Noll v. Peterson

• Decision Date: 02 April 1930
• Docket Number: No. 19203.,19203.
• Citation: 338 Ill. 552,170 N.E. 756
• Parties: NOLL et ux. v. PETERSON et al.
• Court: Illinois Supreme Court

338 Ill. 552

170 N.E. 756

NOLL et ux.

v.PETERSON et al.

No. 19203.

Supreme Court of Illinois.

Feb. 21, 1930.

As Modified on Denial of Rehearing April 2, 1930.

Commissioner's Opinion.

Suit by Henry Noll and wife against Elmer Peterson and others. Decree for complainants, and defendants Peterson and others appeal.

Affirmed.Appeal from Superior Court, Cook County; Denis E. Sullivan, judge.

Nels J. Johnson and Oke L. Pearson, both of Chicago (Amos W. Marston, of Chicago, of counsel), for appellants.

Chetlain, Meagher & Chetlain, of Chicago, for appellees.

EDMUNDS, C.

Appellees, Henry and Elizabeth Noll, filed in the superior court of Cook county a bill for rescission of a written contract which involvedthe exchange of certain apartment properties in the city of Chicago, alleging misrepresentation of income through concealed concessions on leases. The cause was referred to a master, hearings were spread over a period of more than a year, and nearly two years elapsed before the report was filed. Based on the report, a decree awarding relief was entered against appellants, Elmer and Nancy Peterson and Gustav and Ellen Seegren, as well as other defendants, whose connection with the case will subsequently appear, but who did not join in the appeal.

Appellants have made and argued assignments of error touching many phases of the pleadings, proof, and principles of law applicable thereto, a proper understanding of which makes it advisable to outline the course of the pleadings and evidence in more than ordinary detail.

In what will be designated throughout the opinion as the original amended bill, filed November 28, 1925, appellees, complainants below, allege, among other things, that on December 11, 1924, they were the owners of certain apartment property known as 1500-1502 Orleans street, also a second mortgage in the sum of $10,500 on certain Glenwood avenue property; that on said date appellants, defendants below, Elmer Peterson and Nancy Peterson and Gustav Seegren and Ellen Seegren, owned certain premises Known as 7415-7423 Rogers avenue, which were improved with a sixteen-apartment building; that on said date R. V. Fonger, doing business as R. V. Fonger & Co., was engaged in the real estate business and was the authorized agent of appellants in the transaction hereinafter described; that appellants and Fonger combined and conspired to defraud appellees; that pursuant to said conspiracy Fonger solicited appellees to exchange their Orleans street property for appellants' Rogers avenue property, and drew up a written agreement for such transfer, the terms and conditions of which appear from a copy attached to the bill and made a part thereof; that appellees signed the agreement on December 11, 1924; that pursuant to the agreement, and relying upon the representations of appellants therein, appellees conveyed to appellants the Orleans street property, transferred to them the Glenwood avenue mortgage, paid them $9,500 in cash, gave back a purchase-money trust deed on the Rogers avenue property to Nels J. Johnson, trustee, in the sum of $9,050, and performed everything required of them by the contract; that to defraud appellees, appellants falsely represented in the written agreement that the rental from the Rogers avenue property was $1,505 per month, whereas the actual rental was much less than said sum, by reason of secret rent concessions granted by appellants; that appellants falsely represented that the Rogers avenue property was worth $125,000, whereas it was not then or thereafter worth any such sum; that appellees believed said representations and relied thereon; that to conceal the fraud until the deal was consummated, appellants deposited with Ferguson & Neumann, who were acting as rental collection agents of the Rogers avenue property, a sum of money in an amount equal to the secret concessions granted for a period of two months, with instructions to apply enough on each lease to make up the difference between the actual rent paid, and the amount called for by the face of the lease; that Ferguson & Neumann did apply the money in this way, in consequence whereof appellees did not discover the fraud until long after the transaction was consummated; that appellees relied upon these misrepresentations; that they have paid off certain notes on the purchase-money trust deed; that the Capital State Savings Bank is the holder of the balance of the notes; that they fear the bank may dispose of the notes or initiate foreclosure proceedings unless restrained by injunction; that appellees have paid all interest and part of the principal due on a first mortgage of $80,000, executed by appellants on the Rogers avenue property. Appellees pray an accounting, that the transaction be set aside, appellees reconveying to appellants the Rogers avenue property, and appellants returning to appellees the Orleans street property, the Glenwood avenue mortgage, the $9,500 cash, the purchase-money trust deed, and all money on account of principal and interest paid by appellees on said mortgage, with interest on the same, or, in the event it is impossible to return any of said property, an equivalent in cash representing the value as of December 30, 1924. Appellees further pray that appellants be decreed to pay the value of all improvements made by appellees, as well as money paid on the $80,000 mortgage. As an alternative to the foregoing relief prayed, appellees pray that they be allowed to retain the Rogers avenue property, and that appellants be decreed to pay them $35,950 in cash; that the purchase-money mortgage on the Rogers avenue property be canceled, and that appellants return all moneys paid on the purchase-money mortgage, with interest thereon; that appellants pay the value of improvements and the amount paid on the $80,000 mortgage. Injunction is prayed to restrain the Capital City Bank from transferring the notes given under the purchase-money trust deed, and to restrain Nels J. Johnson, trustee, from initiating foreclosure proceedings. By leave of court, the bill was subsequently amended on its face to show a tender by appellees of the Rogers avenue property, and a general offer to do equity.

