Bank v. Miller

• Citation: 153 Ill. 244,38 N.E. 1078
• Parties: ROBINSON BANK v. MILLER et al. LAMPORT v. SAME.
• Decision Date: 23 November 1894
• Court: Supreme Court of Illinois

153 Ill. 244

38 N.E. 1078

ROBINSON BANK

v.MILLER et al.

LAMPORT

v.SAME.¹

Supreme Court of Illinois.

Nov. 23, 1894.

Appeal from appellate court, Fourth district.

Bill by the Robinson Bank against Frank O. Miller and others to set aside three mortgages as clouds on title, and cross bills to foreclose said mortgages. A decree was entered setting aside one mortgage and foreclosing the other two, and this decree was affirmed by the appellate court. 47 Ill. App. 310. Separate appeals are taken by the Robinson Bank and by Thomas V. Lamport, the owner of the mortgage that was set aside. Affirmed.Callahan, Jones & Lowe, for appellants.

Parker, Crowley & Bogard, for appellees.

The original bill in these consolidated causes was filed by certain persons doing a banking business, as partners, under the name of the Robinson Bank, for the purpose of removing the three mortgages, hereinafter named, as clouds upon the title of Abner P. Woodworth, trustee for said bank, to four acres of land in Robinson, in the county of Crawford. Upon the first trial in the circuit court, all the mortgages were set aside. Upon appeal to the appellate court, the decree of the circuit court was reversed, and the cause was remanded. The cause was heard a second time in the circuit court; and at the second hearing the mortgage to Lamport was set aside as fraudulent, and his cross bill to foreclose the same was dismissed, but the two Emmons mortgages were sustained as valid, and the prayers of the cross bills and supplemental cross bills to foreclose the same were granted by the entry of the decree of foreclosure. The second decree of the circuit court has been affirmed by the appellate court, and the present appeal is prosecuted from such judgment of affirmance. The two causes, here consolidated by agreement, involve two appeals: One is the appeal of the Robinson Bank, which brings up for review the action of the lower courts in sustaining the Emmons mortgages, and refusing to remove the same as clouds. The other is the appeal of Thomas V. Lamport, which questions the action of the lower courts in refusing to sustain his mortgage, and in dismissing his cross bill. Other questions were involved and other parties were interested in the hearings heretofore had in the circuit and appellate courts; but, as the record now stands, the only question presented is whether or not the trustee of the bank holds the title to the land subject to the lien of said mortgages, or either or any of them.

The material facts which it is necessary to state are as follows:

Prior to April, 1883, said four acres, upon which there was a flour mill, were owned, two-thirds thereof by John Newton, and one-third thereof by Henry O. Wilkin. Wilkin sold his one-third interest to one Dyer, who executed a mortgage thereon to secure the purchase money. Dyer died, and the mortgage so given by him was foreclosed. This one-third interest was sold under the decree of foreclosure on April 20, 1883, to John S. Emmons, for $3,500, and a certificate of sale was issued to Emmons by the master. By arrangement between Wilkin and John S. Emmons, the latter gave to the former, in payment of the purchase money, two notes,-one for $2,000, secured upon a farm, and the other for $1,500,-dated April 24, 1883, due on or before April 24, 1884, with Willis Emmons, a brother of John S., as surety thereon. Subsequently, suit was brought upon this note for $1,500, and judgment obtained against Willis Emmons, who paid the whole of the judgment, no part thereof being paid by John S. Emmons. A few days after the purchase of the one-third interest by John S. Emmons at the master's sale, John Newton sold an undivided one-third interest in the four acres, except three-fourths of an acre in the northeast corner thereof, to the appellant, Frank O. Miller, for $3,000, and executed a deed therefor to Miller. It would appear from the evidence that Newton resided upon the three-quarters of an acre excepted from Miller's deed. Thereupon, Newton, being the owner of an undivided one-third of the four acres, and Emmons, being the holder of a master's certificate of sale of an undivided one-third of the four acres, and Miller, being the owner of an undivided one-third of three and one-quarter acres of said four acres, formed a partnership, under the firm name of Newton, Emmons & Miller, to engage in the business of milling and buying and selling grain. There were no written articles of partnership. The partnership arrangement was oral merely. The business of the firm was done in the mill upon the land. In August, 1883, the firm was indebted to the Robinson Bank in the sum of $5,400 for advances made to it by the bank for use in the grain business, and to pay for improvements in the mill machinery; and, when the bank called for payment of this amount, Newton and Miller each paid one-third of it,-$1,800,-but John S. Emmons gave the bank his note for $1,800, dated August 28, 1883, due four months after date, with Wiley S. Emmons and William W. Walter as sureties thereon; the former being his father, and the latter his father-in-law. Subsequently, the bank sued and obtained judgment upon this note, and the judgment was paid, one-half by Wiley S. Emmons, and one-half by Walter, but no part thereof by John S. Emmons. The firm continued to do business until September 2, 1884, at which time it had become indebted to the bank in the sum of $21,585.32, and to various other creditors in various amounts. It is conceded that the firm was then insolvent.

