Nichols v. Otto

• Decision Date: 21 January 1890
• Citation: 23 N.E. 411,132 Ill. 91
• Parties: NICHOLS v. OTTO et ux.
• Court: Illinois Supreme Court

132 Ill. 91

23 N.E. 411

NICHOLS

v.OTTO et ux.¹

Supreme Court of Illinois.

Jan. 21, 1890.

Error to circuit court, Cook county.

Bill by Charles C. and Louisa C. Otto against William J. Nichols to redeem from a mortgage which had been foreclosed under a power of sale. The court decreed redemption, and defendant brings error.

Abner Smith and J. M. H. Burgett, for plaintiff in error.

Holden & Farson, for defendants in error.

CRAIG, J.

A motion was entered in this case to dismiss the writ of error on the ground that a freehold was not involved. We do not regard the motion as well founded. The complainants allege and claim that they own the title to the premises, while, on the other hand, Nichols claims the title under a sale by virtue of the power contained in a mortgage executed by complainants to him. Both parties claimed title to the premises. The title was thus in issue, and the court, from the evidence, determined that complainants held the title, and entered a decree divesting the title that Nichols claimed under the deeds from Nichols to Hathaway, and from Hathaway to him. Under the ruling in Sanford v. Kane, 127 Ill. 591, 20 N. E. Rep. 810, and the cases there cited, we think it plain that a freehold is involved. The motion to dismiss the writ of error will therefore be overruled.

It is conceded in the argument that Nichols purchased at his own sale; that the name of Hathaway was used as a mere conduit for the conveyance to Nichols of the interest which the complainants held in the premises. When a mortgage confers a power of sale upon the mortgagee, and a third party becomes a purchaser at a sale under such power for the benefit of the mortgagee, the authorities all agree that the sale is invalid, and may be set aside at the instance of the holder of the equity of redemption, as against such purchaser. Harper v. Ely, 56 Ill. 179;Lockwood v. Mills, 39 Ill. 603;Miles v. Wheeler, 43 Ill. 123;Hamilton v. Lubukee, 51 Ill. 415. It is therefore plain that Nichols had no right to become a purchaser at the sale. He could not lawfully, at the same time, act as vendor and purchaser. But a sale of that character is not absolutely void; it is voidable only. Munn v. Burges, 70 Ill. 611. After the sale was made, the owners of the equity of redemption might ratify it, and if they did so the sale would become valid; or they could repudiate the sale, and cause it to be set aside by an appropriate proceeding in a court of equity.

It will be observed that the sale under the mortgage was made on the 2d day of October, 1876, while the bill in this case was not filed until July 13, 1883, a period of six years and nine months; and it is insisted that complainants are barred of relief by their laches. The deed from Nichols, the trustee, to Hathaway, and the deed from Hathaway back to Nichols, were placed on record immediately after the sale; and Nichols at once went into possession of the property. The fact, therefore, that Nichols was a purchaser at his own sale was known to complainants at the time the sale occurred. And the law is well settled that where the owner of the equity of redemption knew of the defects attending a sale he must, as a general rule, proceed with diligence in his application to set the sale aside, or a court of equity will refuse relief. In Bush v. Sherman, 80 Ill. 175, in discussing this question, the court said: ‘The principle that lies at the foundation of all the cases in this court upon this subject is, the party who challenges a sale on account of irregularities that may have intervened must be diligent in discovering that which he alleges will avoid the sale, and diligent in his application for relief.’ It is true that no general rule has been established fixing a definite time in which a bill shall be filed to set aside a sale in a case of this character. As a general rule, each case, as it has arisen, has been determined...