author: Mr. Justice Walker

text:
    John A. Tyrrell v. Samuel S. Ward, Receiver.

      Filed at Ottawa November 10, 1881

      Rehearing denied March Term, 1882.

    1. Subrogation—discharge of prior incumbrance by junior mortgagee —rights under intervening judgment lien. Where a person loaning money, talking a deed of trust as security, applies a portion, of the money so loaned in the discharge of a prior incumbrance on the premises embraced in his deed of trust, for the purpose of making his security a first lien, he mil, in equity, be subrogated to the rights of the prior lienholder in respect to his security, although there be a formal release of the prior incumbrance, and the transaction will be treated as an assignment of such prior lien or incumbrance, so as to cut off an intervening lien of a judgment recovered against the grantor in the trust deed after the execution and recording of such deed, but before the money loaned was actually paid over, so far as concerns the lien of the prior incumbrance.
    2. In such case a purchaser under the-judgment will not be allowed to assert his title as against the junior mortgagee so advancing the money to discharge the prior incumbrance, without first paying to the latter the sum so advanced by him, and after a sale under the junior mortgage, cutting off the equity of redemption sold under the judgment, the title of the purchaser under the judgment will be extinguished.
    3. Same—execution sale of equity of redemption—what interest in the land will pass. Where a party at the time of the recovery of a judgment against him, has only an equity of redemption in real estate, the lien of the judgment will attach only to such equity of redemption, and that is all that will pass to a purchaser under execution upon such judgment,, and if the latter fails to redeem from prior incumbrances on the land, and suffers it to he sold under a power of sale, in favor of one who.succeeds to such ’prior lien, all rights acquired under the execution sale will be gone.
    4. Inuring op title.—as between a mortgagor and a junior mortgagee. Where prior liens are discharged restoring the legal title in a party who has given a deed of trust containing covenants of title, the title so acquired by the grantor on redemption from prior trust deeds, inures to the trustee in the latter deed of trust for the benefit of the party secured thereby.
    Appeal from the Superior Court of Cook county; the Hon. John A. Jameson, Judge, presiding.
    Mr. Geo. Scoville, Mr. Wm. C. Grant, and Mr. L. Hi Bisbee, for the appellant:
    The lien of the Worthington judgment having accrued on the 12th of February, 1876, which was before the money borrowed under the junior deed of trust was paid over, was.prior and paramount to that of the trust deed. Schultze v. Houfes, 96 Ill. 335.
    A valid mortgage, without any indebtedness or liability, is impossible. The making and recording of the deed of trust to Smith, to secure notes made by Hayes, payable to his own order, was of no validity, until the notes were assigned. Jackson v. Willard, 3 Johns. 40 ; Lucas v. Harris, 20 Ill. 165 ; Vansant v. Allmon, 23 id. 30.
    It was not a mortgage to secure advances, as to Bayard or any other person, until the advance was agreed upon, in April, 1876. Therefore, the rights of Bayard, as mortgagee, were subject to all liens then existing against the land, and so, necessarily to that of the Worthington judgment. Ackerman v. Hunsicker, 28 N. Y. 53; Ladue v. Detroit and Milwaukee R. R. Co. 13 Mich. 380; Ter-Hoven v. Kerns, 2 Pa. St. 96; Preble v. Conger, 66 Ill. 370.
    The rule of subrogation is, that if the person who pays the debt is compelled to pay to protect his own interests, then the substitution should be made. A mere stranger or volunteer can not thus be subrogated to the creditor’s rights. Hough v. Ætna Life Ins. Co. 57 Ill. 318; Young v. Morgan, 89 id. 199.
    Ward paid no new consideration for his purchase. He has the warranty deed of Goudy & Chandler for his protection, and has parted with no value for the conveyance, and has no remedy at law, since the legal title only must prevail in an action of ejectment. Chapin v. Billings, 91 Ill. 543; Reese v. Allen, 5 Gilm. 236; Dawson v. Hayden, 67 Ill. 52; Rice v. Brown, 77 id. 549.
    Mr. Geo. W. Smith, for the appellee:
    The release of the Hosmer deed was made on April 6, 1876. Smith then became vested with the legal title. He held it until the sale of April 28, 1879. He then, in pursuance of that sale, conveyed to Mrs. Bayard, who conveyed to Goudy & Chandler, and they to Ward. Ward has therefore the legal title. Chicago, Rock Island and Pacific R. R. Co. v. Kennedy, 70 Ill. 350; Chapin v. Billings, 91 id. 539.
    The purchase of an equity gives the purchaser the estate which he buys in the condition in which it was when bought. Maghee v. Robinson, 98 Ill. 458.
    Tyrrell stands precisely as he would have stood had he purchased from Hayes on February 12, 1876. His equitable interest was subject to the trust deed of December 1, 1875, of which he had notice. If Worthington, when his judgment was recovered, had notified Smith, and if the facts had been that no agreement had then been entered into between Bayard and Hayes, and that the former was under no legal obligation to make the loan, and no money had been paid, then Smith could have governed himself accordingly. Or if Worthington had filed a bill asking that any surplus be paid to him rather than to Hayes, his judgment would have been protected. Schultze v. Houfes, 96 Ill. 335; Buchanan v. International Bank, 78 id. 500; Preble v. Conger, 66 id. 370.

      A mortgage made for the purpose of being sold, is not a lien in the mortgagee’s hands ■ as against subsequent purchasers or lien creditors, except from the time the advances are actually made upon it either by the mortgagee or his assignee. Jones on Mortgages, sec. 86.
    Kindred to this proposition concerning advances made under or in pursuance of the authority to discharge liens, is the doctrine of subrogation. Bayard was not a volunteer. Young v. Morgan, 89 Ill 199.
    Messrs. Goudy & Chandler, also for the appellee:
    - Counsel for appellant claim that when Hosmer made a release, the Worthington judgment attached to the title in fee as it had before to the equity of redemption; but this can not be, because Hayes had conveyed the equity of redemption to Smith with covenants, which caused the title on the release being made eo instanti to vest in Smith. -It did not vest in a judgment creditor. The title could not be in abeyance. It had to vest somewhere, and that place, and the only place, was in Smith. It was immaterial whether the trustee executed the power so as to foreclose the equity of redemption or not. His deed passed the title vested in him to Mrs. Bayard, and this was transferred until it vested in Ward. Reese v. Allen, 5 Gilm. 236; Chapin v. Billings, 91 Ill. 543; Graham v. Anderson, 42 id. 517; Rice v. Brown, 77 id. 549.
    Bayard also held an older and better equity than Worthington. Hayes, before that judgment, became liable on part of the Bayard notes by pledging them to Hammond, and also to Bayard, upon an agreement for subsequent advances; which, when made, related back to the date of the notes and trust deeds, the same as the rights of Tyrrell related back to the date of the judgment.
    If the complainant has an equitable title, it does not date from the time the Worthington judgment was rendered, but from the time of the sheriff’s sale. A bona fide purchaser must pay the entire purchase money before he receives notice of an adverse claim.
    This principle has been applied to purchasers at execution sales, and it has been held, that if a purchaser (certainly of an equity, merely,) who is charged with notice before the sheriff’s sale and payment of purchase money, buys, he is not protected, and his rights do not relate back to the date of the judgment. In re Howe, 1 Paige, 395; Evans v. McGasson, 18 Iowa, 150; Norton v. Williams, 9 id. 528; Shaw v. Padley, 64 Mo. 519; Davis v. Owsley, 14 id. 170; Wharton v. Wilson, 60 Ind. 591; Wade on Notice, sec. 239; Herman on Executions, sec. 335; Engles v. Byers, 16 Ark. 543.
    That Bayard was subrogated to the rights of Hosmer, who acquired a lien January 20, 1873, and of Meyer and Hammond, who had liens by judgment before December 3, 1875, which were older and better equities than Worthington obtained by his judgment February 12, 1876, and these older equities were added to the legal title vested in Ward before the bill was filed, counsel cited Young v. Morgan, 89 Ill. 13; Payne v. Hathaway, 3 Vt. 212; Dixon on Subrogation, 165; Walker v. King, 44 Vt. 610; Cole v. Malcolm, 66 N. Y. 363; Cottrell’s Appeal, 23 Pa. St. 294; Ellsworth v. Lockwood, 42 N. Y. 89; Kinney v. Harvey, 2 Leigh, 70; Patterson v. Birdsall, 6 Hun, 632; Barnes v. Mott, 64 N. Y. 397; French v. DeBow, 38 Mich. 708; Jones on Mortgages, secs. 874, 878.
    Ward occupies the position of a bona fide purchaser without notice that the lien of the deeds to Smith did not attach until after Worthington obtained his judgment. .
   Mr. Justice Walker

