Small v. Stagg

• Decision Date: 18 May 1880
• Citation: 95 Ill. 39,1880 WL 10006
• Parties: DANIEL SMALL et al.v.BENJAMIN STAGG.
• Court: Illinois Supreme Court

95 Ill. 39

1880 WL 10006 (Ill.)

DANIEL SMALL et al.

v.BENJAMIN STAGG.

Supreme Court of Illinois.

Filed at Ottawa May 18, 1880.

APPEAL from the Circuit Court of Will county; the Hon. JOSIAH MCROBERTS, Judge, presiding.

Mr. G. D. A. PARKS, for the appellants:

1. A second vendee with notice holds subject to all liens against his immediate vendor, whether for purchase money or otherwise. When Benjamin Stagg purchased, James Stagg had only an inchoate, equitable, conditional interest by virtue of a verbal agreement from Aldrich, and was still indebted for a large amount of the purchase money. James Stagg had no deed, as the record shows. His only proof of any interest in the land consisted in his possession, and this was only evidence that the possessor had some claim, of which subsequent purchasers or incumbrancers were bound to take notice. Williams v. Brown, 14 Ill. 205; McClaurie v. Thomas, 39 Id. 295.

Hence, it is clear that Benjamin Stagg acquired no equities which were not subordinate to the original paramount claim for purchase money.

2. The trust deed is clothed with the essential equity of a vendor's lien. That the loan was made by James Stagg for the avowed purpose of paying the balance of the purchase money due to Aldrich can not be denied, and the avails of the loan were actually applied to that object.

What, then, were the complainant's equities against the old incumbrance in this new form? It is not enough for him to say, speaking with technical precision, that it is not a purchase money mortgage. It stands, nevertheless, as a valid legal conveyance, only to be dislodged from the position of advantage which the law assigns it by some superior equity; and in such a contest the court inquires for the substantial facts. The general rule is, that equity is careless of mere forms, and looks only at the substance of instruments and of transactions submitted to its consideration. Broadwell v. Broadwell, 1 Gilm. 612; Mulvey v. Gibbons, 87 Ill. 382; Christie v. Hale, 46 Id. 120; Jenneson v. Jenneson, 66 Id. 259; Beach v. Shaw, 57 Id. 24; Alden v. Garven, 32 Id. 35.

The substantial fact is that Small's loan paid off the purchase money due to Aldrich, and that the original vendor's lien, binding the second vendor ab initio, was never waived, paid or extinguished, except that effect was produced by the new lien which succeeded it, and in which it merged, without the interval of a single instant to admit intervening rights. Shaver v. Williams, 87 Ill. 472.

Appellee having notice of the original lien, had occasion at every step, under his own contract with James Stagg, to inquire as to the status of that lien. Russell et al. v. Rawson, 76 Ill. 171; Wall v. Schofield, 76 Id. 163; Farrar v. Payne, 73 Id. 88; Heaton v. Prather, 84 Id. 332; Sheen v. Hogan et al. 86 Id. 19; Young v. Morgan, 89 Id. 202. Before paying his own purchase money ($400) an inquiry of Aldrich or his brother must inevitably have led him to the knowledge of the new incumbrance, and he then might have protected himself pro rata, with the aid of chancery if necessary, by applying the amount to the paramount lien.

Messrs. BROWN & MEERS, for the appellee:

A valid contract for the sale of real estate is, as a rule, equivalent in equity to an actual conveyance at law. The vendor is regarded as a trustee for the purchaser, and the latter as the equitable owner. Sutherland v. Harrison et al. 86 Ill. 368; Dart on Vendor and Purch. 125; Lombard v. Chicago Sinai Cong. 64 Ill. 477; Baker v. Bishop Hill Colony, 45 Id. 264; Baldwin et al. v. Pool, 74 Id. 100; Borders et al. v. Murphy, 78 Id. 85; Seton v. Slade, 7 Ves. 214; Rood v. N. Y. R. R. 18 Barb. 80; Fitzhugh v. Maxwell, 34 Mich. 38.

The open, notorious and visible possession of land is notice to subsequent purchasers or incumbrancers of all claims, equitable as well as legal, of the person in possession, and the party buying or incumbering takes subject to his rights. White et al. v. White, 89 Ill. 464; Doyle v. Teas, 4 Scam. 123, 202; Smith v. Heirs of Jackson, 76 Ill. 254; Russell et al. v. Ransom, 76 Id. 168; Partridge, Wells & Co. v. Chapman, 81 Id. 138; Merrick v. Wallace, 19 Id. 498; Morrison v. Kelly, 22 Id. 610; Lumbard v. Abbey et al. 73 Id. 177; Doolittle v. Cook, 75 Id. 354.

When a vendor of real estate is in possession under his contract, and the vendor subsequently executes a mortgage on the same premises to a third person, the mortgagee can only take an interest in any unpaid portion of the purchase money; and to reach that he is bound to give notice of his claim to the vendee in possession, or enjoin its payment to the vendor. The recording of the mortgage is not constructive notice to the vendee. Doolittle v. Cook, 75 Ill. 354.

It is the settled law of this State that a vendor's lien is strictly personal and can not be assigned even by express contract. Bonnell v. Holt, 89 Ill. 74; Richards v. Leaming, 27 Id. 431; Keith v. Horner, 32 Id. 524; Wing v. Goodman, 75 Id. 159; Dayhuff v. Dayhuff et al. 81 Id. 499; McLaurie v. Thomas, 39 Id. 291.

Mr. JUSTICE CRAIG delivered the opinion of the Court:

It appears, from the evidence incorporated in the record, that in February, 1871, James Stagg purchased of D. H. Aldrich, by verbal contract, the following described premises: Beginning at the north-west corner of block 1, in Allen's addition to the city of Wilmington, thence easterly along the north line of the block 13 rods, thence south 8 rods, thence west 13 rods, thence north 8 rods to the place of beginning; situated in the county of Will.

The purchase price of the premises was $2150. James Stagg paid $1000 of the purchase money and went into the possession of the property under the contract. In the month of March, 1871, James Stagg sold to Benjamin Stagg the west half of the east half of the premises for $400, and he went into possession of the premises under the contract of purchase, using it for garden purposes during the spring and summer. In September he commenced building a house, which, prior to November 24, was inclosed, shingled and plastered. The house cost about the sum of $1400.

It also appears that Aldrich, in pursuance of the verbal contract, on the 25th day of November, 1871, conveyed the premises to James Stagg, by deed bearing date February 8, 1871. It also appears that on the 24th day of November, 1871, James Stagg loaned from Daniel Small $1200, and on that day gave his promissory note for the amount, due in one year, and to secure the payment of the note he executed and delivered a deed of trust to Daniel Small on all the property purchased of Aldrich. It also appears that the money obtained from Small was used in payment of the balance of the purchase money due from James Stagg to Aldrich.

In the spring of 1872, Benjamin Stagg, having paid James Stagg the full amount of purchase money agreed to be paid, received a deed for the premises purchased; the deed, however, was not acknowledged or recorded until some time afterwards. James Stagg having failed to pay the note secured by the deed of trust, the trustee advertised the property for sale, and this bill in equity was brought by Benjamin Stagg to enjoin the sale, and to set aside the deed of trust, so far as it related to the...