Johnson v. Hefferan

• Decision Date: 12 February 1937
• Docket Number: No. 23751.,23751.
• Citation: 365 Ill. 359,6 N.E.2d 638
• Parties: JOHNSON v. HEFFERAN et al.
• Court: Illinois Supreme Court

365 Ill. 359

6 N.E.2d 638

JOHNSON

v.HEFFERAN et al.

No. 23751.

Supreme Court of Illinois.

Feb. 12, 1937.

Suit by John J. Johnson against William S. Hefferan and others.From an order dismissing the complaint as to certain defendants, plaintiff appeals.

Cause transferred to the Appellate Court for the First District.Appeal from Circuit Court, Cook County; Stanley H. klarkowski, judge.

Joseph E. Snowden and Heber T. Dotson, both of Chicago, for appellant.

William Annan Taylor, of Chicago (George Gillette and Elmer M. Leesman, both of Chicago, of counsel), for appellees.

WILSON, Justice.

John J. Johnson, hereafter called the plaintiff, filed in the circuit court of Cook county a complaint seeking to have a trust imposed on certain real estate originally owned by the plaintiff subject to two mortgages.By the prayer of the complaint the plaintiff also requested an accounting and offered to pay the defendants whatever sum or sums may be decreed to be due them.The complaint was twice amended and is referred to in the briefs as the second amended complaint.It will hereafter be called the complaint.A large number of persons and certain corporations were made defendants.Certain of the defendants made a motion in pursuance of section 45 of the Civil Practice Act(Smith-HurdIll.Stats. c. 110, § 169) to dismiss the complaint, and also interposed separate special grounds of objection to certain of its allegations.The chancellor dismissed the cause as to the defendants who joined in the motion.From that order the plaintiff has prosecuted an appeal direct to this court.

The plaintiff is a resident of Chicago.On July 10, 1925, he was the owner of two lots and an apartment building thereon in Chicago.William H. Butterfield, the owner of a junior mortgage against the property, instituted a foreclosure proceeding.The plaintiff(the defendant in that proceedings) failed to redeem within the twelve-month period allowed him by law.Thereafter the plaintiff entered into a contract with Butterfield, the purchaser at the foreclosure sale, to acquire the master's certificate of sale and to reacquire the property.The complaint recites that ‘the plaintiff agreed to buy the said master's certificate at the price and condition offered by William H. Butterfield.’The plaintiff employed George C. Adams as his attorney.The plaintiff and Adams, on October 8, 1928, entered into a contract which recited the fact of the foreclosure proceeding; that the period of redemption would expire on or about October 9, 1928; that the plaintiff was unable to redeem; that, in consideration of legal services rendered and to be rendered to the plaintiff, Adams was authorized to effect an arrangement, if he could do so, permitting a redemption and financing of the property for which Adams should receive 50 per cent. of ‘said sum or sums that can be realized out of said property’; that the title to the property was to be taken in trust by the Chicago Trust Company‘for the benefit of the interested parties.’The contract was recorded on November 9, 1928.

The plaintiff claims that by reason of the two contracts and the other transactions recited in the complaint he acquired the equitable ownership of the property.The complaint consists of many allegations, all but two of which are of considerable length.Only the substance of the allegations necessary to be considered will be here stated.In addition to the facts above set forth, it is alleged that subsequent to the execution of the contract between the plaintiff and Adams the latter exhibited the contract to certain officers of two banks, and upon their inspection of the premises a new loan, to be secured by a mortgage on the premises, was arranged to be made with the funds of one of the banks.Certain conditions were imposed by the maker of the loan, namely, that a person other than the plaintiff, and against whom there were no judgments (to be named by Adams), should take title; that such nominee should execute notes for $50,000 secured by a mortgage on the property; that Adams should give his personal note for $50,000 to the Exchange State Bank of Chicago; and that the bank should take the mortgage notes mentioned as collateral for Adams' personal note.Upon the fulfillment of those conditions the Exchange State Bank of Chicago would pay the necessary money to Butterfield, the purchaser at the foreclosure sale.The title to the property was to be transferred to the person named by Adams, and the person so designated should execute a deed in trust to the Chicago Trust Company as additional security for the loan.

The complaint alleges that Adams procured his stepson, Siegel E. Young, to take the title to the property, and on October 10, 1928, a master's deed was issued to Young, and on the same date Young signed a trust deed to the Chicago Title & Trust Company to secure notes for $50,000.On the following day Young conveyed the property to the Chicago Trust Company by a deed in trust subject to a trust agreement numbered 2419 which purported to have been made for the sole benefit of the Exchange State Bank of Chicago.

The complaint alleges that Young paid no consideration for the conveyance of the premises in question and has not made any claim thereto; that Adams, Young, the president and vice-president of the Exchange State Bank of Chicago and the vice-president of the Chicago Trust Company(the same person as the vice-president of the Exchange State Bank of Chicago), each knew that the plaintiff was the equitable owner of the option to purchase the premises described and that Young was taking title thereto as trustee for the benefit of the plaintiff and that each of the persons named knew that Butterfield was selling the premises for the amount involved because of the latter's desire to aid the plaintiff, who had been defrauded in previous transactions by third persons, and which made it necessary for Butterfield to foreclose.The complaint alleges that on April 20, 1929, the Exchange State Bank of Chicago authorized the Chicago Trust Company, trustee, to execute a deed to Charles J. Burleigh for the premises, and the deed was so executed; that the bank held the premises as security for the loan to Adams, and that the Exchange State Bank of Chicago and the persons heretofore mentioned had notice of the interest of the plaintiff and Adams in and to the premises, but that such conveyance was without the knowledge and consent of the plaintiff; that on the same date Burleigh executed an instrument in which he acknowledged that he was holding title to the property in trust for the Exchange State Bank of Chicago; that on April 29, 1929, Burleigh executed two mortgages, one for $60,000 and one for $30,000, the first mortgage conveying the premises to Hefferan, trustee, and the second to the Chicago Title & Trust Company, as trustee, to secure a note in that amount; that the property was then encumbered with a prior first mortgage for $50,000 which had been paid, but the mortgage had not been released of record; that on January 24, 1930, Burleigh, trustee, conveyed to William J. Rathje, receiver of the Exchange State Bank of Chicago, his interest in the property, and that Rathje took with knowledge of the character of Burleigh's title, and that Hefferan, trustee in the mortgage for $60,000, knew or could have known, from the transactions and conveyances by and between the respective parties, of the interest of the plaintiff.

The complaint recites the conveyance by Rathje, receiver, to Henry R. Otto, but alleges that Otto was then an agent and employee of Rathje; that Otto succeeded Rathje as receiver of the Exchange State Bank of Chicago upon the death of Rathje; that Otto, while acting as receiver, sold the collateral note of Adams, with the remaining security, to Hefferan for $1,120, but without any court order, and title to the premises was taken by one John H. Cougle, the husband of Mary Stocker Cougle(sometimes known as Mary E. Cougle), secretary to Hefferan.Cougle died, leaving surviving his widow, Mary Stocker Cougle, and five sisters named in the complaint.

The complaint alleges that the plaintiff did not have knowledge of all the facts, conveyances, and transactions with reference to the property at the time they transpired; that the plaintiff's attorney did not inform the plaintiff that...