Siegel v. Borland

Mb. Justice Seabs delivered the opinion of the court. A personal liability ivas sought to be charged upon appellants upon two different grounds: first, upon the theory of an assumption of the entire mortgage indebtedness by the appellants, and secondly, upon the theory that the sum of $25,000 had been paid to appellants to apply upon the indebtedness, and hence they were equitably bound to so apply it, and in the event of a deficiency, the mortgagee could enforce the obligation. The chancellor found against the appellee and in favor of the appellants upon the first contention, but upon the second contention found that the appellants were liable to the extent of the $25,000 received by them, and interest thereon. The chancellor having found against the first of these contentions, and the decree being in no manner based upon it, we would have no occasion now to consider it, were it not that counsel for appellee, in seeking to sustain the decree, again present to this court the proposition that upon the evidence the appellee was entitled to a personal decree for the entire deficiency, and hence that this decree for a lesser amount must be sustained, irrespective of the fact of a receipt by appellants of the $25,000. It seems to be well settled, by the authorities and by decisions in this State, that in order to impose a personal liability upon a grantee to pay a pre-existing mortgage upon the premises purchased by him, there must either be an express agreement to that effect or a retention by him of a part of the consideration, i. e.. the purchase price, for the purpose of paying such mortgage debt. Jones on Mortgages (2d Ed.), Secs. 748, 749, 750, 751 and 752; Comstock v. Hitt, 37 Ill. 542; Hammer v. Johnson, 44 Ill. 192; Fowler v. Fay, 62 Ill. 375; Rapp v. Stoner, 104 Ill. 618; Dean v. Walker, 107 Ill. 540; Drury v. Holden, 121 Ill. 130; Robinson Bank v. Miller, 153 Ill. 244; Crawford v. Nimmons, 180 Ill. 143; Richardson v. Venn, 84 Ill. App. 601. There is here no agreement expressed in the deeds of conveyance by which it can be said that appellants, or either of them, contracted to assume and pay the mortgage debt. There was such an agreement expressed in the conveyances to Peck, to Bryan and to Simmons; but not in the conveyances to appellants Philipsborn and the Siegels. The provision in the deeds by which they took title, was only that the conveyance was made subject to the mortgage. The words must be considered as words of qualification and not as words of contract. We have, therefore, to inquire whether the evidence establishes the fact that the amount of the mortgage debt was included in the consideration of the sale by Simmons to Philipsborn — that is to say, whether it was a part of the purchase price and retained by the purchaser to be applied by him in discharge of the mortgage debt. We understand the authorities above cited as basing the doctrine announced upon the establishment of the fact of a retention by the grantee of part of the purchase price for the purpose of applying it upon the mortgage debt, from which fact an implied con tract arises to so apply the part retained. We do not understand that it is meant by any of these cases to announce that because the amount paid for a parcel of land, bought subject to mortgage, when added to the amount of the mortgage debt, makes up the amount of the true value of the land, therefore from such fact alone a contract to assume and pay the mortgage debt can arise. Mere computation can not thus create a contract. It would seem clear that there must be something more, viz., that which amounts in effect to a withholding of a part of the purchase price, included in the actual consideration, for the purpose of paying the debt. In Drury v. Holden, supra, the court said : “ The deed to Drury was made expressly subject to the incumbrances. It appears that the mortgage debt was included in and formed a part of the consideration of the conveyance. * * * It was expected that he would pay it, and Drury, in effect, retained from the purchase price the amount of the incumbrance to pay it. If, then, Drury should afterward pay the mortgage debt it would be but just that he should do so; it, would be in accordance with the arrangement between him and ' Daggett; it would, in truth, be but the payment of part of the purchase price of the lots. That price he ought to pay. There was, in effect, property retained in his hands to pay the mortgage debt, and it would seem inequitable for him to appropriate it to his own use and not apply it, as contemplated, to the mortgage debt.” Does the evidence here establish that in the agreement and transactions by which the Cambridge property and block 44 were exchanged for the stock of merchandise and fixtures, the expressed consideration of transfer of the Cambridge included the mortgage debt, and that the amount of this debt was withheld by the purchasers of the Cambridge to apply on a payment of the debt? The agreement between Simmons and Philipsborn and the Siegels, which was reduced to writing and executed in the name of The Grand, was part of the same transaction in which the deed to Philipsborn was given. The deed was executed by Simmons and received by Philipsborn in the carrying out of the agreement. By the terms of the written agreement the expressed consideration of the transfer of the property was $200,000. Payments were made by appellants as follows : Stock of merchandise at agreed value of $95,000; fixtures at agreed value of $30,000. The remaining balance of the expressed consideration of $200,000 was not paid at all, except it be considered to have been paid by reserving of it to apply upon the mortgage-debt, which Avas precisely in the principal sum of $75,000:. Upon these facts, apparently, the master based his com elusion of fact that there was such a withholding of part of the purchase price as raised an implied contract to apply it on the debt. Against this evidence there is the positive-testimony of Philipsborn, the Siegels, Stetson and Mr. Binswanger, their attorney, that they positively refused to assume the payment of any part of the mortgage debt, and that the consideration expressed in the contract and deeds was not based upon any such assumption, but was a fictitious - consideration fixed upon by caprice or wish of the purchasers. Upon all this evidence the chancellor found that facts' were not established upon which an implied contract to assume and pay the debt could be based. Had the chancellor found