Home Sav. Bank of Chicago v. Bierstadt

• Decision Date: 01 November 1897
• Citation: 168 Ill. 618,48 N.E. 161
• Parties: HOME SAV. BANK OF CHICAGO et al. v. BIERSTADT.
• Court: Illinois Supreme Court

168 Ill. 618

48 N.E. 161

HOME SAV. BANK OF CHICAGO et al.

v.BIERSTADT.

Supreme Court of Illinois.

Nov. 1, 1897.

Appeal from appellate court, First district.

Bill by Mary Stewart Bierstadt against the Home Savings Bank of Chicago, C. K. G. Billings, trustee, and others, to foreclose a trust deed. From a judgment of the appellate court (68 Ill. App. 656) affirming a decree in favor of complainant, the defendants named appeal. Affirmed.

Winston & Meagher (James F. Meagher and Silas H. Strawn, of counsel), for appellants.

James E. Munroe, for appellee.

On the 30th day of June, 1892, William K. Lowrey was the owner of seven certain lots in a subdivision of land laid out bu him at the northeast corner of Western and Park avenues, in Chicago; and on that date he executed to William J. Goudy, of the firm of Goudy, Shanklin & Co., trust deeds upon each of these lots, to secure a gross sum of $22,450, with interest at 6 per cent., and with a provision that, if default should be made in any installment of interest, the entire sum might, at the option of the holder, become due and payable. Each of these seven trust deeds was recorded in the recorder's office of Cook county, Ill., July 21, 1892, and then became a first lien upon the lots mentioned. On August 10, 1892, Lowrey executed a trust deed to one C. K. G. Billings, conveying lots 1, 2, and 3, referred to, to secure a note for $5,250, payable to the Home Savings Bank of Chicago one year after date. This trust deed, dated July 1st, was not delivered until August 19, 1892, and on the following day was filed for record in the recorder's office. On October 22, 1892, the firm of Goudy, Shanklin & Co. became dissatisfied with the Lowrey loans which they held, and desired him to take them up by procuring a new loan. A written agreement was entered into, which recited that Lowrey was indebted to them in the sum of $25,300, of which $25,000 was secured by the trust deed mentioned, and that an attachment was levied against the seven lots for the small amount reciting, further, that Lowrey should apply to Horace A. Hurlbut for a first mortgage loan of $25,000 for the seven lots mentioned; and, to induce the same, Goudy, Shanklin & Co. agreed to pay the commission Hurlbut should charge, together with expenses of examination of abstract. The loan was requested by, and the money was paid, Goudy, Shanklin & Co., at Lowrey's request. It was also agreed that Goudy, Shanklin & Co. should join with Lowrey in a bond to remove the small attachment lien upon the property. Hurlbut made the loan, and received from Lowrey an abstract of title brought down to include the 28th of October, 1892, being the date his trust deed was recorded. This abstract did not show the deed of trust from Lowrey to Billings, which was given to secure the note of appellant. Upon the showing of this abstract, Hurlbut, who was acting for and negotiating the loan for appellee, paid to Goudy, Shanklin & Co. $25,000, whereupon the trust deeds held by them were released. Appellee had no notice of the deed of trust from Lowrey to Billings until June, 1895, when she filed her bill to foreclose the trust deed given to Hurlbut for her benefit. Her bill charged the loan was made and obtained for the purpose of paying off the seven trust deeds heretofore mentioned, and further charged that at the time of the execution and recording of the trust deed made by Lowrey to Billings, to secure the note of the Home Savings Bank, both Billings and the bank knew of the trust deeds to Goudy upon the lots conveyed to Billings, and took their deed of trust subject to that of Goudy. The bill set forth the payment by her, through Hurlbut, of the Goudy trust deeds, without any notice on her part of the existence of the Billings trust deed, and that her loan was made to Lowrey, with the full belief that it was a first loan, and for the sole and single purpose of discharging the Goudy trust deeds. She asks in her bill that her trust deed should be declared to be a first lien, and, in equity, she be declared to be entitled to be subrogated to the Goudy, Shanklin & Co. deeds. To that part of her bill in which she alleges the knowledge of Billings and appellant of the existence of the Goudy deeds, and the making of the loan for the purpose of satisfying those notes and deeds of trust, at the request of Lowrey, appellant filed its demurrer. The demurrer was overruled, and appellant elected to stand by it, whereupon the parts of the bill demurred to were taken as confessed. The case was referred to a master, who found the allegations of the bill true, and reported that appellee was entitled to a first lien upon those lots, prior to the Billings trust deed. The amount due appellee was found by the master, and a decree entered accordingly, which, on appeal to the appellate court, was affirmed, and this appeal is prosecuted.

PHILLIPS, C. J. (after stating the facts).

Subrogation as a principle of equity jurisprudence is generally confined to the relation of principal and surety and guarantors, or to a case where a person is compelled to remove a superior title to that held by him in order to protect his own, and also to cases of insurers. The general principle of subrogation is confined and limited to these classes of cases. Borders v. Hodges, 154 Ill. 498, 39 N. E. 597;Bishop v. O'Conner, 69 Ill. 431. While these general heads include the doctrine and principles of subrogation, that doctrine has been steadily expanding and growing in importance and extent in its application to various subjectsand classes of persons. This equitable principle is enforced solely for the accomplishment of substantial justice where one has an equity to invoke which cannot injure an innocent person. The right to subrogate which springs from the mere fact of the payment of a debt, and which is included under the heads first above stated, as including the equitable principles of subrogation, is what is termed ‘legal subrogation,’ and exists only where included within these classes. But, in addition to this principle of legal subrogation, there exists another principle, which is termed ‘conventional subrogation,’ and which results...