Gorham v. Farson

• Decision Date: 31 March 1886
• Citation: Gorham v. Farson, 18 Ill.App. 520, 18 Bradw. 520 (Ill. App. 1886)
• Parties: CHARLES J. GORHAMv.JOHN FARSON ET AL.
• Court: United States Appellate Court of Illinois

18 Ill.App. 520

18 Bradw. 520

CHARLES J. GORHAM

v.JOHN FARSON ET AL.

Appellate Court of Illinois, First District.

March Term, 1886.

OPINION TEXT STARTS HERE

APPEAL from the Superior Court of Cook county; the Hon. HENRY M. SHEPARD, Judge, presiding.Opinion filed April 28, 1886.

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 31st 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 1st 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 1st 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 notes 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. afterward 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 afterward 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 afterward 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 terms 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...