Siegel v. Borland

• Decision Date: 19 June 1901
• Citation: 191 Ill. 107,60 N.E. 863
• Parties: SIEGEL et al. v. BORLAND et al.
• Court: Illinois Supreme Court

191 Ill. 107

60 N.E. 863

SIEGEL et al.

v.BORLAND et al.

Supreme Court of Illinois.

June 19, 1901.

Appeal from appellate court, First district.

Bill by Harriet Blair Borland and another against Ferdinand Siegel and others. From a decree of the appellate court (93 Ill. App. 320) affirming a decree in favor of plaintiffs, defendants appeal. Reversed.

Binswanger & Jackson and James E. Munroe, for appellants.

Wilson, Moore & McIlvaine, for appellees.

CARTWRIGHT, J.

The appellee, Harriet Blair Borland, and Frederick W. Crosby, as trustee, filed their bill in this case in the circuit court of Cook county to foreclose a trust deed made by Louise C. Clark and husband, conveying to said trustee a lot with an apartment building thereon, known as the ‘Cambridge,’ to secure a note for $75,000, with 6 per cent. interest. The bill, as finally amended, sought to hold subsequent owners of the property personally liable for the debt, and charged that the premises were conveyed to Annah B. Peck, who conveyed the same to Thomas B. Bryan, who in turn conveyed them to Howard P. Simmons, and that each of the successive grantees expressly agreed to pay said debt secured by the trust deed. It was also sought, upon other grounds, to hold the appellants, a corporation known as the ‘Grand,’ Ferdinand Siegel, and Joseph Siegel, and one Maximilian Philipsborn, liable for said debt. The facts alleged as the basis of such liability were that said Simmons, for an expressed consideration of $160,000, conveyed the premises to Maximilian Philipsborn, who purchased them for and on behalf of appellants Ferdinand Siegel and Joseph Siegel; that Philipsborn conveyed the premises for the same expressed consideration to said Ferdinand Siegel and Joseph Siegel; that said Philipsborn and Joseph Siegel and Ferdinand Siegel were the owners of all the stock in said corporation, the Grand; that the contract for the purchase of the premises was made by the Grand for the consideration of a stock of goods and fixtures transferred to Simmons, and valued at $125,000; that the Grand demanded payment of Simmons of said $25,000, to apply on the indebtedness secured by the trust deed, and Simmons paid the same; that said $25,000 was paid to said Philipsborn and said Ferdinand Siegel and Joseph Siegel, the stockholders of the Grand, who were the real parties in interest; and that by virtue of said facts the said corporation and parties became personally liable to pay the debt. Philipsborn and the appellants Ferdinand Siegel, Joseph Siegel, and the Grand answered, denying all liability for the debt. The cause was referred to a master in chancery to take the evidence and report it, with his conclusions. The master's report showed the amount due on the trust deed and for solicitor's fee, which, with interest to the date of the decree for sale, amounted to $89,641.64. The property sold for $50,000; and, with interest from the date of the decree and the costs of suit and sale, there was a deficiency of $41,357.84, for which there was a personal decree against the Clarks, Annah B. Peck, Thomas B. Bryan, and Howard P. Simmons. There is no controversy about those decrees or the sale. The only point contested before the master or the court related to the personal liability of appellants and Philipsborn for any part of the debt secured by the trust deed. The master reported that the Grand was liable for the deficiency, because it had the land, and $25,000 paid by Simmons with which to pay the debt. He also reported that the actual consideration passing from Ferdinand Siegel and Joseph Siegel to the Grand for the same money and property conveyed to them was the payment of a merchandise indebtedness of the Grand of $28,000, and an understanding that they would credit the Grand, on account of its indebtedness to them, with whatever they might realize out of the Cambridge, and therefore their position towards Simmons was the same as that of the Grand, and they were personally liable. His further conclusion was that, even if that were not so, Ferdinand Siegel, Joseph Siegel, and Philipsborn, as directors of the Grand, incurred liabilities in excess of its capital stock, and were personally liable, under the corporation act, and, for the purpose of avoiding unnecessary litigation, their liability could properly be enforced in this suit. There was no statutory liability charged against the parties as stockholders of the Grand, and there was no issue of that kind referred to the master. The circuit court sustained exceptions to the master's report, but found that Ferdinand Siegel, Joseph Siegel, Philipsborn, and the Grand received from Simmons $25,000, to be used, by agreement between the parties, for the express purpose of paying the same on the trust deed, and that said parties were liable for said sum, with interest from January 20, 1897, at 6 per cent. until the maturity of the note secured by the trust deed, and 7 per cent. thereafter to the day of sale. The court again referred the cause to the master to state the amount for which said parties were liable. The master reported and the court entered a decree against them for $29,502.78; the interest having been computed as directed. Appellants and Philipsborn removed the record to the appellate court by appeal. The appellate court held the decree erroneous only as to the time for which interest was computed, and in computing it at a higher rate than allowed by law; and appellee having remitted the excess of interest, amounting to $1,978.49, the decree was affirmed for the balance. The case is here by appeal from the judgment of the appellate court.

The agreement for the purchase of the Cambridge and the exchange of the properties was in writing, and was made January 20, 1897. It was signed by Howard P. Simmons and by the corporation, the Grand, through its president, under its corporate seal, attested by its secretary. The deed from Simmons and wife to Maximilian Philipsborn was made in pursuance of the contract and a resolution of the directors of the Grand, as trustee for the corporation; and neither in the contract nor in the deed, nor in the subsequent deed to the Siegels, was there any assumption whatever of the debt secured by the trust deed, or any agreement to pay it or any part of it. The deed was to be made, and was made, subject to the trust deed. The contract and deed not only failed to imply any assumption of the debt, but, rather, excluded the implication. Complainant can only establish the liability of appellants by proving a contract to assume and pay the debt, or some part of it. To sustain the decree, the facts proved must amount to an agreement to pay the $25,000 upon the debt secured by the trust deed. It is true that a contract may be implied, and that if the amount of an incumbrance is included in and forms a part of the consideration which a grantee promises to pay for premises, and he retains that part of the purchase price, the law will create a personal liability against him, on the ground that he has agreed to pay such indebtedness. In such a case the law presumes that the grantee has agreed to apply the money so retained for the purpose of paying the incumbrance. Either there must be an express assumption of the indebtedness, or the amount must be allowed in the purchase price, so that the law will imply the promise. Comstock v. Hitt, 37 Ill. 542;Hammer v. Johnson, 44 Ill. 192;Fowler v. Fay, 62 Ill. 375;Rapp v. Stoner, 104 Ill. 618;Drury v. Holden, 121 Ill. 130, 13 N. E. 547;Coal Co. v. Peers, 166 Ill. 361, 46 N. E. 1105,38 L. R. A. 624;Crawford v. Nimmons, 180 Ill. 143, 54 N. E. 209. In this case there was no retention by the grantees of any part of the agreed...