dying intestate is to provide for and insure, first: the conservation of all the personal assets of the estate, including the collection of all debts due the decedent; second: the payment of all the debts of the decedent, and third: the proper distribution of the residue among the heirs at law, according to the statute of descent. Cotterell v. Coen, supra. Administration is not necessary in every estate, and the statute applies only to those cases where it is necessary; the necessity therefor being dependent upon the particular facts of each case. Unless and until the contrary appears in a direct proceeding upon objection by a party or parties interested in the administration or disposition of the estate, as heir, creditor or otherwise, the probate court making the appointment will, in the absence of fraud, be presumed to have acted within its jurisdictional power.

Here the estate was stipulated to be the sum of $100 in addition to the alleged cause of action lodged by statute in the administrator arising out of the wrongful death of the deceased. Under this state of facts, we hold that the probate court was acting within its jurisdictional powers in making the appointment. The public administrator was entitled to letters and the probate and circuit courts did not err in denying the motion to revoke the letters and set aside the order of appointment.

The judgment of the circuit court is therefore affirmed.

Judgment affirmed.


author: Mr. Justice Biess

text:
    H. H. Messick, Appellant, v. Ernest J. Mohr et al., Appellees.
    Gen. No. 9,065.

      Opinion filed October 15, 1937.
    Henry H. Morey, of Decatur, for appellant.
    Busch & Harrington and O. E. Tate, of Champaign, for appellees; William L. Springer, of counsel.
   Mr. Justice Biess

delivered the opinion of the court.

This is an appeal from a decree entered by the circuit court of Champaign county, sustaining defendants’ motion in the nature of a demurrer to the complaint and dismissing the cause for want of equity at the costs of plaintiff.

The facts alleged in plaintiff’s verified complaint set forth in substance that on April 27,1927, he purchased from the payee a promissory note signed by the defendant Ernest J. Mohr due one year after date for the principal sum of $685; that on April 15, 1928, he notified Mohr that he was the owner of this note, and that on April 26, 1928, there would be due thereon the sum of $719.25; that thereupon on April 20, 1928, Mohr and his wife conveyed by warranty deed to W. O. Dale, 145 acres of farm land inherited from Mohr’s father in 1926 and set off to him in partition at the value of $20,000, which is also its present value, for an alleged consideration of one dollar and other valuable consideration, which deed to Dale was made subject to a mortgage lien of $2,500 payable to the Dighton-Dilatush Company and maturing in 1961.

On March 25, 1929, plaintiff recovered a judgment by confession on the Mohr note in the circuit court of Macon county, Illinois, for $862.59 and costs of suit and on March 27, 1929, a transcript of this judgment was filed in the circuit court of Champaign county, Illinois, and execution was issued and served on the defendant Mohr; that on October 15, 1935, an alias execution was issued out of the circuit court of Champaign county, and was returned “No property found”; that no part of this judgment had been paid or satisfied and that there are no setoffs nor counterclaims in favor of defendant Mohr against the same. The complaint seeking a remedy in equity herein was filed on February 25, 1936.

It is further alleged that the defendant W. O. Dale is an elderly man, owns land adjoining the land of the defendant Mohr and that he is related to said defendant, administered on the estate of his father, and was the confidant and business advisor of Mohr in his affairs; that after demand and notice of plaintiff’s indebtedness, Mohr went to Dale and together they went to the office of an attorney and executed and caused to be recorded the deed in question to Dale and also a chattel mortgage for $2,000 on all the chattels, machinery, livestock and crops on the farm by Mohr to a stenographer in the attorney’s office without any valuable consideration, which was never foreclosed nor sought to be collected, but was so executed for the purpose of further covering up defendant’s property and in preventing the collection of plaintiff’s indebtedness; that while the sheriff held the execution on said judgment for collection, defendant Mohr, on February 3, 1936, executed another purported chattel mortgage to said stenographer for $400 due in three years, without consideration, to defraud the plaintiff; that after the said deed was executed, Mohr and his wife continued to live on the land and to remain in exclusive and sole possession thereof, paid all taxes thereon and all credits on the Dighton-Dilatush Company mortgage; that Mohr has improved the premises, bought and paid for material and hardware used in • improving the house, marketed all grain and crops raised thereon without any division or claim for rent by Dale, and that he held no lease thereon; that the plaintiff interviewed defendant W. O. Dale about the land, and Dale stated at one time that he paid no attention to it, and later that he took the deed to cover a debt Mohr owed him; that he did not know the amount of the debt; that it was a mere book account, not evidenced by a note or writing, and that the deed from Mohr to Dale was a mortgage.

The complaint further alleges that said deed conveying the farm to Dale was made by the defendants without any adequate consideration and with intent to defraud the plaintiff; that said land is not the land of Dale, but in reality is the property of Mohr, and by a secret arrangement and contrivance entered into between them is held in trust by Dale for the use and benefit of Mohr for the fraudulent purpose of preventing a levy and sale on an execution on plaintiff’s judgment; that the plaintiff knows of no other property out of which Mohr’s debt can be made, and that no other persons have acquired any right or interest in the real estate since March 27, 1929, when a transcript of the judgment was filed in Champaign county.

Plaintiff prays that defendants be required to answer under oath to said allegations and that the deed, as to, the plaintiff, be declared null and void, if so found to be fraudulent; that if the deed is found and decreed to be a mortgage, the amount due the defendant Dale be ascertained and declared a lien against said land, subject to the Dighton-Dilatush Company mortgage, and that the plaintiff’s judgment be declared a further lien thereon, and for certain further equitable relief therein specifically prayed.

The defendants filed a motion to strike the complaint, based on six alleged grounds, namely: “that the complaint did not state a cause of action in chancery”; that the complaint fails to state facts showing intent on the part of any of the defendants to defraud creditors; that the complaint failed to state that plaintiff had recovered a judgment on which execution was issued and returned at the time of the conveyance; that no actual fraud or intent to defraud is alleged; that the complaint is inconsistent in its allegations respecting a consideration for the deed, and that it is improperly verified.