delivered the opinion of the Court:

On the 1st day of December, 1875, Samuel S. Hayes was the owner of twenty-one improved lots in the city of Chicago. For the purpose of effecting a loan of $50,500 he executed three deeds of trust on these lots to George W. Smith, who had previously consented to act as- trustee.' The deeds "were to secure a number of promissory notes aggregating that sum, and were payable to his own order. One deed included six of these lots, and purported to secure six notes, aggregating $15,000. The second deed of trust was given for seven of the lots, and to secure seven notes, aggregating $15,600. The third deed was for eight lots, and to secure eight notes, aggregating $20,000. The notes were payable at five years from date, with eight per cent interest, payable semi-annually, for which coupons were attached. They bear even date with the deeds, and the deeds stated that Hayes had become indebted to the holders of the notes.

Robert Bayard, of New York, had previously employed Smith in the transaction of business for him in the city of Chicago, and in March, 1876, he wrote Smith, informing him that he had agreed to loan Hayes $50,500 upon these houses and lots as security, and requesting Smith to act for him in consummating the loan. Hayes delivered the abstracts of title to Smith for examination. The abstracts disclosed liens on the property named in the first trust deed, by a prior trust-deed to one Hosmer, dated January 20, 1873, securing an indebtedness of $4000. The lots named in the second trust deed were subject to a lien by trust deed to C. R. Field, for an indebtedness of $8000. The lots described in the third trust deed were subject to a lien of a trust deed to secure upwards of $15,000. The property was likewise subject to the lien of various judgments, to the amount of $9244.89, with interest and costs. Smith received all but three of the notes from Hayes, and received the other three from Hammond, to whom Hayes had pledged them to secure a judgment he held against Hayes, which was a lien on this property,, and was paid by Smith when the notes were delivered to him. Afterwards Smith drew on Bayard for $39,600, and received the money, and on its receipt he paid off and discharged all of these liens, and the releases therefor were delivered to him. To discharge them, and to pay delinquent taxes against the property, and a note Hayes had given for $700, as a premium for insurance on the property, which Smith paid to prevent a forfeiture of the policies, amounted to near $40,000. Hayes received in money from Smith on the loan but $1988.55.

Default in the payment of interest having occurred, Smith took possession of the property under the deeds of trust, and the default continuing, in April, 1879, after giving the required notice, he sold the property under the power in the deeds of trust. Elizabeth Bayard, the widow and legatee of Robert Bayard, who had died, being the holder of the notes, became the purchaser. Before that time, a petition to enforce a mechanic’s lien against the property had been filed, and a decree rendered against the property, subject to the trust deeds, George Scoville being the attorney for the petitioner. At the sale the property was bid off by George Chandler, for Mrs. Bayard, and it was conveyed to her by the trustee. In May following she conveyed it to Goudy & Chandler, and received other property in payment, and Goudy & Chandler afterward sold and conveyed it to appellee.

After Hayes had executed the trust deeds to Smith, and they were recorded and delivered, on the 12th day of February, 1876, and before Bayard had received the notes or advanced the money, James M. Worthington recovered a' judgment against Hayes, in the Superior Court of Cook county, for $260, and costs. On the 18th of that month an execution was issued, but was afterwards returned'unsatisfied. In the month of May following another execution was issued, and was levied on a part of the lots. Scoville purchased the judgment, and at the sheriff’s sale he bid off the lots and received a certificate of purchase, and assigned it for the consideration of $150 to appellant, Tyrrell. The property was not redeemed from the sale, and he received a sheriff’s deed.

Neither Gmidy, Chandler, Ward nor Smith ever had any actual notice of this judgment, sale or deed, but it is claimed they were put upon inquiry by the records, and by what Scoville said at Smith’s sale of the property. Scoville testified he gave notice at that sale to "all persons present, that there were judgment liens against the property prior to the trust deeds. It appears that "Chandler replied: “You refer to the mechanic’s-lien,” and Scoville says he replied: “Yes, and other judgments.” McG-raw, Smith and Chandler say they did not so understand him. Loomis testifies he forbade the sale on the ground of prior liens which he held against the property. Be this as it may, there is no pretense that Scoville named the Worthington judgment.

Tyrrell filed a bill to remove and set aside Ward’s title as a cloud on his own. He does not ask for a conveyance of that title to him, nor does he offer to pay anything for the removal of the incumbrances by Smith with Bayard’s money, but proceeds upon the theory that he acquired both the legal and equitable title by the purchase under Worthington’s judgment. On a hearing, the Superior Court, on these facts, dismissed the bill, and Tyrrell appeals to this court and asks a reversal.

It is insisted, that "notwithstanding the deeds of trust were executed and recorded before the recovery of the Worthington judgment, no money had then been paid on the loan by Bayard, and he did not, nor could he, have "any lien; that the execution and recording of such deeds, without any money being paid, were fraudulent as against all creditors and subsequent purchasers for value; that until the money was paid, Bayard could acquire no lien; that as Worthington’s judgment was recovered before the money was advanced, it became a prior and preferred lien to these trust deeds to Smith; that being such, and as Bayard failed to pay and discharge it, the sale under it cut off the lien of these trust deeds, and appellant, by his purchase and sheriff’s deed, cut off the lien in favor of Bayard, and appellant has the title. There is not the slightest question, under the evidence in the case, that at the time Worthington recovered his judgment the property in controversy was incumbered by legal, valid and just liens, to nearly, if not quite, the sum of $40,000, and it is fully as clear that they were discharged and satisfied by Smith with the money of Bayard advanced for the purpose, and as a part of the loan of $50,500, which Hayes had effected for this very purpose. It is equally certain that it was the intention of Bayard, Smith and Hayes to pay and discharge these liens, to render the trust deeds to Smith effective, and to make them a prior lien to all others in favor of Bayard. This was their clear and unmistakable purpose. All pretense that it was done for any other purpose is excluded by the testimony. Then what effect did such a payment thus made have on .the rights of the parties ? Manifestly it subrogated Bayard to all rights of the prior lien-holders, precisely as they were held by them. When paid by Smith for Bayard, they were transferred to him, and equity must treat the transaction as an assignment to Bayard, as fully so as had a formal assignment been made and endorsed on the papers evidencing these debts and liens. This, every consideration of justice and good conscience demands. It would be highly inequitable and unjust to defeat the intention of the parties, and visit so heavy a loss on Bayard, when he advanced the money expressly to remove these prior liens and perfect his own. Justice and authority, not only sanction, but demand, that Bayard should be subrogated to all of their rights.

