Dempster v. Charles West.

• Decision Date: 30 September 1873
• Citation: 1873 WL 8526,69 Ill. 613
• Parties: CLANCEY J. DEMPSTER et al.v.CHARLES WEST.
• Court: Illinois Supreme Court

69 Ill. 613

1873 WL 8526 (Ill.)

CLANCEY J. DEMPSTER et al.

v.CHARLES WEST.

Supreme Court of Illinois.

September Term, 1873.

OPINION TEXT STARTS HERE

APPEAL from the Superior Court of Cook county; the Hon. WILLIAM A. PORTER, Judge, presiding.

This was a bill in chancery, by Charles West against Clancey J. Dempster and others, to set aside the sale of certain mortgaged premises, made under a power contained in a mortgage, and for redemption, etc. The opinion of the court gives a statement of the leading and material facts of the case. The defendants, Clancey J. Dempster and John H. Kedzie, appealed.

Messrs. GOUDY & CHANDLER, and Mr. ANDREW J. BROWN, for the appellants.

Mr. W. H. STANDISH, and Messrs. AYER & KALES, for the appellee.

Mr. JUSTICE WALKER delivered the opinion of the Court:

In the month of August, 1859, appellee purchased of John H. Kedzie the tract of land in controyersy. The nominal price was $34,095, of which $18,000 was paid in lands in Gallatin and Johnson counties, in this State, and which were sold by Kedzie for $800. This left $16,095. For the residue appellee gave one note for $13,638, payable to Kedzie, and the balance, $2547, was to be paid to Carr, for commissions. These notes were secured by a mortgage on the premises.

In September, 1860, appellee paid Kedzie $818.28, to be applied on the principal of the notes. Soon after this, Kedzie, learning that appellee was involved, and being himself pressed for money, proposed to take, in satisfaction of his debt, $7500 in cash, and it was arranged that appellee should raise $2500 from his own means and raise $5000 by mortgaging the land. Appellee came to Chicago, but brought only $1000 in money, which he paid Kedzie, and executed a note and mortgage to Elizabeth A. Turney, upon which to raise the $5000, and gave his note to Kedzie for $1500, the balance of the money to be paid under this new arrangement.

Kedzie, however, failed to raise the $5000 from Miss Turney, and had to retain this first mortgage himself. The $1500 note was to become due at the end of five years, with interest payable semi-annually. Kedzie, on the execution of these notes and mortgages for $6500, released appellee from the balance of his indebtedness. In February, 1861, he took an assignment of the note payable to Miss Turney to himself, and in the following April sold both notes to John Dempster, the father of one of the appellants, and received property therefor now proved to be worth from $50,000 to $70,000. On selling these notes, Kedzie retained the coupon for the first six months' interest, which appellee paid, and is all he ever paid on these last notes, and he never paid Dempster anything on them.

After some correspondence between Dempster and appellee, the former wrote the latter, Jan. 3, 1862, that the interest, then several months due, must be paid; and on the 16th of the same month he again wrote that he found it difficult to obtain money sufficient to pay taxes, and interest on $15,000 borrowed money; that he saw no possible way but to sell the land for what it would bring; “painful as this would be to me, because of the sacrifice it would be to you, I know of no other method of securing myself from sacrifice.” On the 25th appellee replied: “Had I been let alone, and allowed time and opportunity to have turned my property, I might have saved something; but, as it is, I suppose I shall have to give up the ship. I had hoped to save my Chicago house and 68 or 69 acres. * * * I have no money, nor can I say when I shall have.”

This closed the correspondence, but Dempster waited until in October following, and hearing nothing further from appellee, on the 31st of that month, two installments of interest being due, Dempster elected, under the terms of the note, to treat principal and interest as due, and had the land sold under the $1500 note and mortgage.

The sale was made by Kedzie, and, to enable him to do so, the name of Kedzie was erased from the back of the note, by agreement between Dempster and Kedzie, in order that Kedzie might sell and Dempster become the purchaser. At the sale Dempster became the purchaser, at $1500, and Kedzie made him a deed. After the sale, appellee did nothing for nearly seven years, when, in 1869, he instituted this suit to set aside the sale and to be let in to redeem. In the meantime, the West Side Park was located in the immediate vicinity, and produced an immense increase in the value of this property, which is shown now to be worth about $150,000.

The principal ground of relief relied on in the bill is, that the sale is voidable, because Dempster, still holding the debt, had the assignment of the note stricken out, to enable Kedzie to sell and he to purchase--that a person thus situated can not become a purchaser; and the court below took this view of the case, set aside the sale, and decreed a redemption. To reverse that decree, appellants bring the case to this court, and assign various errors.

The doctrine is, and can not be controverted, that when a party holds a promissory note by assignment, he and the assignor may, by agreement, strike out the assignment, and, by so doing, the legal title to the note, without reference to the equitable interest, will thus be restored or returned to the assignor. By erasing the indorsement, the legal title reinvests in the assignor, as effectually as if it had been re-indorsed to him.

Whilst the mere delivery of a note, on its sale, to the purchaser passes the equitable title to the instrument, still the legal title remains in the payee, if not indorsed, and if so, then in the last indorsee. The equitable title passes by delivery, but the legal title only by assignment, or its equivalent; and the striking out of an assignment is the equivalent of an indorsement to the next previous indorsee. It, then, follows, that when Kedzie's name on the note was erased, the legal title was vested in him for the use of Dempster, who, under the arrangement, was still entitled to all that might be realized on the note and mortgage.

We are at a loss to perceive how or for what reason Kedzie, after the title to this note became re-invested in him, was not empowered to legally make the sale and conveyance under the power in the mortgage. He, as we have seen, was fully invested with the legal title to the note; and appellee, when he made the mortgage, gave to him or to his assigns full power to conduct the sale, and to convey the premises to the purchaser. He held the power, and transferred it to Dempster by assigning the note to him, but he not having exercised the power, it was restored to Kedzie by striking out the assignment of the note. Kedzie was selected and intrusted by appellee, either to make the sale himself, if he chose, or to transfer the power to any person to whom he might indorse the note; and if, in the course of business, the note had been put into circulation, and been again returned regularly to Kedzie through the channels of business, either as indorsee or by having to take it up under his assignment, we presume no one would have doubted his power to sell and convey.

In what would such a case as that differ from this, so far as it involves the exercise of the power? The power was coupled with an interest, and was irrevocable. It would continue until the debt was extinguished or the power was exercised. If Kedzie could not exercise the power, who could? By striking out the indorsement and vesting the legal title to the note in Kedzie, Dempster divested himself of all power to sell. Had Kedzie again indorsed the note, would or could it be contended that such new assignee could not exercise the power? We think not. Then, if he could again transfer the power to another, what could prevent him from exercising it before such transfer? How could he confer power he himself did not possess? We, as a question of naked legal power, have no hesitation in saying that he was fully invested with it, and might legally make the sale under the authority conferred by the mortgage.

This brings us to the vital question in the case, and that is, whether Dempster, who was unable to become a purchaser whilst he held the legal title to the debt, by simply transferring the legal title to Kedzie, without consideration, and still retaining the equitable title to the proceeds, became...