The motion was submitted on oral arguments and briefs, and the trial court filed with its decree dismissing the cause for want of equity a short written opinion, basing its decision on the sole ground that the alleged cause of action of the plaintiff was barred by the doctrine of laches, apparent from the allegations of the complaint, to which rulings the plaintiff excepted and the case was brought here on appeal.

Two questions arise for determination in passing upon the assignment of errors herein: (1) Does it appear from the facts and allegations set forth in the bill that the plaintiff is guilty of laches that would bar him from relief in a court of equity? (2) Can the defendant avail himself of the defense of laches without specifically raising it in his motion or by plea or answer in the court below ?

It is earnestly contended by defendants in their brief that laches appear on the face of the complaint. For the purpose of this motion, all facts that are well pleaded are admitted by the defendants. Barnett v. Gitlitz, 290 Ill. App. 212, 8 N. E. (2d) 517.

We will first consider whether, independent of the sufficiency of the defendants’ motion, the trial court erred in holding that the facts and circumstances set out in the complaint do not state a cause of action because of laches apparent on the face of the complaint.

Laches is such neglect or omission to assert a right as, taken in conjunction with lapse of time, more or less great, and other circumstances causing prejudice to the adverse party, operates as a bar in a court of equity. Brunotte v. DeWitt, 360 Ill. 518, 196 N. E. 489.

There is no fixed time that is held to apply in bar of actions in equity. Where it is necessary to prevent fraud or great hardship, courts of equity will grant relief, even after the statute of limitations applicable to actions at law has run, .and in other cases, courts of equity may, in order to accomplish a proper result, bar the action in a shorter time than that prescribed by the statute. "What is a reasonable time cannot well be defined, but must be left in large measure to the determination of the court in view of the facts presented. Cory v. City of Hillsboro, 205 Ill. App. 49; Carlock v. Carlock, 249 Ill. 330, 94 N. E. 507.

Mere delay in asserting a right does not ordinarily bar the enforcement of the right in equity on the ground of laches, unless the statutory period allowed for asserting this right has elapsed. There must he, in addition to the delay, something in the conduct of the plaintiff which would make it inequitable to permit him to maintain his action. Yunkes v. Webb, 339 Ill. 22, 170 N. E. 709.

When, however, the status and conditions of the parties and subject matter have so changed as to render the relief unjust or inequitable, or when the lapse of time impairs and destroys evidence of the true facts and makes it impossible to meet positive testimony, a court of equity, finding itself unable to render substantial justice between parties, asserts the principle of laches on the ground of public policy and the repose of property rights. Carlock v. Carlock, supra.

When there is no evidence in the record showing or tending to show that appellees were in any manner prejudiced by appellant’s delay in bringing his suit, the doctrine of laches will not apply. Forest Preserve District v. Emerson, 341 Ill. 442, 173 N. E. 477. A court of equity applies the doctrine of laches in the denial of relief only where from all the circumstances, the delay would render the relief to which the complaint would otherwise be entitled, inequitable and unjust. Coryell v. Klehm, 157 Ill. 462, 41 N. E. 864; Luttrell v. Wyatt, 305 Ill. 274-283, 137 N. E. 95; Manson v. Berkman, 356 Ill. 20, 190 N. E. 77.

Parties who combine together for the purpose of defrauding creditors or persons holding legal demands are precluded from relying on laches in a court of equity. Greenman v. Greenman, 107 Ill. 404.

No specific facts are alleged or shown that indicate why the plaintiff delayed his action for seven years. It is apparent that he could have been much more prompt and diligent in filing his suit. His judgment was in full force. The allegations of the complaint show, however, that the defendant Mohr is still in possession of the property, that he collects all rents, that he pays the taxes and interest on the mortgage of $2,500, that the defendant Dale did not claim or assert any rights to the property and that the status of the property and interest of the parties remains the same now as they were at the time the note and indebtedness, which merged in the judgment, was due and the deed was made and recorded and that the claim had not been barred by the statute of limitations.

If the allegations in the complaint are taken as true, it is impossible to come to the conclusion that the defendants in this case have been prejudiced in any manner, by any delay, in the institution of this suit. The doctrine of laches was never intended to protect a wrongdoer or to bring about an end which is inequitable and unjust.

We hold that in other respects the complaint sets forth in substance sufficient allegations, facts, and circumstances to state an equitable cause of action and that the motion to dismiss the complaint should not have been allowed.

The appellant further contends that the trial court erred in permitting the defendants to raise the question of laches without specifically setting out this defense in his motion or by plea or answer in the court below.

The motion states only that “(1) Said complaint does not state a cause of action in chancery.”

It is provided by section 45 of the Civil Practice Act, Ill. Rev. Stat. 1937, ch. 110, § 169; Jones Ill. Stats. Ann. 104.045, that: “(1) All objections to pleadings heretofore raised by demurrer shall be raised by motion. Such motion shall point out specifically the defects complained of, and shall ask for such relief as the nature of the defects may make appropriate, such as the dismissal of the action or the entry of a judgment where a pleading is substantially insufficient in law, or that a pleading be made more definite and certain in a specifiéd particular, or that designated immaterial matter be stricken out, or that necessary parties be added, or that designated misjoined parties be dismissed, and so forth.”

In construing the above section, this court has said that: “This section abolishes demurrers and substitutes a motion in the nature of a special demurrer, in that the motion must point out specifically the defects complained of and ask for such relief as the nature of the defects may make appropriate. ’ ’ Hitchcock v. Reynolds, 278 Ill. App. 559-562.