Even if such had not been the manifest purpose of Hayes and Bayard, there would have been a strong appeal to equity for such relief. It would be flagrant injustice, after Bayard had paid this large sum, as he did, and for the purposes contemplated, to deny him relief. All of these incumbrancers had the undeniable right to sell the property, and cut off and defeat, the Worthington judgment, unless he redeemed. It was but a lien' on the equity of redemption which Hayes held in the property. By the trust deeds he had conveyed the legal title, and not having redeemed and procured a release, it still remained in the trustees; and when the prior liens of the trust deeds were discharged, and releases were executed, the legal title was restored to Hayes, and he thus acquired it from the trustees, and it inured to Smith under and by virtue of the covenants for title contained in Hayes’ deeds to him. Inasmuch as Hayes had but the equity of redemption, Worthington’s judgment became a lien on that, and nothing more, and that was all that was, or could be, sold under the execution, and the purchaser could acquire only Hayes’ equity of redemption, and he never redeemed.

Bayard, by redeeming from the prior trust deeds, by paying and obtaining their release to secure a first lien on the premises, succeeded to all of the rights of lienholders under the trust deeds, and of these was the right to have the property sold in the same manner it could have been done under those trust deeds, and a sale under them, it is apparent to all, would have cut off and barred Hayes’ equity of redemption, and all subsequent liens upon it. Hayes had given Smith full power to sell the premises to refund the money borrowed to discharge the prior trust deeds and judgments, and Smith exercised the power conferred for the purpose, and he thereby transferred the title to the purchaser. Appellant, as a judgment creditor, could have redeemed from these prior liens, and had he done so, that would have prevented Smith from selling to raise the money to pay Bayard the money advanced to release the property, and left Smith with no power to sell for anything but the amount loaned above that sum. No redemption was made, and Smith sold in pursuance of the power conferred by Hayes, and thus passed the title to the purchaser as effectually as had the sale been made by the trustees named in the prior trust deeds, and appellant’s lien was barred by that sale.

This court has, in several cases, had the question of subrogation before it. In the case of Young v. Morgan, 89 Ill. 200, where one purchased land of another, and as a part of the purchase money paid off and discharged a trust deed made by his grantor on the land, and to protect this land from sale, and to free his title from the incumbrance, it was held the payment was not voluntary, and he should be subrogated to the rights of the creditor under the trust deed, although it was formally released, and not assigned, so as to cut off an intermediate judgment lien against the land.

In the case of Darst v. Gale, 83 Ill. 136, it was said: “The claim made that the bonds were paid and the deed of trust thereby discharged, is not tenable. Neither Pulsifer & Co. nor the corporation ever treated the bonds as paid. On the contrary, they both treated them as unpaid, and as a standing security for future advances. The parties had the unquestionable right to treat the notes and deed of trust in this light, and having done so, it does not lie in the mouth of one in nowise prejudiced thereby, to complain. ” In that case the deed of trust and notes were in fact, although not in form, as fully satisfied as in this case; but the satisfaction in this case was for Bayard’s protection and benefit, and not for the general release of the property, and in this as in that case, keeping the deed of trust alive did not injure appellant and those under whom he claims. Their rights were in nowise affected by keeping this lien alive in equity in favor of Bayard. The lien of that judgment remained the same on Hayes’ equity of redemption as before.

It is said Bayard was not required to loan his money; but it may be answered that the purchaser, in the case of Young v. Morgan, supra, could have refrained from purchasing land subject to a trust deed. He was not required to purchase to protect any interest of his. So, in Darst v. Gale, supra, Pulsifer & Go. were not under any necessity of loaning further sums of money after the notes and deed of trust were satisfied, and yet they were protected.

In the case of Worcester National Bank v. Cheeney, 87 Ill. 602, where, in pursuance of an agreement, a member of a firm indebted to a bank took up the indebtedness of the firm by giving his own individual notes, with the agreement that the notes and trust deed then held by the bank as collateral security for the firm debt should remain as collateral security of such new notes, it was held that this did not extinguish the lien of the deed of trust. It is true, in that case there was an express agreement, while here, from the facts and circumstances, the law will imply such an agreement between Hayes and Bayard.

While it may not be strictly subrogation, the doctrine of this court is, that when required, in the promotion of justice, and to prevent wrong, a special or implied contract to keep a satisfied lien on foot to secure other and further advances or indebtedness will be enforced. In such cases the intention of the parties must, to a large extent, control; but, as in subrogation, such agreements will not be enforced against equal or superior equities. In this case the judgment in favor of Worthington was not of that character, but it was a junior lien to the deeds of trust and the other judgments, and to protect Bayard in the payment of these prior liens in nowise affects that lien. To do so but prevents appellant from obtaining an inequitable advantage, and promotes justice.

We have seen that Smith held the legal title, and sold and conveyed it to Mrs. Bayard. This sale was not made by virtue of Bayard having paid the judgments, but by virtue of the legal title having inured to Smith by the covenants in Hayes’ trust deed to him on the release of the legal title held by the other trustees. The debts secured by the trust deeds and judgments still remained a lien in favor of Bayard. It is true that Smith, by discharging the judgments, acquired by reason thereof no right to sell for their satisfaction, but being a lien on the property in Bayard’s favor, and having power under Hayes’ deeds to sell the land, when the sale was made by virtue of that power he had the right, and it was his duty, to pay the liens of the, trust deeds and the judgments to Bayard’s representative. This he virtually did by Mrs. Bayard purchasing the property. When Bayard acquired the benefit of these judgments, they were superior to the Worthington lien, and appellant, under any aspect of the case, to render his judgment effective, was bound to redeem. He that asks equity must do equity. This, appellant has failed to do, as he did not redeem, or offer to redeem, from the prior trust deeds and judgments. He has therefore, failed to present a case entitling him to the relief sought. Even if Smith sold for more than was due as a lien on the premises under his trust deed, that would be ground for Hayes to set the sale aside, but not by a third person, unless the sale was in fraud of his rights. Hayes made no such objection, and appellant has shown no grounds for urging it.

The entire record considered, we perceive no grounds for reversing the decree of the court helow, and it is affirmed.

Decree affirmed.


source: Caselaw Access Project

author: Mr. Justice Scott

license: Public Domain

text:
    The Lamar Insurance Company v. E. Gulick.

