Ogden Bldg. & Loan Ass'n v. Mensch

• Decision Date: 16 April 1902
• Citation: 196 Ill. 554,63 N.E. 1049
• Court: Illinois Supreme Court
• Parties: OGDEN BUILDING & LOAN ASS'N v. MENSCH et al.

196 Ill. 554

63 N.E. 1049

OGDEN BUILDING & LOAN ASS'N

v.MENSCH et al.¹

Supreme Court of Illinois.

April 16, 1902.

Appeal from appellate court, First district.

Suit by the Ogden Building & Loan Association against Anna Mensch and others to foreclose a mortgage From a judgment of the appellate court (99 Ill. App. 67) affirming a decree determining the rights of the parties, plaintiff appeals. Affirmed.

Joseph H. Muhlke and Samuel B. King, for appellant.

E. J. Batten and D. K. Tone, for appellees.

BOGGS, J.

The appellant association exhibited in the superior court of Cook county a bill in chancery praying for the foreclosure of a real estate mortgage executed by the appellees Anna and Michael Mensch, husband and wife, to secure a loan, in the sum of $3,000. Appellee George Landgraf held a mortgage on the same property, subsequently executed by the same mortgagors, to secure an indebtedness in the sum of about $300, and he was for that reason made a party defendant to the bill. He filed a cross bill praying for the foreclosure of his mortgage. The mortgaged premises were the homestead of the mortgagors. On the hearing the chancellor ascertained and declared the amounts due the mortgagees, respectively, as to which there was and is no controversy, but ruled that the lien of the mortgage given to the appellant association, though superior in point of date of execution and of recording to that of said Landgraf, did not attach, as did the lien of the mortgage to Landgraf, to the homestead estate; decreed foreclosure of both mortgages, and that the mortgaged premises be sold by the master; and directed that out of the net proceeds of the sale the sum of $1,000, being the value of the homestead estate, should be appropriated first, so far as necessary, to the payment of the mortgage indebtedness due to the appellee Landgraf, and that the remainder of said sum of $1,000 should be paid to the appellees Anna and Michael Mensch, the mortgagors, and that the appellant association should be paid the net proceeds of the sale in excess of said $1,000, so far as necessary to discharge the indebtedness due to it. The appellate court for the First district affirmed the decree, and the appellant association has perfected a further appeal to this court.

The mortgage given to the appellant association was acknowledged before Joseph H. Muhlke, a notary public. The said Muhlke, at the time he made the certificate that the mortgage was acknowledged before him by the said mortgagors, was the holder and owner of 10 shares of the capital stock of the appellant association. He was also at the same time a member of the board of directors of the appellant association, and was its attorney. The certificate of acknowledgment is in compliance with the provisions of sections 26 and 27 of chapter 30 of the Revised Statutes, entitled ‘Conveyances,’ and contains a clause stating that the mortgagors, and each of them, waived and relinquished all right of homestead in the mortgaged premises. In the body of the mortgage there is a clause to the effect that the mortgagors waived their right of homestead. The decree entered by the chancellor, and the affirmance thereof by the appellate court, were on the ground that the acknowledgment was void for the reason that the notary who certified to the acknowledgmentwas a stockholder in the association to whom the mortgage was given, and was therefore pecuniarily and beneficially interested in the indebtedness intended to be secured by the mortgage. The answer of the mortgagors contained the admission that they had executed and delivered to the appellant association, ‘as security for said loan, a bond and mortgage, copies of which are annexed as exhibits to said bill of complaint.’ It is contended that the word ‘executed’ denotes all acts of execution, including the acknowledgment of the mortgagors, and therefore this admission necessarily includes the admission that the acknowledgment to the mortgage was valid and effectual. The answer, however, further states ‘that defendants did not, in and by said mortgage, release or waive their right of homestead.’ The bill contained no express averment as to the sufficiency and legality of the acknowledgment, and the admission, especially when considered together with the further statement of the answer explicitly denying that the homestead right had been waived, cannot be regarded as an admission the respondents had waived the estate of homestead in a binding and legal manner.