with the master in this behalf, we are not prepared to say that we would not sustain the conclusion; nor can we say upon the conflicting evidence that the chancellor’s conclusion to the contrary is so against the weight of the evidence as to warrant us in disregarding it. Therefore, if the decree be sustained, it must be upon the evidence tending to establish the fact that the sum of $25,000 was paid by Simmons to the appellants for the express purpose of applying it upon the mortgage debt. The master and the chancellor agree in finding that the evidence does establish this fact. We are of opinion that this conclusion was warranted and is sustained by the greater weight of the evidence. The fact is undisputed that the sum of $25,000, partly in cash and partly in promissory notes,'was paid by Simmons to the appellants in carrying out the agreement of exchange of properties. No provision for this payment was made by the agreement as first considered. There is evidence to show that the Siegels refused to go on with the exchange because they had learned that the mortgage loan of $75,000 could not be renewed for more than $50,000 thereof, and that they thereupon insisted that Simmons pay $25,000 in order that the debt of $75,000 might be reduced to $50,000, for which latter amount it might be renewed. Montgomery’s testimony goes to establish this fact. Bryan’s testimony as to admissions of Joseph Siegel tends thereto. The Siegels deny that the $25,000 was paid or received for the purpose of reducing the mortgage debt. The testimony of other witnesses can hardly be treated as of much weight upon this point. W e think that the master and the chancellor were fully warranted in regarding the denial by the Siegels as wholly overcome by the other evidence. The circumstances all tend to show that the $25,000, the payment of which by Simmons is uncontroverted, was given to reduce the mortgage debt. In the written agreement the consideration fixed upon for the granting of the realty was $200,000. In the deeds themselves the amount of the expressed consideration of the two deeds was $175,000, i. e., $160,000 for the Cambridge and $15,000 for block 44, a difference by way of reduction of precisely $25,000. The provision in the written agreement for the payment of the $25,000 appears in connection with the qualification as to incumbrance, and no word is contained in the writing as to why or in what behalf this payment was made. It merely provides that Simmons should pay $25,000, of which $12,000 should be in cash and $13,000 in the form of promissory notes. It is reasonable to conclude that the payment was for the reduction of the mortgage, as indicated by the testimony of Montgomery and Bryan; it is unreasonable to draw any other inference from all the facts and circumstances of the case. Therefore, we are of opinion that the decree is right in finding that the sum of $25,000 was paid by Simmons, who had become obligated to pay the mortgage debt, to appellants, who acquired the title from him, for the express purpose of applying the sum in reduction of the debt. This being so, the decree was also right in ordering that appellants apply the payment as by the agreement they were bound todo. We are unable to accede to the contention of counsel for appellant that rules of evidence were disregarded in the admitting of extrinsic evidence to explain the purpose of the payment of the $25,000. By admitting such evidence nothing contained in the writing was in any way contradicted or changed. It simply operated to disclose that upon which the writing was silent, viz., the purpose of the payment of the $25,000. The writing expressed the purpose and application of other payments and exchanges; but it was silent as to the purpose of the payment of the sum of $25,000. ISTor do we think that the court erred in admitting the written contract as varying the terms of the deeds as to the consideration. Kinzie v. Penrose, 3 Ill. 515; Sidders v. Riley, 22 Ill. 109; Drury v. Holden, 121 Ill. 130; Harts v. Emery, 184 Ill. 560. The theory of relief, suggested by the master, to be granted upon a liability incurred by some of appellants because of their action as directors of the corporation, The 'Grand, in contravention of the provisions of the corporation act, can not, we think, be sustained. The bill of complaint is not framed upon any such theory. That the Siegels, who received the $25,000, are liable as well as The Grand, by which corporation the agreement was made, seems clear. Ho reason is suggested why Philipsborn, who took the property as first grantee, should not also be held, except as it is urged that neither he nor the Siegels are liable upon like grounds. When Philipsborn received the deed in carrying out the transaction in which the $25,000 was paid to appellants, he, as one of 'the real purchasers, together with the other appellants, became principal debtor for the mortgage debt to the extent of the $25,000, and to that extent Simmons became surety only. We are of opinion that the allegations of the bill are sufficient to warrant the relief granted upon a finding that the $25,000 was paid as above indicated. It was a part of the transaction of purchase,and sale, and was an assuming of the mortgage debt to that extent as part of the contract of the parties in making the sale. If, instead of paying back the $25,000, Simmons had permitted an amount of the merchandise or fixtures, equal in value to $25,000, to be withheld, the transaction would have been no different in principle. The interest allowed by the decree is, we think, excessive. Interest was allowed from January 20, 1897, the date of the transaction, i. e., the date of the carrying out of the contract of sale, and at a rate in excess of five percentum. It does not appear that appellants could have made any partial payment upon the mortgage debt at the time of the receipt by them of the $25,000. Therefore, the interest should be computed only from the maturity of the mortgage notes, at which time appellants could and should have so applied the money. We are of opinion that appellee is entitled only to interest at five per cent per annum from the date of the maturity of the mortgage debt until the date of the decree. This would make the amount due at the time of the decree $27,524.29. If the appellee remits, within ten days, all of the decree in excess of $27,524.29, the decree will be affirmed as to that amount, otherwise the decree will be reversed and the cause remanded. Affirmed on remittitur.