Error to appellate court, First district.
Bill by John Farson, trustee, to foreclose a deed of trust. The facts in the case appear in the following extract from the opinion of the appellate court, (BAILEY, P. J.:)
‘On the first day of May, 1881, Preston, Kean & Co., by their agent, James Payne, entered into a contract in writing with Gilbert A. Colby, whereby they demised to him block four in Hubbard, Crocker & Stone's subdivision, etc., in Cook county, on which were situated certain smelting works, for the term of three years, reserving as rent the sum of $100 per month during the term; and in and by said contract said Preston, Kean & Co. agreed to sell, and said Colby to purchase, said premises within said three years, for $15,000, of which sum $5,000 was to be paid down, $5,000 in one year, and $5,000 in two years, with interest at the rate of six per cent. per annum on the deferred payments, said payments to be secured by a mortgage or deed of trust on the premises; and it was provided that on the payment by Colby of $5,000, the rent under the agreement was to cease; but in case of his failure or refusal to make the purchase, the agreement might be enforced against him, and Preston, Kean & Co. might retain, as liquidated damages for the breach of the contract, all the machinery and improvements put on said premises by him. By the same instrument Preston, Kean & Co. also agreed to sell, and said Colby to purchase, lots six, seven, and eight, in block four, in Day's subdivision, etc., in said county, for $1,300, and interest from the date of the contract at the rate of six per cent. per annum, such payment to be made within one year from that date.
‘After the execution of the contract Colby formed a copartnership with his son and one Gardner, under the firm name of Colby, Gardner & Co., for the purpose of manufacturing plows; and said firm thereupon took possession of said property under said contract, and placed upon it a considerable amount of machinery and other improvements. On the thirty-first day of May, 1881, said firm borrowed of Preston, Kean & Co. the sum of $3,000 for ninety days, and gave their promissory note therefor, and on or about the first day of October, 1881, the firm failed, being then indebted to Preston, Kean & Co. for the full amount of said loan, and for the further sum of $200 rent for said premises then in arrears. It being impossible at that time, as it seems, for Colby or his firm to pay said indebtedness or any portion of the purchase money of said premises, it was arranged between him and Preston, Kean & Co. that the latter should at once convey said premises to Colby, and take back from him a deed of trust securing the entire purchase money, and also the indebtedness for borrowed money and for rent. This arrangement was carried out, both instruments being dated October 1, 1881. The deed of trust, which run to John Farson, as trustee, secured four promissory notes of even date therewith, executed by Colby, payable to his own order, and by him duly indorsed, all drawing interest at the rate of seven per cent. per annum, payable annually, one being for $4,500, due six months after date, and the other three for $5,000 each, and maturing respectively on the first day of May in the years 1884, 1885, and 1886. It was further provided in the deed of trust that in case of default in the payment of the principal or interest, or any part thereof, the whole of the note should, at the election of the holder, become due and payable.
‘At the time of executing the deed of trust, the firm of Colby, Gardner & Co. sold, assigned, and transferred to Preston, Kean & Co. all their stock, materials, machinery, and personal property then on said premises, it being agreed that the same should be sold and the proceeds applied to the payment of the note for $4,500, in which was embraced the indebtedness for borrowed money and for rent. Preston, Kean & Co. afterwards took possession of said personal property, and sold a portion of it, realizing $436.15. Gardner thereupon filed his bill for a dissolution and settlement of the partnership, making Preston, Kean & Co. parties; and a receiver being appointed in that suit, Preston, Kean & Co. turned over to him the residue of the personal property in their hands, and he afterwards sold it under an order of the court for $311.45. The receiver also sold the interest of the firm in said real estate for $345, said sale taking place April 1, 1882, Allen Breed being the purchaser, and said sale was afterwards confirmed by the court. Breed then entered into possession of said real estate, and held possession thereof by himself and tenants until after the commencement of the present suit. The present bill was filed by John Farson, the trustee, to foreclose said deed of trust. The bill alleges that said Colby, on executing and indorsing said notes, delivered them to Preston, Kean & Co., and that they indorsed and delivered the same to Frederick W. Hayes, and that he was then the owner and holder thereof, and that neither of said notes nor any part thereof had been paid, and that said Hayes, by virtue of the therms of the deed of trust, had elected to declare all of said notes due and payable. It appears, however, that prior to the decree said notes had become the property of Preston, Kean & Co. The bill further alleged that said Colby was wholly insolvent, and had departed from this state, and that said premises were insufficient security for the money due on said notes.
