Steger v. Traveling Men's Bldg. & Loan Ass'n

• Decision Date: 17 February 1904
• Citation: 208 Ill. 236,70 N.E. 236
• Court: Illinois Supreme Court
• Parties: STEGER v. TRAVELING MEN'S BUILDING & LOAN ASS'N et al.

208 Ill. 236

70 N.E. 236

STEGER

v.TRAVELING MEN'S BUILDING & LOAN ASS'N et al. ^*

Supreme Court of Illinois.

Feb. 17, 1904.

Appeal from Superior Court, Cook County; Jesse Holdom, Judge.

Suit by Chris G. Steger against the Traveling Men's Building & Loan Association and others. From a decree for defendants, plaintiff appeals. Reversed.Frederick Mains, for appellant.

Ives, Mason & Wyman, for appellee Traveling Men's Building & Loan Ass'n.

C. Arch Williams, J. Erb, and Cyrus J. Wood, for appellees Joseph and Marcianna Strozewski.

CARTWRIGHT, J.

The only question to be decided on this appeal is one of priority between liens held by the appellant and by the Traveling Men's Building & Loan Association, one of the appellees, upon a homestead estate in a lot in Chicago. The property, at the time the liens were created, was the homestead of Joseph Strozewski. The lien of the building association on the lot is by virtue of a trust deed executed June 18, 1894, by Joseph Strozewski and Marcianna, his wife, to the American Trust & Savings Bank, trustee, to secure an indebtedness in the sum of $3,300 for money loaned, with interest and penalties. The acknowledment of this trust deed was taken by George J. Kuebler, a notary public, who was secretary of the building association, and a stockholder therein, and for that reason the estate of homestead was not released, and the trust deed created no lien upon it. Ogden Building & Loan Ass'n v. Mensch, 196 Ill. 554, 63 N. E. 1049,89 Am. St. Rep. 330. The liens of the appellant were created by a trust deed executed by said Joseph Strozewski and wife on August 2, 1894, to L. L. Gilman, trustee, to secure the payment of four promissory notes to different persons, aggregating $443.70, and by a judgment recovered in the circuit court of Cook county on October 28, 1895, for improvements on the homestead premises, and an execution levied thereon. In the trust deed securing the notes held by the appellant the homestead estate was released, and the trust deed was acknowledged in accordance with the statute, so that it became a lien upon the homestead estate. The controversy is over the question whether the act in force May 15, 1903 (Laws 1903, p. 120), legalizing acknowledgments taken before stockholders or officers of corporations, had the effect to make the trust deed securing the building association a lien upon the homestead prior to the liens held by appellant.

The building association and the trust and savings bank, as trustee, filed their bill in the superior court of Cook county November 20, 1901, for the foreclosure of the trust deed securing the building association. Among the defendants were the holders of the four notes now owned by appellant and L. L. Gilman, the trustee, and Joseph Strozewski and his wife. Gilman, the trustee, and the holders of the notes, as well as Joseph Strozewski and his wife, in their answers set up the homestead estate, and alleged that the trust deed of the building association was null and void so far as that estate was concerned. Gilman and the holders of the notes claimed that their trust deed was a first lien on the homestead, and afterward filed their cross-bill to foreclose said trust deed, making the same averments. The owner of the judgment recovered for the improvement of the homestead premises answered the cross-bill, claiming a second lien on the estate of homestead, subject only to that of the trust deed to Gilman. Replications having been filed to all the answers, the issues under the original bill and cross-bill were referred to a master in chancery, who filed his report September 19, 1902, finding that there was a homestead estate in the premises; that the trust deed securing the building association was null and void as to such estate; that the trust deed securing the cross-complainants was a first lien on the homestead; that by the levy of an execution the judgment became a second lien on the estate of homestead; that the building association had a first lien on the excess over and above the homestead; that the Gilman trust deed was a second lien on such excess, and the judgment a third lien thereon. Other liens not involved in this appeal were also disposed of by the report. On December 15, 1902, the issues were again referred to the master on the question whether the trust deed securing the building association was a lien on the homestead as a debt incurred for the improvement thereof. The master filed his supplemental report on April 28, 1903, finding that said trust deed secured a debt in part for the improvement of the premises; that as to such part it was a first lien on the homestead estate, and that the Gilman trust deed and judgment were second and third liens. The case stood on exceptions to this report, when appellant, who had become the owner of the notes secured by the Gilman trust deed and of the judgment, by leave of court, together with Gilman, the trustee, filed a supplemental cross-bill on June 2, 1903, alleging the purchase of said securities as first and second liens in reliance upon the law as it existed at the time of the purchase, and claiming priority for his liens. The answer of the complainants in the original bill admitted the purchase of the securities by appellant on July 21, 1902, after examination of the records, and in the belief that they were first and second liens on the homestead; but averred that the indebtedness to the building association was incurred for the improvement of the homestead, with the exception of $750. The answer of Joseph Strozewski and wife set up the act of 1903, legalizing acknowledgments. Replications having been filed to the answers, it was stipulated that the issues should be submitted to the court on the evidence taken and reported by the master.

The material facts shown by the evidence are as follows: Joseph Strozewski, the owner of the premises occupied as a homestead, entered into a contract with John Skotnicki to erect a building thereon, and on May 22, 1894, Strozewski made application to the building association for a loan of $3,300, offering said premises and 33 shares of capital stock of the association as security, and stating that the property was incumbered by a mortgage for $750, and that he had agreed to pay the contractor $3,200 to complete the building. The application was accepted, and the trust deed was executed and acknowledged before the secretary of the association, who was also a stockholder. The association advanced money to pay the existing incumbrance and commissions, attorney's fees, insurance and other expenses, together with $200 to a subcontractor, amounting to $1,315.70. The balance of the loan was retained until August 2, 1894, when the building was completed, and it was insufficient to pay the entire amount due on the building. By agreement the contractor and subcontractors entitled to liens met at the office of the association on that day, and the balance of the loan was distributed among them upon their executing releases of their claims for liens. At the same time Joseph Strozewski and wife executed the four promissory notes to contractors, and secured them by the trust deed to Gilman, which was acknowledged so as to convey the homestead. They also executed two other notes for work on the building, on which the judgment was afterward entered. On July 21, 1902, appellant purchased the judgment and the notes secured by the trust deed to Gilman.

Upon the hearing the superior court entered a decree finding that the lien of the building association was a first lien on the premises, including the homestead estate; that the liens of appellant were subject thereto; that there was due the building association $3,856, including $300 for solicitor's fees; that on July 21, 1902, appellant, in consideration of $428.09, became the owner of the notes secured by the trust deed to Gilman; that the amount due thereon was $620; that on August 11, 1902, appellant, for the consideration of $202.62, purchased the judgment; that the act of 1903, legalizing acknowledgments, had the effect to make the trust deed securing the building association a valid and legal conveyance of the estate of homestead as against appellant, the same as though it had been originally acknowledged in accordance with the law; and that appellant purchased his notes and judgment before the passage of said act, but with knowledge that the building association claimed a lien on the homestead estate. The master was ordered to sell the property, and pay the amount due the building association, and bring the surplus into court.

The trust deed securing the building association, when executed, was null and void as to the...