Fridley v. Bowen
| Decision Date | 31 October 1879 |
| Citation | 5 Bradw. 191,5 Ill.App. 191 |
| Parties | BENJAMIN F. FRIDLEY, Impl'd,v.EDWIN A. BOWEN ET AL. |
| Court | United States Appellate Court of Illinois |
OPINION TEXT STARTS HERE
APPEAL from the Superior Court of Cook county; the Hon. S. M. MOORE, Judge, presiding. Opinion filed February 4, 1880.
Mr. R. G. MONTONY, for appellant; that where a note is taken for an antecedent debt, it will be presumed to have been taken in satisfaction of it, unless shown to have been intended as collateral security, cited White v. Jones, 38 Ill. 160.
The court should have found the note and mortgage paid, and dismissed the bill for that reason: Emery v. Kighan, 88 Ill. 483.
Fraud vitiates all contracts: Jamison v. Beaubien, 3 Scam. 113; Prevo v. Walters, 4 Scam. 35; 2 Story's Eq. § 1502.
Where both parties claim by equitable title, he who is prior in time has the better right: Boone v. Chiles, 10 Pet. 210; Anderson v. Roberts, 18 Johns. 532.
A bona fide purchaser must claim his advantage by way of defense: Beckman v. Frost, 18 Johns. 543; Boone v. Chiles, 10 Pet. 210; Peterson v. Dughle, Ambler, 192; Daniell's Ch. Pr. 674; Brown v. Welch, 18 Ill. 343.
Under the claim of a bona fide purchase, the consideration must not be an antecedent debt: Met. Bank v. Godfrey, 23 Ill. 604; Manning v. McClure, 36 Ill. 490.
Fridley's possession was notice of every claim which he might legally assert: Met. Bank v. Godfrey, 23 Ill. 604; Smith v. Heirs of Jackson, 76 Ill. 254.
A national bank cannot take a mortgage to secure a previous indebtedness to its president or to any other than the bank itself; the power must be exercised in conformity with the statutes: Met. Bank v. Godfrey, 23 Ill. 604; Fridley v. Bowen, 87 Ill. 157; People v. Supervisors, 4 Hill, 20; Gillett v. Moody, 3 Comst. 479; Head v. Providence Ins. Co. 2 Cranch, 50; Dartmouth Coll. v. Woodward, 4 Wheat. 636; Safford v. Wyckoff, 4 Hill, 443; Talmage v. Pell, 3 Seld. 340.
Mr. F. J. CRAWFORD and Mr. L. B. CROOKER, for appellees; that in considering a case in chancery on appeal, this court will consider only proper evidence, cited Pratt v. Pratt, 12 Chicago Legal News, 95.
The defendant is bound to apprise a plaintiff by his answer of his defense: Home Ins. and Banking Co. v. Meyer, 1 Syn. Rep. 220; 1 Daniell's Ch. Pr. 712.
He cannot avail himself of a defense not set up in his answer: Stanley v. Robinson, 1 Russ. & Myl. 527; Warren v. Warren, 30 Vt. 530; Burnham v. Dalling, 17 N. J. 134; Moors v. Moors, 17 N. H. 481; Woods v. Morrell, 1 John. Ch. 103; Harrison v. Borwell, 10 Sim. 382; Story's Eq. Pl. § 855.
As to the rights of a bona fide purchaser, and that a mortgagee taking a mortgage in good faith for a pre-existing debt is a purchaser: Robinson v. Rowan, 2 Scam. 499; Babcock v. Jordan, 24 Ind. 24; Work v. Brayton, 5 Ind. 396; Butters v. Haughwort, 42 Ill. 18.
The same rule applies to the purchaser of negotiable securities: Russell v. Hadduck, 3 Gilm. 233; Manning v. McClure, 36 Ill. 490; Doolittle v. Cook, 75 Ill. 354.
The circumstances under which the mortgage was given raise a strong equity in favor of the bank: First Nat. Bank v. Haire, 36 Iowa, 447; Burch v. Hubbard, 48 Ill. 164.
If one of two innocent parties must suffer, he who enabled another to commit the wrong must bear the loss: Gavagan v. Bryant, 83 Ill. 376.
A purchaser without notice of an equity is not affected by it: Moore v. Hunter, 1 Gilm. 317; Stampofski v. Hooper, 86 Ill. 321.
As to rule of application of payments: Hare v. Stegall, 60 Ill. 380.
Personally property attached to the estate should be sold as part of the estate mortgaged: Wood v. Wheeler, 1 Syn. Rep. 312.
On the eleventh day of December, 1876, appellee, Edwin A. Bowen, filed his bill in chancery in the Superion Court of Cook County, to foreclose a mortgage executed by Edmund D. Taylor, and his wife, Margaret Taylor, to secure Taylor's note to Bowen of that date for $10,000, payable one year after date at the First National Bank of Mendota, with interest at ten per cent. per annum. The bill alleges that Taylor was the owner in fee of the premises described in the mortgage, namely: the north nine feet of the west 112 1/4 feet of lot 10, and the south eleven feet of the west 112 1/4 feet of lot eleven, in Whitbeck's subdivision of the west half of Sec. 27, T. 39, N. R. 14, east of the 3d P. M., consisting of a dwelling house, barn, and the furnace, carpets and gas fixtures then in use in the house; the premises being known as No. 906 Michigan avenue, in the city of Chicago. The bill alleges that Benjamin F. Fridley, Alvin A. Patton and Edward H. Burdsall claim to have some interest in the premises, and makes them parties defendant with Taylor and wife.