By par.- 2, section 45, ch. 110, supra, it is further provided that: (2) Where a pleading or a division thereof is objected to by a motion to dismiss or for judgment or to strike out the pleading, because it is substantially insufficient in law, the motion must specify wherein such pleading or division thereof is insufficient. ’ ’

Paragraphs 2 and 3, section 42, ch. 110, Ill. Rev. Stat. 1937, §166; Jones Ill. Stats. Ann. 104.042, provide that: “(2) No pleading shall be deemed bad in substance which shall contain such information as shall reasonably inform the opposite party of the nature of the claim or defense which he is called upon to meet. (3) All defects in pleadings, either in form or substance, not objected to in the trial court, shall be deemed to be waived. ’ ’

It is specifically provided by paragraph 4, section 43, ch. 110, Ill. Rev. Stat. 1937, §167; Jones Ill. Stats. Ann. 104.043, that “(4) The facts constituting any affirmative defense, such as payment, release, satisfaction, discharge, license, fraud, duress, estoppel, laches, statute of frauds, illegality, — and any defense which by other affirmative matter seeks to avoid the legal effect of or defeat the cause of action set forth in the plaintiff’s complaint, or the defendant’s counterclaim, in whole or in part, and any ground or defense, whether affirmative or not, which if not expressly stated in the pleading, would be likely to take the opposite party by surprise, must be plainly set forth in the answer or reply. ’ ’

Prior to the adoption of the present Civil Practice Act, which became effective on January 1, 1934, the courts of review of this State adhered to the well settled rule of practice that in order to avail himself of the defense of laches, the defendant was required to either demur, generally or specifically, if the defect appeared on the face of the bill or to set up the defense in a special plea or answer so as to point out the defect and aiford the complainant opportunity to amend the bill. Spalding v. M. & W. I. R. Co., 225 Ill. 585, 80 N. E. 327; Coryell v. Klehm, supra; Porter v. Armour & Co., 241 Ill. 145-154, 89 N. E. 356; Ogden v. Stevens, 241 Ill. 556, 89 N. E. 741; Schnell v. City of Rock Island, 232 Ill. 89-97, 83 N. E. 462. The general demurrer, having been abolished by statute and so construed by the courts of review of this State, could not be availed of to raise the defense of laches herein; hence ‘ ‘ all defects in pleadings, either in form or substance, not objected to in the trial court, shall be deemed to be waived. ’ ’

Under the construction of section 45 by this court, it is clear that in order to avail himself of the defense of laches, the defendant must set up the defense in a motion “in the nature of a special demurrer, in that the motion must point out specifically the defects complained of” and that “this section abolishes demurrers and substitutes a motion therefor.” Hitchcock v. Reynolds, supra.

This, the motion to strike in the instant case utterly failed to do; hence the defendant could not avail himself of the defense of laches thereunder and we hold that it was error to grant this motion and dismiss the suit on the ground of laches which was neither pointed out nor set forth in defendants ’ motion.

For the reasons stated, the decree of the circuit court is reversed and the cause remanded.

Beversed and remanded.


author: Mr. Justice Scanlan

text:
    George H. Biggs and Daisy Biggs, Appellees, v. Hannah Obermeyer et al., Defendants. Chicago Title & Trust Company, Appellant.
    Gen. No. 38,944.

      Opinion filed October 19, 1937.
    Rehearing denied November 2, 1937.
    George Gillette, Norbert B. Tyrrell and Carl F. Faust, all of Chicago, for appellant.
    George J. Haddad and James M. Whiteside, both of Chicago, for appellees.
    Barnet Hodes, Corporation Counsel, Joseph F. Grossman, First Assistant Corporation Counsel and Arthur A. Sullivan, Assistant Corporation Counsel, for City of Chicago.
   Mr. Justice Scanlan

delivered the opinion of the court.

Chicago Title and Trust Company, as trustee under trust agreement known as Living Trust No. 16622 (hereinafter called appellant), appeals from a decree entered in a foreclosure proceeding' filed by George H. Biggs and Daisy Biggs, appellees.

On September 10, 1928, complainants owned the property situated at 1435 North LaSalle street, Chicago, Illinois, described as follows: “The North half of the North half of the West half of Lot 102 in Bronson’s Addition to Chicago (except that part thereof taken for North LaSalle Street and for alley).” The exception in the description refers to a portion of the lot taken many years ago for street and alley purposes. The lot was approximately 152 feet in length, fronted west on LaSalle street, and was improved with a three-story brick house. In 1925 the City of Chicago (hereinafter called the City), for the purpose of widening North LaSalle street, instituted proceedings under the Local Improvement Act for the taking of the west fourteen feet of the lot, and an award of $9,923 was made as damages for the taking of the same and benefits in the amount of $3,607 were assessed against the remaining part of the lot. The property was then subject to a first mortgage in the sum of $4,500. On September 10, 1928, complainants entered into a written agreement to sell the real estate to Hannah Obermeyer for $30,000. By its terms she was to pay $6,000 in cash, give to the sellers her purchase money mortgage in the sum of $19,500, and accept from them a conveyance of the property subject to the $4,500 mortgage. The contract recites the facts as to the condemnation proceedings and provides that the purchaser is to get the award money and assume the assessment of benefits and also certain fees incurred by the sellers in relation to the proceedings. The sellers agree that they will “execute any and all releases, assignments and documents and perform such acts as may be necessary to secure to the purchaser” the award money. The contract further provides that the purchaser may make a new mortgage on the property in any amount, provided the proceeds thereof in excess of $4,500 be applied in partial payment of the purchase money mortgage, in which event the holder of the purchase money mortgage would subordinate it to such new mortgage. On December 14,1928, pursuant to the contract of sale, complainants conveyed the tract, by warranty deed, to Hannah Obermeyer, and the latter executed and delivered to complainants the purchase money mortgage in the amount of $19,500, which is the trust deed complainants sought to foreclose. The purchase money mortgage contained a clause providing for its subordination in accordance with the provisions of the contract of sale. On December 27, 1928, final judgment was entered in the condemnation suit. Certain defendants, not interested in the instant property, appealed from the judgment, which was affirmed by the Supreme Court on April 17, 1934. On April 4, 1929, Hannah Obermeyer made a new trust deed to Chicago Title and Trust Company, Trustee, which conveyed the land by the same description used in the deed to her and in the purchase money mortgage. This new mortgage was in the amount of $4,500 and was made paramount to the purchase money mortgage by a subordination agreement executed on May 24, 1929, by complainants, which subordinates the purchase money mortgage, as provided therein and in the contract of sale. All of the above instruments of conveyance were duly recorded. The contract of purchase, with other instruments, was placed in escrow with Chicago Title and Trust Company, in September, 1928, for delivery by the escrowee to the parties interested upon their joint order. On October 23, 1929, the $4,500 note was acquired by appellant, and it is still held and owned by said trust. It appears from the evidence that before purchasing this note appellant caused the premises to be appraised, and in making the appraisal only the land that remained after the 14 feet were taken by the City was considered. On June 4, 1929, Hannah Obermeyer conveyed the premises to Foreman Trust and Savings Bank, a corporation, as trustee under the provisions of a trust agreement dated June 4, 1929, known as Trust No. 4238. The beneficiaries under this trust were the real purchasers of the property. On January 24,1931, the City paid to that bank, as said trustee, $4,852.21, the net amount of the compensation award after the benefits assessed and the amount of an attorney’s lien had been deducted. On January 23, 1931, Foreman-State Trust and Savings Bank, successor to Foreman Trust and Savings Bank, as trustee, conveyed the condemned portion of the property to the City. On November 18, 1933, the Chicago Title and Trust Company, as trustee under the trust deed herein sought to be foreclosed by complainants, but without direction from complainants, executed and recorded a release to Hannah Obermeyer of the 14 feet from the lien of said trust deed.

