Scanlan v. Scanlan

• Decision Date: 31 October 1890
• Citation: 25 N.E. 652,134 Ill. 630
• Parties: SCANLAN et al. v. SCANLAN.
• Court: Illinois Supreme Court

134 Ill. 630

25 N.E. 652

SCANLAN et al.

v.SCANLAN.¹

Supreme Court of Illinois.

Oct. 31, 1890.

Appeal from appellate court, first district.

Bill by Edward J. Scanlan and Nellie Scanlan, heirs of Jeremiah Scanlan, deceased, against Timothy H. Scanlan and Ann Scanlan to compel the reconveyance by Timothy H. Scanlan of certain land formerly owned by said Jeremiah. Ann Scanlan filed a cross-bill in which she admitted the allegations of the bill, and claimed dower in the premises as widow of Jeremiah Scanlan. In his life-time, Jeremiah Scanlan was the owner in fee of the real estate in controversy, subject to three trust-deeds thereon to L. C. P. Freer, which secured separate loans made to Jeremiah in the years 1874, 1875, 1876. Default having been made in the payment of interest due on the loans, Freer advertised, and sold the premises to Nathan M. Freer, his son, in pursuance of the power given by one of the trust-deeds, and conveyed the same to Nathan, by trustee's deed dated March 4, 1879. Nathan did not claim that he acquired the absolute title to the property, free from the equity of redemption, and in fact after the sale the relation of mortgagor and mortgagee between Jeremiah and the owner of the indebtedness continued. For the purpose of saving the property, Jeremiah arranged with his brother, Timothy H. Scanlan, to advance the amount necessary to make the redemption, and take the title as security. To carry out this plan, Timothy paid to the holder of the indebtedness a part thereof in cash, and secured the rest, which he has paid. At the same time, Nathan conveyed the property to Timothy, by quitclaim deed dated May 1, 1879; and Jeremiah and his wife, by quitclaim deed dated May 2, 1879, also conveyed the same to Timothy, but no consideration was received by them for the deed. Both bill and cross-bill were dismissed at the hearing, and the appellate court affirmed the decree. Complainants appeal.

W. T. Burgess and James E. Munroe, for appellants.

Smith & Pence and Thomas J. Walsh, for appellee.

BAKER, J.

We are entirely satisfied, from the evidence in this cause, that L. C. P. Freer, the trustee in the trust-deed of 1874, when he advertised and sold the premises in controversy, under the power contained therein, in fact struck off and sold the same to himself; that he was the real purchaser, and his son, Nathan M. Freer, only the nominal purchaser. It is also manifest, from the proofs, that it was intended by all parties concerned that such sale should not bar the equity of redemption owned by Jeremiah Scanlan, but that it was made simply for the purpose of freeing the equity of redemption from the liens of certain judgments that had been theretofore recovered against said Jeremiah; and that it was the understanding before both, and after the sale that not withstanding such sale, and the deed made in pursuance thereof, said Jeremiah might redeem by paying the amount due upon the several notes and mortgages, together with taxes, expenses, and interest. The effect, therefore, of the trustee's deed to Nathan M. Freer was merely to put the legal title in the latter, to be held under the same trusts that it was subject to while vested in the original trustee, and the equity of redemption was not cut off, but still subsisted. We furthermore think that the proofs conclusively show that the appellee, Timothy H. Scanlan, took his quitclaim deed from Nathan M. Freer, and paid the indebtedness due to L. C. P. Freer with full knowledge of the rights and equities of his brother Jeremiah in the premises conveyed, and that he did so at the special instance and request of Jeremiah, and for the express purpose of affording the latter a better opportunity than it was feared the Freers would allow for either clearing the property from the incumbrances which were upon it or for disposing of it in such manner as would realize a pecuniary benefit to Jeremiah over and above the incumbrances. The fact that appellee and Jeremiah were brothers, and that the former had a short time prior to the transactions here involved loaned the latter $1,000, to apply on interest and taxes; the fact that immediately before the execution of the two quitclaim deeds, Jeremiah had again applied to him for pecuniary assistance and for a loan, and that in response to such application he had come all the way from Galveston, Tex., to Chicago; the fact that the consideration money paid L. C. P Freer ($7,033.56) for the conveyance from Nathan M. Freer, was the exact amount due upon the incumbrances, and was grossly inadequate to the value of the land, it being admitted by appellee its value was $12,000; the fact that the notes for $4,000, for $1,000, and for $1,000, respectively, with the trust-deeds securing them, were delivered to Timothy H.; the fact that Jeremiah and his wife quitclaimed to Timothy H., without the payment of any consideration therefor; the fact that Jeremiah continued in possession of the house and premises without paying or agreeing to pay rent; and the admission of appellee in his answer that on October 29th following he ‘had an accounting and settlement with Jeremiah,’ that he then paid to Jeremiah and his wife $2,100, in consideration of their relinquishing to him ‘all claim to said land,’ and that they did then ‘release and quitclaim * * * all their interest in said property by writing subscribed by them, and for full consideration,’-are circumstances which conclusively establish that the conveyances to appellee, although absolute upon their faces, were in fact a mortgage, and conveyed the legal title to appellee in trust, to pay out of the proceeds of the property his advances to Jeremiah and to the Freers, with interest, and account to Jeremiah for the residue, or, in case of full payment to him by Jeremiah of the amount due him, to reconvey to Jeremiah. A deed absolute in form, if intended as a security, is, in equity, but a mortgage, and will be treated and enforced as such, even though the agreement for redemption rests only in parol, and notwithstanding the statute of frauds. Insurance Co. v. White, 106 Ill. 67.

A defendant to a bill in chancery may set up any number of defenses in his answer, but the defenses must be consistent with each other. Stone v. Moore, 26 Ill. 165; 2 Daniel, Ch. Pr. 815, 816. The defenses here interposed by appellee to the original bill were inconsistent with each other, but, then, no exceptions were filed thereto on that account. We take it that where inconsistent defenses are set up in an answer, and such answer is not excepted to, and on the hearing one of the defenses pleaded is found to be untrue, and the other is established by the proofs, the decree will not be reversed on account of the interposition of such untrue and inconsistent defense.

The denial by a trustee of the trust relation is a breach of trust, and a flagrant fraud. Appellee has, in his answer, denied the trust relation which we find existed between himself and his deceased brother, and has sought, by pleading the statute of frauds, and in various other ways, to avoid the consequences of the existence of such relation. By falsely claiming he was not a mortgagee or trustee, he has undoubtedly placed himself in an unenviable attitude, and one which has a tendency to justly arouse the suspicions of the court in respect to the merits of his case. We find, however, in the record no evidence which would justify the conclusion, or even a reasonable suspicion that appellee ever denied he was mortgagee or trustee prior to the time he conceived it was expedient so to do in depense of this suit. In fact, the evidence tends strongly to show that he recognized and admitted the existence of an equity of redemption in his brother until after the arrangement of October 29, 1879, hereinafter mentioned. We understand the doctrine to be that the denial by a trustee of the trust relation is a fraud, which taints with fraud all his dealingswith his cestui que trust which transpire at the time of such denial or subsequent thereto, and into which such denial enters. Taylor v. Luther, 2 Sum. 228. But we cannot see how a fraudulent denial made after the institution of this suit in 1887 could possibly enter as an element into a settlement and arrangement made in 1879, and fully completed and carried into effect at that time.

Did appellee on or about October 29, 1879, purchase from Jeremiah Scanlan his equity of redemption? And, if so, was the arrangement them made such that, in view...