The proceedings resulted in a decree of foreclosure, which was subsequently reversed by the Supreme Court, and the cause was remanded to the Superior Court for further proceedings. Fridley v. Bowen, 87 Ill. 157.
On the 16th day of September, 1878, Bowen and the First National Bank of Mendota filed an amended bill, in which they set forth that previous to the giving of the note and mortgage, Taylor had become indebted to the bank in the course of dealings between him and the bank, and that in consideration of such indebtedness, Taylor executed the note and mortgage in question, to secure ten thousand dollars of such indebtedness; that Bowen was the President of the bank, and that the note and mortgage were given for the use and benefit of the bank, and are held in trust therefor, and that the note is wholly unpaid. In other respects, the allegations of the amended bill are similar to those contained in the original bill.
All the defendants were defaulted except Fridley, who filed his answer setting forth, in substance, that on the 12th day of March, 1875, he was the owner in fee of the premises described in the mortgage, and that on that day he was induced to sell and convey, and did execute to Taylor a proper deed of conveyance therefor, in exchange for eighty thousand dollars of the capital stock of the Northern Illinois Coal and Iron Company of LaSalle, of which company Taylor was the President and the principal owner of its stock; that he was induced to make the exchange by the representations of Taylor that the company was in a flourishing condition and its stock very valuable; that it would soon go to par and pay large dividends; that soon thereafter he learned that Taylor's representations were false; that the company was insolvent and its stock valueless; that about the 15th day of April, 1875, he demanded of Taylor a re-conveyance of the property, and offered to return the stock; that Taylor promised to re-convey, and afterwards, on the 9th day of December, 1875, Taylor and his wife, in fulfillment of Taylor's promise, re-conveyed the property to Fridley; that at the time Fridley demanded of Taylor a reconveyance in April, Taylor informed him that he had borrowed $10,000 of the Mendota bank and had given a mortgage on the property to secure the same, which he promised to have removed.
The answer alleges that Fridley was in possession of the property at the time of his conveyance thereof to Taylor, and that he has ever since remained in possession of the same, and charges that his possession was notice to Bowen and the bank, as mortgagees, of his equitable right in the property. The answer further alleges that the note and mortgage were taken by the bank for a loan of money, and was in violation of the provisions of the act of Congress prohibiting national banks from loaning money on real estate security, and was therefore null and void. The answer concludes with a general denial of all matters alleged in the bill not otherwise answered, confessed or denied.
Replications were filed, proofs heard and a decree rendered in favor of complainant for $10,656.90, with the usual order of sale. Fridley brings the case to this court by appeal, and assigns for error among others, that the court erred in finding that there was due to complainant $10,656.90, or any part thereof. In the view we take of the case, this is the only error assigned we deem it necessary to consider.
We shall not enter into any analysis of the evidence in detail, portions of which are, to say the least, confused and obscure, and in some instances difficult of reconciliation with other portions; but after a careful examination of the testimony of Bowen and Taylor, the two principal witnesses sworn in the case, we think it sufficiently appears that the indebtedness represented by the note and mortgage was paid before the filing of the bill. It appears from the proofs that for some time prior to March 25th, 1875, the First National Bank of Mendota, had been in the habit of discounting E. D. Taylor's notes, and also drafts of the Illinois Coal and Iron Company, on various railroad companies for coal supplies, the drafts being endorsed by Taylor. The indebtedness of Taylor to the bank, as maker and endorser of these notes and drafts, amounted to $17,000 at the time the note and mortgage in question were executed, and was made up of the following items:
1. Note of E. D. Taylor, dated Dec. 30, 1874, $4,000.
2. Note of E. D. and C. F. Taylor, dated Feb. 15, 1875. $1,500.
3. Note of Northern Illinois Coal and Iron Company, endorsed by E. D. Taylor, dated Jan'y 8th, 1875, $3,000.
4. Draft of W. W. Taylor, Treasurer Northern Illinois Coal and Iron Company, on C. H. Harris, Rec'v'r C. D. & M. R. R. Co., dated March 13th, 1875, $2,000.
5. Draft of W. W. Taylor, Treasurer Northern Illinois Coal and Iron Company, on W. H. Purdy, Treasurer Chi. R. I. & Pac. R. R. Co., dated March 13th, 1875, $2,000.
6. Draft of W. W. Taylor, Treasurer Northern Illinois Coal and Iron Company, on C. W. Ackerman, Assistant Treasurer Ill. Cent. R. R. Co., dated March 13th, 1875, $4,500.
Total, $17,000. The drafts were all endorsed by E. D. Taylor.
Some days prior to the giving of the ten thousand dollar note and mortgage in question, Taylor had applied to the...
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