Gardner v. Diederichs

1. Priority of lien—as between several notes secured by the same mortgage, and maturing at different times. It has been held, that, where several notes are secured by a mortgage, in the absence of any special provision to the contrary, the notes are entitled to payment from the proceeds of the mortgage in the order of their maturity. 2. This ruling rests upon the fact, that the holder of the note first maturing, without being vested with any special equity by reason of the capacity in which he holds the paper, as assignor, for instance, may foreclose for non-payment, without waiting for the succeeding notes to mature. The power to do this implies a priority of lien in the notes first falling due. 3. This principle is applied in this case, where a deed of trust was given to secure several notes, falling due at different times and payable to different persons. 4. But where the interest on the notes last maturing is payable annually, the installments of such interest as may fall due at the same time the notes first maturing became due, will be placed on an equal footing with them in respect to payment out of the proceeds of the mortgage. 6. Construction of a trust-deed—as to ike time of the maturity of notes secured by it. Where a deed of trust, which is given to secure several notes, payable at different times and to different persons, simply authorizes the trustee, “ in case of default in the payment of said notes, or any part thereof, or the interest accruing thereon,” to sell “ the premises, or any part thereof,” and apply the proceeds to the payment of “ the amount due on said notes,” and to render the overplus, if any, to the grantor, it will not be construed as meaning that, in the event of a sale on the falling due of the notes first maturing, all the notes shall be deemed to be due; but the notes will be held to mature in the order and at the times specified on their face, and subject to the principle that the notes first maturing have a priority of lien on the trust fund. 6. Disposition of the overplus — where there is a sale before all the notes become due. Whether a court of chancery would protect the holder of the notes which were not due at the time of a sale under the deed of trust, by staying the payment of the surplus fund to the grantor till security could be given that it would be held subject to the lien, the court do not decide; but, at all events, the trustee would not, under such a deed of trust as is mentioned, have the right to apply the surplus on debts not due, nor would a court of chancery compel him to do so. 7. Contribution as between tenants in common, for repairs and improvements. One tenant in common can make another, at common law, contribute to such repairs to a house or mill as are necessary to its preservation or use. Beyond that the right to contribution has not ordinarily been carried. 8. Improvements and taxes — how compensated—as between two mortgagees, or tenants in common. The owner in fee of one-lialf of a mill property, executed a deed of trust thereon to secure debts owing to two persons, severally, one of the creditors being the owner of the other half, who, after the execution of the deed of trust, went into possession and run the mill and made valuable improvements thereon and paid taxes. On a bill filed by the other creditor to foreclose the deed of trust, it was held, that, while the party thus making the improvements might not be able to maintain a bill for contribution against the other cestui gue trust for more than the repairs necessary to preserve the property, yet, as the estate of the grantor in the deed of trust was to be sold, it was but equitable, that, so far as the price which it might bring at the sale should be enhanced by the improvements, the party making them should be refunded, and he should also be allowed for taxes. 9. Bents and profits — as between the same. And as against the sums so allowed for improvements and taxes, he should be charged reasonable rents and profits upon one-lialf the mill, independently of his improvements. 10. Priority of the claim for improvements. The amount found due for improvements would be first paid out of the proceeds of the sale under the foreclosure of the deed of trust, and then the notes secured thereby, in their proper order.

