Stevens v. Pratt

• Decision Date: 31 January 1882
• Citation: 101 Ill. 206,1881 WL 10704
• Parties: JOHN S. STEVENSv.CYRUS N. PRATT et al.
• Court: Illinois Supreme Court

101 Ill. 206

1881 WL 10704 (Ill.)

JOHN S. STEVENS

v.CYRUS N. PRATT et al.

Supreme Court of Illinois.

Filed at Springfield Sept. 30, 1881.Rehearing denied January Term, 1882.

OPINION TEXT STARTS HERE

APPEAL from the Superior Court of Cook county; the Hon. JOSEPH E. GARY, Judge, presiding.

This was an action of ejectment, by appellant against appellees, for certain real estate in the city of Chicago, tried in the Superior Court of Cook county. The plea was, not guilty.

Preliminary affidavit was filed showing that the parties claimed from a common source of title--one Richard B. Appleby. Appellees claimed under a mortgage executed by said Appleby to the United States Mortgage Company, to secure a note, for money loaned, of $5000, on the 25th of April, 1873, and duly recorded in the proper office on the next day. Appellant claimed under a mortgage executed by said Appleby to Elizabeth D. Smith, on the 17th of September, 1873, and duly recorded in the proper office on the 23d of said month, to secure a loan of $2000.

Appellant claimed that he was entitled to hold title entirely disregarding the mortgage to the United States Mortgage Company, on the ground that the note and mortgage to that company were absolutely void.

The court rendered judgment on the trial in favor of appellees, and the record comes here by appeal.

Mr. W. C. GOUDY, and Mr. JAMES E. MONROE, for the appellant:

1. The United States Mortgage Company, at the time it made the loan to and received the pretended mortgage from Appleby, was expressly prohibited by the statutes of Illinois from exercising its powers in this State. General Incorp. Law of 1872, secs. 1 and 20; United States Mortgage Co. v. Gross, 93 Ill. 492.

2. A contract prohibited by statute, or against the manifest policy of the law, is a nullity. Cincinnati Ins. Co. v. Rosenthal, 55 Ill. 91; Carroll v. East St. Louis, 67 Id. 577; Starkweather v. American Bible Society, 72 Id. 50; United States Trust Co. v. Lee, 72 Id. 143.

3. A mortgage made to a National bank to secure a contemporaneous loan is void. It passes no title and creates no lien, because the bank has not the power to take the mortgage, and the taking of it is prohibited. Fridley v. Bowen, 87 Ill. 155; Fowler v. Scully,72 Pa. St. 456; Crocker v. Whitney, 71 N. Y. 161; National Bank v. Powell, 2 Dillon, 371; Ripley v. Harris, 3 Biss. 199.

4. All conveyances and contracts made in violation of law are void. Such conveyances pass no title. No one can pass a title or right on the violation of law. Mitchell v. Smith, 1 Binn. 110; New York Ins. Co. v. Ely, 2 Cow. 678; Fowler v. Scully,72 Pa. St. 468.

5. When there is no right to acquire a title as mortgagee, the mortgage is a nullity. Fowler v. Scully,72 Pa. St. 468; Metropolitan Bank v. Godfrey, 23 Ill. 610.

6. A deed which is insufficient to pass the title can not be made valid by subsequent legislation. Lane v. Soulard, 15 Ill. 125; Illinois R. R. Co. v. Cook, 29 Id. 241; Rogers v. Higgins, 48 Id. 211; Same case, 57 Id. 244; Russell v. Ramsay, 35 Id. 262, 374; Deininger v. McConnel, 41 Id. 227; Conway v. Cable, 37 Id. 82; Gebhart v. Reeves, 75 Id. 301; Helm v. Webster, 85 Id. 116; McDaniel v. Correll, 19 Id. 226.

7. Courts will not so construe general words in a statute as to give them a retrospective operation to take away rights of property previously vested, unless the intent is very clear. Gillmore v. Shuter, 2 Md. 310; Couch v. Jeffries, 4 Burr. 2461; Dash v. Van Kleek, 7 Johns. 477; Wood v. Oakley, 11 Paige, 403; Matter of Protestant Episcopal School, 58 Barb. 161; Williams v. Johnson, 30 Md. 500; Hooker v. Hooker, 10 S. & M. 599.

8. The following cases are believed to be in point on the exact question raised in this case,--that is, the question of the power of the legislature to validate the mortgage of the mortgage company, to the prejudice of Smith's mortgage interest. Meighen v. Strong, 6 Minn. 177; Thompson v. Morgan, Id. 292; Wright v. Hawkins, 28 Texas, 452; Sherwood v. Fleming, 25 Id. (Supp.) 408; Williamson v. New Jersey R. R. Co. 29 N. J. Eq. 311; Smith v. Morse, 2 Cal. 524; Garnett v. Stockton, 7 Humph. 84; Bolton v. Johns, 8 Barr, 145; Ballard v. Ward,89 Pa. St. 358.

9. The following cases are on the point that the law of the State, in force when the contract is made, is a part of the contract, and a statute changing the law to the prejudice of either party to the contract is violative of the obligation of the contract, and void: Bronson v. Kinzie, 1 How. 311; Brine v. Insurance Co. 96 U. S. 627; Edwards v. Kearzey, 96 Id. 601; Van Hoffman v. Quincy, 4 Wall. 535; McCracken v. Hayward, 2 How. 508; Smoot v. Lafferty, 2 Gilm. 383.

