Laughlin v. Calumet & Chicago Canal & Dock Co.

• Decision Date: 26 January 1895
• Docket Number: 195.
• Parties: LAUGHLIN v. CALUMET & CHICAGO CANAL & DOCK CO. et al.
• Court: U.S. Court of Appeals — Seventh Circuit

65 F. 441

LAUGHLIN v. CALUMET & CHICAGO CANAL & DOCK CO. et al.

No. 195.

United States Court of Appeals, Seventh Circuit.

January 26, 1895

The only appellee concerned in this appeal is the Calumet &amp Chicago Canal & Dock Company, hereinafter called the 'Dock Company.' On February 12, 1884, the appellant as the assignee in bankruptcy of Henry Wisner, filed this bill against George H. Waite and 20 other; and on March 26 1888, by amendment, made the dock company a party defendant alleging that it claimed title to the S.E. fractional 1/4 (south of the Calumet river) of section 25, township 37 N. of range 14 E. of the third P.M., and also the S.E. fractional 1/4 of the N.E. fractional 1/4 (south of the Calumet river) of the same section, township, and range, all in Cook county, in the state of Illinois. The object of the bill is to set aside a deed of this property from the bankrupt to one John N. Wisner, his brother, bearing date January 8, 1878; and also a sale and conveyance of the same property made by John P. Wilson, as trustee, April 14, 1881, under the powers contained in a trust deed executed by the bankrupt and one Waite, to secure the purchase price of the land. The prayer is that the deed from the bankrupt to Wisner, as well as the conveyance by Wilson, may be set aside as clouds on appellant's title as assignee, and that, if any equitable rights exist under the trust deed, they may be defined and declared. The dock company, by its answer, claims title to the property as an innocent purchaser for value by mesne conveyances from John N. Wisner, and from Thomas R. Wilson and George L. Thatcher, the purchasers at the trustee's sale; and it also claims the benefit of section 5057, Rev. St. U.S., as a limitation which bars an action by an assignee in bankruptcy after two years. The facts, so far as needful to an understanding of the questions involved, are as follows:

By a special warranty deed dated July 8, 1874, delivered and recorded July 13, 1874, James L. Campbell conveyed the land in question to Henry Wisner, the bankrupt, and to George H. Waite. Wisner and Waite gave notes amounting to $12,000, constituting the principal part of the purchase money, bearing 8 per cent. interest, all of which notes, by their terms, fell due within three years from date; and contemporaneously an agreement was made, and referred to in the notes, to the effect that the notes should not be payable until certain clouds upon the title to the land should be removed, the agreement reciting that Campbell had already filed a bill to remove them. At the same time Wisner and Waite executed to John P. Wilson, as trustee, a trust deed to secure the payment of the notes according to their tenor. The deed did not refer to the contract shown by these notes, but contained express authority to sell the property upon default of payment, unless certain unfilled blanks therein defeated the power. The blank spaces for the time during which it was to be advertised before sale and the number of the advertisements to be made were not filled, and the record of the deed showed these blanks unfilled. On July 17, 1874, Waite quitclaimed to Henry Wisner his interest in the land by a deed which was recorded the next day, and it now appears that he took a contract from Wisner, providing that he should be entitled to a certain portion of the profits which might be derived from a sale of the land; but this contract was not recorded until August 18, 1883, which was after the dock company obtained title to the land. On July 12, 1875, a decree was entered in the Campbell suit, under the burnt record act, which, read in connection with certain deeds from Rucker to the Brighton Company, and from Forsythe to Wisner, appearing in the record, it is claimed, removed all clouds from the title. On January 8, 1878, Henry Wisner and wife executed to John N. Wisner a special warranty deed of the property in question, which was recorded February 28, 1880. On August 31, 1878, Henry Wisner filed his petition in voluntary bankruptcy, and scheduled this property, stating the value as unknown, subject to the incumbrance of the trust deed. The other assets scheduled consisted of land similarly situated. His unsecured indebtedness was scheduled at various small sums, amounting to about $1,200, and his indebtedness to his brother, John N. Wisner, was scheduled at about $5,000. Of this indebtedness only one note, amounting to $111.15, was afterwards proved up, except that his brother proved up his debt to the amount of $11,932. On December 3, 1879, Henry Wisner was adjudged a bankrupt, and the complainant was appointed his assignee, and the usual deed was made to him, which has never been recorded. On June 10, 1880, Wisner was discharged from bankruptcy. On April 14, 1881, Wilson, as trustee, having advertised the sale of the property under the terms of the trust deed for the period of 30 days, sold it at public auction, for the amount due upon the notes (about $29,500), to Thomas R. Wilson and George L. Thatcher, and executed to them a deed, which was recorded on July 20, 1881. Thatcher shortly after conveyed his interest to Thomas R. Wilson. On July 16, 1881, William B. Howard purchased the property in question from John N. Wisner, and received a deed, which was immediately put upon record. Howard paid, on the day of the delivery of the deed, for this title, and for some claims of Gilbert Wyman, $8,000. The amount paid Wisner and Wyman was $4,000 to each. On July 22, 1881, Howard purchased the title acquired under the trust deed from Thomas R. Wilson, and paid him in cash $21,750, receiving a deed which was put upon record the following day. On February 1, 1882, by a deed recorded February 20, 1882, Howard conveyed the land in question to the dock company, which paid therefor, and for other land embraced in the same deed, $200,442.50, and this entire consideration was paid in full by June 28, 1882. The deed from Howard to the dock company was recorded December 15, 1883. In March, 1882, the complainant brought a suit similar to the present one in the court below, but the dock company was not made a party to it. No process was issued and served on that bill, and on July 5, 1883, it was dismissed for want of prosecution. So much of the bill as is material to show the grounds relied on by complainant is as follows:

