Franklin Sav. Bank v. Taylor

• Decision Date: 18 January 1893
• Docket Number: 5.
• Citation: 53 F. 854
• Parties: FRANKLIN SAVINGS BANK et al. v. TAYLOR et al.
• Court: U.S. Court of Appeals — Seventh Circuit

53 F. 854

FRANKLIN SAVINGS BANK et al. v. TAYLOR et al.

No. 5.

United States Court of Appeals, Seventh Circuit.

January 18, 1893

Swift Campbell, Jones & Martin, for appellants.

Robert B. Kendall, (Charles E. Pope and George R. Grant, of counsel,) for appellees.

Statement by WOODS, Circuit Judge:

The principal facts have been well stated by Judge Blodgett in his opinion--50 F. 289-- as follows:

'This is a bill to review, reverse, and set aside a decree of foreclosure, entered in this court on the 30th of April 1880, under which defendant claims title to lots 1, 4, and 5 of the subdivision of lot 4, in block 16, in Bushnell's addition to the city of Chicago; and also to set aside a sale made July 15, 1881, under a decree for a mechanic's lien, in favor of Gilsdorff and others, entered in the circuit court of Cook county, July 20, 1874. * * * The facts, as they appear from the proof, and which are not disputed, are that on the 13th of June, 1871, Maria louise Taylor, being seised in fee of all of lot 4, in block 16, in Bushnell's addition to Chicago, joined with her husband, Frank C. Taylor, in the execution of a deed of the premises to Ira Scott, to hold upon certain trusts, in the deed set forth, which trusts, so far as it is necessary to state them for the purposes of this case, were that the property was to be held for the benefit of Mrs. Taylor and the children of the marriage between Frank C. Taylor, her husband, and herself, except that in the event of the death of Mrs. Taylor and of the children, before the youngest child had reached the age of twenty-one years, Mr. Taylor, or his heirs, should become entitled to the remainder of the estate. The deed of trust contained an express provision 'that no lien, incumbrance, or charge shall be created on said premises;' and although there was a provision in the trust deed that the trustee might sell some portion of the premises for the purpose of improving that which was unsold, yet the provision was so guarded as to prohibit the creation of any lien, incumbrance, or charge upon the unsold portion of said premises. At the time the deed was made, there was a house upon the premises, which was occupied by Mr. and Mrs. Taylor as their home, this house covering only a comparatively small part of the lot. When this trust was created, three children had been born to Mr. and Mrs. Taylor, and four have since been born, and this bill was filed by the three youngest of the seven children; the three oldest having arrived at lawful age since this bill was filed, and the other four are still minors.

'By the great fire of October 8 and 9, 1871, the house upon the trust premises was destroyed, and the public records of deeds of land titles in the city were also destroyed, and the trust deed itself was for several years supposed to have been destroyed by the same fire, although it had been duly recorded within a few days after its date. In January, 1872, Mr. Taylor borrowed the sum of $30,000 from the Franklin Savings Bank, the principal defendant in this case, for which he gave his own note, payable one year after date; and, to secure the payment of that note, he and his wife executed to Edward Brown a trust deed upon the whole of said lot 4, in block 16. The money so borrowed by Taylor was used in building upon the trust premises a block of five dwelling houses, which cost about $53,700. In January, 1873, Taylor and his wife filed a petition in the superior court of Cook county, under the provisions of what is known as the 'Burnt Records Act' of this state, alleging the making and recording of the deed of trust, the destruction of the records, and the loss of the deed itself, and praying an establishment and confirmation of the trust deed and its terms, as set out in said petition; and such proceedings were had under this petition that on the 19th of March, 1873, a decree was entered establishing and confirming what was found, from the proof, to be a substantial copy of the trust deed, but in fact omitting the clause which provided that no lien, incumbrance, or charge should be created on the premises, and containing, in place of that clause, a clause that authorized the trustee to make liens for the purpose of rebuilding, etc. After the entry of this decree, Scott, the trustee, and Taylor and wife made a subdivision and plat of said lot 4, dividing the same into five sublots, numbered from 1 to 5, inclusive. On the 22d day of July, 1873, Mr. Scott declined to act longer as trustee, and Taylor and wife filed a bill in the superior court of Cook county for the appointment of another trustee, and that such new trustee be empowered to make a loan of money sufficient to reimburse them for the fair value and cost of the improvements made on said lots; and a decree was on the 19th of August, 1873, entered appointing Charles H. Mulliken, trustee, as successor to Mr. Scott, and authorizing him to make a loan to pay Mr. and Mrs. Taylor the cost of the improvements made on the lots, not to exceed $53,700. Mr. Mulliken accepted the trust, and on the 23d of August made four trust deeds, covering sublots 1, 2, 4, and 5 of said subdivision, to Francis S. Howe, trustee, to secure the payment of four notes of $9,000 each given by Mulliken and Mr. and Mrs. Taylor to the Franklin Savings Bank; and on the 1st of January, 1874, Mulliken, the trustee, and Mr. and Mrs. Taylor joined in the execution of another trust deed to Francis S. Howe, to secure the individual note of Taylor to the Franklin Savings Bank for $2,875. The proceeds of the four first-mentioned trust deeds were used to take up the $30,000 loan made by Taylor from the bank in June, 1872, and the last-mentioned trust deed for $2,875 was to secure a personal indebtedness of Taylor's to the bank, not growing, as the proof shows, out of the rebuilding.

