Whiting Paper Co. v. Busse

Mr. Presiding Justice Adams delivered the opinion of the court. The preceding statement contains the main facts in the case. It appeaps-from the evidence, and is not controverted, that appellant never had possession of either the Baur mortgage or the unsigned note, the payment of which it purports to secure. It also appears that what appellees’ witness, Dickerman, calls the new note, and which is identical as to date and terms' with the unsigned note, only differing from it in being signed, wras drafted by Dickerman, appellant’s attorney, about the middle of February, 1899, which was about three weeks after the mortgage from Harrison and Siegel to Busse was executed; that when it was drafted, Dickerman gave it to Becker to have it signed and that it was returned to Diclcerman’s office in two or three weeks after that time, which would be February 28 or March 7,1899, or from fourteen to twenty-one days after the mortgage from Harrison and Siegel to appellee was recorded. So that prior to the execution of the latter mortgage there was no note in existence such as that described in it, and the payment of which that mortgage purports to have been made to secure. In Ogden v. Ogden, 180 Ill. 543, it appeared that a mortgage was executed purporting to secure payment of a promissory note, and no note was executed by the mortgagor at the time of the execution of the mortgage, but that in six years after the execution of the mortgage the mortgagor made a note dating it as of the date of the mortgage, and corresponding with the description of a note in the mortgage. But between the time of the execution of the mortgage and the making of .the note, the.mortgagor conveyed the mortgaged premises to a third party. On these facts the court held that the mortgage was invalid as to the mortgagor’s grantee. The court say : “ The debt is the principal thing and the mortgage only the incident. While this court has held in several cases that the giving of renewal notes or the merging of the notes in a judgment does not operate to release the mortgage lien (Rogers v. Trustees of Schools, 46 Ill. 428; Citizens’ Nat. Bank v. Dayton, 116 Ill. 257), yet it has not been held, to our knowledge, that a mortgage purporting to secure only a supposed note never made can be foreclosed as drawn, even though an indebtedness, which it does not purport to secure, existed. Thus in Branhall v. Flood, 41 Conn. 68, where the mortgage purported to secure a note for $1,000 which was never given, it was held void as against an attaching creditor, although the mortgagor was at the time indebted to the mortgagee in three-fourths of that amount, and had agreed to advance goods to the amount of the remaining one-fourth, and the purpose in making the mortgage was to secure the total amount of the $1,000. It was said in Metropolitan Bank v. Godfrey, 23 Ill. 579, that ‘ the spirit of our recording system requires that the record of a mortgage should disclose with as much certainty as the nature.of the case will admit, the real state of the incumbrance.’ ” In the present case no such note as that described in the Baur mortgage, or any note from Elizabeth Becker to Baur, so far as appears from the evidence, had been made January 24, 1899, when the mortgage from Harrison and Siegel to appellee was executed. In so far as the date of instruments and of recording are concerned, appellant can not, as equitable assignee of the mortgage by virtue of the assignment to it of the note, claim priority over the mortgage from Harrison and Siegel to appellee, because that mortgage was recorded February 24, 1899, and the note with Baur’s indorsement was not delivered to appellant’s attorney, as he, in substance, testified, until about February 28 or March 7,1899. Still less can appellant claim such priority by virtue of the formal assignment of the mortgage itself, which was not made till May 3, 1899. If a bill were filed by. Baur for the foreclosure of the Baur mortgage against the Beckers, appellee Henry Busse and others interested, his conduct in the premises, as shown by the statement preceding this opinion, would, in our opinion, preclude relief as against appellee. He put John E. Becker, the husband and agent of one of the mortgagors, in possession of the mortgage and unsigned note, knowing, as he himself testified, that it wTas Becker’s intention to assume the indebtedness of the Beckers to him, and that Harrison was to take up the first mortgage. It is evident, as we think, from the testimony of Doctor Baur and Becker, that the former delivered the mortgage to Becker with the understanding that it was to be surrendered, he, subsequently, to have other security. He said to Becker, “ Whatever you decide on will be satisfactory to me, providing I get some security afterward,” and when McCulloch inquired of him how any one could claim under him while he, McCulloch, had the mortgage in his possession, he said: “ That is Becker’s business and I don’t want to talk about it.” A mortgage is not a negotiable instrument, and if the assignee of a mortgage seeks relief in equity, as he may, by the foreclosure of the mortgage, his bill is subject to all equitable defenses which could be made in case of a like bill filed by his assignor. Olds v. Cummings, 31 Ill. 188; McAuliffe v. Reuter, 166 Ib. 491, 496. We think the evidence tends strongly to support the view that the Baur mortgage was made to hinder and delay the creditors of the Beckers. The evidence of several witnesses is that Becker stated that it was made for his protection and was without consideration, notwithstanding the evidence shows that there was an indebtedness of the Beckers to Doctor Baur sufficient to support a mortgage, yet we think the circumstances in evidence tend to show that Dr. Baur’s motive in taking the mortgage was to protect the Beckers from their creditors. He did not act in the premises as a creditor desiring to protect himself, and looking exclusively to his own interest, ordinarily would. He was not sufficiently interested, apparently, to observe whether .the paper described in the mortgage as a note was signed; he would not even spare the time necessary to take the mortgage to the recorder’s office, but, for that purpose, intrusted it to Becker, the agent of the mortgagor. Subsequently he turned it and the unsigned note over to Becker with apparent and, as we think, actual authority to do what "he pleased with them, and when Mr. McCulloch sought information from him, he told him, substantially, that the matter was none of his, Baur’s, business; that it was Becker’s business. Dr. Baur testified that nothing was paid to him by appellant for the assignment to it of the Baur mortgage. It would be unreasonable to presume that appellant paid nothing for the assignment, and, therefore, reasonable to presume that if it did not pay Dr. Baur, it paid some other person or persons. This may have been and probably was another instance of Dr. Baur’s generous assistance of his relatives, the Beckers. December 10, 1900, the date of the decree, the court, by order of that date, permitted appellee to amend his bill, and ordered that appellant’s answer to the original bill should stand as an answer to the bill as amended. Appellant’s counsel complain that the court would not allow appellant to answer the amendment. The only new matter in the amendment is the averment that long after the date of the mortgage, etc., Elizabeth Becker executed a note, and this fact was proved on the hearing and is relied on by appellant in argument, and we can not see how appellant is in the least prejudiced by the amendment, or want of specific answer thereto. We find no reversible error in the record, and the decree will be affirmed.