      Filed at Ottawa January 18, 1882

      Rehearing denied March Term, 1882.

      Decebe—-parties—person not concluded when not a party. A stockholder in an insolvent insurance company is not liable to an action on an assessment made on his stock notes by the court in a proceeding by the creditors against the company in which a receiver is appointed, on the petition of the receiver and creditors, where he is not made a party to either proceeding. Such an assessment is not binding on him.

      Wbit of Ebbob to the Appellate Court for the First District ;—heard in that court on appeal from the Superior Court of Cook county; the Hon. Joseph E. Gaby, Judge, presiding.
    Messrs. Shufeldt & Westoveb, for the plaintiff in error:
    1. The bill filed in the chancery court by Edwin E. Burn-ham and other judgment creditors of the corporation, in behalf of the complainants therein and all other creditors of the corporation, against the corporation and its officers, to discover the assets of the corporation, and apply them in payment of its debts, was a proper proceeding, recognized and approved by courts of chancery, irrespective of statutory regulations. 2 Barbour’s Ch. Pr. 154; Edmeston v. Lyde, 1 Paige, 636; Brinkerhoff v. Brown, 6 Johns. Ch. 151; Adler v. Milwaukee Brick Co. 13 Wis. 70; Ward v. Griswoldville Mfg. Co. 16 Conn. 593; Pennell v. Lamar Ins. Co. 73 Ill. 303.

      2. The appointment of a receiver of the effects of the corporation defendant in said cause, was the proper course, as adopted and followed by all courts of equity. Adler v. Milwaukee Brick Co. 13 Wis. 70.
    3. There being no other assets, and the debts of the corporation rendering it necessary, the receiver can enforce the liability of the stockholders to the corporation upon their stock subscriptions, in some proper proceeding, to an amount, at least, to be ascertained in equity, sufficient to discharge the bona fide debts of the corporation. Charter of the company, secs. 12 and 16; Ward v. Griswoldville Mfg. Co. 16 Conn. 593; Sanger v. Upton, 91 U. S. 56; Adler v. Milwaukee Brick Co. supra, and cases cited in argument.
    4. Though ordinarily, in a proceeding to assess the unpaid stock of an insolvent corporation for the payment of the' company’s debts, all the stockholders being directly interested persons, should perhaps be made parties to the proceeding; nevertheless, when the parties are very numerous, or it is otherwise impracticable to bring them into court, the ends of justice shall not be defeated by reason thereof, but the cause shall proceed in such manner as the court shall consider will protect the rights of all interested. City of London v. Richmond, 2 Vern. 421; Menx v. Maltby, 1 Swanst. 280; VanVechlin v. Terry, 2 Johns. Ch. 197; Shaw v. Norfolk Co. R. R. 5 Gray, 170; Pettibone v. McGraw, 6 Mich. 441; Mandeville v. Riggs, 2 Peters, 484; Sawyer v. Upton, 91 U. S. 56.
    Mr. W. B. Cunningham, for the defendant in error:
    There is but one defendant, and he has not been legally brought into court. Again, this action at law is based upon the decree of the Superior Court of Cook county, in a proceeding to which this defendant was no party, and he can not be affected by it.
    The publication of the order in chancery was a clear attempt to get jurisdiction without legal service, and without making them parties. When money to a large amount is to be taken from citizens, they must be in court according to law. Chandler v. Brown, 77 Ill. 336; Morgan v. New York and Albany R. R. Co. 10 Paige, 290.
    An account should have been taken of the assets and of the debts, and the amouñt of unpaid capital due from each shareholder, in order that they might be made equally liable. This can only be done by bill in equity, filed in behalf of all the creditors of the corporation, making the delinquent stockholders parties. Mann v. Pentz, 3 Conn. 415; Chase v. Grant, and Dummer v. Wood, in same case cited; Stuyvesant v. Hall, 1 Barb. Ch. Pr. 157.
   Mr. Justice Scott

delivered the opinion of the Court:

This case comes to this court on a writ of error to the Appellate Court for the First District, a majority of the judges of that court having certified the ease in-their opinion involves questions of law of such importance, on account of collateral interests, it should be passed upon by the Supreme Court.

It is an action of assumpsit.on a stock note or bond, given by defendant to the Lamar Insurance Company, for ten shares of stock in that company. The suit is brought in the name of the insurance company, for the use of the receiver. In the declaration the note or bond is set out in hcee verba, and it is then averred, by way of recitals, that various installments, amounting to twenty per cent of the note, had been paid; that the corporation became insolvent, and in 1872 a receiver was appointed to take charge of its effects, by the Superior Court, on a bill filed by creditors to discover assets; that in 1878 the receiver had exhausted all assets-in paying debts, except stock subscriptions, and still $100,000 of debts remained unpaid, and that the receiver and complainants in the creditors’ suit presented to the court in which that suit was instituted, a petition for an assessment upon the unpaid stock subscriptions, for the purpose of paying the existing indebtedness of the company. It is then further averred such proceedings were had on such petition, the court determined the proper sum to be assessed was $40 per share of such stock, and the receiver was authorized and directed, either in his own name or in the name of the insurance company, to prosecute each stockholder in some appropriate action, for the recovery of the sum so assessed on each share of stock, if the same should not be paid on demand. To the declaration defendant pleaded the general issue, and on the trial the court to whom the cause had been submitted for trial, without the intervention of a jury, found the issues for defendant. That finding was warranted by the law and the evidence.

It is admitted defendant was not in person made a defendant in the chancery case instituted by creditors to discover assets, and wherein a receiver was appointed to take charge of the affairs of the corporation, nor to the petition to the court praying for an assessment on the unpaid shares of stock to pay debts still owing by the corporation, except as ■ set forth in the decree. It appears the court in which the petition for an assessment was pending, by an order, fixed a day when the cause would be heard, and directed the receiver to give notice to all stockholders in the company, by a publication of a copy of such order in some newspaper of general circulation, once a week for four successive weeks, and also directed that a copy thereof be sent by mail, directed to each stockholder at his place of business or residence. That publication, it appears, was made, and a copy mailed to each stockholder. Whether any notice was in fact received by defendant, does not appear. It is certain he was not a party either to the original suit by the creditors, wherein the receiver was appointed, or to the proceeding to procure an assessment to be made upon the unpaid shares of stock to pay debts. Not having been made a party to either proceeding, defendant is not bound or concluded thereby. He is not affected by either decree. Excluding the order of the court making an assessment on the shares of stock as evidence against defendant, as must be done, no evidence remains of any assessment on shares of stock that is obligatory on defendant, or that he is bound to observe. A case exactly in point in principle is Chandler v. Brown, 77 Ill. 833, and as it is conclusive of this view of the law, it will not be necessary to discuss it as a new question in this court.

The judgment of the Appellate Court will be affirmed.

Judgment affirmed.

Sheldon and Walker, JJ„, dissenting.


author: Mr. Chief Justice Craig Mr. Justice Walker : Mr. Justice Dickey :

text:
    Commercial Union Assurance Company v. J. Young Scammon.

      Filed at Ottawa November 10, 1881

      Rehearing denied March Term, 1882.