‘Charles T. Gorham, the appellant, was made a defendant, under an allegation that he had or claimed some interest in the mortgaged premises, or some part thereof, as purchaser, mortgagee, or otherwise, but that such interest was subsequent to the lien of said deed of trust and subject thereto. A receiver was appointed shortly after the filing of the bill, at the instance of the complainant, who rented the mortgaged premises by order of the court to one Lamb, who went into possession thereof and paid rent therefor. Gorham afterwards appeared and answered, alleging that on the tenth day of October, 1879, he recovered a judgment in the superior court of Cook county against said Colby for $5,500 and costs, and immediately caused execution to be issued thereon; that upon the purchase of said mortgaged premises by Colby, said judgment became a lien thereon, and that said Gorham, on the fourteenth day of February, 1883, caused said premises to be sold under said judgment, and became the purchaser, and received a sheriff's certificate of purchase therefor; and that on the twentieth day of May, 1884, said premises not having been redeemed from said sale, said Gorham received a sheriff's deed therefor. [See Breed v. Gorham, 108 Ill. 81.] Gorham subsequently moved that the receiver be discharged, and the possession of said premises be turned over to him, and an order was entered on said motion, providing that on Gorham's entering into a bond to the complainant in the sum of $5,000, conditioned to account to the court for all moneys derived from the use of said premises, and also conditioned that said Gorham should ratify the lease to Lamb, or else that the obligors should be liable for the rent of the premises at the same rate as reserved in said lease, the receiver should surrender the possession of said property to Gorham. In compliance with this order, Gorham filed his bond, which was approved. The order discharging the receiver and awarding possession of the premises to Gorham was brought to this court by writ of error, and by order of this court said writ was made a supersedeas. The writ of error was afterwards dismissed by this court, and such order of dismissal was thereupon taken to the supreme court by writ of error, which writ was in like manner made a supersedeas by that court, and was pending at the time of the final hearing and decree in this case in the court below. [Since decided. See Farson v. Gorham, 7 N. E. Rep. 104.] By the decree, the deed of trust was declared to be a lien, as against the title of Gorham, derived through his judgment and execution sale, on lots six, seven, and eight, in block four, in Day's subdivision, etc., only to the extent of $1,300, and interest thereon at the rate of six per cent. per annum, from May 1, 1881, making $1,642.35, and on block four in Hubbard, Crocker & Stone's subdivision, etc., only to the extent of $15,000, and interest thereon at the rate of six per cent. per annum from October 1, 1881, making $18,825; and it was ordered that said Gorham might redeem said premises within thirty days from the date of the decree by the payment of said sums, and six per cent. interest thereon from that date, and that, in default of such redemption, said premises should be sold by the master, and the proceeds applied to the payment of costs and expenses of sale and the satisfaction of said first liens created by said deed of trust, and the surplus brought into court. By a subsequent order modifying said decree it was provided that if any other person than Preston, Kean & Co., the holders of the lien under the trust deed, should become the purchaser, all the proceeds of the sale, after paying costs, disbursements, etc., should be brought into court to await its further order.’
The decree of the circuit court was affirmed, and thereupon Gorham took this writ.
The lien of Gorham's judgment attached to Colby's rights under the land contract as soon as it was made. Breed v. Gorham, 108 Ill. 81;Rogers v. Brent, 5 Gilman, 573;Tinney v. Wolston, 41 Ill. 215;Niantic Bank v. Dennis, 37 Ill. 381;Ryhiner v. Frank, 105 Ill. 327;Welsh v. Richards, 41 Mich. 593;S. C. 2 N. W. Rep. 920; Freem. Judgm. (2d Ed.) § 357; Lippencott v. Wilson, 40 Iowa, 426;Lathrop v. Brown, 23 Iowa, 49;Blaney v. Hanks, 14 Iowa, 403;Denegre v. Haun, 13 Iowa, 240.
Complainant's bill...
