Miller v. Larned

• Decision Date: 30 September 1882
• Citation: 103 Ill. 562,1882 WL 10355
• Parties: LEOPOLD MILLER et al.v.RUSSELL M. LARNED et al.
• Court: Illinois Supreme Court

103 Ill. 562

1882 WL 10355 (Ill.)

LEOPOLD MILLER et al.

v.RUSSELL M. LARNED et al.

Supreme Court of Illinois.

Filed at Ottawa Mar. 28, 1882.Rehearing denied September Term, 1882.

OPINION TEXT STARTS HERE

APPEAL from the Appellate Court for the First District;--heard in that court on writ of error to the Circuit Court of Cook county; the Hon. E. S. WILLIAMS, Judge, presiding.

Messrs. ROSENTHAL & PENCE, for the appellants:

No one is bound to search the records for conveyances made by the same person subsequent to the record of the deed under which he claims. He is only bound to look for prior conveyances or mortgages. Iglehart v. Crane, 42 Ill. 268; Matteson v. Thomas, 41 Id. 113; Hosmer v. Campbell, 98 Id. 572; Heaton v. Prather, 84 Id. 332; Connecticut v. Bradish, 14 Mass. 296.

Hansbrough is estopped from alleging that these notes were not for a valuable consideration. Silverman v. Bullock, 98 Ill. 11; Commonwealth v. City of Pittsburg, 34 Pa. St. 520.

A contract will be construed according to its legal effect, and not according to a pretended secret agreement different from that expressed on its face. Mason v. Burton, 54 Ill. 353; Jones v. Allen, 70 Id. 34.

A mortgage being non-negotiable, its assignee takes in equity subject to all the equities residing in the notes secured, in favor of the original maker; but no secret or collateral equity which merely grows out of the note itself, there being no equity between the assignee and a third person, can be asserted against an assignee who takes after maturity. Olds v. Cummings, 31 Ill. 188; Ullman v. Kline, 87 Id. 268; Silverman v. Bullock, 98 Id. 11; Colehour v. State Savings Inst. 90 Id. 156; Murry v. Lylburn, 2 Johns. Ch. 441; Mott v. Clark, 9 Pa. St. 339; Pryor v. Wood, 31 Id. 142; Davis v. Barr, 9 S. & R. 141; Livingston v. Dean, 2 Johns. Ch. 479; Commonwealth v. Councils, etc. 34 Pa. St. 496; Putnam v. Clark, 29 N. J. Eq. 412; Losey v. Hoagland, 3 Stockt. 246; Woodruff v. Depue, 1 McCart, 174; Starr v. Hoskins, 26 N. J. Eq. 416; 2 Daniell's Neg. Instr. secs. 1435-1437.

The maker of commercial accommodation paper negotiable after maturity to one having notice of its accommodation character, can not defend against the same where no limitation has been imposed upon its negotiation. 1 Daniell's Neg. Instr. sec. 726; Redfield & Bigelow's Leading Cases, 216, 217; Story on Promissory Notes, sec. 194; Brown v. Mott, 7 Johns. 362; Grant v. Ellicott, 7 Wend. 227; Charles v. Marsden, 1 Taunt. 224; First National Bank v. Grant, 71 Maine, 374; Smith v. Knox, 3 Esp. 46; Harrington v. Dow, 3 Rob. 283; Dunn v. Weston, 71 Maine, 270; Parr v. Jewett, 81 Eng. C. L. 684; Maitland v. Citizens' National Bank, 40 Md. 540; Commonwealth v. City of Pittsburg, 34 Pa. St. 520.

The trust deed was given not only to secure the holder of the notes, but also to indemnify the maker against loss. His personal liability on the notes gives him a right to hold the trust deed as his indemnity. Burdett v. Clay, 8 B. Mon. 291; Comstock v. Hitt, 37 Ill. 546; Fowler v. Fay, 62 Id. 377.

The conveyance of the equity of redemption by quitclaim by Hansbrough to Walker, made the land the primary fund as between Hansbrough and Walker for the satisfaction of the notes, and Hansbrough had the right to enforce the security for their payment against the land. Funk v. McReynolds, 33 Ill. 495; Tice v. Annin, 2 Johns. Ch. 125; Matthews v. Aiken, 1 N. Y. 604; Cox v. Wheeler, 7 Paige, 248; McKinstry v. Curtis, 10 Id. 503; Dow v. Peters, 3 Edw. Ch. 141; 2 Washburn on Real Property, pp. 216, *575.

Hansbrough being entitled to this security for his indemnity, then the holders of his notes are entitled to be subrogated to his rights, and may enforce his security before payment by him. Curtiss v. Tyler, 9 Paige, 432; Moses v. Murtgatroyd, 1 Johns. Ch. 129; Phillips v. Thompson, 2 Id. 418; Russell v. Clark, 7 Cranch, 69; Burdett v. Clay, 8 B. Mon. 291; Bank v. Thorp, 18 Johns. 505.

