First National Bank v. Leech, 69 N.E. 890

First National Bank v. Leech

69 N.E. 890

Ill.

1904

Check Treatment

Mr. Justice Scott

delivered the opinion of the court:

Thе principal insistence of appellant is that the decree is not sustained by the evidence, and that the case made by the evidence, if any, does not conform to the allegations of the bill. The finding of the decree is that the allegatiоns of the bill are true as therein stated. The bill alleges that Adams acquired the certificate of purchase with funds belonging to his wards, the appellees, and alleges that the bank took the assignment of the certificate with knowledge of that fact. No question is made as to the first of these charges, but it is insisted that the bank did not have notice. We have carefully examined the evidence contained in the record. It is somewhat conflicting. A discussion thereof would be profitless here, however, as we are satisfied that the judge of the circuit court, who saw and heard the witnesses testify, reached a correct conclusion on this question of fact.

The appellant sought to show, and did show, that before taking the assignment it sought the advice of cоunsel for the complainant in the foreclosure suit, and was by him assured, in substance, that the bank could lawfully take and hold the certificate as security for' the money it was about to loan to Adams. This is not enough. The fact that Adams purchased this certificate with funds that he ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍held as guardian, and that the bank accepted- the certificate with knowledge of that fact, makes the bаnk a trustee for appellees, no matter what an attorney advised it and no matter what the bank officers believed about the question of their liability. It is the existence of these facts that makes the bank liable—not the views of its officers or attorney in regard to whether it is liable.

Where a guardian invests the money of his ward in the purchase of land, taking the title to himself, a trust arises, by implication, in favor of the beneficiary, who may follow the money into the land and hold the land as trust estate; and the motives by which the guardian was animated in taking the title to himself are wholly immaterial. Rice v. Rice, 108 Ill. 199; Cookson v. Richardson, 69 id. 137; Reese v. Wallace, ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍113 id. 589; 2 Pomeroy’s Eq. Jur. sec. 1049.

And further: “The doctrine is, that a purchaser with notice of a trust, either express or implied, becоmes himself a trustee for the beneficiary with respect of the property, and is bound in the same manner as the original trusteе from whom he purchased,—and this even though he is a purchaser for a valuable consideration.— 2 Pomeroy’s Eq. Jur. sec. 688; 27 Am. & Eng. Ency. of Law, pp. 251, 265; School Trustees v. Kirwin, 25 Ill. 73; Fast v. MсPherson, 98 id. 496; Cushman v. Bonfield, 139 id. 219; Union Mutual Life Ins. Co. v. Slee, 123 ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍id. 57; Phillips v. South Park Comrs. 119 id. 626.” Indiana, Illinois and Iowa Railroad Co. v. Swannell, 157 Ill. 616.

The bill contains certаin charges of actual fraud or fraud in fact, as distinguished from constructive fraud or fraud in law, and certain charges of conspiracy on the part of the bank and others to wrong these wards, which we do not think are sustained by the evidence; but material аverments of the bill, which we have above held to have been established by the evidence, are sufficient to sustain the deсree. The fact that other allegations contained in the bill are not established by the evidence does not warrant а reversal. Booth v. Wiley, 102 Ill. 84; Chicago West Division Railway Co. v. Mills, 105 id. 63.

Appellant takes the position that the decree of confirmation in the foreclosure suit is an adjudication that Adams purchased the land in his individual capacity, and that, consequently, ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍when the certificate ripenеd into a deed the grantee therein would necessarily take both the legal and equitable title, and reliance is placed on the case of Hunter v. Stoneburner, 92 Ill. 75, which is said to be identical in principle with the case at bar. That is a case in which the complainant, Stoneburner, filed a bill to set aside a sale and conveyance in partition of property in which he had owned an interest, and also to set aside a deed conveying the same property from the purchaser at the partition sale to Hunter. In the suit to partition the land he had been made a defendant while a minor. The principal grоund upon which he based his claim for relief was the charge that his co-tenant fraudulently procured the commissioners in pаrtition to report that the land was not susceptible of division. The land was sold under a decree in partition and purchasеd by the co-tenant at a grossly inadequate price, and by him conveyed to Hunter, who was the owner thereof at the time the bill to set aside the sale was filed. The court held that even if there was fraud Hunter could not be affected thereby unless he had actual or constructive notice thereof. It will be perceived at once that the notice which was provеn in the case at bar was wholly lacking in the Stoneburner case. The court properly held in that case that in the absence of either actual or constructive notice to Hunter of the fraud, he had the right to rely upon the decree of sаle and the approval by the court of the report of sale as res judicata. One distinction between the two cases is, that in the case before us notice to the purchaser was proved; in the Stoneburner case it was not. The decree of confirmation here was an adjudication, binding upon all the parties to the foreclosure suit, that Frank Adams held the legal title. On the question whether he held the legal title for another of upon a trust arising by implication in favor of another, thе decree of confirmation was no evidence whatever.

Adams testified on the part of appellees. On cross-examination appellant sought to show by him that no conspiracy existed to wrong or defraud the appellees. Cоmplaint is made of the action of the court in sustaining objections to cross-interrogatories on this subject. This was not proper cross-examination. ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍Moreover, the witness afterwards testified, during the same cross-examination, that it was not his purpose, nor the purpose of the officers of the bank, to defraud appellees by the transaction under investigation, so that appellant had the benefit of the witness’ views on that subject.

We are of opinion the decree of the circuit court does equity between the parties, and it will accordingly be affirmed.

Decree affirmed.