Africani Home Purchase & Loan Ass'n v. Carroll

• Decision Date: 08 April 1915
• Docket Number: No. 9664.,9664.
• Court: Illinois Supreme Court
• Parties: AFRICANI HOME PURCHASE & LOAN ASS'N v. CARROLL.

267 Ill. 380

108 N.E. 322

AFRICANI HOME PURCHASE & LOAN ASS'N

v.CARROLL.

No. 9664.

Supreme Court of Illinois.

Feb. 17, 1915.

Rehearing Denied April 8, 1915.

Appeal from Superior Court, Cook County; Charles M. Foell, Judge.

Bill by the Africani Home Purchase & Loan Association against John A. Carroll and others. Decree for complainant, and defendant Carroll appeals. Reversed and remanded, with directions.William J. Pringle, Edwin Terwilliger, Jr., Charles S. Bartlett, Sherman C. Spetzer, and Robert Humphrey, all of Chicago, for appellant.

David F. Matchett, of Chicago, for appellee.

Appellee filed its bill in chancery in the superior court of Cook county to enforce the specific performance of a contract for the sale of certain real estate, and to recover the title and possession of said real estate, which was described in the bill, consisting of a lot with a three-story flat building thereon, used for residence purposes, known as No. 121 East Fifty-Fifth street, in the city of Chicago. After interposing a demurrer to the bill, which was sustained, and leave having been granted to amend the bill, appellant answered the amended bill, denying the material allegations thereof. The cause was then tried by the chancellor, and a decree entered in favor of appellee, which was, in effect, one for specific performance of the contract and ordering conveyance of the property to appellee. This appeal followed.

The original bill alleged that appellee is incorporated under the building, loan, and homestead association laws of this state; that on March 27, 1907, William D. Neighbors entered into a contract with Robert Bartlett, who held the title to the premises in controversy, for the purchase of the same for the sum of $4,700, payable as follows: Neighbors to assume a trust deed on the property for $2,500, to pay $100 upon the execution of the contract, $400 when the title was found good by guaranty policy, and the balance of $1,750 in monthly installments of $50 each, with interest on deferred payments. The bill further alleged that at the time this contract was made Neighbors was secretary of the appellee association, and acted for it in making the contract, which was afterwards, on May 4, 1907, assigned to appellee, and the assignment duly recorded in the recorder's office of Cook county; that appellee took possession of the premises immediately after the execution of the contract, and leased it to various persons for residence purposes; that afterwards Neighbors entered into a conspiracy with Ethel H. Spence to cheat and defraud the appellee out of its property, and for that purpose on January 9, 1910, caused a forged assignment of said contract to be executed by the association and placed of record, and a deed to be made to Miss Spence by William B. Walrath, to whom Bartlett had in the meantime conveyed the legal title, subject to Neighbors' contract; that on April 25, 1910, Miss Spence, in furtherance of the conspiracy, conveyed the property by quitclaim deed to Bertha K. Chittenden; that the deed to Mrs. Chittenden was in fact a mortgage to secure the payment of money advanced by her to Neighbors for his own use and benefit; and that Neighbors and Miss Spence have failed and refused to account to appellee with reference to said transaction, although often requested so to do.

The bill fails to allege either a tender of the purchase price and an offer to perform the contract by appellee before filing the bill, or excuse for nonperformance of the contract on its part. It makes Bartlett and his grantee, Walrath, Ethel H. Spence, William D. Neighbors, and Bertha K. Chittenden defendants, and prays that the alleged forged assignment from appellee to Ethel H. Spence be set aside, that all of the deeds above mentioned be canceled, that the deed to Mrs. Chittenden be decreed a mortgage, that Neighbors and Miss Spence be required to account for their transaction in reference to said real estate, that Mrs. Chittenden be required to account for all rents, issues, and profits by her collected, appellee offering to pay to her any sum of money found due her on such accounting, including the amount paid to Jacob Glos for the purchase of a certain tax title to the premises, that the contract between Bartlett and Neighbors may be specifically performed, and defendants decreed to make proper deeds of conveyance of the premises to appellee, and that a receiver be appointed, pending the determination of the cause, to take possession of the premises, and collect and preserve the rents, issues, and profits thereof. The bill concludes with a prayer for general relief.