Complainants’ bill sets forth, inter alia, the execution of the $4,500 mortgage, the proceedings in the county court in the condemnation suit, and the amount of the net award therein. The bill alleges that appellant, in its “individual corporate capacity,” was, on January 24, 1931, and still is, the owner of the said note and trust deed and on that date had a lien “upon said fund of $4,852.21, and the trust deed herein sought to be foreclosed was a second lien upon said fund, subject, however, to the lien of the trust deed recorded as Document No. 10354603 [being the $4,500 trust deed] ”; that “although it received notice on and prior to January 24, 1931, said Chicago Title and Trust Company negligently, carelessly and recklessly informed the City of Chicago that it had no claim to said fund, and the said City of Chicago, relying upon such information, paid said $4,852.21 to the Foreman-State Trust .& Savings Bank”; that by reason thereof complainants are entitled, in equity, to insist that appellant be compelled to satisfy its claim out of said award or be forever barred from asserting or claiming a lien on the remainder of the premises. The bill prays that appellant be compelled to satisfy its indebtedness out of the portion of the premises owned by the City and that complainants have a first lien on the remainder of the premises. Appellant, the City, and certain persons were made parties defendant.

Appellant’s answer, filed “as trustee under Living Trust No. 16622,” claims ownership of the $4,500 trust deed note, admits the alleged facts in relation to the making of the two trust deeds and the subordination of complainants’ mortgage, but denies that its trust deed was intended to cover the 14 feet taken for widening North LaSalle street; denies that it in any manner informed the City, on or prior to January 24, 1931, that it had no claim on the award money; asserts that its trust deed was never intended to cover the 14 feet taken by the City and that appellant has no claim thereon or against the City by virtue of its trust deed; asserts a first lien upon the remaining portion of the premises, and sets forth and attaches to its answer a copy of the contract of agreement under which the land was sold to Hannah Obermeyer.

The answer of the City denies that either the trust deed owned by complainants or that owned by appellant ever covered the land condemned and taken by the City or that either created any lien on the award fund, and asserts that the award money was properly paid to Foreman-State Trust and Savings Bank.

It was stipulated that appellant had no notice or knowledge of the existence of the contract under which complainants sold the above land to Hannah Obermeyer until about October 15, 1933, except such constructive notice as might be charged to it by reason of the fact that the contract was placed in escrow with Chicago Title and Trust Company as escrowee, in September, 1928. It was also stipulated that when appellant became the legal owner of the $4,500 note, on October 23, 1929, it acquired and has since held the guarantee policy issued at the time of the making of the $4,500 mortgage. Further facts appearing in the record relate solely to matters and questions not involved in this appeal.

The master to whom the cause was referred found, O ' inter alia, that on January 24, 1931, appellant had a first lien on the net award of $4,852.21; that such sum was more than sufficient to cover the indebtedness due it under its trust deed; that on the date of the filing of the complaint and on the date of the filing of appellant’s answer the latter “had a good, prior and valid claim against the City of Chicago for the sum due it under trust deed . . ., which sum due it was less than the net amount of the said award; that in filing its answer in this cause, denying that it had a claim against the City of Chicago for said sum and denying that the trust deed ... is and was a lien on said award, said Chicago Title and Trust Company, in its capacity as aforesaid, had released its said claim against the City of Chicago, and that, as a result thereof, said defendant, Chicago Title and Trust Company, is estopped to assert as against complainants that its trust deed . . . is a prior lien on the East 138 feet of the premises described in said trust deed.” The master found that complainants were entitled to the relief prayed for in the bill. The trial court overruled all of appellant’s exceptions to the master’s report and affirmed the master’s report m toto. The decree follows the report and finds that complainants were entitled to a first lien on the land remaining after 14 feet had been taken by the City and orders a foreclosure and sale in favor of complainants in satisfaction of the sum due them under the “elevated” mortgage in the amount of $23,462.62 with interest and costs, and provides for a deficiency decree against Hannah Obermeyer in the event of a deficiency under the sale.

Appellant appeals from that portion of the decree wherein “it was decreed that Chicago Title and Trust Company, as trustee, has released any claim it might have against the City of Chicago on the net amount of the award described in said decree and resulting from the condemnation of a portion of the premises; and whereby it was decreed that Chicago Title and Trust Company, as trustee, is estopped to assert as against complainants that its trust deed . . . is a prior lien on the East 138 feet of the premises described in said trust deed.” Appellant insists that upon remandment of the cause, unless complainants pay off the former’s mortgage in protection of their own secondary lien on the land, a decree should be entered finding and adjudging that appellant has a paramount lien, under its $4,500 mortgage on the remaining land and directing that the land be sold subject to that lien.

