Nichols v. Otto

Mr. Justice Cbaig delivered the opinion of the Court: A motion was entered in this 'case to dismiss the writ of ■error on the ground that a freehold was not involved. We do not regard the motion as well founded. The complainants allege and claim that they own the title to the premises, while, on the other hand, Nichols claims the title under a sale by virtue of the power contained in a mortgage executed by complainants to him. Both parties claimed title to the premises. The title was thus in issue, and the court, from the evidence, determined that complainants held the title, and entered a •decree divesting the title that Nichols claimed under the deeds from Nichols to Hathaway and from Hathaway to him. Under the ruling in Sanford v. Kane, 127 Ill. 591, arid the cases there ■cited, w.e think it plain that a freehold is involved. The motion to dismiss the writ of error will therefore he overruled. It is conceded in the argument that Nichols purchased at his own sale,—that the name of Hathaway was used as a mere conduit for the conveyance to Nichols of the interest which the complainants held in the premises. Where a mortgage confers a power of sale upon the mortgagee, and a third party becomes a purchaser at a sale, under such power, for the benefit of the mortgagee, the authorities’ all agree that the sale is invalid, and may be set aside at the instance of the holder of the equity of redemption, as against such purchaser. (Harper v. Ely, 56 Ill. 179; Lockwood v. Mills, 39 id. 603; Miles v. Wheeler, 43 id. 123; Hamilton v. Lubukee, 51 id. 415.) It is therefore plain that Nichols had no right to become a purchaser at the sale. He could not, lawfully, at the same time act as vendor and purchaser. But a sale of that character is mot absolutely void—it is voidable, only. (Munn v. Burges, 70 Ill. 611.) After the sale was made,.the owners of the equity of redemption might ratify it, and if they did so, the sale would become valid; or they could repudiate the sale, and cause it to be set aside by an appropriate proceeding in a court ■of equity. It will be observed that the sale under the mortgage was made on the 2d day of October, 1876, while the bill in this case was not filed until July 13, 1883,—a period of six years and nine months; and it is insisted that complainants are barred of relief by their laches. The deed from Nichols, the trustee, to Hathaway, and the deed from Hathaway back to Nichols, were placed on record immediately after the sale, and Nichols at. once went into possession of the property. The fact, therefore, that Nichols was a purchaser at his own sale was known to complainants at the time the sale occurred; .and the law is well settled, that where the owner of the equity of a-edemption knew of the defects attending a sale, he must, as a general rule, proceed with diligence in his application to set the sale aside, or a court of equity will refuse relief. In Bush v. Sherman, 80 Ill. 175, in discussing this question, the court, said: “The principle that lies at the foundation of all the cases in this court upon this subject is, the party who challenges a sale on account of irregularities that may have intervened, must be diligent in discovering that which he alleges will avoid the sale, and diligent in his application for relief.” • It is true that no general rule has been established fixing a. definite time in which a bill shall be filed to set aside a sale in a case of this character. As a general rule, each case, as it has arisen, has been determined on its own peculiar facts and circumstances. Here the reason assigned by the complainants for not invoking the aid of a court of equity at an earlier day is, that Nichols agreed, before the sale, to return the property to the complainants at any time, upon payment of principal and interest. In support of the agreement of Nichols, the complainant, Otto, testified, that Nichols, before the sale, said to him, in the presence of Rudolph Schlosser, “I don’t want the property. You may redeem at any time. I only want the money and interest.” In corroboration of this evidence, Schlosser testified that he had' two conversations with Nichols before the sale; that he talked with him in regard to the proposed sale of the property, and that Nichols said, in substance, he would at any time be ready to return the property on payment of capital and interest loaned on the property. These conversations are denied by Nichols, and some evidence was introduced tending to sustain his denial. But there is one admission made by Nichols which gives support to the alleged arrangement relied upon by complainants. Nichols admits, in his evidence, that before the sale he offered to give Otto ten years to redeem, provided he would give him a quitclaim deed of the premises; but he says the proposition was rejected by Otto. From this admission it is apparent, that whether Otto should be allowed to redeem after the sale was a question under negotiation between the parties, and if Sehlosser is to be believed,—and he seems to be an impartial and disinterested witness,—disregarding the evidence of Otto, it is apparent that Nichols and Otto came to an understanding that the latter might, at some future time, redeem from the sale. If, therefore, such an arrangement was made, and Otto acted and relied upon it with the honest belief that he had the right of redeeming the property from the sale, then laches ought not to be imputed to him until such time as Nichols should repudiate the arrangement, and claim absolutely to own the property, unincumbered of any right of redemption. Had there been no evidence whatever of an understanding or arrangement between the parties in regard to the right of Otto to redeem, we are satisfied that complainants would be barred from relief on account of their laches; but laches can not be imputed where one has delayed invoking the aid of a court of equity, relying upon a contract conferring the right of redemption. The rule is well established, that courts will enforce agreements to extend the time of redemption which have been entered into while the right to redeem exists. (2 Jones on Mortgages, sec. 1053; Chase v. McLean, 49 Me. 375; Dodge v. Brown, 31 Mich. 227; Union Mutual Life Ins. Co. v. White, 106 Ill. 69.) In the case last cited, a bill to redeem was not filed until three years after a sale, and it was sustained on the express ground that an agreement had been made before the sale, extending the time of redemption. If the right of redemption may be extended, by agreement, for three years, we perceive no reason why it may not be extended for a longer period. The decree of the circuit court will be affirmed. Decree affirmed.