'And your orator alleges upon information and belief: That at the time of filing of said petition the said bankrupt was the absolute owner of the property, subject to one certain incumbrance and one outstanding claim of title under an unrecorded deed. That the outstanding unrecorded deed above referred to was a special warranty deed, purporting to be signed by the said bankrupt, dated the 8th day of January, 1878, and recorded in Book 611 of Records of Cook County, Illinois, on page 535, on the 28th day of February, 1880, by which deed the bankrupt pretended to convey the said property to one John N. Wisner, his brother. But your orator alleges that the said John N. Wisner took no title to said property, and acquired no rights therein, by virtue of said deed, as against your orator as the representatives of the creditors of said bankrupt; that he never took possession of said property; and that, therefore, your orator became invested with the title to said property, subject to only to the said trust deed to said John P. Wilson. And your orator alleges that the said trust deed to said John P. Wilson, and the other conveyances made thereunder by him and his grantees, and the said deed from said bankrupt to the said John N. Wisner and his grantees, constitute such clouds and stigmas upon your orator's title that he has been wholly unable, and is now unable, to sell said property for any material consideration whatsoever, and that, if such clouds are removed, he believes he can sell at once such property for enough to pay all the costs of the said bankruptcy proceeding, and to pay every creditor of the bankrupt in full. And your orator further prays that the said deed from the said bankrupt to the said John N. Wisner, and all deeds and conveyances by him or his grantees to any of the parties hereto, may be set aside and annulled and declared and decreed to be clouds upon your orator's title, and that an account may be taken of the rents, issues, and profits of said property from the 31st day of August, 1878, down to the present time, and that the said defendants, or some of them, may be decreed to pay your orator such sum as shall appear from such accounting to be justly due.'

On final hearing the bill was dismissed for want of equity, and this appeal is prosecuted from that decree.

Hardy, Essick & Clark, for appellants.

Osborn & Lynde, for appellee.

Cohrs & Green, for Calumet & Chicago Canal & Dock Co.

Before JENKINS, Circuit Judge, and BAKER and GROSSCUP, District Judges.

After making the foregoing statement, the opinion of the court was delivered by BAKER, District Judge.

It is claimed that if the bill filed on March 14, 1882, was filed in time to obviate the bar of the statute of limitations, the present bill is not barred, nor is the appellant open to the charge of laches in sleeping on his rights. Appellant's counsel cite and rely on section 25 of the statute of limitations of the state of Illinois (2 Starr & C.Ann.St 1559), and Herring v. Poritz, 6 Ill.App. 208, in support of this claim. The claim, however, is unfounded because that bill was not filed for more than two years after the bankrupt had conveyed the land in question to his brother, who had conveyed the same to Howard, both of which conveyances were of record before the bill was filed. Besides, the dock company was never made a party to that bill, and, so far as it was concerned, it having acquired the title...