106 Ill. 105 | Ill. | 1882
Lead Opinion
delivered the opinion of the Court:
Aside from the question as to the right of the Wartman Brothers to a mechanic’s lien upon the premises conveyed to Greenebaum, and Charles G. E. Pressing’s right in respect thereof, the right of Flower, the receiver of the German National Bank, is the only subject of contest in this case.
It is insisted that the proposition of agreement of April 4, 1874, should not have been received in evidence, because there was a material alteration thereof after the written acceptance appended thereto was signed. The only proof of this kind which we understand the testimony to show, is in the insertion of the words, “except two of the stores on State street,” the whole effect of which is in the interest of the Pressing creditors, it entitling the Pressing Vinegar Works to a lease, at the same rental of $200 per month, of two stores less than were included in the agreement as originally drawn. This goes to show that the alteration was not made with any fraudulent purpose as against the creditors interested. They, or either of them, are not shown to have been in complicity with the making of the alteration, and it appears to have been made by one Addison,—a stranger to them. Under such circumstances, the German National Bank, one of the creditors, did not, by the alteration, lose the right to use the instrument in evidence. Bledsoe v. Graves, 4 Scam. 382; Rose Clare Lead, Co. v. Madden, 54 Ill. 261.
It is objected that all the creditors did not participate in the selection of Greenebaum as trustee. It appears sufficiently that they did all concur in his selection except Con-diet, as to whom there is no direct proof that he united in the selection,, and he testifies that he did not know of Greenebaum’s being trustee until after the suit was brought. But he ought to have known of it, as respects this trustee. He accepted a proposition that the property should be conveyed to himself and other creditors, or to such person as they might elect for their use, and that he would advance his proportionate part of the amount necessary to clear the property from incumbrances, in pursuance whereof, eleven days after, the property is conveyed to Greenebaum, as trustee for the creditors, and he goes on ever after managing the property and advancing moneys to pay off incumbrances, with not a word of dissent or objection on the part of Gondict. Under such circumstances he should be held bound, as by a tacit acquiescence in the acting of Greenebaum as trustee.
It is next insisted that there is no personal liability for any deficiency on the part of these creditors; that by the terms of the trust deed the trustee was to take possession" and control of the property, collect the rents and profits, sell the property at his discretion, and out of the proceeds of the sale reimburse himself for all the expenses of the trust, and all advances for paying off incumbrances; that the property itself is the sole resource for such reimbursement. There would be much of force in this view were the deed of trust all there is in the ease, but we think it must be taken in connection with the prior agreement of April 4, 1874. Against so doing, it is said, the proposition of April 4 was made to seven named creditors, of whom Clark Lipe was one; that it was .accepted by six only, not including Lipe, and so was of no binding force because not accepted according to its terms, as it should have been done to render it effective. Prussing’s causing the conveyance to be made shows that he waived the concurrence of Lipe in the proposition, and the written acceptance by the six creditors signifies that they were willing to enter into the proposed arrangement of themselves, without Lipe. There is no pretense of any understanding that the acceptance was not to be operative unless it was signed by Lipe. We can not doubt that the acceptance was binding upon the creditors who signed it, although Lipe did not sign. It is then said that the prior agreement should be taken as merged in, or superseded by, the trust deed. The deed made to the trustee was but the fulfillment of the agreement of April 4 in a single particular of it,—the conveying of the property,—and we are unable to comprehend how that conveyance can be held to be the doing away with the other parts of the agreement which contemplate the doing of things after the conveyance had been made,—such as, the provisions for the benefit of Trussing, and for advances by the creditors to clear the property from incumbrances. We see no reason why the prior agreement of April 4, and the trust deed, may not well stand together, and the former have force. They are, then, to be taken as parts of one transaction, and the creditors should be held personally liable for any deficiency of the advances made by the trustee the proceeds of the property fail to satisfy, for the reason that, by their agreement of April 4, 1874, they agreed with each other to advance their due proportion of the amount which might be necessary to clear the property from incumbrances.
