Merchants' Loan & Trust Co. v. Patterson

• Decision Date: 20 June 1923
• Docket Number: No. 14791.,14791.
• Citation: 139 N.E. 912,308 Ill. 519
• Parties: MERCHANTS' LOAN & TRUST CO. v. PATTERSON.
• Court: Illinois Supreme Court

308 Ill. 519

139 N.E. 912

MERCHANTS' LOAN & TRUST CO.

v.PATTERSON.

No. 14791.

Supreme Court of Illinois.

June 20, 1923.

Bill by the Merchants' Loan & Trust Company, as trustee under the will of Stewart Patterson and under a deed of trust executed by him asking for construction of such instruments, with cross-bill by Nannine Waller Patterson. From the decree, cross-complainant appeals.

Reversed and remanded, with directions.

Appeal from Circuit Court, Cook County; Hugo M. Friend, judge.

Mayer, Meyer, Austrian & Platt, of Chicago (Levy Mayer, Henry Russell Platt, and M. Paul Noyes, all of Chicago, of counsel), for appellant.

McCulloch, McCulloch & Dunbar and Horace Kent Tenney, guardian ad litem, all of Chicago (Ralph D. Shanesy, of Chicago, of counsel), for appellee.

Charles S. Babcock, of Chicago, amicus curiae.

DUNN, J.

The Merchants' Loan & Trust Company, as trustee under the will of Stewart Patterson and under a deed of trust executed by him on October 23, 1914, filed in the circuit court of Cook county a bill asking for the construction of those instruments and a previous deed of trust and for the instruction and direction of the court as to its duties as trustee. Some of the defendants answered, others were defaulted, a guardian ad litem was appointed and filed an answer, Nannine Waller Patterson, the widow of Stewart Patterson, filed a cross-bill, the cause was heard and a decree construing the instruments in question was entered from which Mrs. Patterson has appealed.