    1. Corporation—power to loan money and receive mortgage security— and herein, of foreign corporations. It has been the policy of the legislature of this State for many years to invest corporations with the power to loan money and to take mortgage on real estate as security therefor. Nor are foreign corporations of' like character prohibited by any existing legislation from exercising like powers within this State.
    2. So where a loan was made in this State by the -United States Mortgage Company, a corporation created under the laws of the' State of New York, and a mortgage upon real estate was executed to the mortgage company to secure the loan, it was held, the transaction was a valid one, and by a sale and conveyance under a power in the mortgage, the title to the mortgaged premises passed to the purchaser.
    3. Same—as to change of title to real estate, within the meaning of a prohibitory clause in a policy of insurance. A policy of insurance upon a building provided: “If the property be sold or transferred, or any change take place in title or possession, whether by legal process or judicial decree, or voluntary transfer, or conveyance,” “without the consent of the company indorsed hereon, ” “ this policy shall be void. ” At the time the policy was issued there was existing a mortgage upon the premises, which had been executed by the assured to a foreign corporation to secure a loan of money. Subsequent to the date of the policy, the premises were sold under a "power in the mortgage, and a conveyance executed to the purchaser. Afterwards that purchaser conveyed to another: Held, as the mortgage was a valid one, the conveyances mentioned operated as a change of title to the property insured, within the meaning of the policy, and the policy was thereby forfeited.
    Appeal from the Appellate Court for the First District;— heard in that court on appeal from the Circuit Court of Cook county; the Hon. Thomas A. Moran, Judge, presiding.
    This was an action upon a policy of insurance, to recover for a loss upon a building in the city of Chicago. The policy, among other things, provided: “If the property be sold or transferred, or any change take place in title pr possession, whether by legal process or judicial decree, or voluntary transfer, or conveyance,” “without the consent of the company indorsed hereon, ” “this policy shall be void. ”
    The defence interposed by the company was, that prior to the making of the policy the assured had mortgaged the premises insured to the United States Mortgage Company, a corporation created under the laws of the State of New York, to secure a loan of money from that corporation,—it being further shown, that after the policy was issued the mortgaged premises were sold under a power in the mortgage, and conveyed to James H. Rees, the purchaser. Subsequently, Rees conveyed to Samuel D. Babcock. The insurance company contends that these conveyances, which were made without its consent, operated to change the title to th'e property insured, in such way as to render the policy void. Scammon, the assured, insists the mortgage he had executed was void, and hence there was no change in the title to the premises, and that is the question in the case.
    The points and authorities upon the question are so fully presented in the case of Stevens v. Pratt et al. 101 Ill. 206, that they are omitted here.
    Messrs. Miller, Lewis & Bergen, and Messrs. Dexter, Herrick & Allen, for the appellant.
    Mr. Francis H. Kales, for the appellee.
   Mr. Chief Justice Craig

delivered the opinion of the Court:

This was an action brought by J. Young Scammon, against the Commercial Union Assurance Company, upon a policy of insurance issued January 2, 1874, for the sum of $5000, for one year, on certain premises in Chicago.

The policy contains the following provision: “If the property be sold, or transferred, or any change takes place in the title or possession, whether by legal process or judicial decree, or voluntary transfer, or conveyance, * * * this policy shall be void. ”

In May, 1872, Scammon applied to the United States Mortgage Company, a foreign corporation created by the laws of the State of New York, for a loan of money. On May the 30th, 1872, a bond and mortgage were executed, ready for delivery, and on the 9th day of July the mortgage company paid to Scammon the amount agreed to be loaned, $200,000, received the bond and mortgage, and placed the mortgage upon record. In November, 1873, Scammon made default in the payment of interest, and the mortgage company elected to declare the whole debt due, as provided by the terms of the bond and mortgage, and advertised the property for sale on March 31, 1874. In pursuance of the notice the property was sold, and bid off by James H. Bees, for the sum of $100,000. On the 20th day of April, 1874, Bees conveyed the' property to Samuel D. Babcock. The property was destroyed by fire, July 14, 1874.

On the trial of the cause in the circuit court, the following instruction was asked by the defendant, and refused:

“12. The jury are instructed, as a matter of law, that the mortgage executed by the plaintiff to the United States Mortgage Company, the deed executed by the mortgage company to James H. Bees, and the deed executed by James H. Bees to Samuel D. Babcock, which have been given in evidence, operated as a change of title to the property described in the policy, within the meaning of the provision of the policy upon that subject, and they should find a verdict for the defendant.”

The decision of the court on this instruction is the only question which it will be necessary to consider, as the disposition of that question will settle the whole controversy involved in the case. The circuit court doubtless refused the instruction on the authority of The United States Mortgage Company v. Gross, 93 Ill. 483. This court, in the recent case of Stevens v. Pratt, opinion filed September 30, 1881, (101 Ill. 206,) had occasion to review the decision in the Gross case, and that opinion was overruled, in so far as it held a mortgage void which was executed to a foreign corporation after the adoption of the General Incorporation act of 1872.

The decision in Stevens v. Pratt, supra, is conclusive of the question involved in this case. It will not be necessary to repeat here the reasoning upon which that decision is based, but we content ourselves with a reference to that case for a full expression of the views of the court upon the question. In accordance with the decision in Stevens v. Pratt, the court erred in refusing the instruction.

The judgment of the Appellate Court will be reversed, and the cause remanded.

Judgment reversed.

Mr. Justice Walker :

I hold the mortgage company had no power to take, hold or convey the title to this property, and therefore dissent.

Mr. Justice Dickey :

While the mortgage company may have been capable of taking and holding a lien upon real estate in this State, it was prevented by statute from taking title. Having no title, a deed made in its name to another conveyed no title. At law I think there was no change in the legal title, and hence the policy was not thereby avoided.


text:
    Abraham B. Albertson v. Mary J. Ashton.

      Filed at Ottawa November 10, 1881

      Rehearing denied March Term, 1882.

    1. Statute op Frauds—sale of land by agent—of the writings required. Under recent legislation an intent is shown not to relax, but to increase, the rigor of the Statute of Frauds, by not only requiring the authority of an agent for the sale of land to be in writing, and signed by his principal, but that there shall also be a memorandum of the sale in writing, and signed by the agent.
    2. Same—authority of agent—effect of certain letters to a third person—and a telegram to the alleged agent. A letter by an owner of real estate to his son, saying: “I wrote to F. if I could get a fair price I would sell,—might rent if I found a satisfactory tenant, ” aside from its ambiguity in not referring to any specific property, can not, by any known rules of construction, be held to confer the slightest authority on F. to sell the "writer’s property, especially when he afterwards went to F. and arranged verbally for him to fix the price, commissions, etc., and will not satisfy the requirements of the statute.
    3. Neither does a subsequent letter by the owner to his son, saying: “If you can see F. say to him, if he can not get A. up to my figures, to hold him till I return, when I can help the sale, j>erhaps,” nor his telegram to F. in reply to an inquiry, “Will you accept $10,000 net? Must know immediately, ” to “Hold on; will be home to-morrow noon; see my son,” confer any sufficient authority in writing, under the statute, to F. to make a sale of the party’s property. They show at most only that F. was employed to" solicit and negotiate for prices, but not to make any binding contract for the sale of the property.
    Appeal from the Circuit Court of Winnebago county; the Hon. William Brown, Judge, presiding.
    Mr. William Lathrop, for the appellant:
    ■The Fergusons had no authority to sell the premises, in writing, signed by Albertson. Statute of Frauds, sec. 2; Bissell v. Terry, 69 Ill. 184; Dunlap’s Paley on Agency, 172; Story on Agency, secs. 68, 69.
    The memorandum purporting to be signed by the Fergusons is without authority, and not binding on appellant.