It is objected that if there be any personal liability, it is to Greenebaum, the trustee; that Greenebaum borrowed the money which he advanced, from the German National Bank, and the bank’s only recourse is against Greenebaum,—that it is not entitled to a decree for it against these creditors. The cross-bill of Flower alleges that Greenebaum borrowed the money from the bank, and gave his note therefor for some $25,000, which is still due and unpaid. The form of the transaction .was, a borrowing of money from the bank by Greenebaum. He was the president of the bank, and obtained the money needed to pay advances from the bank, giving his note, as trustee. All the money which was needed from time to time to pay off liens and incumbrances, and charges with respect to the property, was furnished by the bank in manner above stated. The bank being the largest creditor in the case, the money it let Greenebaum have was essentially an advance of the money by it, as one of the creditors interested, for the discharge of liens and incumbrances, for which it was equitably entitled to contribution from the other creditors under the agreement of April 4, and we see no substantial objection to its having a direct decree therefor in its own name. ■
Some exception is taken to the account rendered by the trustee, as not sufficiently proved. There does not seem to have been any contest in the court below as to the accuracy of the account. The trustee gave general testimony of its correctness, and we see no reason for disturbing the finding of the amount due as not sustained by the evidence. This is, however, with one reservation as to the item of ten per cent interest. So far as that could entirely be paid from the proceeds of the property the charge would be proper, because the trust deed allowed it. But in decreeing against the creditors personally they would not be liable for the payment of such interest unless it might be upon payments made in discharge of incumbrances bearing ten per cent interest. Further than that, to render the creditors liable to pay this rate of interest there must have been a contract on their part. There was none in this case. It is not found in the trust deed, all there is there being a simple permission that the trustee may, from the proceeds of the sale of the property, retain that interest on advances made for the purpose of removing incumbrances. And there is no provision in the agreement of April 4 for the payment of such interest. All the interest that could be recovered under that agreement,— the only one the creditors have themselves made in the case, —would be the statutory rate of six per cent interest. The Gallup deed of trust on the property was bearing ten per cent interest, and upon the payment made on the sale of the property under that trust deed we are inclined to think ten per cent interest might be properly allowed, by way of subrogation to the rights of the creditor whose debt was discharged by the sale. This is the only instance we perceive of the payment of any charge upon the land bearing ten per cent interest.
It is urged that because two of these creditors, Stein & Hirseh, and the First National Bank of Waukegan, asked Greenebaum, the trustee, to sell the property in 1876, at an offer which had been made of $30,000, which was more than enough to cover advances to that time, and Greenebaum declined to make the sale, the right to contribution from those two of the creditors is gone. Greenebaum testifies that he declined to make the sale because the directors of the German National Bank, (of whom defendant Leopold, another of the creditors, was one,) did not wish him to make the sale. We can perceive no abuse of his discretion by the trustee in this matter, and certainly a mere difference of opinion among the several creditors as to when a good sale of the property could be made, should not have the effect which is claimed.
There remains for consideration the further question in respect of the alleged mechanic’s lien of the Wartmans. The record shows that John P. Davies and others had instituted their proceeding in the circuit court of Cook county, against Charles G. E. Prussing and others, to establish a mechanic’s lien in their favor upon the premises before mentioned, and that the proceeding was pending on January 21, 1874, when, on that date, the Wartmans filed in that proceeding their intervening petition, claiming to be entitled to a mechanic’s lien on the same premises, for work done and materials furnished in the erection of the building upon the premises, under a contract agreed on, and work commenced February 5, 1873. Subsequently, that proceeding, by agreement of parties, was transferred to the Superior Court, and consolidated and heard with the present cause. The Wartmans, also, on February 7, 1874, brought their action at law against Charles G. E. Trussing, in the Superior Court of Cook county, to recover judgment against him on his personal liability for the indebtedness in respect of which the mechanic’s lien was claimed, and on trial recovered a personal judgment against Prussing in that action, November 7, 1874, for $6367.10. The date of the Gallup trust deed, before mentioned, on the premises, to secure a debt for money borrowed, was December 1, 1871, and recorded December 4, 1871. That trust deed, then, was an incumbrance on the land prior to the alleged mechanic’s lien of the Wartmans. In such case of a prior incumbrance, by the provisions of the statute, the prior incumbrance has preference as to the land, and the lienholder as to the improvements. The building on the premises having been burned on July 15, 1874, there were then no improvements for the lien to attach upon,—there remained but the land, as against which the Wartmans had no claim until the prior trust deed had been satisfied. Their lien, if any, was only upon the equity of redemption, and the subsequent foreclosure sale of the premises, under the trust deed, to Greenebaum, on February 15, 1876, for the sum of $18,059.59, and trustee’s deed to him, cut off their whole lien entirely, and afterwards they had no lien whatever upon the premises.
