Walker v. John Dement.

• Decision Date: 30 April 1866
• Citation: 1866 WL 4676,42 Ill. 272
• Parties: T. DWIGHT WALKERv.JOHN DEMENT.
• Court: Illinois Supreme Court

42 Ill. 272

1866 WL 4676 (Ill.)

T. DWIGHT WALKER

v.JOHN DEMENT.

Supreme Court of Illinois.

April Term, 1866.

OPINION TEXT STARTS HERE

APPEAL from the Circuit Court of Winnebago county; the Hon. BENJAMIN R. SHELDON, Judge, presiding.

The opinion of the court contains a statement of the case.

Mr. EMERY A. STORRS, for the appellant

Mr. JAMES K. EDSALL, for the appellee.

Mr. CHIEF JUSTICE WALKER delivered the opinion of the Court:

This case was before the court at the April Term, 1864, where the decree of the court below was affirmed. A petition for a rehearing was afterward filed, and, from the able and forcible arguments presented in the petition, we were induced to apprehend that we might have mistaken the law on the previous hearing; and, that we might give more mature reflection and further examination to the legal propositions involved, a rehearing was granted. A re-argument has been had, and, after the most careful consideration of the case, and the most mature reflection we have been able to give it, we are impelled to arrive at the conclusion first announced.

To a proper understanding of the case it is necessary that a short statement of the facts should be presented. It appears that one Collins and his wife, on the 10th day of April, 1857, made and delivered to W. H. Godfrey four notes of that date, payable to his order,--one for $1,050 payable September 5, 1857; one for $1,450 payable March 5, 1858; one payable March 5, 1859, for $1,350, and one for $2,750 payable March 5, 1860; and, to secure the payment of these several notes, Collins and wife, at the same time, executed and delivered to Godfrey a mortgage containing a power of sale upon the property described in the bill. That afterward, on the 13th of May, 1857, Heaton, while negotiating to sell to Charles Godfrey, the father of the mortgagee, certain water power and lots in Dixon, applied to appellee to purchase of him an interest in other lots near to this water power, that he might be able to sell it to Godfrey. That Heaton thereupon agreed to pay appellee for such interest, with two of the notes executed by Collins last falling due, all of which notes Heaton was to acquire by the arrangement with Godfrey, as a part of the consideration for the lots and water power which Heaton was then negotiating to sell to Charles Godfrey.

Heaton proposed to appellee to procure the notes, and to give him the two last maturing, and pay them to him for the undivided interest in his lands and lots adjacent to the water power he was offering to sell to Godfrey. The trade was consummated, and appellee conveyed to Heaton, who also conveyed this as well as the other property to Godfrey. The price paid by Heaton to appellee was $4,050. When Heaton conveyed to Godfrey, he received the Collins notes, and the two last falling due he transferred to appellee, agreeing with him, at the time of the transfer, that he should have the first and full benefit of the mortgage on the land, executed by Collins and wife to secure the notes which he then delivered to appellee. Afterward, on the 26th of June, 1857, William H. Godfrey put his name to an assignment written by Heaton on the back of the mortgage, by which he transferred and assigned the entire mortgage, together with all his interest in the land described in it, to appellee, who on the same day caused the mortgage and assignment to be recorded in the proper office.

Soon after the transfer of the notes to appellee, Heaton sold and delivered to appellant, Walker, the other two first maturing, but they were not then indorsed by the payee, Godfrey. One of which for $1,050 was subsequently paid by some arrangement with Heaton. The other note for $1,450, was, after its sale to appellant, and long after its maturity, assigned without recourse by Godfrey to Walker, although he was the equitable owner by purchase from Heaton a short time after Heaton received it of Godfrey.

After this note fell due, Godfrey, the mortgagee, at the instance of Walker, proceeded to sell the mortgaged premises to satisfy the note. He sold the property to one Wilty, and thereupon appellee filed a bill and supplemental bill setting forth these facts, and making Wilty a defendant, charging him with notice of appellee's equities, and with acting as the agent of Walker, in making the purchase and using his money in payment of the lands struck off to him, all of which was admitted by Wilty. The prayer of the original and amended bill was for an injunction against Godfrey, Walker and others, to restrain them from selling the lands for the purpose of satisfying the note held by Walker, and that the sale to Wilty might be set aside, and the mortgage be foreclosed, the premises sold, and the proceeds be applied in discharge of the note held by appellee. The court below passed a decree in accordance with the prayer of the bills, and the case is brought to this court by appeal.

The two material questions presented by this record are, was Heaton a competent witness to prove the contract between him and appellee, that he should have the first equity? and, second, was it competent for Heaton to give this preference to appellee? According to the reported decisions of this court, the first of these questions cannot be raised in this court for the first time. It should have been before the hearing by motion to suppress Heaton's deposition. Mozier v. Knox College, 32 Ill. 155, and the cases there cited. It was also urged that he was a defendant and was therefore incompetent. It appears that he was not made a defendant until after his deposition was taken, and only to the supplemental bill, which was confessed as to him. Had he, however, been a defendant to the original or amended bill, he still might have been examined as a witness against his co-defendants, even if he had an interest in the event of the suit, if not against the party whose interests are sought to be prejudiced by his testimony. Dyer v. Morton et al., 4 Scam. 150. But the objection on the ground of interest was not made at the proper time, and cannot therefore be entertained. Had the question been raised at the proper time, a release could have been executed and his deposition subsequently taken.

As to the other question, there has been much discussion, where several notes falling due at different times are secured by a mortgage, whether the mortgagee can legally stipulate, with an assignee of a part, that he shall have a preferred lien on the security, over the assignees of the other notes. It now seems to be settled that he may, and such a stipulation will be binding as between the parties and all persons having notice. It is a matter of contract, lawful in itself, contravening no principle of law or public policy. Langdon v. Kieth, 9 Vermont, 229; McNay v. Bloodgood, 9 Porter (Ala.) 547; Ewing v. Arthur, 1 Humphrey (Tenn.) 537; Bryant v. Damon, 6 Gray (Mass.) 567; Bank of England v. Tarlton, 23 Mississippi, 173; Trustees of Jefferson College v. Prentiss, 29 Id. 50; Moore v. Ware, 39 Maine, 498; Van Rensselear v. Stafford, 1 Hopkins Ch. (N. Y.) 569; Hilliard on Mortgages, 175, 176.

If there be no contract, the rule would be as declared in Sargeant v. How, 21 Ill. 148, and Vansant v. Allmon, 23 Id. 34. The authorities relied upon by appellant, to establish a different rule, so far as we have been able to examine, were cases where no stipulation was made giving one assignee a preference over another. These views are the same as were expressed in the previous opinion filed in this case, and we see no reason to modify them. We have, however, thought it proper to give some additional reasons for the judgment then announced.

It is urged with great earnestness and plausibility, in the petition for a rehearing, that appellant having purchased the notes first maturing, he must be protected and preferred in his equity in the mortgage security, unless notice of appellee's prior purchase and contract for a preference can be charged upon him. On the other side, it is urged, with equal earnestness, that the rule of caveat emptor applies, and that appellant purchased at his peril. We regard the proposition as fully settled and firmly established, that, as between the parties, the mortgagee may assign any of a series of notes, secured by mortgage, and by agreement give a prior equity or lien on the mortgaged premises for their...