      For the requirements and provisions that must appear in the memorandum, see Pomeroy on Contracts, secs. 87, 91,.93.
    The memorandum must show what the parties have really assented to, so that" it can be gathered from the writing, and not be left to the recollection of witnesses. Pomeroy on Contracts, see. 85; Browne on the Statute of Frauds, secs. 3, 76; Parkhurst v. VanCourtland, 1 Johns. 273.
    It must contain the price agreed to be paid. Farwell v. Lowther, 18 Ill. 256; Wood v. Davis, 82 id. 311.
    Mr. J. C. Garver, for the appellee:
    The consideration need not be expressed in the writing, under the statute, but may be proved or disproved by parol or other legal evidence. Statute of Frauds, sec. 4; Patmer v. Haggard et al. 78 Ill. 607.
    The memoranda and notes of the contract were made and signed before appellant refused to convey, and contain all the terms required by the statute. The consideration in the place book is stated also, but if not, it may be proved. McConnell v. Brillhart, 17 Ill. 354.
    In this case there are several memoranda or notes of the contracts of sale, each and all of which come up to the prescribed rule of evidence, and were made, signed and delivered to complainant’s husband before appellant pretended to take away from the agent the authority given to make contract of sale. Work v. Cowhick, 81 Ill. 317; Browne on the Statute of Frauds, sec. 348 (4th ed.)
    The, evidence shows the circumstances, the situation of parties, and is competent to explain terms in receipts, and to identify the property, and to prove the consideration. Patmer v. Haggard, 78 Ill. 607; Pomeroy on Contracts, sec. 161.
    The letters addressed to the son were sufficient evidence of authority. Pomeroy on Contracts, sec. 84, p. 121.
    Albertson, by his conduct, showed that he considered the authority as clearly given by those letters. He ought to be estopped by his representations. Pomeroy on Contracts, sec. 78, p. 114.
    The most that can be said about these letters is, that they in themselves are a little ambiguous. In such case, if the agent bona ficle has adopted the theory that they gave him authority to make the contract, then the principal can not repudiate the contract of sale. Ewell’s Evans on Agency, (1878) see. 2, p. 211.
    The principal is bound by the apparent authority. Smith v. Board of Supervisors of Peoria County, 59 Ill. 412.
    He may also have the authority to bind his principal to convey, even when he can not convey. Force v. Dutcher, 18 N. J. Eq. 401.
    The authority to the agent may be in letters to the son, and the telegram “see my son,” shows that the letters (each of which speaks of Ferguson) were intended to give authority to him. Pomeroy on Contracts, sec. 84, p. 122.
    Mr. W. C. Goudy, also for the appellee,
    contended that Ferguson was lawfully authorized, in writing, to sell the lots, by the three letters of appellant to his son. The memorandum need not be addressed to the other party, so the authority need not be. The purposes of the statute are answered by having a written authority, to whomsoever addressed. Moore v. Mountcastle, 61 Mo. 424; Peabody v. Spears, 56 N. Y. 230; Bailey v. Sweeting, 96 U. S. 857; Wilkinson v. Evans, L. R. 1 C. P. 407; Gibson v. Holland, id. 1; Baxter v. Rust, L. R. 7 Ex. 279; McLean v. Nicolls, 9 W. R. 811; Barkworth v. Young, 4 Drew, 13; Agnew on Statute of Frauds, 241-2; Browne on Statute of Frauds, (4th ed.) 354 a; Wood v. Davis, 82 Ill. 311; Spangler v. Danforth, 65 id. 152; Welford v. Beasley, 3 Atk. 503; Clark v. Wright, 1 id. 13.
    The authority need not contain the terms of the contract. Baum v. Dubois, 43 Pa St. 360; Matherson v. Davis, 2 Cold. 443; Minor v. Willoughby, 3 Minn. 235.

      The agent, though not empowered to convey, can make the memorandum required by the statute, and sign it himself. Johnson v. Dodge, 17 Ill. 433; Farwell v. Lowther, 18 id. 256; Wood v. Davis, 82 id. 311.
   Mr. Justice Walker

delivered the ojnnion of the Court:

This was a bill for a specific performance of a contract to sell certain lots in the city of Rockford, by appellant to appellee. It is not denied that an agreement to sell the lots was made, but it is insisted that there was no memorandum or note of the agreement in writing, signed by appellant, or by any other person by him lawfully authorized in writing, and signed by him, as required by the second section of the Statute of Frauds. That section was set up and relied on by appellant in his answer, and it is claimed the court below erred in not allowing the defence.

The material facts appearing in the record are, that appellant was the owner of the property, and resided on a part of it, with three minor children, as his homestead, but concluding to sell it, he placed it in the hands of D. & D. H. Ferguson, land agents of the place, for sale, at $12,000, and they so entered it on their books. This was in March, 1880. This authority was verbal. On the 14th of February, previously, he wrote to his son, saying: “I wrote to Ferguson if I could get a fair price I would sell,—might rent if I found a satisfactory tenant.” Again, on the 10th of March, 1880, he wrote his son Charles, and in the letter he says: “If you can see Ferguson, say to him if he can not get Ashton up to my figures, to hold him till I return, when I can help the sale, perhaps.”

The next letter to his son was written March 18, 1880, and in it he says: “In regard to the place, perhaps we better sell at the price offered, if we can not do better, but think we can work the price up to at least $10,500, .we paying commission, in which case we’ should want Ferguson to take one per cent commission, instead of 1J per cent which I would have to pay him if he got $11,000. So upon the whole, I guess the best is to wait till I come home, as there are some preliminaries about the deal that Mr. F. does not understand, and I should want to provide for them. I do not think any of the places suits him as well as mine. Wormwood’s is at $15,000 or $16,000, and Williams’, say from $12,000 to $14,000. ( Mine, as to location and all, will suit him the best. I shall reach home next week. Will start, perhaps, Monday, and will go by Indianapolis, and stop one day there. I go out to Hood’s Mills to-day, where the farm is, and it may take me the balance of the week to close matters up there. If Ferguson tells him I will be home next week, and to hold on till he sees me again, the chances are he will not buy. Write me to Indianapolis, care of Barnes.” On the 20th Ferguson telegraphed to appellant as follows: “Will you accept $10,000 net? Must know immediately.” To this, on the 24th, he received the reply: “Hold on; will be home to-morrow noon; see my son.”

This seems to be all that was introduced in evidence as being in writing, signed by appellant, to show authority to Ferguson.

