Powell v. Allen
| Decision Date | 31 May 1882 |
| Citation | 11 Bradw. 129,11 Ill.App. 129 |
| Parties | JAMES POWELL ET AL.v.EDWARD R. ALLEN ET AL. |
| Court | United States Appellate Court of Illinois |
OPINION TEXT STARTS HERE
APPEAL from the Circuit Court of Kane county; the Hon. CHARLES KELLUM, Judge, presiding. Opinion filed August 8, 1882.
Mr. M. O. SOUTHWORTH and Mr. CHARLES WHEATON, for appellants Powell and Barrett; that a surety who was not originally bound for the debt, but who comes in during the prosecution of a remedy for the debt, can not by subrogation obtain preference over creditors whose liens attached before the surety became bound, cited Brandt on Suretyship, 362; Bank v. Rudy, 2 Bush, 326; Armstrong's Appeal, 5 Watts, 85, 352; Patterson v. Pope, 5 Dana, 241; Dickinson v. Todd, 43 Ill. 504.
A former adjudication is a bar to all matters in controversy and to all that might properly have been included therein: Hamilton v. Quinby, 46 Ill. 9; Peterson v. Nehf, 80 Ill. 25; Rogers v. Higgins, 57 Ill. 244.
Mr. A. J. HOPKINS and Mr. N. J. ALDRICH, for appellants Dickenson and George; against the right of subrogation in this case, cited Bank v. Rudy, 2 Bush, 326; Crump v. McMurtrie, 8 Mo. 408; Farmer's Bank v. Shirley, 12 Bush, 304; Swan v. Patterson, 7 Md. 164; Johnson v. Morrison, 5 B. Mon. 106; Korms v. Bank, 7 B. Mon. 303; Magee v. Leggett, 48 Miss. 139.
Mr. R. G. MONTONY and Mr. EUGENE CANFIELD, for appellees; as to the right of subrogation, cited, Salter v. Salter, 6 Bush, 624; Leake v. Ferguson, 2 Gratt. 419; Rogers v. McLurn's Adm. 4 Gratt. 81; Taul v. Epperson, 38 Tex. 492; Billings v. Sprague, 49 Ill. 509; Fogarty v. Beam, 100 Ill. 366.
Although appellees were stockholders, they had a right to deal with the society or its creditors as if they were strangers: Merrick v. Penn. Coal Co., 61 Ill. 472; Field on Corporations, § 361; Angell & Ames on Corporations, § 233.
Appellees did not purchase the decree lis pendens. After decree the suit is not existing in the sense of the doctrine of lis pendens: Fergus v. Wordsworth, 44 Ill. 374; Harrington v. McCollum, 73 Ill. 476; Story's Eq. Jur. § 405; Miller v. Sherry, 2 Wall. 237; Lee County v. Roger, 7 Wall. 181; Montanye v. Wallahan, 84 Ill. 355.
In December, 1870, the Aurora Agricultural and Horticultural Society, a body corporate, borrowed of John R. Coulter $6,000, which it secured by a mortgage on its fair grounds.
Afterward it became indebted to the several firms of Howell and Shoemaker, Powell and Barrett and Dickinson and George--lumber dealers of Aurora--for material used in the erection of sheds and other suitable improvements upon said premises.
In October, 1873, upon the petition of Shoemaker, making the society and the executors of Coulter the only defendants, the debt so due to his firm, amounting to $807, and of which he had become the sole owner, was decreed to be a lien thereon, subject to that of said mortgage.
Between that time and the 23d day of January, 1874, the other creditors above mentioned also instituted proceedings for the enforcement of their respective claims.
The bill to foreclose the mortgage made all the other lien holders co-defendants with the society.
Shoemaker, though duly served with process, failed to appear and was defaulted. At the October term, 1874, the other pending cases were consolidated with that, and afterward, on final hearing upon the pleadings and proofs, a decree was entered, finding due to the executors $7,190.30, to Powell & Barrett $449.48 and to Dickinson & George $1,408.89, and directing that in default of payment within ten days, the master should sell the premises and out of the proceeds pay said several sums with interest in full, or, in case of a deficiency, pro rata.
From so much of said decree as related to the mortgage, the society appealed, the appellees herein, together with George Loucks, becoming sureties on its bond.