While complainants argue that by the application of the doctrine of marshaling of securities equity could properly decree that they have a first lien on the proceeds of the sale of the remaining-138 feet, nevertheless, they have seen fit to file a cross-appeal, which asks “in the first instance that said decree be affirmed, ’ ’ but prays that in case this court holds that appellant “is entitled to a modification of the said decree of foreclosure and sale and a judgment order or decree in accordance with the prayer of said defendant and appellant in its notice of appeal heretofore filed herein, or is otherwise entitled to relief by way of review, then the said complainants and appellees pray that the Reviewing Court grant additional relief in one or more of the following respects: 1. That the decree be further modified to provide that . . . Chicago Title and Trust Company, a corporation, as trustee under a trugt agreement known as living trust No. 16622, be decreed to have a lien upon the net amount of the award or judgment described in said decree and resulting from the condemnation by the City ... of a portion of the premises described in said decree, being the sum of $4,852.21, together with lawful interest thereon, to the extent of the sum due . . . appellant upon the indebtedness secured by the trust deed recorded in the Recorder’s Office of Cook County . . .; and that said . . . appellant have a decree therefor against . . . the City . . .; and that to the extent of any deficiency due the complainants after the sale of the premises ordered to be sold by the said decree of March 26, 1936, it be ordered and decreed that . . . complainants, upon terms and conditions as are just and equitable, be subrogated to the rights of the . . . appellant . . ., as trustee under a trust agreement known as living trust No. 16622, in and to said decree against the City . . ., and in and to the liens and claims of said . . . appellant on the said award or judgment, and against the City . . .; or that the cause be remanded . . . with instructions to modify the decree of March 26, 1936, in accordance with this paragraph. 2. That the Reviewing Court by its decree otherwise marshal the assets, securities and liens forming the subject matter of this cause according to equity, or remand the cause . . . for that purpose. 3. That such other and further order and judgment be entered herein as to equity and justice may appertain.” In their brief complainants ask that “if the Court holds that the decree is erroneous, it should, in accordance with the prayer in our notice of cross appeal, provide for a final decree granting the Title Company a judgment against the City and providing that the complainants may be subrogated to that judgment upon such conditions as the Court may properly impose.”

Appellant and the City contend that the cross-appeal “is inconsistent and improper.” Where a party has obtained a judgment for everything that he claimed in the trial court he cannot assign cross-errors on an appeal from such judgment. See Bullman v. Cooper, 362 Ill. 469, wherein the court said (pp. 471-2): “If a party has not obtained all that he deems himself entitled to, he may appeal, but not when he receives all that he claims. (Pelouze v. Slaughter, 241 Ill. 215.) The final and appealable order rendered by the county court was that the appellee be declared elected to the office of supervisor of the town of Kelly, and for costs against the appellants. No part of this judgment was adverse to the appellee and, hence, he was not in a position to file a notice of or prosecute a cross-appeal. On the other hand he has the right in such cases to sustain the judgment upon any ground warranted by the record irrespective of whether the particular reasons given by the trial judge or his specific findings are correct. Stewart v. Dodson, 282 Ill. 192; Pelouze v. Slaughter, supra.(See also Cook v. Newhold, 189 Ill. App. 537; McNulty v. Hotel Sherman Co., 280 Ill. App. 325, 331.)

Moreover, complainants’ bill does not seek a decree against the City, and the decree entered, at their instance, is entirely favorable to the City and adjudges nothing against it. The case was not tried upon the theory now advanced by complainants and the pleadings would not support such a decree as is sought in their cross-appeal. In its answer appellant disclaims any right of action against the City, and there was no issue raised by the pleadings as to whether or not the City was liable in any way to appellant. The City, in reply to the cross-appeal of complainants, strenuously objects to the entry of the decree proposed by complainants. It argues: “ (a) That the pleadings in the case and the theory on which the case was tried do not embrace any issue between said co-defendants, and the City of Chicago therefore had no occasion or opportunity to meet such issue, and (b) That the trial of such issue between said co-defendants was in no way necessary to enable complainants to obtain their rights.” The City calls attention to the fact that complainants, by their amended bill, sought relief against the City only for the difference between the amount due undér the mortgage owned by appellant and the net amount of the award, which is approximately $150, and states that the City, because of the small amount claimed, was willing to have a decree entered against it for that amount, but that the decree, entered at the instance of complainants, granted no relief whatever against the City; that under the pleadings and the proof the City was not called upon to introduce evidence to show that it was not liable to its codefendant, appellant; that if the issue as to whether or not complainants’ mortgage constituted a lien on the award had been properly presented by pleadings and proof, the City would have successfully met the issue.

There is no merit in complainants ’ cross-appeal, and appellant is justified in contending that by filing it and arguing in support of it, complainants practically recognize that the instant decree is erroneous. The City is satisfied, of course, with the decree.

The pertinent findings of the master and the parts of the decree following the same are based upon the theory that the doctrine of marshaling of securities applies to the instant case and supports the decree wherein it elevates complainants’ second mortgage to a position of priority over that of appellant’s mortgage.

“It is a fundamental and well established principle of equity that where there are two creditors standing in equal equity, one of whom has security upon two funds and the other upon only one of the two, the former is required to proceed primarily against the fund upon which the latter has no claim, and if the person having the claim on both funds, with full knowledge of the facts, releases a portion of the fund against which he alone has a claim, he thereby, so far as the other creditor is concerned, releases pro tanto the fund on which such other creditor has his claim. (Boone v. Clark, 129 Ill. 466; Iglehart v. Crane & Wesson, 42 id. 261.)” (Beckman v. Alberts, 346 Ill. 74, 78.)

Appellant contends that that doctrine has no application to the facts. Complainants failed to support the allegations in the bill that appellant caused the City to pay out the award money and the master’s finding and the decree are justified upon the assumption that appellant’s answer, disclaiming any right of action against the City, constituted a "release and discharge of any right of action possessed by it against the City, and that such release constituted a release of a portion of its security and works to complainants’ injury unless the latter are given priority on the balance of the security, viz., the remaining land. In the bill and the amendment thereto complainants allege that they have a second lien upon the award, subject to the lien of appellant’s trust deed, and pray to be adjudged entitled to such lien. The master sustained complainants in that regard.