The written memoranda and receipts made by Ferguson were introduced in evidence to show that there was a memorandum or note in writing, signed by the agent, as a compliance with the statute. The first is a mere written entry by Ferguson in his memorandum book: “Sold to Mary J. Ashton for $10,500, March 27, 1880, for cash,” which was signed “D. & D. H. Ferguson.” Three receipts were introduced in evidence, to Ashton, the husband of complainant, given by the Fergusons: one for $1000, for appellant to bind the bargain, dated March 27, 1880, and the other two, dated the 29th of that month, one of them for $5890, in a certificate of deposit in the Rockford National Bank, to the order of appellant, the other one, $1010, being a thousand dollar county order, being the price, exclusive of an incumbrance of $2600 on the property, which Mrs. Ashton was to pay as a part of the purchase money of the property.

After the agreement for the sale and the terms were arranged and agreed upon, the Fergusons made and signed this memorandum in their book for Inch entries:

“rockford, Ill., March 27, 1880.

“Memorandum of sale made this day between A. B. Albert-son and Mary J. Ashton, of lots 6 and 1, block 29, Geo. Haskell’s addition to Bockford, 111. Albertson has accepted the offer made by Ashton, of $10,500, all cash, except an incumbrance of $2500, and $100 interest on the same, due April 11, 1880, which incumbrance said Ashton is to assume, and agrees to pay, together with the interest to said April 11th, making $2600. Possession to be given of the main house (the residence) May 1st, and of the tenant houses April 15th,—Mrs. Ashton to have the rents of the tenant houses after April 15, ’80. The furnace, gas fixtures, and all other fixtures to remain in the house, and are part of the purchase. Albertson reserves the little round summer house in the back yard, and the range and brass heating boilers are reserved. Mr. Ashton has paid $1000 down to bind the bargain, for which I have given him a receipt, March 29, 1880. Have this day receipted to Mr. Ashton for the balance of the purchase price of $6900.”

Memorandum in pencil:

“The above mem. made by me this 29th day of M’ch, 1880,”

On the 27th of March, Ashton, the husband of complainant, appellant, and one of the Fergusons, came together, and after considerable negotiation an agreement was reached, which is set forth in this memorandum. When they had come to the understanding, Ashton drew his check .for $1000 and handed it to appellant, who gave it to Ferguson, saying, “hold it until the matter is closed up. ” Ferguson drew a deed from appellant- for the property to Mrs. Ashton, which, after examination, he said he would sign. A defect, however, being found in the title, it became necessary to procure a quitclaim deed to remove the defect, which was procured, but too late to close the transaction that day, and it being on Saturday, the matter went over to be closed up the next Monday, appellant saying he would call on Monday morning and attend to it. He failed to do so, and when Ferguson called on him- that evening he refused to sign the deed or to consummate the trade. Ashton had that day started for Iowa, but directed Ferguson to deliver over to appellant the check, certificate of deposit and county order, and receive the deed and have it recorded. Ferguson gave to Ashton the two receipts under date of the 29th of March, 1880, and made the memorandum in his book of that date on that day, and there is no evidence that appellant directed them to be made, or even knew of the fact, but it is claimed he had no knowledge of their existence until produced, to be used as evidence.

On these facts the court below decreed the relief sought, and from that decree defendant appeals to this court, and urges a reversal on the ground that there was no memorandum in writing signed by appellant, or his agent authorized by such a writing, and if there' was, the property was the homestead of appellant, and he can not be compelled to perform the agreement.

The question as to what constitutes a memorandum or note in writing, signed by the party, in compliance with the requirements of the statute, has been the subject of much discussion and various decisions ever since its adoption. Owing to the natural repugnance of all right thinking men to permit the success of unfair dealing, there are many cases found that manifestly have strained the language and meaning of the statute. Hence we find cases that have gone to the very verge, if not beyond, reasonable and fair construetion, or rather facts have been strained to hold that they constitute a compliance with its requirements. The statute was regarded as necessary at the time of its adoption, and we have no doubt, notwithstanding it may have worked hardships, its operation has been salutary. And the General Assembly has not relaxed its provisions, but on the contrary has increased its rigor, by not only requiring the authority of the agent to be in writing, and signed by his principal, but that there shall be a memorandum of the sale in writing, and signed by the agent, to be binding, thus showing a disposition to increase the rigor rather than relax the rule of the statute.

We shall proceed to determine whether there has been in this case a compliance with the statute. It is claimed that appellant’s letter to his son, under date of the 14th of February, 1880, in which he says: “I wrote to Ferguson if I could get a fair price I would sell,—might rent if I found a satisfactory tenant, ” if it does not confer, it is a written recognition of Ferguson’s authority to sell. Waiving its ambiguity, as it refers to no specific property, we are unable, by any known rules of construction, to hold that this confers the slightest authority on Ferguson to sell. It does not say he wrote to Ferguson he might sell. It may be, and probably was, in answer to an inquiry whether appellee was disposed to sell the property. If it was, would any one say that because he answered the inquiry in the affirmative he thereby conferred power to sell ? If such is to be the construction of such answers, then it would lead to more injurious results than the wrongs intended to be cured by the statute. If that be the true construction of such an answer, then a person, without suspecting it, would be liable to constitute persons wholly untrustworthy to act as agents to sell property for them. The law of agency, we think, never has been, nor ever will be, carried to that length.

But concede that, unsolicited, appellant did. so write Ferguson, we are wholly unable to say that this language alone was intended to, or was understood by either party to, confer any such power. If not so intended and so understood, there can be no rightful claim that it had that effect. If it had, and appellant so understood it, why formally go afterwards to Ferguson and arrange with him to act for him, fixing the price, commissions, etc. ? If Ferguson so understood it, why did he not enter it in his book for sale, and not defer that until he was formally authorized to,sell? The language will bear no such construction, nor would it convey such an idea to persons in general, and certainly was not so understood by the parties themselves. This, then, was not the memorandum in writing required by the statute.

It is next urged, that in his letter to his son of date the 10th of March, he acknowledges he has conferred the power on Ferguson to sell. Appellant says: “If you can see Ferguson, say to him if he can not get Ashton up to my figures, to hold him till I return, when I can help the sale, perhaps.” This does not in the remotest manner imply that Ferguson was empowered to close any sale and bind appellant by the agreement. It only implies that Ferguson was to use efforts to procure the desired price, and appellant would close the sale. Nor does appellant’s telegram to Ferguson, in answer to his, when appellant says: “Hold on; will be home to-morrow; see my son, ” purport to give authority to sell, but on the contrary prohibits a sale. The letter of appellant to his son of the 18th of March, 1880, does not say that Ferguson may sell. In it he says to his son that “perhaps we had better sell at the price offered, if we can not do better, but think we can work the price up to at least $10,500.” He says to wait until he came home, as there were preliminaries that Ferguson did not understand which he wished to provide for on the sale. This was a letter to his son, and not to Ferguson; but if it had been, it conferred no power to sell: On the contrary, it required them to wait until his return home, saying there were some preliminaries. not understood by Ferguson. So far from authorizing Ferguson to sell, it forbid him selling the property. There can be no pretense that authority was conferred by this letter, even had it been addressed to Ferguson. It shows that appellant desired Ferguson’s assistance in making the sale, and to pay him for that assistance, but it repels the idea that Ferguson could sell. Neither of these writings, singly or collectively, even if addressed to and received by Ferguson, confers the power claimed. They no doubt show that Ferguson was employed to solicit and negotiate for prices, but was never authorized in writing to make a sale that would bind appellant. The employment of the Fergusons was by verbal agreement. Nor did the fact that they entered a memorandum of it in their book, and signed it, make it a memorandum in writing contemplated by the statute. It was not signed by appellant, and until it or some other instrument conferring authority was thus signed, the requirements of the statute would not be fulfilled. The agent, by such a memorandum signed by himself, is wholly powerless to acquire such authority. We, from all the evidence, fail to find that appellant ever gave to the Fergusons any memorandum or note in writing signed by him, or that he otherwise in writing acknowledged "that he had conferred such power on them. All the power they had was verbally given, and that does, not satisfy the requirements of the statute.