Upon the affirmance of that decree by the Supreme Court, 80 Ill. 263, the executors brought suit upon the appeal bond to the February term, 1878, but on the 29th day of January, the sureties therein--excepting Loucks, who had gone into bankruptcy--paid the amount of the mortgage debt found due, with the costs of said suit, and took a formal assignment of the executors' interest in the note, mortgage and decree. They then obtained a quitclaim from Shoemaker, who had purchased the premises at the sale under the decree upon his petition, and received a deed in pursuance thereof--and thereupon with him filed a bill to impeach the foreclosure decree, as to its finding in favor of appellants herein, and leaving out the claim of Shoemaker for fraud; upon which a preliminary injunction against further proceeding under said decree was granted. That case being heard upon the merits at the February term, 1879, said injunction was then dissolved and the bill dismissed.
In April following, appellants Powell and Barrett, filed what they called a supplemental bill, in the foreclosure case, alleging that since the decree entered therein, the mortgage debt had been fully paid, and praying a modification of the direction as to the application of the proceeds of the sale. Process thereon was taken out only against the executors and Dickinson & George.
The executors failing to appear were defaulted, and upon a hearing on said bill and the answer of the other defendants thereto, a decree was made finding as a fact the payment of the mortgage debt, and ordering the proceeds of the sale to be applied upon the claims of Powell and Barrett, and Dickinson and George, and the residue, if any, to be brought into court. The master then advertised the sale for July 1, 1879, but on the 30th of June, appellees filed the bill herein against appellants, together with said executors and the master in chancery, reviewing the facts and litigation above outlined, alleging that the said supplemental proceedings were fraudulent on the part of appellants, praying that the decree thereon be set aside and claiming as purchasers all the rights of said executors under the Coulter mortgage and the decree for its foreclosure.
Appellants answered, defending said supplemental proceedings, and after all the evidence had been taken, the parties filed a stipulation that this cause should be consolidated with the foreclosure case and the supplemental proceedings, and that the decree herein should determine the whole controversy. The circuit court found the equities with the complainants, and granted the relief prayed.
Hence this appeal.
As we view it, this voluminous record presents for our determination a single question, and that a legal one arising upon a few undisputed facts, viz: whether appellees acquired to their full extent, as against appellants, the rights of the executors under the mortgage and decree of foreclosure.
The facts referred to are those here following:
First. Appellees were sureties for the mortgage debt. The decree was for that debt, their obligation as sureties was to pay the decree if it should be affirmed, and it was affirmed.
Second. That obligation was contracted more than four years after the execution of the mortgage security, and without the consent of the mortgage creditor.
Third. That in the meantime the liens of appellants upon the mortgaged premises had accrued, been judicially declared, and were in course of enforcement.
Fourth. That of these facts the appellees at the time they assumed said obligation had full notice.
Fifth. That such assumption was voluntary, and in their own interest, or that of the principal debtor or of both.
The answers of appellants charge that appellees were officers and stockholders, and embraced nearly all the stockholders of the debtor society. The mortgage is executed by appellee Gates as its secretary, and appellee Blair testifies that he was a stockholder.
The writer does not now refer to the record as to the others, but if the allegation of the answers is true of them also, the interest of all was in fact identical with that of the principal debtor; this, however, is not very material.
Sixth. That the purpose of appellees in its assumption was thereby to delay the enforcement of appellants' liens.
Seventh. That its natural and actual, and therefore presumably its intended effect was not only to delay such enforcement, but to expose appellants to risks of loss and injury which would not otherwise have arisen.
Since the decree found that the amount of appellants' claims bore to that of the mortgage debt the same proportion as did the value of the improvements upon the mortgaged premises to that of the land without the improvements, and fixed so short a time for the sale of the premises that no change in their relative values before such sale was reasonably to be apprehended, it not improperly directed that the land and the improvements be sold as an entirety, and the proceeds applied to the payment of all the claims pro rata if not sufficient to pay them in full. No injustice to the executors, representatives of the mortgage creditor, was likely to be thereby done.
But in strictness the mortgage was the first lien upon the land, and appellants' claims first only upon the improvements, and if by the delay of the sale any material change in their relative value had occurred--as by decay or destruction of the improvements to which the land was not liable, it would have been proper to modify it in justice to the mortgage creditor.
Suspension of the execution of the decree as to the mortgage indebtedness, by appeal therefrom, would also delay it as to the other claims, since the...
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