Appellant’s mortgage was made several months after the final judgment in the condemnation suit, and from the evidence it appears that in its appraisal made before the execution of said mortgage it did not contemplate acquiring any claim in the 14 feet taken by the City, or the condemnation money. Appellant contends that the equitable doctrine of marshaling of securities will not be enforced whenever it will trench upon the rights or operate to the prejudice of the party entitled to the double fund (citing Sweet v. Redhead, 76 Ill. 374, 377; Friedlander v. Fenton, 180 Ill. 312, 316; In the Matter of Bates, 118 Ill. 524, 530; Dreader v. Commercial Savings Bank, 5 F. (2d) 13), and that equity did not require appellant to pursue its doubtful claim against the City instead of the clear rights and adequate remedies afforded it by its first lien mortgage. In support of its contention that its said claim was a doubtful one appellant cites the recent case of Feldman v. City of Chicago, 363 Ill. 247, which holds that in condemnation proceedings under the Local Improvement Act the entry of the final judgment is unconditional; that the land is “then presumed to have been taken for public use” (p. 249) and the City cannot thereafter abandon the proceedings, but must pay for the land. Appellant states that its attitude in not pursuing the award was based upon the legal assumption that under the decision in the Feldman case the 14 feet had vested in the City four months before the execution of appellant’s mortgage and therefore the mortgage could not give rights to any claim against the City under the award, and it argues, that whether it was right or wrong as to the law, under the authorities and the facts it was not incumbent upon it to abandon its clear remedy under the mortgage against the remaining land and to test out its rights against the City in any action against it wherein many questions might arise. Why the City paid the award to the Foreman-State Trust and Savings Bank does not appear in the record, but it asserts, in its pleadings and in its brief, that the award money was properly paid to Foreman-State Trust and Savings Bank. Appellant further contends that its answer did not release the City from any obligation actually owed by it to appellant; that in the instant proceedings the City, while a codefendant, was not an adverse party to appellant; that there were no issues between them; that there was no consideration moving from the City to appellant for any release or discharge; that there has been no change of position on the part of the City because of appellant’s answer, and that if it should appear that appellant was entitled to a claim against the award the City would not be relieved of its obligations in that regard; that even if this decree were to stand it would not bar a future action by appellant against the City (citing Gouwens v. Gouwens, 222 Ill. 223; Lawler v. Schilling, 249 Ill. App. 290), and that as there has been no release by appellant of any of its security the doctrine of marshaling of securities does not apply. Appellant raises an additional and still stronger reason why the doctrine relied npon does not apply, viz.: “If the complainants are entitled to the second lien or claim against the City which they assert in their bill, and which the Master so finds, then any release and discharge by this defendant of any prior claim it might have on account of said condemnation money would merely remove this defendant’s claim out of the complainants’ way, not to their injury but to their benefit. Their claim against the City would then be a first lien or claim. ’ ’ The lien of a mortgage is transferred to the award money by way of substitution for the mortgaged land taken. Complainants state in their brief: “When the judgment of condemnation ... became final on April 1st, 1930, it removed the liens of the. two trust deeds from the 14 feet and transferred them to the fund. The gross amount of the judgment was $9,923.00. After the payment of two prior liens there remained $4,852.21, applicable to the payment of the two mortgages in the order of their priority. When the City erroneously paid this sum to the owner of the equity on January 24, 1931, the rights of the parties became vested.” To this appellant answers: “It is inconsistent . . . for complainants to assert on the one hand that the liens of the trust deeds were transferred and became attached to the award moneys by way of substitution for the land and at the same time to contend that complainants’ secondary lien would not become a first lien on the whole amount of the award the moment it should appear that this defendant had no lien thereon, whether because this defendant had waived such lien or for any other reason.’.’ If appellant had a clear lien upon the award, as complainants insist it had, but failed to make a demand for it or waived its rights to it, complainants were not thereby barred from making a claim for the award; or if appellant, by reason of the decision in the Feldman case, or for any other reason, had no claim upon the award and made no claim for it, and if the City, without right, paid the award to Foreman-State Trust and Savings Bank, Trustee, nevertheless, complainants were in a position to assert whatever right, if any, they had to the fund. We must not he understood, however, as passing upon the action of the City in paying the award to said Bank.

Complainants strenuously insist that appellant has a clear case against the City for the amount of the award, which amount is sufficient to pay appellant’s mortgage in full, and they argue that equity should force appellant to pursue its remedy against the City and allow complainants a first lien upon the remainder of the land; but at the end of their brief they say: “If, however, . . . the Court is of the opinion that it ivill be necessary for the complainants to pay off the Title Company’s mortgage as a condition precedent to subrogation, ioe are prepared to do so. But the Title Company is opposed to the entry of a decree granting us subrogation, even if it would be conditioned upon the complainants paying off the debt due the Title Company.’’ (Italics ours.) In its reply brief appellant makes the following response to the above: “It is not true that this defendant opposes complainants’ right to be subrogated to whatever remedies this defendant may have under its mortgage in the event complainants see fit to pay the indebtedness due this defendant. Nor is it true that this defendant is refusing to use its mortgage to collect the award, but willingly using it to prevent complainants from collecting such award, as counsel say at the bottom of page 16 of their brief. The fact is, and it must be clear from what we said at page 25 of appellant’s brief, that we have never for one moment opposed complainants’ right to subrogation upon their paying this defendant’s claim. And further, if complainants really think they need an assignment of this defend ant’s note and trust deed in order for them to reach the award, this defendant has at'all times been willing, cmd is now willing, to execute and deliver such an assignment upon being paid the amount of its claim. . . . This defendant is interested only in the payment of its debt and will gladly assign its note and trust deed to the complainants upon their paying the amount due thereunder. If, for any reason, the complainants do not wish to rely upon their own trust deed as a basis for recovery against the City of Chicago, it would seem that the sensible thing would be for this Court to reverse the present decree, with instructions to the lower court to permit the complainants to amend and supplement their foreclosure bill within a reasonable time. The complainants will then have an opportunity in such interval to acquire this defendant’s note and trust deed and to assert the same by supplemental bill. On the other hand, if complainants wish to proceed against the City under their own trust deed, they will have the opportunity to do that. This would seem to be much the more fair and equitable course. There is no good reason why this defendant, as the owner of the first mortgage on the land here involved, should be compelled to follow the course of litigation between complainants and the City of Chicago, and no good reason why the complainants, if they wish to use this defendant’s trust deed for the purpose of pursuing the City, should not first be required to pay the amount due this defendant. It would be different if this defendant was denying* complainants’ right to subrogation or was refusing to accept payment from complainants. It might be proper in such case for the decree to declare and establish complainants’ right of subrogation, but even then complainants should be required to tender or offer payment by their bill, which they do not do here. They do not by their pleadings or otherwise even assert an intention to pay this defendant’s claim and acquire its rights. We respectfully submit that the procedure suggested is most fair and proper.”