But in order to sustain the decree here in favor of the Wartmans, their counsel present the case upon the theory that from the trust deed to Greenebaum of April 15, 1874, and the prior agreement of April 4, there was what was tantamount to an assumption by these creditors of the payment of the indebtedness to the Wartmans, in respect of which they claimed a lien, whereby the creditors became liable to the Wartmans, and Prussing stood but as a surety, and whereby Greenebaum stood in the relation' of trustee to them, and his purchase of the premises under the trust deed should be held to have been by him as trustee for them, as well as for the other creditors. We will examine what there may be for the support of this theory. Looking at the trust deed to Greenebaum, we find in it nothing of any assumption by the creditors of the payment of any claims whatever. We see nothing which can be claimed as being in that direction, more than the clause conveying the property, “subject, always, to all incumbrances or other charges against the' same, as shown by the records of the aforesaid county of Cook. ” But property conveyed subject to a lien does not impose any personal liability upon the grantee to the person holding the lien. (Comstock v. Hitt, 37 Ill. 542 ; Fowler v. Fay, 62 id. 375; Jones on Mortgages, see. 748.) And we find nothing of such assumption in the written acceptance of the creditors of April 4, wherein they “agree, each with the other, to advance our due proportion of the amount which may be necessary to clear said property from liens and incumbrances.” That was not coming under any obligation to any one for the payment of such liens and incumbrances, and was not with any such intent,—it was an agreement, merely, between the creditors themselves as to action with regard to each other, fixing the proportion between themselves of the necessary advances for clearing the property from liens and incumbrances.
The only ground of support which we can find for the theory above, is in the concluding words of the first clause in the proposition of agreement of Prussing of April 4, where, after proposing a conveyance of the premises, subject to all incumbrances and liens now standing of record against the same, it concludes with saying, “and I to be kept harmless from any personal liability for or on account of any suits or liens against said property to be conveyed. ” Now, it is to be marked that this provision of indemnity against personal liability is not on account of debts incurred in respect of the property, but it is against personal liability “on account of any suits or liens against said property.” The property was to be taken subject to the liens and incumbrances upon it, and the situation was, that Prussing’s personal liability in respect to such liens and incumbrances still existed, which might be enforced against him, and he be made to pay the liens and incumbrances subject to which the land was taken, and it was to meet such event that it was in Prussing’s proposition that he should be kept harmless from any personal liability for any actual liens and incumbrances,—not for any simple debt, unaccompanied with any lien or incumbrance upon the property, although it may have been incurred in respect of the property. At the time when this decree was rendered, this indebtedness in favor of the Wartmans was not a lien upon this land. It stood as a personal debt, simply, of Prussing, which, although it was originally incurred in respect of this property, there would seem to be no more good reason that these creditors should pay, than any other mere personal debt of Prussing which might have been contracted in respect of the property. ' Should Prussing himself pay this debt, it would not be discharging any lien or incumbrance on the land which the land was taken subject to, which, as we conceive, forms the only true ground and reason for calling upon the creditors for payment, upon the proper construction of the writing. It was not against debts that might be pretended or claimed to be liens and incumbrances that the creditors undertook to indemnify Prussing, but against debts which were, in fact, liens and incumbrances, and nothing more; and, accordingly, when Prussing comes to make the trust deed, in pursuance of his proposition there is inserted in it the provision that the creditors took the property subject to liens and incumbrances, and by virtue of this, Prussing would have recourse back on the creditors for any liens and incumbrances that he might pay off. The whole meaning would seem to have been, that the creditors took the property subject to the liens and incumbrances on it, and that Prussing was to be kept harmless from any personal liability on claims that were really liens and incumbrances on the land, and which the land might be made to satisfy, and there is nothing carrying the idea that the creditors were to pay any of the personal debts of Prussing which were not, in fact, liens or incumbrances upon the land. In the acceptance of the proposition, in fixing the proportion of the money they are to advance, it is. of the amount “necessary to clear said property from liens and incumbrances, ” excluding the idea that there was to be an advance of money for any other purpose.
