Phares v. Barbour

• Decision Date: 30 September 1868
• Citation: 49 Ill. 370,1868 WL 5242
• Parties: GRANDERSON R. PHARESv.NORRIS S. BARBOUR.
• Court: Illinois Supreme Court

49 Ill. 370

1868 WL 5242 (Ill.)

GRANDERSON R. PHARES

v.NORRIS S. BARBOUR.

Supreme Court of Illinois.

September Term, 1868.

OPINION TEXT STARTS HERE

APPEAL from the Circuit Court of Peoria county; the Hon. SABIN D. PUTERBAUGH, Judge, presiding.

This was an action in assumpsit, brought by the appellee, Norris S. Barbour, in the court below, against the appellant, Granderson R. Phares, and William Croka and Thomas J. Hoffman, upon a note given by them to appellee to secure a debt of Hoffman's. Appellant and Croka signed as sureties, at the request of appellee. The facts in the case are fully stated in the opinion.

Messrs. WEAD & JACK, for the appellant.

Messrs. JOHNSON & HOPKINS, for the appellee.

Mr. JUSTICE WALKER delivered the opinion of the Court: It appears, from the record in this case, that on the 30th day of January, 1857, Hoffman, Phares and Croka executed a note to appellee, the first as principal and the other two as sureties, for the sum of three hundred and fourteen dollars, payable on the 1st day of February, 1858. Although the fact that the two latter names to the note are not signed as sureties, still the evidence shows that appellee knew the fact when the note was executed. It also appears that after the note fell due, appellee, by the assistance of the sureties, procured Hoffman to execute a chattel mortgage, which embraced two horses and a two-horse wagon, a set of double harness and a plow, to secure the debt, when the time for its payment was extended until the 1st of January, 1859. Hoffman was to retain possession, by the terms of the mortgage, until that time, unless the property was levied upon, removed, or attempts were made for its sale by Hoffman. On a breach of the conditions of the mortgage, by failing to pay the debt at its maturity or otherwise, appellee was authorized to take the property into possession, and after giving six days' written or printed notice, to sell the same and apply the proceeds to the payment of the note.

There seems to be little if any doubt, from the evidence, that the sureties as well as appellee, understood at the time, that the execution of the mortgage was to release them from their liability as sureties on the note. It seems that when the mortgage was executed, Phares insisted that his name should be taken off the note, but appellee replied that he would never call upon him for payment, and did not hold him for it any longer. There seems to be no dispute that the property was worth as much as four hundred dollars, at the very least, when the mortgage matured. About the time the money became due under the terms of the mortgage, appellee took the property into possession, gave a notice, as he swears, sold it at auction, and it was struck off to one Hutchinson for the sum of thirty-one dollars, which was credited upon the note. Appellee swears that he did not bid off the property, but he requested Hutchinson to do so, which he did and afterwards turned it over to appellee. The evidence further shows that he turned over one of the horses to Hoffman upon his paying appellee seventy-five dollars. But we are unable to discover, from the evidence, what became of the remainder of the property. Nor does it appear that he gave the sureties any notice of the sale of the mortgaged property.

It also appears that after about eight years had elapsed, and Hoffman had removed to Ohio, appellee brought this suit upon the note, and obtained service upon the sureties alone, Hoffman not being found. They appeared and filed several pleas, among which, one of release and extension of time of payment of the note, without the consent of the sureties. Issues were formed, and a trial was had by the court and a jury, resulting in a verdict in favor of appellee for the amount of the note and interest, after deducting the thirty dollars credited for the sale of the property under the mortgage. A motion for a new trial was entered, but it was overruled by the court and judgment rendered on the verdict; to reverse which Phares prosecutes this appeal, and insists that the verdict is against the evidence, and that the court gave improper instructions for appellee and refused proper ones asked for appellant.

It is a rule of law, firmly established and fully recognized, that a trustee must act in good faith towards the cestui que trust, with reference to the trust fund; and if he fails in the discharge of the duty that relation imposes, he will be chargeable with loss or injury sustained by the beneficiary, growing out of his want of reasonable care, or from acts of bad faith. When appellee took possession of the property under the mortgage, he thereby became a trustee, not only for Hoffman but also for the sureties on the note. And occupying that relation, he was bound to use all reasonable efforts for its preservation, and under the provisions of the mortgage, to sell it for the best price that could be obtained. A person thus situated, who appropriates the trust property contrary to the terms of the mortgage, must be held to account for its full value. He has no right to appropriate it contrary to the...