The present decree must be reversed and the cause remanded, but in view of the above attitudes of the parties future proceedings in this cause should be devoid of difficulties. Complainants can acquire, by purchase, appellant’s note and trust deed, and the trial court, in that event, should allow complainants to amend their pleadings so that they may be enabled to assert all of their rights thereunder. Or, if complainants wish to proceed against the City under their own note and trust deed they can do so, by apt amendments to their bill and the amendment thereto. No decree for foreclosure should be entered that does not recognize that the $4,500 mortgage, owned by appellant, is a paramount lien on the remaining land.

The decree of the circuit court of Cook county is reversed, and the cause is remanded for further proceedings not inconsistent with the views expressed in this opinion.

Decree reversed, and cause remanded for further proceedings.

Friend, P. J., and John J. Sullivan, J., concur.


author: Mr. Justice S candan

text:
    Citizens State Bank et al., v. Charles J. Goebel et al. Barton A. Scowley, Appellant, v. William G. Eich and Charles H. Albers, Appellees.
    Gen. No. 39,337.

      Opinion filed October 19, 1937.
    H. C. Bumbry, of Chicago, for appellant.
    Trude & Kahane, of Chicago, for certain appellees; David W. Kahane and Martin Piepenburg, both of Chicago, of counsel. Brown, Fox & Blumberg, of Chicago, for certain other appellees; Jacob Pincus, of Chicago, of counsel.
   Mr. Justice S candan

delivered the opinion of the court.

Barton A. Scowley (appellant), a defendant in foreclosure proceedings, filed a verified petition that he be awarded $487.50 which was on deposit with the clerk of the court. William' Gr. Eich and Charles H. Albers, Deceiver, respondents (appellees),'filed a joint answer to the petition asking the court to award them the said sum. Upon a hearing the court entered an order directing the clerk to pay said sum to appellees. Scowley appeals.

It was stipulated at the hearing that the material facts were correctly stated in the petition and answer. The order recites that upon the hearing the court considered the petition and answer and “the files and records of this proceeding.”

The petition recites that at the time the bill was filed the appellant was the owner of the premises in question “and of the rents, issues and profits thereof subject only to the liens described in the decree herein”; that the Chicago Bank of Commerce was appointed receiver of the premises and continued to act as such until July 7, 1932, when it was removed as receiver; that at the time of its removal the Bank “had in its hands $712.50 the property of this petitioner, and on December 3, 1932, paid said sum to the Clerk of this court and thereafter said Clerk, by order of this court, paid out from said sum $225.00 leaving $487.50 the property of your petitioner in his hands, and that said $487.50 still remains in the possession of said Clerk”; that on July 18, 1933, a decree of sale was entered in the cause and the premises were sold by a master in chancery, on September 6, 1933, and the sale was afterwards approved and confirmed, “and it was ordered that Charles J. Goebel and Violet Goebel, two of the defendants herein, pay the amount of the deficiency remaining after said sale to the parties found entitled thereto”; that neither the decree nor the order approving the sale ordered that said $487.50 be applied upon the indebtedness found due by the decree and that “all right of the complainant and other parties under the trust deed . . . were merged in said decree, and that by reason' of the failure of said decree and of the order approving the sale made thereunder to decree that said sum be paid to the complainant, it became res adjudicata that neither the complainant nor any party to this suit other than your petitioner had any right or claim to said sum or any part thereof.” The petition prayed that an order be entered directing the clerk to pay appellant said $487.50.

The verified answer of. appellees recites, inter alia, that Chicago Bank of Commerce was removed as receiver because it had been closed by the auditor of public accounts; that DeForrest A. Matteson was appointed successor receiver; that on November 30,1932, “without notice to these respondents,” an order was entered requiring the surety on the bond of said Bank to pay $712.50 to the clerk of the court; that on December 3, 1932, said surety paid said sum to said clerk; that respondents “had no knowledge of the money having been paid to the Clerk . . . until they were served with notice on September 3, 1936 of the petition” of appellant; that on December 15, 1932, the final report and account of said Bank, as receiver, was approved; that it showed a balance on hand of $712.50 and unpaid bills in the sum of $116.10; that the order of approval provided that the clerk pay $125 to the solicitor for the receiver, $100 to the bonding company, and the balance, $487.50, to the successor receiver; that on May 24, 1934, an order was entered removing the successor receiver and appointing Edward C. Hoyer as second successor receiver; that the clerk never complied with the order requiring him to pay the balance of $487.50 to the successor receiver ; that on April 19, 1935, said second successor receiver filed his final report and account, showing a balance of $364.43; that the court allowed said receiver $65 for his services, approved the account and ordered said receiver to pay the balance of $299.43 to be applied on account of the unpaid bills left by his predecessor receiver. The answer recites certain parts of the decree entered in the cause, from which it appears “that the rents, issues and profits of said premises are and were pledged for the payment of the indebtedness herein by the trust deed being foreclosed herein pending foreclosure proceedings and also until the period of redemption from any sale thereunder expires, the court hereby retains jurisdiction for the purpose of appointing or continuing the receiver herein for the collection of the rents, issues and profits from said premises for and during the period of redemption, and may grant such other power and authority to said receiver as to the court may seem meet, and that any deficiency decree entered in this cause shall be a lien upon the rents, issues and profits of said premises for and during the period of redemption.” The answer further states that in the order approving the sale the following appears:

“It is therefore Ordered, Adjudged and Decreed that said defendants, Charles J. Goebel and Violet Goebel, pay to Otto J. Gondolf and William G. Eich the sum of Two thousand nine hundred seventeen and 64/100 Dollars, together with interest thereon at five per cent per annum from September 6th, 1933, and that executions issue therefor.

