Chicago Title & Trust Co. v. Hoffberg

• Decision Date: 10 January 1938
• Docket Number: Gen. No. 39766.
• Citation: 12 N.E.2d 230,293 Ill.App. 290
• Court: United States Appellate Court of Illinois
• Parties: CHICAGO TITLE & TRUST CO. v. HOFFBERG ET AL. APPEAL OF WEINSTEIN ET AL.

293 Ill.App. 290

12 N.E.2d 230

CHICAGO TITLE & TRUST CO.

v.HOFFBERG ET AL.

APPEAL OF WEINSTEIN ET AL.

Gen. No. 39766.

Appellate Court of Illinois, First District, First Division.

Jan. 10, 1938.

Appeal from Circuit Court, Cook County; Cornelius J. Harrington, Judge.

Foreclosure proceeding by the Chicago Title & Trust Company, as successor-trustee, against Philip Hoffberg, J. Weinstein, and others. From a decree finding the amount due on all bonds and coupons and directing a sale, J. Weinstein and another appeal, questioning that part of the decree placing certain bonds and coupons held by the liquidating trustee, assignee of the Madison & Kedzie State Bank, original trustee, on a parity with those held by other holders.

Decree affirmed. Shulman, Shulman & Abrams, of Chicago (Meyer Abrams, of Chicago, of counsel), for appellants.

Concannon, Dillon, Bostelman & Snook, of Chicago, for appellee.

McSURELY, Justice.

This is a foreclosure proceeding which went to a decree finding, among other things, that there was due on all bonds and coupons the sum of $191,170.26, and directing a sale. This appeal questions that part of the decree which places certain bonds and coupons, aggregating approximately $33,700, held by the liquidating trustee, assignee of the Madison & Kedzie State Bank, on a parity with those held by other holders.

J. Weinstein and Israel A. Abrams are the appealing defendants, and their claim is that the bank paid out of its funds these bonds and coupons after they were in default and holds them uncanceled, and therefore such bonds and coupons should be subordinated to the remaining bonds and coupons.

The record does not support the claim that these bonds and coupons were paid by the bank after default. The trust deed, dated June 27, 1927, ran from Philip Hoffberg to the Madison & Kedzie State Bank as trustee; the bond issue was in the amount of $130,000 payable at the bank; the first default occurred June 27, 1929; September 19, 1930, the mortgagor, Hoffberg, was served with notice of the acceleration of the entire debt; and January 13, 1931, the bill of foreclosure was filed. There was no evidence that the questioned bonds and coupons were acquired by the bank after maturity. The bonds of $500 each--Nos. 11, 12, and 13--which matured June 27, 1929, were acquired by the bank on July 26, 1928. Bonds numbered 18 and 19, matured December 27, 1929, were acquired June 27, 1929. There is no evidence as to when the bank acquired the other bonds in question. The witnesses testifying before the master all referred to these bonds as purchased by the bank. A witness called on behalf of defendant Etta Weinstein testified that the bonds were acquired by the bank “by purchase, those bonds were bought by the bank.”

Defendants rest their case largely on the opinion in Lake View Trust & Sav. Bank v. Rice, 279 Ill.App. 538. The facts in that case are substantially different from those before us. There it clearly appeared that the bonds were presented for payment to the Lake View bank at maturity, in the regular course of business, and they were paid without any knowledge on the part of the party presenting them that they were not marked paid and canceled. But the most decisive difference is the absence from the trust deed involved in the Lake View Case of any permission permitting the bank to purchase bonds, paying for them out of its own funds and holding them on a parity basis. The trust deed in the instant case contains such a provision, which we shall later set out in full.

The question whether the Madison & Kedzie Bank, when it acquired the bonds and coupons in question, paid them as a mere volunteer or acquired them as a purchaser is one of fact, and the master's report and the decree find that the bank was a purchaser.

It might be noted that no proof was made before the master that either of the appealing defendants owned any bonds or coupons, so we cannot see how they could be injured by the decree. Under a similar state of facts in Anderson v. Pennsylvania Hotel Co., 5 Cir., 56 F.2d 980, it was held that the party claiming a subordination of bonds held by a bank receiver had not shown that he owned any of the bonds, and it was neither pleaded nor proved that he was benefited or injured by the decree.

It also appears that no issue of subordination was raised in the pleadings. Defendant Weinstein in his answer claimed to have some interest in the premises covered by the trust deed, but no claim of subordination or payment of the bonds by the bank was made. A party will not be permitted to argue on appeal a defense or present an issue not interposed by his answer. Bittner v. Field, 354 Ill. 215, 220, 188 N.E. 342;Hill v. Siffermann, 230 Ill. 19, 25, 82 N.E. 338;Chicago R. I. & P. Ry. Co. v. People, 222 Ill. 427, 434, 78 N.E. 790.

The points just considered present no convincing reason which requires the reversal of the decree. But even a more conclusive reason for sustaining it appears when we consider the terms of the trust deed itself. Section 7, article 2 of the trust deed, provides: “In consideration of the purchase for investment or resale by Madison & Kedzie State Bank of bonds or coupons issued hereunder, it is hereby expressly declared and agreed that all of said bonds and coupons thereto attached shall be received and held by each and every legal holder or owner thereof at all times hereafter, subject to the following rights and privilege of the Madison & Kedzie State Bank, its successors and assigns, that is to say: in case at any time the Madison & Kedzie State Bank or any corporation which may succeed to its business, shall pay, out of its individual funds, to the holder or holders of any bonds or coupons, the amount or amounts due thereon, such bonds or coupons, whether the same be then matured or unmatured, shall thereupon be deemed to have been purchased by said Madison & Kedzie State Bank, or its successor in business, as the case may be, and shall be delivered uncanceled to it, and shall...