A general demurrer was sustained to the bill, whereupon an amendment was filed, alleging that at the time appellee sought to acquire the title to said real estate it did so because its directors in good faith believed it would become needful and necessary for the location and maintenance of a business office in which to conduct its then exceptionally large business, and that it temporarily leased the premises, not at the time being ready to occupy the same, but intending to do so shortly; that in December, 1909, its stockholders and directors decided to liquidate and wind up its affairs and business; that a meeting was called for that purpose, and liquidators were named, but that they never qualified; and that appellee has ceased to do business, but has been unable to dispose of and distribute its assets because of the wrongful acts of defendants.

Answers were filed to the bill as amended, denying the allegations in regard to the alleged fraudulent conduct of Neighbors and the others and that the deed to Mrs. Chittenden was a mortgage, and denying that appellee was a corporation, or that the property was necessary, at the time of its purchase or now, for the proper conduct of the business of appellee. The answers also set up the defense of laches, in that appellee knew of the deed to Miss Spence in January, 1910, but waited for over two years before filing its bill, in which time Mrs. Chittenden in good faith purchased the property, and also alleged that the contract sought to be enforced was ultra vires, and therefore void, and should not be specifically enforced. John A. Carroll, who purchased the property after the beginning of the suit, was allowed to intervene and adopt the answer of Mrs. Chittenden as his own.

The decree finds the facts, in the main, in accordance with the allegations of the bill, and decrees that the deed from Miss Spence to Mrs. Chittenden is a mortgage; that the cause be referred to the master in chancery to take an account of the amount due Mrs. Chittenden on her said mortgage, and the amount due from Neighbors to appellee; that upon the payment of the amount found due Mrs. Chittenden by the appellee within four months after the master makes his report, Mrs. Chittenden, and all persons claiming through or under her, convey and quitclaim said premises to appellee; that they surrender said premises to appellee, or to such person or persons as it shall direct, free and clear of all incumbrances, together with all deeds or writings in her custody or power relating to said mortgaged premises; and that in default of making the payment to Mrs. Chittenden of the amount so found due her, as therein provided, appellee's bill be dismissed. It appoints the Central Trust Company of Illinois receiver, with the usual power of receivers to take possession of the property, collect the rents, issues, and profits, etc., until the further order of the court.

The evidence shows that appellee actively entered upon the discharge of its duties and functions as a building, loan, and homestead association pursuant to the provisions of its charter. It received its charter on November 21, 1906, but neglected to file the same for record with the recorder of Cook county within two years, as required by law, or at any other time. A few meetings of its stockholders and directors were held, but no considerable amount of money was paid into its treasury by the stockholders as dues. At a stockholders' meeting held on January 25, 1907, a motion was adopted ‘that the stockholders meet February 25th and pay into the funds of the association for the purpose of investing in real estate,’ and another motion was adopted appointing a committee ‘with full power to rent an office for the association.’ At a directors' meeting held March 4, 1907, the secretary submitted a financial report showing a balance of $13.15 in the treasury. On March 7, 1907, the directors adopted a resolution appointing a committee with plenary power to select and purchase a building or buildings for the Africani Home Purchase & Loan Association, and on May 31, 1907, at a meeting of stockholders, resolutions were adopted that the secretary's salary be suspended indefinitely, that the assignment of the contract for the sale of real estate made by Neighbors to appellee be accepted and referred to a committee for record, and that the rented typewriter be sent back to the owner. There was no proof that at the time the premises in question were purchased such premises were needful or necessary for the growing business of appellee, as alleged in its amended bill of complaint.

On December 14, 1907, the state auditor of public accounts notified appellee by letter that the report made by an examiner from his office showed the association was insolvent, and that unless proper action was taken by its officers and stockholders to either reorganize or liquidate its affairs he would be compelled to appoint a custodian and proceed according to the provisions of section 17 of the Homestead Loan Associations Act. Pursuant to this letter a special meeting of the board of directors was held December 21, 1907, at which meeting a meeting of the stockholders was called for January 17, 1908, to consider the question of the liquidation or re-organization of the association. At the stockholders' meeting on January 17, 1908,...