Turpin v. Ogle

• Decision Date: 31 October 1879
• Citation: 4 Ill.App. 611,4 Bradw. 611
• Parties: VIRGINIUS A. TURPIN, Receiver, etc.,v.DAVID OGLE.
• Court: United States Appellate Court of Illinois

4 Ill.App. 611

4 Bradw. 611

VIRGINIUS A. TURPIN, Receiver, etc.,

v.DAVID OGLE.

Appellate Court of Illinois, First District.

October Term, 1879.

OPINION TEXT STARTS HERE

ERROR to the Superior Court of Cook county; the Hon. S. M. MOORE, Judge, presiding. Opinion filed December 8, 1879, as of May 30, 1879.

Messrs. HITCHCOCK, DUPEE & JUDAH, for plaintiff in error; that a deed not having the name of a grantee when it was executed and acknowledged is invalid, cited Chase v. Palmer, 29 Ill. 306; Wilson v. South Park Com'rs, 70 Ill. 46.

Assignments of mortgages should be recorded: Rev. Stat. Ch. 30, § 20; Edgerton v. Young, 43 Ill. 464; Cornog v. Fuller, 30 Iowa, 212; Executors of Schwartz v. Leist, 13 Ohio St. 419; Fisher v. Knox, 1 Harris, 622.

By the endorsement and delivery of the notes, defendant in error acquired the legal title to them, but his title to the mortgage security is purely equitable, and must be determined upon equitable principles, with a due regard to the equitable rights of others: Old v. Cummings, 31 Ill. 188; Walker v. Dement, 42 Ill. 272; Kleeman v. Frisbie, 63 Ill. 482; White v. Sutherland, 64 Ill. 181; Thompson v. Shoemaker, 68 Ill. 256.

Where the equities are equal, the law must prevail, and plaintiff in error having the legal title, and being in possession, is entitled to protection: 1 Story's Eq. Jur. § 64; Broom's Legal Maxims, 685.

A party cannot claim the aid of a court of equity, who has been guilty of laches: Dickerman v. Burgess, 20 Ill. 266.

As to the notice requisite to postpone a subsequent purchaser's whose deed is of record, to the rights of an unrecorded assignment: 4 Kent's Com. 171; 1 Story's Eq. Jur. § 398; Doyle v. Teas, 4 Scam. 249; Henderson v. Pilgrim, 22 Tex. 464; James v. Johnson, 6 Johns. Ch. 417.

It is immaterial that the notes had not matured at the time of the release: Gregory v. Savage, 32 Conn. 250.

Where a purchaser on examination of the records finds no record of assignment of a mortgage, but does find a record of release of such mortgage, he is warranted in believing that the debt has been paid: Walsh v. Priest, 8 Allen, 165; Warden v. Adams, 15 Mass. 238; Bailey v. Merrick, 50 Me. 172; Orvis v. Newell, 17 Conn. 96; Bank v. French, 17 Conn. 129; McClue v. Barris, 16 Iowa, 591.

As to delivery of a deed, and that the record is prima facie evidence of delivery: Gunnell v. Cockerill, 79 Ill. 79; Lessee of Mitchell v. Ryan, 3 Ohio St. 377; 2 Greenleaf's Ev. § 297; Warren v. Town of Jacksonville, 15 Ill. 236; Rivard v. Walker, 39 Ill. 413; Walker v. Walker, 42 Ill. 311; Crocker v. Loewenthal, 83 Ill. 579; Gunnell v. Cockerill, 84 Ill. 319.

Messrs. DENT & BLACK, for defendant in error; contending that the endorsement and delivery of the notes with the mortgage operated to convey the mortgage to Ogle, cited Vansant v. Allmon, 23 Ill. 30; Olds v. Cummings, 31 Ill. 188; Fryer v. Rockefeller, 63 N. Y. 276; Craft v. Webster, 4 Rawle, 242; Rigney v. Lovejoy, 13 N. H. 247; Wilson v. Kimball, 27 N. H. 300; Lucas v. Harris, 20 Ill. 169.

There was no merger, neither can plaintiff in error assume from a release acknowledged after the giving of the trust deed to the bank, that the mortgage was discharged: Edgerton v. Young, 43 Ill. 464; Goff v. Denny, 2 Phila. 275; Campbell v. Vedder, 42 N. Y. 174; Purdy v. Huntington, 42 N. Y. 334.

After receiving the deed from Allen, Runyan stood in the position of mortgagor to Ogle: Pratt v. Bank of Bennington, 10 Vt. 293.

Even if Runyan had not been trying to release to himself, the release would be open to inquiry: De St. Romes v. Blanc, 20 La. An. 424; Trenton Banking Co. v. Woodruff, 1 Green Ch. 117; Stanley v. Valentine, 79 Ill. 544; Flower v. Elwood, 66 Ill. 438.

The bank should have required full evidence of the payment of the notes: Smith v. Jackson, 10 Chicago Legal News, 49; Brown v. Blydenburgh, 7 N. Y. 141.

