North Ave. Bldg. & Loan Ass'n v. Huber

• Decision Date: 09 December 1915
• Docket Number: No. 9824.,9824.
• Citation: 110 N.E. 312,270 Ill. 75
• Court: Illinois Supreme Court
• Parties: NORTH AVE. BUILDING & LOAN ASS'N et al. v. HUBER.

270 Ill. 75

110 N.E. 312

NORTH AVE. BUILDING & LOAN ASS'N et al.

v.HUBER.

No. 9824.

Supreme Court of Illinois.

Oct. 27, 1915.

Rehearing Denied Dec. 9, 1915.

Error to Branch C. Appellate Court, First District, on Appeal from Circuit Court, cook County; Charles M. Walker, Judge.

Action by the North Avenue Building & Loan Association and another against Christina Huber. Judgment for plaintiffs modified and affirmed by the Appellate Court (187 Ill. App. 42), and defendant brings error. Reversed and remanded.

Frederick Mains, of Chicago, for plaintiff in error.

Christian Meier, of Chicago, for defendants in error.

FARMER, C. J.

This case comes to this court upon a writ of certiorari to the Appellate Court for the First District to review the judgment of that court modifying, and affirming as modified, a decree of the circuit court of Cook county in a foreclosure suit begun and prosecuted by defendants in error against plaintiff in error and others.

The plaintiff in error, Christina Huber, and John Huber, are husband and wife. Prior to October 24, 1895, they became and were indebted to E. S. Dreyer & Co. in the sum of $14,000 and to Kemper Bros. in the sum of $4,000. On said date, October 24, 1895, they executed a note, payable to the order of themselves, for $18,000, due in five years with interest at 6 per cent. per annum, payable semiannually, and evidenced by coupon notes. The note was secured by a trust deed on real estate given to William Kemper as trustee. The Hubers indorsed the note and delivered it, with the trust deed, to Kemper, a member of the firm of Kemper Bros. The indebtedness of the Hubers to E. S. Dreyer & Co. was paid by a check drawn on the bank account of Kemper Bros., and the indebtedness to Kemper Bros, was satisfied by giving the Hubers credit on its indebtedness to that firm of $4,000. William Kemper was the treasurer of the defendant in error building association and banked the money coming into his hands as such treasurer to the account of Kemper Bros. Said firm of Kemper Bros, also deposited the firm's money in the same bank and to the same account. At the time william Kemper drew the check for the payment of the indebtedness of the Hubers to E. S. Dreyer & Co., Kemper Bros. had a balance in bank to their credit of $17,047.25. Of that amount $8,185.88 was funds of the defendant in error association. On November 12, 1895, the directors of the association at a regular meeting adopted a resolution that the association buy a $10,000 interest in the $18,000 note and trust deed of the Hubers and caused an order to be drawn for the payment of the money to William Kemper. Upon receipt of it he delivered, without indorsement, the note and trust deed to the association. A memorandum attached to the voucher to William Kemper stated the association was to hold the papers and receive the interest on $10,000 and Kemper was to receive it on $8,000. On November 18, 1895, the association bought an additional $4,000 interest in the Huber note and trust deed, and on September 8, 1896, the association bought the remaining $4,000 interest in the Huber note and trust deed. The Hubers paid the interst on the note up to April 24, 1910, since which time they have paid nothing.

In the original bill to foreclose the trust deed the North Avenue Building & Loan Association and William Kemper were the complainants. The bill alleged the note was given for a loan made to the Hubers by the building association and that the trust deed was executed to secure the sale. The bill was demurred to, and among the special grounds of demurrer assigned were that the bill did not allege the Hubers, or either of them, were stockholders or members of the association at the time the loan was made, and that the making of the loan was ultra vires and malum prohibitum. Without the court having ruled upon the demurrer, complainants asked and were granted leave to file an amended bull. There was a demurrer and plea to the amended bill, which were overruled, and plaintiff in error, Christina Huber, answered the bill. Subsequently an engrossed amended bill was filed by leave of court, in which the association and William Kemper, as trustee, were complainants. This bill alleges that the statement made in the original bill that the loan was made by the association to the Hubers was erroneous; that it arose from a misunderstanding of the facts by the solicitors for the complainants and was made without the knowledge of the complainants. The bill then alleges the loan of $18,000 was made to the Hubers by William Kemper, that the association had fuunds on hand for which there was no demand from its members, and that it purchased the note and trust deed for the benefit of the members of the association and was then the legal holder and owner of the note. The bill alleges Christina Huber asserts that the purchase of the note and trust deed was an ultra vires act and that the association acquired no title to the securities thereby; that, if such transaction should be held to be ultra vires, in that event the legal title to the note would be in William Kemper for the use of the association as the equitable owner of the note and trust deed, and the trust deed should be foreclosed and the money realized therefrom held by Kemper as trustee for such person as may be equitably entitled thereto.

Christina Huber answered, denying the statement made in the original bill that the loan was made by the association to the Hubers was a mistake, and alleging that the complainant association was informed of and knew the contents of the bill at the time it was filed and persisted in said statement until the filing of the engrossed amended bill, which occurred long after the filing of the original bill and after evidence was heard. The answer sets up as matter of estoppel the admissions in the original bill, and also sets up that the investment of the association's money in the purchase of the note and trust deed was ultra vires and prohibited by statute.

The cause was referred to a master in chancery to take the testimony and report his conclusions. The master reported that the Hubers were not members of or stockholders in the North Avenue Building & Loan Association; that the loan was not made to them by said association, but was made by Kemper, who, in making it, used $8,185.88 of the association's funds; that such use was without the authority of the association, and did not make it, in whole or in part, a loan by the association; that after the loan was made by Kemper the association purchased, or attempted to...