Dreger v. Boyer

• Decision Date: 13 December 1938
• Docket Number: Gen. No. 40021.
• Citation: 18 N.E.2d 87,297 Ill.App. 581
• Parties: DREGER v. BOYER ET AL.
• Court: United States Appellate Court of Illinois

297 Ill.App. 581

18 N.E.2d 87

DREGER

v.BOYER ET AL.

Gen. No. 40021.

Appellate Court of Illinois, First District, Second Division.

Dec. 13, 1938.

Appeal from Superior Court, Cook County; Walter T. Stanton, Judge.

Suit by Conrad M. Dreger against Harvey L. Boyer and others and Robert E. Anderson and another, minors, by Gustav O. Anderson, their guardian, and another, to foreclose a trust deed, wherein defendants Robert E. Anderson and another, minors, by Gustav O. Anderson, their guardian, and another filed counterclaim. From an adverse decree, the counterclaimants appeal.

Reversed and remanded, with directions. Otto Fetting, James H. Cronin, and Francis J. Cuneo, all of Chicago, and Henry N. Shabsin, of Oak Park, for appellants.

Cooney & Verhoeven and Joseph A. Weber, all of Chicago, for appellees.

BURKE, Justice.

On February 5, 1937, plaintiff (appellee) filed his complaint in the Superior Court of Cook county seeking to foreclose a trust deed executed December 24, 1926, by Harvey L. Boyer and Mabel A. Boyer, his wife, on real estate in Cook county, to secure the payment of eight promissory notes numbered from 1-A to 8-H, inclusive, the first two for $750 each, the next three for $500 each, and the last three for $4,000 each, notes 1-A and 2-B by their terms coming due December 24, 1929, and December 24, 1930, respectively, and notes 3-C, 4-D, 5-E, 6-F, 7-G and 8-H coming due December 24, 1931. There was no parity clause in the notes or trust deed. Plaintiff alleged that he was the owner of note 2-B and sought to foreclose as to the entire issue. He made the other noteholders parties by the name of “Unknown Owners.” Plaintiff proved, and the decree found, that he also owned principal note 1-A. Defendants Robert E. Anderson and Virginia I. Anderson, minors, by Gustav O. Anderson, their guardian, and James Murphy, who are appellants herein, filed answers and counterclaims and asserted therein that they were the owners of notes 7-G and 8-H and that the other six notes were extended by agreement beyond the maturity dates of notes 7-G and 8-H. Counterclaimants maintain that the extension of the other notes to a date beyond the maturity of notes 7-G and 8-H, all being secured by the same trust deed (containing no parity clause), postpones the right of the holder to receive payment of his debt from the security until the prior maturing notes are paid. The cause was referred to a master in chancery, who reported to the court that note 1-A was on December 24, 1929, by agreement extended to December 24, 1930, and on said day the time for payment was extended to December 24, 1931; that the time for payment of note 2-B was on December 24, 1930, by agreement extended to December 24, 1931, and on the latter day was again extended for a period of three years; that the time for payment of note 3-C was on December 24, 1931, extended for a period of three years; that the time for payment of note 4-D was extended from time to time, the last time on December 6, 1934, for a period of four years; that note 5-E was paid and canceled; that there was paid on account of the principal of note 6-F the sum of $500, reducing the principal balance to $3,500, and the time for payment of the note was extended from time to time, the last time on December 24, 1934, for a period of four years; that the time for payment of principal notes 7-G and 8-H (owned by appellants) was never extended, and that the schedule of due dates on the unpaid notes as extended as found by the master is: “Note 1A due December 24, 1931; Note 2B due December 24, 1934; Note 3C due December 24, 1934; Note 4D due December 24, 1938; Note 6F due December 24, 1938; Note 7G due December 24, 1931; Note 8H due December 24, 1931.” The master found that the notes were on a parity. Plaintiff filed an objection to the master's report, which reads: “For that the said Master has found that there was an attempt made by the Citizens State Bank of Chicago, acting as agent for the owners and holders of the unpaid notes, to extend certain of said notes, as they became due, and that some of said extensions were accepted by the owners and holders while other noteholders did not acquiesce; when in truth and in fact the Master should have found that the legal holder of the premises never agreed to any extension, and no valuable consideration was suggested or proven with reference to any of the notes. The Master's conclusion, however, in this regard, is correct, but the finding as to the evidence is not in accordance with the facts.” The conclusion of the master is that some of the extensions were accepted by the noteholders while others did not accept the extensions. The counterclaimants also filed objections. In addition to objecting to the finding that the notes were on a parity counterclaimants objected to a finding by the master that the counterclaimants as noteholders were not entitled to have an allowance made for their attorneys' fees, and asked that the report be amended so as to allocate the fees to be allowed to plaintiff and to such holders and owners of notes as had made proof showing that they were entitled to attorneys' fees. The master overruled the objections. On October 18, 1937, the following order was entered: “This cause coming on to be heard upon the motion of Cooney and Verhoeven, attorneys for the plaintiff, Conrad M. Dreger, to approve the Master's report and decree of sale, and it appearing to the Court that objections were filed to the Master's report by James Murphy and Gustav O. Anderson, guardians of the estate of Robert E. Anderson and Virginia F. Anderson, by their attorneys, and the Court having jurisdiction of the subject matter hereof and being fully advised in the premises, Does Hereby Order, Adjudge and Decree, that the said objections be and the same are hereby made exceptions to the said reports and decree of sale, and hearing on said exceptions are hereby set down on the eighth day of December, 1937, at 11 A. M.” Thus it will be observed that the objections of counterclaimants were allowed to stand as exceptions but that no further action was taken on the objection of plaintiff. In that state of the record the assumption is that plaintiff had no criticism of the report of the master. After argument on the exceptions of counterclaimants a decree was entered substantially as recommended by the master, to reverse which this appeal is prosecuted. Appellees asked leave to file a reply to the reply brief, which leave was denied. The proposed brief was attached to the motion. In order to be sure that we did not overlook any points, however, we read the proposed brief.

Counterclaimants urge that the extension of time for the payment of one note of a series, secured by the same trust deed, containing no parity clause, postpones the right of the holder to receive payment from the security until the prior maturing notes are paid. The general rule in this state is expressed in the following language from Kuppenheimer v. Chicago Title & Trust Co., 163 Ill.App. 127, 134-135:

“The rule that in the absence of an agreement to the contrary, notes are payable from the proceeds of the sale of mortgaged property in the order of their maturity, is predicated upon the fact that the holder of the note first maturing may foreclose upon non-payment without waiting for the succeeding notes to mature. Sargent v. Howe, 21 Ill. 148;Gardner v. Diederichs, 41 Ill. 158. In the case last cited it was said: ‘The power to do this implies a priority of lien in the notes first falling due.’

“When the notes and trust deeds here involved were executed it may reasonably be presumed that the parties intended that the several notes would be paid at maturity. This was the contract, and we perceive nothing in the default clause which evidences a contrary intention. The provision whereby the holders of the notes were authorizedto declare the notes to be due before their maturity by their terms only became operative in the event that the mortgagor and...