No record of the assignment was necessary: Greene v. Warnick, 64 N. Y. 220; Campbell v. Vedder, 42 N. Y. 174.

The release deed was never delivered to Allen, the grantee therein, and hence was ineffectual: Herbert v. Herbert, Breese, 354; Wiggins v. Lusk, 12 Ill. 132.

PLEASANTS, J.

From the record in this case it appears that in August, 1874, Eben F. Runyan, payee and holder of certain notes of Heman R. Allen, dated July 31, 1874, payable in one, two and three years, and secured upon lands in Cook county by mortgage of even date and duly recorded, indorsed said notes for a valuable consideration, and delivered the same with the mortgage, to the defendant in error; that in the spring of 1875, he obtained from the mortgagor a conveyance of the equity of redemption; and that thereupon, before said notes were paid or due, and without the consent or knowledge of Ogle, but upon the strength of his apparent title, which he then made perfect of record by releasing the mortgage, he negotiated a loan of the Fidelity Savings Bank of Chicago, and executed a trust deed of the same premises to secure it.

In regard to his transaction with the bank, it appears more particularly, that he first applied for the loan about the 10th of June, 1875, and had several interviews on the subject with Mr. Haines, the president, in the course of which he constantly represented himself as the owner of the property, and was told that he would need to make out his notes for the amount desired, with a trust deed to secure them, and produce to the attorney of the bank an abstract, brought down to include the trust deed, and if upon examination the title should be found satisfactory he could have the money.

On the 18th of that month, Mr. Tripp, the attorney, prepared the deed to himself as trustee, which Runyan then took away to execute. When he returned the next day to acknowledge it Tripp noticed in his hands a deed of release of the Allen mortgage. About the 6th of July he came again, bringing abstracts, which showed the title from Allen as follows: (1), the mortgage from Allen to Runyan, recorded August 1, 1874; (2), the deed from Allen to Runyan, recorded June 19, 1875; (3), the release from Runyan to Allen, recorded July 2, 1875, and (4), the trust deed from Runyan to Tripp, recorded July 2, 1875. The trust deed bore date the day before that of the release, which was June 19th; but both, together with the deed from Allen to Runyan, were acknowledged on the 19th, and recorded in the order above stated. It is probable that Runyan himself took or sent all these instruments to the recorder's office. He assured Tripp that the mortgage was in fact canceled and the property free from incumbrance; and proposed, being a prominent lawyer and operator in real estate, to give his own certificate to the title, which was declined by Tripp, who, after some days occupied in its examination, and in causing to be cured some minor defects which he had pointed out, reported it as satisfactory; whereupon the bank loaned the money and took the trust deed as security.

Default being made in the payment of the Allen notes, Ogle, the assignee, filed his bill to set aside the release and foreclose the mortgage as a first lien. The Superior Court, upon the pleadings and proofs, decreed accordingly, and Turpin, having become receiver of the bank and been admitted to defend, prosecutes this writ of error. The question is, who has the prior equity, Ogle or the bank?

Its ultimate decision is regarded as important, not only to the parties, whose interests here at stake are large, but also in its general application as affecting titles to real estate and the security of loans. We find no clear precedent in any adjudication of our own State, but are of opinion that it must turn upon the effect to be given to the registry acts, and to the comparative diligence or negligence of the parties in acquiring or manifesting their respective interests. Ogle in good faith paid full value for all that he received, and by the assignment of the notes unquestionably took, as between himself and the assignor, a valid and effectual assignment, in equity, of the mortgage also; so that as to him its subsequent release was a fraud on the part of Runyan.

The bank also, in like good faith, took the trust deed as security for money loaned, not only without notice, actual or constructive, that the mortgage was outstanding, but upon the faith of positive verbal assurances and of proper evidence furnished by the records that it was extinguished.

Was it bound, under the circumstances, to make further inquiry and know at its peril, that it had been assigned, or, on the other hand, was it necessary that Ogle, to protect himself against such a subsequent purchase or incumbrance of the premises, should have his assignment of record?

In the consideration of this question we attach great importance to the release. If the title of the bank was not itself apparently perfect of record, clearly it could claim no protection under the registry acts against an incumbrance or adverse title not necessarily inconsistent with that record. And such, without the release, would have been its condition. For it was well understood long before it was so declared in Edgarton v. Young, 43 Ill. 464, that upon a conveyance by mortgagor to mortgagee the mortgage would not necessarily merge, but might be held to be still subsisting if the intention or interest of the mortgagee, or perhaps his obligation--which in equity might control and conclusively declare his intention--should so require; and that a party claiming through him, without further assurance, must take this risk, so that if it turned out to be subsisting he would not be a purchaser without notice. The reasonableness of the doctrine was the more apparent in that case, where the party so claiming derived his title under proceedings in invitum.

He had purchased at an execution sale, and his deed was not from the mortgagee but from the sheriff. The former had not released the mortgage nor done any other act inconsistent with an intention, interest and duty, positively manifested...