Mr. E. C. LARNED, for the appellee R. M. Larned:

Complainants' sole claim to enforce the trust deed is upon an equitable assignment made to them of the same as collateral security to the note of S. J. Walker, of $12,000. By such equitable assignment they take the trust deed subject to all the equities which attached to it in the hands of their assignor, S. J. Walker. If he was estopped from enforcing the mortgage against his grantor, his equitable assignee is equally estopped. Foster v. Strong, 5 Bradw. 207; Davis v. Beecher, 69 Ill. 440; Jones v. King, 25 Id. 388; Walker v. Dement, 42 Id. 272; Gregory v. Savage, 32 Conn. 261; Brooks v. Ricord, 47 Id. 30; Stafford v. Fargo, 35 Id. 454; Fortier v. Darst, 31 Id. 218; Sumner v. Waugh, 56 Id. 539; Crane v. Turner, 67 Id. 439; Kleeman v. Frisbie, 63 Id. 489; Clute v. Robinson, 20 Johns. 611; Schaffer v. Reilly, 50 N. Y. 61.

The indebtedness evidenced by the notes being that of S. J. Walker, when he became the owner of the notes the debt, as between him and the maker, was satisfied, and he could not create a new indebtedness against Hansbrough by the reissue of these notes, nor could the mortgage be enforced by him against the premises to the prejudice of his grantee. Bush v. Lathrop, 22 N. Y. 543; Turpin v. Ogle, 4 Bradw. 611.

Mr. JUSTICE SCOTT delivered the opinion of the Court:

The appeal of Leopold Miller and Jacob Leibenstein brings before this court the decision of the Appellate Court for the First District, in the case of Augustus Bauer v. S. J. Walker, touching the matters involved in their cross-bill in that case. So much of the decree of the circuit court made in the principal case as dismissed the cross-bill of Miller and Leibenstein, by which it was sought to foreclose a trust deed on the tract of land claimed by Russell M. Larned, was affirmed by the Appellate Court, although the decree in other respects was reversed and the cause remanded. As the judgment of the Appellate Court as to Miller and Leibenstein was final and conclusive of their rights, they prayed, and were allowed, an appeal to this court touching the matters adjudged against them.

As elaborate arguments have been made on every phasis of the case as now presented in this court, rather more than the usual elucidation will be required to express the views entertained by the court concerning the question raised and discussed. A concise statement of the facts will be necessary to an understanding of the questions of law discussed. Both parties concede that on and prior to October 24, 1870, the title to the tract of land in controversy was in Henry H. Walker. On that day Henry H. Walker, by warranty deed, conveyed the property to William Hansbrough, and took back a trust deed on the property made to John G. Rogers, to secure two promissory notes, each for the sum of $6000, bearing date the 24th day of October, 1870, and payable to the order of Henry H. Walker, in one and two years, respectively, after date, with interest thereon at the rate of eight per cent per annum. The deed to Hansbrough and the trust deed to Rogers for the security of the notes to Henry H. Walker were both placed on file and recorded in the proper office in Cook county, where the land is situated, on the 5th day of November, 1870. It seems the original trust deed was either lost or destroyed, and afterwards Hansbrough executed a new trust deed describing the same property, and reciting on the face of it that it was made in lieu of the one lost or destroyed. On the 17th day of December, 1870, Hansbrough, by quitclaim deed, conveyed the equity of redemption,--for that was all the interest he then had in the land,--to Samuel J. Walker; and afterwards, on the 12th day of January, 1871, Samuel J. Walker, his wife joining with him, by warranty deed, for a full, valuable consideration, conveyed the premises to Russell M. Larned. This latter deed was filed for record in the proper office on the 26th day of January, 1871. Leopold Miller and Jacob Leibenstein claim to be the assignees and holders of the Hansbrough notes, and to have the right to foreclose the trust deed and subject the land to their payment, while Russell M. Larned insists he is the owner of the premises under his deed from Samuel J. Walker, divested of the lien created by the trust deed to Rogers,--and this is the real contention between the parties to this appeal.

Had the transaction ended here, the case would have presented no difficulty. Larned, the grantee of Samuel J. Walker, would have taken nothing by his deed from him but the equity of redemption that was in Hansbrough, and the premises in his hands would have been subject to the lien created by the trust deed to Rogers, as the notes to Henry H. Walker secured by the trust deed were outstanding and unpaid. The complications in the case arise out of collateral facts, and the subsequent conduct of Samuel J. Walker, with which Hansbrough and Henry H. Walker had no direct or immediate connection, although it is doubtless true, as the sequel will disclose, that he had their implied, if not express, consent to do as he pleased with the Hansbrough notes. It will, therefore, be necessary to note the connection of Samuel J. Walker with the transaction.

There is evidence tending to show that Samuel J. Walker was the equitable owner of the premises at the time the same were conveyed to Hansbrough, although the legal title was in Henry H. Walker. Be that as it may, it is not a matter of much consequence, as the fact of its existence could not be known to strangers dealing with the land, or the notes secured on it. It appears that soon after the making of the notes and trust deed by Hansbrough to Henry H. Walker, the latter indorsed the notes in blank, and delivered the same to Samuel J. Walker.

There can be no doubt the transaction between Hansbrough and Henry H. Walker was colorable, and that the conveyance to Hansbrough was not an actual sale. It was a mode adopted to make accommodation paper of such unquestionable value as that it could be...