It is said that at the time of the making of this proposition of April i, this suit at law against Prussing to recover upon his personal liability was pending, and it must have been with the intention of embracing that suit that the word “suits” was employed by him in this above quoted language. Even were this so, the construction we have adopted is not inconsistent ; but there is no evidence that the creditors knew of such suit, or had it in view, and there is no reason why the language should have any different construction from what it imports on its face,—indemnity against personal liability “on account of any suits or liens against said property.” We see no reason why there should be any particularly liberal interpretation to give these building contractors the benefit of the security of third persons for the payment of their claim, which it was never in contemplation, in the making of the contract, that they should have, or why there be any strict interpretation against these creditors to render them liable as sureties for the debt of another person, where it was not within the fair intendment of any undertaking of theirs that they should become such. In our opinion the Wart-mans were not entitled to a decree against these creditors of Prussing, nor was Prussing entitled to a decree against the latter that they should pay the judgment of the Wartmans against him.
The judgment of the Appellate Court will be reversed, and the cause remanded for further proceedings not inconsistent with this opinion.
Judgment reversed.
Dissenting Opinion
dissenting:
I do not concur in the opinion of the majority of the court in this case in so far as it holds the creditors of Prussing, under contract of April 4, 1874, are not personally liable to pay the claim of the Wartmans, which at that time was a valid lien upon the State street property. Their undertaking was to keep Prussing harmless from any personal liability on account of any liens against the property,—and this, clearly, could only be done by paying off or obtaining a release of the indebtedness itself. It is manifest that no personal liability attached to Prussing on account of the Wartman lien upon the property, independent of the indebtedness to which the lien related. As the property was to be sold subject to all liens, but for his personal liability on the debts to which the liens related it was a matter of perfect indifference to Prussing whether these liens were ever removed from the property or not; yet, as he was personally liable for these claims, it was very important to him, if such was the understanding, to exact of the purchasers, as he did, indemnity against such personal liability, hence their express undertaking to keep him “harmless from any personal liability for or on account of any suits or liens on said property. ” Suppose the undertaking of the purchasers had been to keep Prussing harmless from any personal liability on account of the debts and claims against the property, instead of liens against the property, I presume no one would question for a moment that this would be a direct undertaking on their part to pay off these incumbrances, or in some manner relieve him from doing so-; and yet, in my judgment, the words actually used are but a different form of expression signifying the same thing. The word “liens,” as used in the contract in the connection mentioned, is but descriptive of the character of the debts or claims against the property, and for which Trussing, as well as the property, was liable. So far as these claims or liens were an incumbrance upon the property, was a matter, as we have already remarked, of no consequence whatever to Trussing, as, by the very terms of the agreement, the property was sold subject to them, and consequently the sale of it imposed no personal liability on him; but as such sale did not, on the other hand, at all relieve him from his existing personal liability on account of these liens or claims, it was of vital importance to him to have a clause inserted in the contract, as he did, indemnifying him against such personal liability. It seems to me, to give the contract any other construction would be to render the provision in question meaningless, and wholly inoperative.
Nor can the fact that the buildings on the property were subsequently burned down, and that the naked lots were sold and conveyed • under a prior mortgage, so as to cut off the Wartman lien on the property, at all affect the right of the Wartmans to be paid the- amount of their claim, or the liability of Trussing, or the purchasers of the property from him, to pay it, for although, by reason of the facts stated, the indebtedness ceased to be a lien on the lots, yet the indebtedness,—the only thing about which Trussing had the slightest concern,—remained the same. The only effect of the sale under the prior mortgage, so far as the parties to this controversy are concerned, was to destroy one of the marks or characteristics by which the indebtedness was theretofore properly described. Before the sale and conveyance the indebtedness was a lien or a lien indebtedness, yet, by reason of the sale and conveyance, the descriptive quality of the lien was eliminated from it, but the personal liability of Prussing, with respect to the indebtedness, remained precisely the same as it did before; and it was, as I think I have fully shown, the sole object of the provision of the contract in question to indemnify Prussing against this personal liability,—and this could only be done by payment or release of the indebtedness itself.
I am authorized to say my brothers Scholfield and Dickey concur in the views expressed by me in this dissent.