'In September, 1873, a petition for a mechanic's lien was filed by Henry Gilsdorff for labor and materials used in the construction of the block of new buildings, in which petition other contractors intervened. This case came to hearing in July, 1874, and resulted in a decree establishing liens on the premises in favor of Gilsdorff and those who had intervened with him, which decree was afterwards affirmed by the supreme court of this state at the September term, 1874. 74 Ill. 354. In June, 1876, the Franklin Savings Bank filed in this court a bill to foreclose the four trust deeds of August 23, 1873, which, after default of some of the adult defendants, and answers by the guardian ad litem of the infant defendants, was in May, 1877, referred to a master to take proofs and report. In June, 1877, the original deed of trust to Scott was found, and very soon thereafter bills of review were filed in the case under the burnt records act, and in the suit brought for the appointment of a new trustee in the place of Scott, and in which the decree appointed Mulliken trustee, and authorized him to make the loan to pay for building the five houses, which bills of review resulted in decrees setting aside the former decrees in those cases; but the decree in the case under which Mulliken was appointed trustee contained a clause that nothing therein ordered or contained should deprive the Franklin Savings Bank, or Howe, the trustee in the said trust deeds, of any interest they, or either of them, might have in the trust estate, the claims of the bank and said Howe not having been heard or adjudicated.

'After the original trust deed was found, the bank filed a supplemental bill in the foreclosure case, which was answered. Before a report was made by the master, terms of settlement or compromise were made between the bank and the guardian ad litem of the infant defendants then in court, which included all the children then born, and all the children of the parents, except Margaret, the youngest. By this compromise the children were to have one of the sublots and the house thereon, free and clear of all incumbrance. On the 29th of April, 1880, a decree of foreclosure was entered in the foreclosure suits in pursuance of the terms of this agreement, which by its terms was a foreclosure of the four trust deeds on sublots 1, 2, 4, and 5, respectively, and of the trust deed securing the $2,875 (Taylor's individual debt) on the whole four lots, and a sale was directed to be made by one of the masters of the court of the sublots 1, 2, 4, and 5 to pay the amount found due by said decrees on the respective trust deeds; the lien of the several trust deeds on the premises, covered by them, respectively, being found by the decree to be subject to the prior mechanic's lien established by the decree in the Gilsdorff Case.

'A sale was made under this decree on the 16th of June, 1880 and each house and lot sold to the bank, and certificates of purchase given by the master to the bank as such purchaser; and afterwards, to consummate the settlement made with the guardian ad litem of the infant children, the certificate of purchase for lot 2 at such master's sale was assigned to the guardian ad litem, and by him assigned to the six children then born, and a deed was in due time made to them by the master, and a deed was also made to the bank of lots 1, 4, and 5. After the affirmance by the supreme court of the decree in the mechanic's lien case, the bank purchased the decree in that case, and was the owner of such decree at the time of the entry of the decree in the foreclosure case, and at the time of the alleged compromise and settlement; and on the 15th of July, 1881, a sale was made under the mechanic's lien decrees, and the defendant H. H. Thomas, who was then the president of the bank, became the purchaser of the three sublots 1, 4, and 5; and it is admitted that this purchase was made by Mr. Thomas for the bank, and that ...