Sanford v. Kane

• Decision Date: 14 May 1890
• Citation: 24 N.E. 414,133 Ill. 199
• Parties: SANFORD et al. v. KANE.
• Court: Illinois Supreme Court

133 Ill. 199

24 N.E. 414

SANFORD et al.

v.KANE.¹

Supreme Court of Illinois.

May 14, 1890.

Error to circuit court, Iroquois county.

Bill by Cassa Kane against E. Sanford and George Wilkinson. Decree for complainant. Defendants bring error.

B. C. Cook, for plaintiffs in error.

Robert Doyle, for defendant in error.

SHOPE, C. J.

This bill was filed to set aside the sale of land made under a power in the mortgage given by Morris Kane, joined by his wife, Cassa Kane, October 15, 1875, to E. Sanford, appellant, and to redeem from said mortgage. The mortgage secures the payment of $500 three years after date, with interest at 10 per cent., payable semi-annually. There was executed contemporaneously with the mortgage by Kane and wife a note for $500, signed by Kane and wife, payable to Sanford, and bearing interest as mentioned in the mortgage. While the mortgage does not mention a note, the proof shows that they were parts of the same transaction, and given to secure the same loan, the note being required as further security, should there be any deficiency on a sale under the mortgage. The mortgage provided that, in case of default in the payment of the debt, or any part thereof, ‘the said grantee, his heirs or assigns,’ may sell the mortgaged premises, etc., ‘and in his name, or in my name, or as my attorney in fact,’ make a deed to the purchaser or purchasers. September 15, 1876, Sanford indorsed the note to one Edgar F. Whittlesy, and on the same day made to Whittlesy a separate written instrument, purporting to assign and transfer the mortgage, and also placed his name in blank upon the mortgage. September 2, 1879, Whittlesy made a similar written assignment of the mortgage to George Wilkinson, but no assignment of the note, and delivered the note and mortgage to him. The interest was paid to July 20, 1878, the maturity of the note. Default was made in the payment of principal, and on October 16, 1879, Wilkinson, claiming to be the assignee of the mortgage debt, sold the land under the power contained in the mortgage, having previously given notice, according to the terms of the mortgage, of the sale to take place on that day, at 2 o'clock P. M. Just before the hour of sale, Morris Kane and Wilkinson met, and the proof tends to show that it was agreed that the sale should be postponed until 4 o'clock, to enable Kane to procure the money to pay off the debt; but during his absence, and before the hour of postponement had arrived, Wilkinson sold the property to Sanford for $300, and refused to do anything further, referring Kane to Sanford.

The first and one of the principal questions is whether the power of sale was executed by a person authorized by the mortgage to execute the same. If it was, the sale must stand, in the absence of other grounds of objection; but, if made by one not authorized by the mortgage, then it was void, and no title passed by the sale and deed. The power of sale was given by the mortgage to the mortgagee, or to his heirs or assigns. If there was no transfer of the debt, so as to pass the legal title thereto, the power could be executed only by the mortgagee, but, if the debt was legally assigned, the assignee was the one authorized to make the sale. In Hamilton v. Lubukee, 51 Ill. 415, the mortgage contained a power of sale given to ‘the mortgagee, his heirs or assigns,’ in case of default. The notes in that case were never assigned, but were sold and delivered to Eisendrath & Co. The mortgage was assigned by an indorsement made thereon. The court said: ‘The mortgage not being an assignable instrument either at common law or under the statute, the power to sell remained with the mortgagee.’ And the court referred to Olds v. Cummings, 31 Ill. 188; Pardee v. Lindley, Ill. 93, 12 N. E. Rep. 543; Delano v. Bennett, Ill. 413; Mason v. Ainsworth, 58 Ill. 163;Dempster v. West, 69 Ill. 618;Bush v. Sherman, 80 Ill. 160;Insurance Co. v. Slee, 123 Ill 93, 12 N. E. Rep. 543; Delano v. Bennett, 90 Ill. 533.

If the note was secured by the mortgage, its legal holder would be authorized to execute the power of sale. Whittlesy, being its assignee, alone could make it, if the note was secured by the mortgage; and the sale by Wilkinson, the note not having been indorsed to him, was unauthorized and void. A mortgage of real estate is not negotiable or commercial paper, either at common law or under our statutes, and an assignment of it does not convey or transfer the legal ownership. The right acquired is an equitable right only, so that, in any event, Wilkinson was not the legal assignee of Sanford. As we have seen, the legal title to the note was in Whittlesy by its indorsement to him by the payee Sanford, and not in Wilkinson. The mortgage being a mere chose in action, and not assignable, the right to make the sale, if the mortgage is to be treat independently of the note, would remain in the mortgagee. The sale, having been made by Wilkinson, was therefore void, and there has been no valid foreclosure of the equity of redumption. It follows that the mortgagees have a right to redeem from the mortgage by the payment of the sum legally due thereon. It will be unnecessary to consider, in this view, whether Wilkinson was guilty of such conduct at the sale as would equitably entitle the complainant below to the relief sought by her bill.

The right to redeem from the mortgage being established, the question of usury presented by the pleadings becomes material. It is conceded that Kane received only $475 of the $500 for which the note and mortgage were given. Sanford contends that the $25 retained by him out of the loan was not usury, but was commission paid him by Kane for procuring the loan. Undoubtedly a broker, negotiating loans in good faith from others, may charge the borrower commission without rendering the loan at full rate of legal interest usurious. Hoyt v. Institution, 110 Ill. 392;Phillips v. Roberts, 90 Ill. 492; Boylston v. Bain, Id. 283; Ballinger v. Bourland, 87 Ill. 513. The question here made is one of fact. Was the loan made by Sanford or by Whittlesy? Looking at the papers executed by the Kanes, and the acts of the parties, the conclusion that it was in fact made by Sanford seems irresistible. He took the note and mortgage to himself, and furnished the money by his draft, long before the assignment to Whittlesy. If Sanford was loaning money for Whittlesy, or if the latter had agreed to make the loan, the usual course would have been to have taken the securities directly to him. Sanford, it appears, controlled the securities, and finally became the purchaser of the property. Without entering into detail, we are not satisfied that the money in fact loaned belonged to Whittlesy, or to any one other than Sanford. The transaction was evidently one, not infrequent, where a loan is taken at a high rate of interest, and subsequently sold to investors of money. If Sanford in fact made the loan, he could not divest the transaction of the taint of usury by afterwards selling the note and mortgage to Whittlesy. To sanction such a transaction would be to uphold a palpable evasion of the statute. We think the court below properly held that the evidence shows the transaction to be usurious. The defendant in error, having sought relief in a court of equity, was bound to submit to equitable terms, and the court, therefore, very properly decreed that she should pay 6 per cent. interest per annum on the loan, as a condition of her right to redeem.

The point is made that Cassa Kane, when she filed this bill, October 15, 1881, had no interest in the land, and therefore had no standing in a court of equity to set aside the sale and redeem from the mortgage. The facts upon which the contention is based are substantially as follows: Morris Kane was the owner of the land, said Cassa having only an inchoate right of dower. After their mortgage to Sanford, February 21, 1876, Morris Kane, his wife not joining in the deed, conveyed the land to his father, John Kane. No conditions were inserted in this deed, and the grantee assumed no obligations in respect to the Sanford mortgage. On ...