If the Fergusons had no sufficient power to sell the property and bind appellant by the sale, then it must follow all of the receipts they gave for the purchase money, and the memorandum they made and signed in their book, failed to have that effect. Without legal and requisite authority to make the sale they could not bind appellant. We have seen they had no such authority, and hence all of the papers and memoranda they made were absolutely nugatory and insufficient to bind appellant. They had no more binding effect on appellant than if they had assumed to act without any kind of understanding with him in reference to the property or its sale.

This view of the case renders unnecessary the discussion of the question whether a court of equity will compel the specific performance of a contract, when in doing so it would compel a conveyance of the estate of homestead. We therefore refrain from its consideration and determination in this case.

For the errors indicated the decree of the court below is reversed, and the cause remanded.

Decree reversed.


author: Mr. Justice Scholfield Mr. Justice Mulkey

text:
    Robert T. Lusk v. George L. Thatcher et al.

      Filed at Ottawa November 10, 1881

      Rehearing denied March Term, 1882.

    1. Parties in chancert—dismissing bill for want of necessary parties. Where the matters disclosed in a bill in chancery not only fail to show proper grounds for equitable relief as against any of the persons who are made parties defendant, but show that under any kind of a bill that might be framed, in respect to the same subject matter, there could be no relief as against those persons, the bill may properly be dismissed for the want of necessary parties. It is not incumbent on the court in such case to retain the bill for the proper parties to be brought in. This case distinguished from Thomas, Trustee v. Adams et al. 30 111. 37.
    2. If the complainant, on discovering he had sued the wrong parties, had made a special application to have the proper parties substituted as defendants for those improperly sued, and that application had been denied, quite a different question would be presented. But that was not this case. Parties are never thus substituted, except upon special application.
    3. Same—public must be made a party to a bill to contest an election for organizing a village. On bill to contest an election for organizing certain territory into a village, it is not sufficient to make certain private individuals residing in the territory, alleged to have been the principal promoters of the scheme, parties defendant, as they can not represent the public. If - it is impossible to make the village a party for the want of the election of officers, a proper representative of the public should be made a party, otherwise no decree would bind the comoration.

      Appeal from the County Court of Cook county; the Hon. Mason B. Loomis, Judge, presiding.
    Messrs. Herbert, Quick & Miller, for the appellant.
    Mr. John P. Wilson, Mr. George L. Thatcher, and Mr. Felix J. Griffin, for the appellees.
   Mr. Justice Scholfield

delivered the opinion of the Court:

We are of opinion the decree below should be affirmed, upon the ground that an indispensable party defendant was not before the court. The court itself may state this “objection, and refuse to make the decree, or if a decree is made, it may, for this very defect, be reversed on a rehearing or on an appeal.” * * * Story’s Equity Pleading, (5th ed.) secs. 75, 236; Herrington v. Hubbard, 1 Scam. 569.

The object of the bill was to contest an election held for the purpose of determining whether certain territory should become incorporated as a village. The only defendants named or brought before the court are certain private individuals alleged to have been the principal promoters of the scheme. The contestants are certain private individuals claiming to be residents and voters within the territory proposed to be incorporated. Thus the suit is entirely between private parties. But if there be an incorporation, it constitutes a municipality, and is vested with local sovereignty. It is public, and its powers are to be exercised for the benefit of the public, and not of private parties. Both persons and place are indispensable to such a corporation. Dillon’s Municipal Corporations, (1st ed.) sec. 9. But the persons interested in the establishment of the municipality to-day, may cease to have any interest in it to-morrow, since it is manifest there can be no property rights in a public franchise. Upon no theory are the persons here made defendants entitled to represent the public, and the question, legally considerecl, however much private feeling may be enlisted, is one that purely concerns.the public.

But counsel say there were no village officers elected, and hence it was impossible to make the village a party; but it doés not hence follow that it was impossible to bring before the court a proper representative of the village—that is to say, of the public. But .it is not at present important to ascertain who should have been brought before the court to represent the public interest,—it is sufficient no rule of common. law and no statute authorizes those who are before the court to represent that interest. No one can be affected by a decree who was not before the court, actually or constructively, when it was rendered. It being the public, not A B or C D, that is to be represented in this corporation, it must result that a decree in regard to the election not concluding the public would conclude nobody.

The decree is affirmed.

Decree affirmed.

Subsequently, on an application for a rehearing of this cause, the following additional opinion was filed:

Mr. Justice Mulkey

: An application having been made for a rehearing of this case, we have, with much care, reconsidered the grounds upon which it was placed on the former consideration of it, and have been unable to discover anything which justifies a doubt of the correctness of the conclusions then reached.

It is urged with much earnestness, and apparent confidence, in the petition for a rehearing, that the court should not have dismissed the bill or statement for want of proper parties, but should have retained it, with leave to the plaintiffs to bring the proper parties before the court, and in support of this position the case of Thomas, Trustee, etc. v. John B. Adams et al. 30 Ill. 37, is relied on. A moment’s examination will show that case is not in point. There, Thomas, trustee of the Bank of Illinois, having an equitable title, only, to certain judgments, filed a bill for the purpose of reaching certain property belonging.to .the defendants in these judgments, and the court, upon the consideration of the case, dismissed the bill, on the ground some of the defendants in the judgments had not been made parties, and this was held error. The material difference between that case and the one in hand is this: There the bill showed upon its face that the complainant was entitled to relief upon a properly framed bill, against the parties then before the court, and the only objection to the bill was that certain parties having an interest in the subject matter of the suit had not been joined as co-defendants. Here, the complainants do not show a cause of action against any of the parties before the court, as was done in that case, but, on the contrary, conclusively show they are not entitled to relief, as against the present defendants, under any kind of a bill that might be framed, hence there could have been no propriety, so far as they were concerned, in retaining the bill for amendment. Under any circumstances, the bill would have had to be dismissed as. to them. Consequently nothing could have been gained by retaining it for amendment. To have brought in other parties, and dismissed the ease as to the parties then before the court, would, in effect, have been commencing a new suit. The bill, as framed, clearly showed no equity on its face. If the complainants, on discovering they had sued the wrong parties, had made a special application to have the proper parties substituted as defendants for those improperly sued, and that application had been denied, quite a different question would bé presented; but nothing of that kind was done. Parties are never thus substituted, except upon special application.

Rehearing denied.