“It is further Ordered, Adjudged and Decreed that said defendants, Charles J. Goebel and Violet Goebel, pay to William A. Heath, receiver of Citizens State Bank of Chicago, a corporation, the sum of Eight hundred two and 49/100 dollars, with interest thereon at five per cent per annum from September 6th, 1933 until paid, and that execution issue therefor.

“It further appearing that DeForrest Matteson was heretofore appointed receiver in said cause for said premises, it is further Ordered that DeForrest Matte-son continue to act as such receiver for and during the entire period of redemption or until said deficiencies and interest thereon have been paid in full. ’ ’

The answer further states that after the entry of the deficiency decree Otto J. Gondolf died and that in the matter of his estate an order was entered requiring the executrix under his will to assign to William G. Eich all of her interest in the foreclosure proceeding. The answer further states “that the Clerk of this Court should have paid $487.50 to DeForrest A. Matteson as successor receiver, or he should have paid the same to Edward C. Hoyer, second successor receiver herein, and that in default of so doing said sum should now be applied to any bills remaining unpaid incurred by said receiverships, and thereafter should be paid prorata to William G. Eich and to Charles H. Albers as Receiver for Citizens State Bank of Chicago, on account of the aforesaid deficiency decrees. These respondents deny that Barton A. S cowley is entitled to the aforesaid sum of $487.50 deposited with the Clerk of this Court or any part thereof; and deny that these respondents have no further claim thereto; and further deny that the Court has no jurisdiction to pay the same over to these respondents.”

On the appointment of a receiver in a foreclosure suit where the trust deed pledges the rent the complainant obtains a specific lien on the rents to satisfy any deficiency. (Ortengren v. Rice, 104 Ill. App. 428, 431; Oakford v. Robinson, 48 Ill. App. 270; Howard v. Burns, 201 Ill. App. 579.) Appellant concedes that the rents were subject to the lien of the trust deed and that by appropriate proceedings the amount in the hands of the clerk might have been applied to the payment of the deficiency debt, but he contends that no such proceedings were taken and that by the decree complainant exhausted his remedy not only as to the liens actually referred to in the decree but all such liens which might have been settled and foreclosed therein, and that therefore the sum of money in question cannot be applied to the payment of a deficiency decree “entered not against him but against others.” In Powell v. Voight, 261 Ill. App. 127, 130, we said: “Where there is a deficiency, a pledge of the rents during the redemption period is not extinguished by the foreclosure and sale, and the owner of the deficiency as well as the judgment debtors is entitled to have it satisfied out of such rents. (Prussing v. Lancaster, 234 Ill. 462, 467; Continental and Commercial Trust & Savings Bank v. Leven, 213 Ill. App. 310, 314.) After the foreclosure sale and entry of the deficiency decree, the trust deed remained in force as to the pledge of the rents during the redemption period only for the purpose of satisfying the deficiency decree. (Townsend v. Wilson, 155 Ill. App. 303, 307, 308; Elgin City Banking Co. v. Hancock, 183 Ill. App. 23; First Nat. Bank of Joliet v. Illinois Steel Co., 174 Ill. 140, 148.) ”

“A pledge of rents during the redemption period is not extinguished by a foreclosure and sale, and the owners of the deficiency judgment, as well as the judgment debtors, are entitled to have it satisfied out of such rents. (Prussing v. Lancaster, 234 Ill. 462.) . . . After the foreclosure sale and entry of the deficiency decree the trust deed remained in force as to the pledge of rents during the redemption period only for the purpose of satisfying the deficiency decree. First Nat. Bank v. Illinois Steel Co., 174 Ill. 140.” (Powell v. Voight, 348 Ill. 605, 608.)

The foreclosure decree could not adjudicate the right to the money in question, because the court could not determine who was entitled thereto until after the sale. (First Nat. Bank v. Illinois Steel Co., 174 Ill. 140, 150; Owsley v. Neeves, 179 Ill. App. 61, 64, 65.) We are unable to find any merit in appellant’s contention that respondents waived their right to the funds. It is stipulated that appellees had no knowledge of the money’s having been paid to the clerk until they were served with appellant’s notice of petition on September 3, 1936. If the fund in question had been paid by the clerk to the successor receiver, as he was required by order of court to do, it would have been applied by said receiver to the payment of unpaid bills incurred by him or to the deficiency decree. As appellees argue, “ ‘Equity regards that as done which ought to be done, ’ equity will impress this fund with respondents ’ rights. ’ ’ The character of the fund was not changed by the misprision of the clerk in failing to obey the order of the court. The money paid to the clerk was a fund of the court and under its control. (B. & O. R. R. Co. v. Gaulter, 165 Ill. 233.)

“Where a clerk, master in chancery or other officer of the court has received by virtue of his office, or lias had come into his hands in the course of some legal proceeding, money or property which he has no equitable right to retain, the court in which such proceeding is pending has jurisdiction, on petition or motion of the party entitled thereto entered in the same suit, to order the money or property returned to the party to whom it belongs, even though his term of office has already expired. Baltimore & O. R. Co. v. Gaulter, 165 Ill. 233; Metropolitan Trust & Savings Bank v. Perry, 194 Ill. App. 277.” (Finn v. Wetmore, 212 Ill. App. 550, 553.)

The court had jurisdiction to direct the disposition of the moneys in the hands of the clerk for the purpose for which they were deposited with said official. The order appealed from did not change the decree; it merely enforced it.

Appellant argues, apparently, that because he did not assume to pay the mortgage debt secured by the trust deed he stands in a different light than the mortgagors against whom the deficiency decree was entered. That there is no merit in this contention, see Straus v. Bracken, 242 Ill. App. 122, 134; Owsley v. Neeves, supra, p. 63. See also Powell v. Voight, supra.

We find no equity in appellant’s appeal. Not only appellees but the mortgagors as well, were entitled to have the fund in question applied on the deficiency decree.

It appears from the order appealed from that the trial court, in determining the merits of the petition and answer, considered the files and records in the foreclosure proceeding, and it is somewhat significant that appellant has not seen fit to include these files and records in the instant record.

The order of the superior court of Cook county is affirmed.

Order affirmed.

Friend, P. J., and John J. Sullivan, J., concur.