It is next complained that the statement in the answer ‘that defendants did not, in and by their said mortgage, release or waive their rights of homestead,’ is a mere averment of a legal conclusion, and did not warrant the introduction of evidence. On the hearing before the master to whom the cause was referred, the appellee mortgagors, without objection on the part of the appellant, or suggestion of a variance, introduced testimony to prove the facts necessary to establish the existence of the homestead estate in the mortgaged premises, and to show that the notary public who certified to the acknowledgment was at the time a stockholder in the appellant company, a member of its board of directors and its attorney, and other facts which they relied upon to establish the defense that the mortgage did not have the effect, in law, to release or waive their right of homestead. The master, in his report, found, and reported as findings of fact, that the appellee mortgagors were at the time of the execution of the mortgage, and also at the time of the report, occupying said premises as a homestead; that the notary who took the acknowledgment was at the time a stockholder in the mortgagee association, and was then financially interested in the indebtedness to be secured by the mortgage,-and reported, as a conclusion of law arising out of such facts, that in his opinion the acknowledgment was void. The appellant association did not, in the single objection filed to the report of the master, question the propriety of the action of the master in receiving the testimony referred to, but objected only to the correctness of the legal conclusion reached by the master from the facts established by the proof,-that the acknowledgment was ineffectual to create a lien upon the estate of homestead. If the appellant regarded the averments of the answer as but a mere legal conclusion, and insufficient to warrant the introduction of evidence, it should have filed exceptions to the answer, or, on the hearing before the master, should have objected to the admission of the evidence tendered for the purpose of proving facts upon which rested that which the appellant regarded as but a mere legal conclusion. Again, opportunity to prefer that objection was offered on the coming in of the master's report. Had any such timely objection been made by the appellant association, the objection might have been obviated by an amendment of the answer. Having tried the case precisely as if the defense that the notary public was disqualified to take the acknowledgment, and that for that reason the acknowledgment was void, had been formally and technically pleaded, the appellant association cannot be permitted to shift its position, and urge in this court, for the first time, objections which might have been obviated had they been preferred in the trial court. Improvement Co. v. Whitehead, 128 Ill. 279, 21 N. E. 569;Brainard v. Hudson, 103 Ill. 218;Gehrke v. Gehrke, 190 Ill. 166, 60 N. E. 59;Coal Co. v. Wombacher, 134 Ill. 57, 24 N. E. 627.

The principal object to be effectuated by the creation of the homestead estate is to protect the householder and his family in the enjoyment of a home, and to secure them a shelter beyond the reach of his improvidence or financial misfortune. Considerations of sound public policy affecting the general interest were involved, and contributed to the enactment of the statute by which the estate is created. Having established the specific estate for such beneficent purposes, the general assembly deemed it essential, as a further protection to those entitled to enjoy the benefits of the estate, that the estate should not be held to pass or be lost by the mere ordinary modes of conveyance, and in this view enacted section 27 of chapter 30 of the conveyance act, which provides that, in order to be effectual to alien or incumber the homestead estate, the instrument executed to accomplish either purpose must contain a clause in the body thereof, and also in the certificate of acknowledgment, expressly releasing or waiving such estate. In Gage v. Wheeler, 129 Ill. 197, 21 N. E. 1075, we said: ‘It has been repeatedly held by this court, under statutes prescribing the mode in which the homestead exemption or estate might be released, waived, or conveyed, that to make such release, waiver, or conveyance effectual, as against the person entitled to the exemption or estate, the requirements of the statute, both as to the terms of the deed and the acknowledgment, must have been complied with.’ In Leonard v. Crane, 147 Ill. 52, 35 N. E. 474, we said (page 57, 147 Ill., and page 475, 35 N. E.): ‘By the conveyance act it is requisite that in the deed there shall be contained a clause waiving the right of homestead, and a similar clause must be contained in the acknowledgment of both the husband and wife; and the estate of homestead thus created can be relinquished only in the mode pointed out by the statute, or by abandonment.’ In each of the cases from which we have quoted, many other decisions of this court, all to the same effect, are cited. If, then, the notary public who certified to the acknowledgment to the mortgage in the case at bar was for any reason so disqualified of incompetent in law to take and certify to the acknowledgment of the mortgagors that they waived or relinquished the homestead that such acknowledgment is without legal effect, it is clear the chancellor and the appellate...