Before December 20, 1897, Stewart Patterson and his three aunts, Hannah M. Williams, Helen W. S. Johnson, and Fannie Johnson, were the owners as tenants in common fee simple, in equal shares of sublots 13 and 14 of lots 1, 2, 7 and 8 of block 37 in the original town of Chicago; the share of Stewart Patterson being subject to a life estate of his father, John C. Patterson, in one-third thereof. The premises were subject to a leasehold estate created in Herman H. Kohlsaat on May 1, 1893, which had been assigned by the original lessee to the Merrimac Building Company, and to a mortgage to secure the payment of $140,000. The undivided one-fourth of the premises owned by Mrs. Williams was also subject to a mortgage executed by her to secure the payment of $46,000. On December 20, 1897, Stewart Patterson and his cotenants, together with his father, conveyed the premises in fee simple to the Northern Trust Company in trust to collect all the incomes, rents, and profits of the premises, and to pay out of the money so collected, first, the sum of $20,000 to such persons and in such amounts as might be directed by the joint order of the grantors, then the interest on the $140,000 mortgage or any extension or renewal of it, and any other indebtedness, principal and interest, which might at any time be incurred by the trustee under any of the provisions of the deed or for which the trust estate might be liable, and all necessary costs, charges, and expenditures, including compensation to the trustee except certain specified indebtedness, cost, charges, and expenditures. After making provision for making the payments specified out of the income, the trustee was directed to pay the remainder of the income until the $140,000 mortgage or any extension or renewal of it should have been paid, as follows: To the owner of each undivided fourth of the premises, on the 1st day of each month, $833.33 until and including January, 1900, and after that date $1,000, or such proportionate part of those respective sums as the remainder of the income might be sufficient to pay, the payment on the one-fourth belonging to Stewart Patterson to be made, two-thirds to him and one-third to John C. Patterson during the latter's life. After the payment of all the indebtedness secured by mortgage upon the premises, except the $46,000 mortgage on Mrs. Williams' one-fourth, the trustee was required after making provision for the payment of all current necessary costs, charges, indebtedness, and expenses of the trust, to pay on the 1st day of each month to the four tenants in common, each, one-fourth of the income except that John C. Patterson during his life should receive one-third of Stewart Patterson's one-fourth. The deed of trust provided that on May 1, 1917, or as soon thereafter as possible, or immediately upon the revocation of the deed as therein provided, the trustee should convey to each of the four tenants in common an undivided one-fourth interest in the property in fee simple; the share of Stewart Patterson to be subject to a life estate in John C. Patterson, which was to be conveyed to the latter. The term ‘equitable owner,’ wherever used in the deed of trust, was defined to mean any person who at the time referred to should be entitled to the whole or any part of the monthly payments directed to be made out of the income, and any person so entitled was stated to be deemed an equitable owner, within the meaning of any of the provisions of the instrument, of the same fractional part of the property itself as the share of the remainder of the income directed to be paid to him or her was of the whole remainder. It was provided that during the continuance of the trust and until the conveyance of the property, the trustee, subject to the provisions of the deed of trust, should have all the title, rights, powers, and remedies of the lessors provided in the lease, and in case of its termination should have power, from time to time, to lease the whole or any part of the premises without any request of the equitable owners, for any term not exceeding three years, for such rent and upon such terms as the trustee might determine, or, on request in writing of the equitable owners of one-half of the property, for any term not extending beyond May 1, 1917, or, on request of the owners of three-fourths of the property, for any term not exceeding 99 years. The trustee was given power to settle, adjust, and compromise any claim at any time existing in favor of the trustee or the trust property against any other person, and to settle, compromise, satisfy, or pay any claim against the trustee or the trust property; but if the amount involved should exceed $1,000, only upon the written request of the equitable owners of one-half of the trust property. The deed also authorized the trustee, upon the written request of the equitable owners of three-fourths of the trust property, to raise money for the purposes of the trust by mortgage upon the whole or any part of the trust property and to sell at public or private sale all or any part of such property, and provided for certain advances to be made by the trustee to the tenants in common, respectively, in case the income collected and in the hands of the trustee applicable thereto should not at any time be sufficient to make in full the monthly payments required to be made out of the income, and provided for the reimbursement of the trustee for such advances, and interest thereon, out of any moneys afterward payable to the respective beneficiaries under the terms of the deed of trust, and that such advances should be a lien on the fee of the undivided one-fourth of the property to the income of which the person to whom such advances were made was entitled at the time of making such advances. The deed was revocable by an instrument in writing executed by the equitable owners of three-fourths of the property, but it was stipulated that the revocation should not affect the conveyance of any property theretofore made by the trustee or any lien in favor of the trustee or any person by way of mortgage or trust deed or otherwise, then on the premises or any part thereof or any interest therein, but all such conveyances should remain valid and all such liens should remain a charge on the property and interest subject to the same. There were many other provisions in the deed of trust not material to a consideration of the questions involved. The deed further provided that in case of the death of any one or more of the tenants in common before the time fixed for making the conveyances to them, the share or shares of the income after the death of the one or ones so dying to which the one or ones so dying have been entitled if then alive should be paid until the making of such conveyance, and the share or shares of the property to which one or ones so dying would have been entitled if alive at the time fixed for making the conveyance by the trustee should be conveyed at that time to such person or persons as the one or ones so dying might, respectively, have appointed by will and according to the shares and proportions designated in such will, and in default of such appointment to the child or children, respectively, of the one or ones respectively so dying in equal shares. Limitations follow as to the conveyance of the property in case of the death of either or all of the cotenants without children surviving or without children or grandchildren surviving, but need not be stated because no such event occurred; the final limitation being that the conveyance should be made to the legal heirs of the one or ones dying without children or grandchildren, according to the statutes of the state of Illinois then in force.

Stewart Patterson was unmarried at the time of the execution of this deed. In 1903 he was married to the appellant, and Stewart Patterson, Jr., is their only child. He was made a defendant to the bill, and was represented in the circuit court and is represented here by a guardian ad litem. Mrs. Patterson was the owner of some property which was sold and the purchase price was credited to her husband's bank account; under what circumstances the record does not disclose. This fact is mentioned because it is made the basis of an argument by the appellant, but since it is immaterial to the disposition to be made of the case it will receive no further attention. The $140,000 mortgage and the $46,000 mortgage on Mrs. Williams'...