Buchanan v. the Int'l Bank.

• Decision Date: 30 September 1875
• Parties: MILFORD D. BUCHANANv.THE INTERNATIONAL BANK.
• Court: Illinois Supreme Court

78 Ill. 500

1875 WL 8521 (Ill.)

MILFORD D. BUCHANAN

v.THE INTERNATIONAL BANK.

Supreme Court of Illinois.

September Term, 1875.

OPINION TEXT STARTS HERE

APPEAL from the Circuit Court of Cook county; the Hon. SAMUEL M. MOORE, Judge, presiding.

Mr. GEORGE W. SMITH, for the appellant.

Messrs. ROSENTHAL & PENCE, for the appellee.

Mr. JUSTICE CRAIG delivered the opinion of the Court:

This was a bill in equity, brought by appellant, to remove from the record and cancel two certain trust deeds, which were executed on the 19th day of January, 1871, by Alpheus C. Badger to one Rogers, as trustee, to secure the payment of two promissory notes of $6666.66 each, given by Badger, payable to the order of Samuel J. Walker, one in one year and the other in two years from the date thereof, with interest at eight per cent per annum.

To the bill, the appellee, the International Bank, filed its answer and cross-bill, in which it prayed that a decree might be rendered ordering the premises described in the trust deeds, which were given to secure the two notes from Badger to Walker, be sold, and the proceeds of the sale paid to the bank to the full amount of the two notes and interest, or so much thereof as should be realized upon a sale of the premises.

Upon the hearing, the court entered a decree dismissing appellant's bill, and ordered the premises sold as prayed for in the cross-bill, and that the proceeds of the sale, to the amount of the two notes and interest, should be paid to appellee, and the balance to appellant.

To reverse the decree, appellant has brought this appeal.

The two trust deeds given by Badger were at once placed upon record, and, on the 21st of January, 1871, Walker borrowed of appellee $9500, and to secure the payment of the money, he transferred to appellee, as collateral security, the two notes executed by Badger, which were secured by the two deeds of trust.

The $9500 debt was subsequently reduced to $8000. This amount, together with the interest upon it, appellant concedes appellee is entitled to have paid by a foreclosure of the two deeds of trust, while appellee claims the right to have the balance of the two notes secured by the trust deeds applied on other indebtedness due from Walker to it, under an agreement executed by Walker, as follows:

“CHICAGO, July 7, 1869.

Whereas, the undersigned has heretofore, and intends hereafter, to borrow money from the International Mutual Trust Company, on his own note or notes, or the note or notes of H. H. Walker; and whereas, to secure the payment of such note or notes he has heretofore, and intends hereafter, to deposit collateral securities; and whereas, such collaterals were given and are hereafter to be given to secure the payment of specific notes; now, therefore, for the purpose of more fully securing the said International Mutual Trust Company, I do hereby agree that all and singular the collaterals by me given, or to be given as aforesaid, shall, of the option of said International Mutual Trust Company, apply generally to all notes held at any time by said trust company, executed by me or said H. H. Walker, and shall also apply and be considered collaterals to secure the payment of any and all notes negotiated for my account, by said trust company.

SAMUEL J. WALKER.”

There had been a large amount of dealing between Walker and appellee, and at the time of the trial, appellee showed an indebtedness against Walker of over $2,000,000, which appeared from various promissory notes. Among others were two dated December 30th, 1871, one for $10,000 and the other for $16,740.

It also appears that, on the 27th day of March, 1872, Badger, by quit-claim deed, conveyed the premises in controversy to Walker, which was recorded on the 16th day of May, following. Prior to this, however, Walker, on the 23d day of February, 1872, conveyed the premises by general warranty deed to one Kinney, which deed was recorded Aug. 13, 1872.

On the 23d day of March, 1872, Kinney conveyed by trust deed to Rogers, to secure three notes of $6666.66 each, given to Walker. This deed was recorded on the 26th of March, 1872.

On the 7th day of May, 1872, the Commercial Loan Co., through appellant, its cashier, purchased the notes given by Kinney to Walker. On the 25th day of April, 1874, after the note given by Kinney to Walker was due, on default of payment, the trustee, Rogers, sold the premises on the trust deed, and appellant purchased the same for the sum of $5000.

While it is true, at the time appellant purchased the Kinney notes from Walker, he was informed by the latter that the premises were free from prior liens, and although he had no actual notice of the trust deeds which secured the notes held by appellee, yet these trust deeds being upon the record at the time Kinney derived title, and at the time he executed the notes and deed of trust under which appellant claims, he was bound to take notice of the existence and legal effect of the prior deeds of trust upon the premises, and...