Messrs. DEXTER, HERRICK & ALLEN, Mr. M. W. FULLER, and Mr. FRANK J. CRAWFORD, for the appellees:

The loaning of money by corporations created for that business was not, at the time of this transaction, prohibited by any statute of the State of Illinois, expressly, or by just implication, and was not opposed to any general policy indicated in any particular statute of the State.

The policy of a State not to allow foreign corporations to transact business within its limits, or acquire and hold real estate, must be expressed in some affirmative way. Cowell v. Springs Co. 10 Otto, 59; Christian Union v. Yount, 11 Id. 352.

A party having the benefit of the contract, it having been fully performed by the corporation, will be estopped from setting up a want of power in the corporation to make and perform the contract. Whitney Arms Co. v. Barlow, 63 N. Y. 63; Darst v. Gale, 83 Ill. 140; Ward v. Johnson, 95 Id. 215; Railway Co. v. McCarthy, 96 U. S. 267; Daniels v. Tearney, 12 Otto, 421; Ferguson v. Landrom, 5 Bush, 230; United States v. Hodsen, 10 Wall. 395; Mott v. United States Trust Co. 19 Barb. 569; Steam Navigation Co. v. Weed, 17 Id. 378; Chester Glass Co. v. Dewey, 16 Mass. 102.

An estoppel in pais may be shown as a defence in an action of ejectment. Dickerson v. Colgrove, 10 Otto, 579; Kirk v. Hamilton, 12 Id. 68; Lee v. Getty, 26 Ill. 76; Noble v. Chrisman, 88 Id. 187; Fisher v. Milmine, 94 Id. 328; Brown v. Wheeler, 17 Conn. 352; Shaw v. Bebee, 35 Vt. 209; Rangley v. Spring, 28 Me. 127; Burkholter v. Edwards, 16 Ga. 597.

The legality of the corporation in making the loan can not be drawn in question in this suit. If a corporation can take land for some purposes, the question whether the particular title was taken for an unauthorized purpose can not be tried collaterally. Hough v. Cook County Land Co. 73 Ill. 23; National Bank v. Matthews, 98 U. S. 628; Union Water Co. v. Murphy's Flat Fluming Co. 22 Cal. 621; Grant v. Henry Clay Coal Co.80 Pa. St. 218.

When a corporation is incompetent by its charter to take a title to real estate, a conveyance to it is not void, but only voidable, and the sovereign alone can object. National Bank v. Matthews, 98 U. S. 628.

The legislature may, when it interferes with no vested rights, enact retrospective statutes to validate invalid contracts, or to ratify and confirm any act it might lawfully have authorized in the first instance. United States Mortgage Co. v. Gross, 95 Ill. 494; Goshen v. Stonington, 4 Conn. 210; Beach v. Walker, 6 Id. 197; State v. Newark, 7 N. J. L. 197; Foster v. Essex Bank, 16 Mass. 245; Cowan v. Mutual Benefit Life Ins. Co.52 Pa. St. 287; Lane v. Nelson, 79 Id. 407; Butler v. Toledo, 5 Ohio St. 225; Cooley on Const. Lim. 374.

Mr. JUSTICE SCHOLFIELD delivered the opinion of the Court:

In the view we take of the questions presented by this record, it will be sufficient to inquire whether the United States Mortgage Company's acts, in loaning its money to Appleby, and taking from him his note and mortgage therefor, were void. The contention of the counsel for appellant is, they were void, and therefore incapable of imparting rights to anybody, and if this be not correct, the judgment below must be affirmed, without regard to the merits of the other questions discussed. These acts involve no moral turpitude, and they are, in no sensible degree, detrimental to the public welfare, and the only ground upon which their invalidity is claimed is, that company, as a foreign corporation, created solely for the business of loaning money, can have no legal existence, and hence do no act forming the basis of a legal right, within this State. In United States Mortgage Co. v. Gross, 93 Ill. 483, it was assumed, from the name of this corporation, the character of its transactions there involved, and the facts appearing in the case, that its principal or sole business was to loan money, taking to itself mortgages on real estate to secure the same, and it was thereupon there said: “The general Incorporation law of 1872, which was in force when the mortgage was executed, provided for the formation in the State of companies for any lawful purpose, expressly excepting, however, corporations for banking, insurance, real estate brokerage, operation of railroads, and the business of loaning money.” Section 26 of the act provided that “foreign corporations, and the officers and agents thereof, doing business in this State, shall be subjected to all the liabilities, restrictions and duties that are, or may be, imposed upon corporations of like character organized under the general laws of this State, and shall have no other or greater powers. And no foreign or domestic corporation, established or maintained in any way for the pecuniary profits of its stockholders or members, shall purchase or hold real estate in this State, except as provided for in this act.

From these statutory enactments we deduce these conclusions: the latter sentence of section 26 was aimed at the purchasing and holding of real estate by corporations, for the reason such acts would tend to create perpetuities, and by this and other provisions of the same act the evil feared was effectually guarded against. We think, however, it was not designed thereby to prevent corporations from taking mortgages on real estate as security for debts....