Nat'l Life Ins. Co. v. Ulis

• Decision Date: 26 May 1938
• Docket Number: Gen. No. 39775.
• Citation: 295 Ill.App. 401,15 N.E.2d 51
• Parties: NATIONAL LIFE INS. CO. v. ULIS ET AL.
• Court: United States Appellate Court of Illinois

295 Ill.App. 401

15 N.E.2d 51

NATIONAL LIFE INS. CO.

v.ULIS ET AL.

Gen. No. 39775.

Appellate Court of Illinois, First District, Third Division.

May 11, 1938.

Rehearing Denied May 26, 1938.

Appeal from Superior Court, Cook County; James F. Fardy, Judge.

Suit by the National Life Insurance Company against Joseph Ulis and others, to foreclose a trust deed, wherein it was found that the plaintiff's trust deed was a first lien and wherein a decree of sale was entered. Jennie I. Waterman, under authority of the Civil Practice Act, filed a petition to have the foreclosure decree set aside and to have her lien declared superior. From a decree approving the master's report, finding the lien of Jennie I. Waterman superior, and ordering sale of the property in satisfaction of that lien, the National Life Insurance Company appeals.

Decree reversed. George Gillette, Elmer M. Leesman, and Charles F. Grimes, all of Chicago, for appellant.

Hershenson & Hershenson and James B. McKeon, all of Chicago, for appellees.

HALL, Justice.

On January 31, 1933, the National Life Insurance Company, plaintiff, filed a bill to foreclose a trust deed to the Chicago Title & Trust Company, trustee, given to secure the payment of certain notes for the sum of $14,000, with interest. The number of this document in the records of Cook county is 992839. The notes and trust deed were dated February 7, 1928, and were executed by Joseph and Emily Ulis, his wife. Among the defendants named in the case are Frank H. Lang, trustee under a trust deed recorded as document No. 9331328, together with the unknown owners or holders of the notes which this latter trust deed was given to secure. Personal service was had upon Lang, trustee. The “unknown owners” were served by publication. This latter trust deed and the notes for which it was given as security, were also executed by Joseph and Emily Ulis, both the deed and notes are dated July 3, 1926, and the property involved is the same as that involved in the instant case. In the instant case, after all defendants had been defaulted, a decree of sale was entered, in which it was found that the trust deed of the National Life Insurance Company was a first lien on the mortgaged premises. A sale of the mortgaged property was had on May 27, 1933, and on June 3, 1933, the master who made the sale made a report thereof, in which it is recited that the sale was made to the National Life Insurance Company. On April 26, 1934, Jennie I. Waterman, under section 50, paragraph 8 of the Civil Practice Act, Ill.Rev.Stat.1937, c. 110, § 174(8), filed a petition in the instant proceeding concerning the decree of the court entered therein. In this petition it is recited, inter alia, that the petitioner is the owner of a note for the sum of $19,300, executed by Joseph Ulis and Emily Ulis, dated July 3, 1926; that to secure such note and interest, Joseph and Emily Ulis, on July 3, 1926, executed a trust deed conveying to Frank H. Lang, trustee, the same premises as are involved in this foreclosure proceeding, and that the mortgage being foreclosed is inferior to the mortgage described in her petition. The prayer in this petition is that the court enter an order setting aside, or altering, the decree of foreclosure entered in the instant case and for further relief. On April 9, 1935, the National Life Insurance Company filed an answer to this petition, in which it is recited, among other things, that the note for $19,300, hereinbefore referred to, purports to be secured by the mortgage trust deed dated July 3, 1926, as alleged, and further admits that Jennie I. Waterman was not made a party to the instant proceeding by name and was not served with a copy of the complaint, or by notice sent by mail, and that no copy of the decree entered therein was served upon her. It is further recited in this answer that on July 3, 1928, Harry S. and Jennie I. Waterman filed a complaint in the circuit court of Cook county in equity against Joseph and Emily Ulis, Chicago Title & Trust Company, a corporation, trustee, Frank H. Lang, trustee, Irvin Jacobs, trading as Irvin Jacobs & Co., and the unknown owner or owners of the note or notes secured by the trust deed to the Chicago Title & Trust Company, recorded as document No. 9929839; that in the said complaint it is alleged among other things, that on July 23, 1926, the petitioner owned the premises in question, and that on July 3, 1926, Joseph and Emily Ulis purchased the same from the petitioners, and as part payment of the purchase price, gave the note of $19,300 dated July 3, 1926, all of which was due and payable ten years from its date, with interest at 6 per cent. per annum; that the principal note provided that if any default be made in the payment of any installments of principal or interest agreed to be paid, and if any portion thereof should remain due and unpaid for a period of thirty days after the same should become due, it should, at the option of the legal holder of the note, thereupon become due and payable immediately, without notice, and should be collectible at any time after such default, anything in the note or trust deed to the contrary notwithstanding; that all of the covenants and conditions in this second mortgage trust deed, given to secure the payment of this note, were expressly made a part thereof, and that the note was endorsed in writing by Joseph and Emily Ulis and delivered to the Watermans as a part of the purchase price of the premises involved here; that at the time of the filing of the bill in the circuit court, the Watermans were the owners and holders of the note and the interest due thereon, and that to secure the payment of that note, Joseph and Emily Ulis conveyed the premises to Frank H. Lang as trustee. It is further alleged in this answer that this latter trust deed contained the following provision:

“It is understood and agreed that when the remaining balance of the first mortgage now on the above described premises falls due on April 26, 1928, that the grantors herein will have the privilege of placing a new first mortgage on said premises for as large an amount as possible, or, that the owner of said Second Mortgage may procure said first mortgage, provided the rate of interest shall not exceed 6% per annum, payable semi-annually and that the cost of procuring said mortgage shall not exceed 1% per year for the length of time that said first mortgage shall run and that the duration of this first mortgage shall not exceed five years and that the second mortgage described herein will not be subrogated to said first mortgage so to be placed on said property.

“It being expressly understood and agreed that any prepayments on said first mortgage so to be placed on said property, shall not exceed $1000.00 per annum and that the proceeds of said new first mortgage so to be placed on said property shall be used first to pay up the remaining balance that may be then due on said first mortgage, according to its terms and conditions and that the balance of said money shall be paid to the then owner and holder of said second mortgage to reduce the principal indebtedness provided for therein and that said money so received shall be applied to the last payment or payments provided for in said second mortgage.

“It is further understood and agreed that in the event the grantors herein pay any sums in excess of $100.00 per month, as above provided for, said excess sums so paid shall be applied on the last payment or payments provided for herein and that said monthly payment as herein provided shall continue to be made each and every month as herein provided.”

In this answer of the National Life Insurance Company, it is further alleged that in the complaint filed by Harry S. and Jennie I. Waterman on July 3, 1928, the trust deed from Joseph and Emily Ulis to Frank H. Lang, trustee, provided, among other things, that in the event of a breach of any of the covenants or agreements therein contained, the whole of said indebtedness, including principal and all earned interest, at the option of the legal holder thereof, without notice, became immediately due and payable; that the complainants, Harry S. and Jennie I. Waterman, because of the breach of the covenants by the defendants therein, Joseph and Emily Ulis, “do hereby exercise their option and do hereby declare the whole unpaid balance of said note secured by the trust deed, to be now due and payable, according to the terms and provisions of the trust deed”; that in this complaint they prayed that the mortgage therein sought to be foreclosed in the instant proceeding be declared to be a junior mortgage to that of Harry S. and Jennie I. Waterman because of the fact that upon the release of the mortgage trust deed, for which the mortgage sought to be foreclosed was substituted, became a junior mortgage to that of Harry S. and Jennie I. Waterman hereinbefore referred to. Harry S. and Jennie I. Waterman filed a general replication to this answer, and after a hearing on the bill to foreclose, the answer of the National Life Insurance Company and the replication, the court entered a decretal order dismissing the complaint for want of equity. No appeal was taken from this decree.

At the time the Watermans acquired the real estate in question, it...