Separate answers were filed by Fonger, the Capital State Savings Bank, and Nels J. Johnson,respectively. Appellants filed a joint and several answer. After the case had been referred to the master, appellants filed a cross-bill, to which they later attached a copy of the agreement of December 11, 1924, alleging substantially the matters contained in their joint and several answer, and also that appellees and Fonger had been guilty of conspiracy and fraud in making misrepresentations as to the Orleans street property.

During the progress of the hearing before the master, appellees, by leave of court, amended the above original amended bill by adding averments to the effect that appellantshad sold the Orleans street property to Louis Sterlek, and that the consideration derived therefrom was impressed with a trust in favor of appellees. The court ordered appellants to answer in ten days. Twenty-one days thereafter appellants filed a demurrer, alleging as special ground that appellees had an adequate remedy at law. This demurrer was stricken from the files.

The master's report and objections thereto were filed December 19, 1927. On January 27, 1928, leave was given appellees to amend the original amended bill of complaint to make additional parties defendant. On February 17, 1928, an amended bill was filed, which will be subsequently referred to as the final amended bill. It made Louis Sterlek and wife parties defendant. In form and substance it is in general like the original amended bill. However, there are certain changes. One new paragraph is added, alleging that the rent concessions did not appear in the leases or written agreement between appellees and appellants; that, with the exception of three, they were not disclosed to appellees before or at the closing of the deal, and that appellants then and there stated that there were no more. In a further paragraph, allegations are added to charge that appellants paid Ferguson & Neumann a sum sufficient to pay the full amount of the secret concessions throughout the entire period that they were to run, and that Ferguson & Neumann did so apply them, the original amended bill having alleged the turning over to Ferguson & Neumann of only two months' concession money. In a further paragraph the matter relative to the conveyance to Louis Sterlek, previously introduced into the record by the amendment of May 4, 1926, above referred to, is amplified by the allegation that Sterlek and wife made the purchase of the Orleans street property for valuable consideration and without notice. The prayer differs from that of the original amended bill in that it omits the provision for conveyance back to appellants of the Rogers avenue property. However,there is inserted a tender back of said property, and an offer to do equity. It also proposes that if the Orleans street property could not be returned, appellees should receive back the value of the equity of said property as fixed by the contract, the original amended bill having asked he return of equivalent value as of December 30, 1924. As an alternative to the return to appellees of the Glenwood avenue mortgage, the payment of $10,500 and interest is asked.

To the final amended bill the Sterleks filed answer and appellants demurred. As special grounds of demurrer they set forth that complainants in said amended bill failed to admit conveyance to them of the property described in the bill of complaint and failed to show incumbrances and liens upon real estate alleged to be conveyed by them to defendants and failed to tender an accounting of profits; also that the bill was multifarious for exhibiting distinct matters and causes against different defendants. This demurrer was stricken from the files, with a rule to answer. Appellan...