Miller had executed a note, dated May 1, 1883, payable on or before September 1, 1884, to the order of said Lamport, his brother-in-law, for the sum of $5,500. On July 22, 1884, he executed a mortgage to secure this note to Lamport, upon his undivided one-third interest in said mill property, which mortgage was recorded on September 2, 1884. On September 1, 1884, John S. Emmons executed two mortgages on his undivided one-third interest in said property (he having obtained a master's deed),-one to Willis Emmons, to secure him as surety upon said note for $1,500, and the other to Wiley S. Emmons and William W. Walter, to secure them as sureties upon said note for $1,800. One of these mortgages was recorded on September 1, 1884, and the other on September 2, 1884. The three mortgages thus described are those which the original bill asks to remove as clouds. Newton has died since this suit was begun, but the proof tends to show that said mortgages were not made with his knowledge. His one-third interest was free of mortgage. The bank learned of the making of these mortgages on September 2, 1884. Its officers on that day had an interview with the members of the firm, and sought to obtain a deed from them of the mill property, offering $16,000 therefor. Sixteen thousand dollars was agreed upon as the value of the property, and was the consideration agreed upon for the transfer, and was finally paid therefor in credits on the firm indebtedness to the bank. On September 2, 1884, Newton and his wife and Miller and his wife executed to Woodworth, as trustee for the bank, a deed conveying ‘all of the interest of the grantors' in the four acres, except the three-quarters of an acre above mentioned. The consideration expressed in the deed is $5,333. The deed contains the words, ‘The grantee takes subject to incumbrances on the interest conveyed.’ At that time, John S. Emmons refused to join in the deed, saying that $16,000 was an inadequate consideration. But afterwards, on September 4, 1884, John S. Emmons and his wife executed a quitclaim deed to Woodworth, as such trustee, conveying ‘one-third undivided interest’ in the four acres above mentioned. The consideration named in this deed is $3,333.33. On September 3, 1884, Newton and Miller confessed judgment in favor of the bank for $16,252.32, and on the next day John S. Emmons confessed judgment in the bank's favor for the same amount. $16,252.32 was the amount of indebtedness remaining due to the bank after crediting $5,333 (which was the agreed value of Newton's one-third interest, and the consideration named in his and Miller's deed to the bank) upon the total indebtedness of $21,585.32. Execution was at once issued upon these judgments, and levied upon certain grain and other personal property belonging to the firm, which was sold by the sheriff on or about November 10, 1884, for $5,380.06, and the latter amount was credited upon the execution. The bank took possession of the mill on or about September 3, 1884, and operated it until it was transferred, during the pendency of this litigation, to Singleton B. Allen, originally a member of the banking firm, and appointed receiver in this cause. The books of Newton, Emmons & Miller remained in the mill after the bank took possession, and collections were made on the accounts under the direction of Newton, who had become an employé of the bank. The books showed accounts due to the firm to the amount of $3,348.73. The bank paid the wife of John S. Emmons $200 for signing the deed to Woodworth. On January 14, 1885, it gave credit on its books for $16,000, as the consideration of the conveyance to it of the mill property, and on the same day entered upon the margin of the record of the judgments for $16,252.32 each against Newton and Miller and Emmons a receipt dated back to September 4, 1884, for $10,666.66, credited ‘on this judgment by balance conveyance of the Eclipse Mills and appurtenances thereunto belonging, and the tract of land on which said mill is situated.’The proof shows that the firm of Newton, Emmons & Miller put new machinery in the mill, after the formation of their partnership, to the amount of about $11,200.

MAGRUDER, J. (after stating the facts).

The Robinson Bank, one of the appellants herein, claims that the mill property, including the four acres of land upon which the mill was located, was partnership property belonging to the firm of Newton, Emmons &...