Appeal from the Circuit Court of Grundy county; the Hon. Jesse 0. Sort on, Judge, presiding. On the 24th of February, 1860,1. B. Hymer & Co., a firm consisting of Isaac B. Hymer and Addison Weeks, being indebted to Bobert Diederichs and Bansom Gardner, severally, executed to the former their two promissory notes for the sum of $1,200 each, one payable one year and the other eighteen months after date, and to Gardner their two other notes, one for the sum of $1,500, payable two years from date, and the other for $1,800, payable two years and six months from date; all the notes bearing interest at ten per cent, payable annually. On the same day, Hymer and Weeks and their wives, for the purpose of securing those notes, conveyed to a trustee an undivided one-half.interest in certain real estate, situate in the town of Minooka, in Grundy county. The trust-deed was as follows: “ This indenture Witmesseth, that Isaac B. Hymer and Permelia L., his wife, and Addison Weeks, Eva L., his wife, of Chicago, Cook county, Illinois, grantors herein, in consideration of the indebtedness hereinafter mentioned, and one ($1) dollar to them paid by Sylvester Lind, of Chicago, Cook county, Illinois, grantee, the receipt whereof is hereby acknowledged, do hereby grant, bargain, sell, remise, release and convey unto the said grantee the following described lots, or parcels of land, situate in the county of Grundy and State of Illinois, to wit: The undivided half of village lots number three (3) and four (4), in block number ten (10), in village Minooka, in said county of Grundy, situated in section number one (1), town number thirty-four (34), to have and to hold the same, with all the privileges thereunto or in anywise appertaining, and all the estate, right, title, interest, claim or demand, in and to the same, either now or which may be hereafter acquired, unto the said grantee, his heirs and assigns in trust, nevertheless, for the following purposes: Whereas, the said grantor herein is justly indebted upon four certain promissory notes, bearing even date herewith, payable two of them to the order of Bobert Diederichs, for the sum of twelve hundred dollars each, with interest at ten per cent, payable annually at the bank of J. M. Adsit, Chicago, Illinois, one due in one year and the other in eighteen mqnths from the date thereof, with exchange on Hew York city. And two of said notes being payable to the order of Ransom Gardner, one for fifteen hundred dollars, due two years from date with interest annually at ten per cent, and one note for eighteen hundred dollars due two years and six months from date, with interest at ten per cent, payable annually; all of said notes being signed by said grantors under their firm name of I. B. Hymer & Co. How, in case of default in the payment of said notes, or any part thereof, or the interest accruing thereon, according to the tenor and effect thereof, or in the payment of any taxes or assessments, ordinary or special, which may be levied or assessed against said premises during the continuance hereof, on the application of the legal holders of said notes, or of either of them, the said grantee, Sylvester Lind (full power being hereby given), or his legal representatives, after having advertised such sale thirty days in a newspaper published in said Grundy county, or by posting up written or printed notices in four (4) public places in the county where said premises are situate (personal notice being hereby expressly waived), shall sell the said premises, or any part thereof, and all the right and equity of redemption of the said grantors, their heirs, executors, administrators, or assigns, therein at public vendue, to the highest bidder, for cash, at the court-house door in said Grundy county, at the time appointed in said advertisement; or may adjourn the sale from time to time at discretion, and as the attorney of the said grantors, for such purpose hereby constituted irrevocable, or in the name of the said grantee or his legal representatives, shall execute and deliver to the purchaser or purchasers thereof deeds for the conveyance in fee of the premises sold, and shall apply the proceeds of sale, 1. To the payment of expenses for advertising, selling and conveying as aforesaid, including attorney’s fees; 2. The due on said notes; 3. Rendering the overplus, if any there be, to the said grantors or their legal representatives, at the office of the said grantee in Chicago, Illinois; and it shall not be the duty of the purchaser to see to the application of the purchase-money: Provided, that the said grantors and their heirs and assigns may hold and enjoy said premises and the rents, issues and profits thereof until default shall he made as aforesaid, and, that, when the said notes and all expenses accruing hereby shall be fully paid, the said grantee, Sylvester Lind, or his legal representatives, shall reconvey all the estate acquired hereby in the said premises, or any part thereof, then remaining unsold, to (and at the cost of) the said grantors or their heirs or assigns; and the said Hymer & Weeks, grantors, covenant with the said grantee and his legal representatives and assigns, that they are seized in fee of the said premises and have good right to convey the same in form aforesaid; that they are free from all liens or incumbrances of whatever name or nature, and that they will warrant and defend the same against all claims whatsoever, and will pay all taxes or assessments levied or assessed on the said premises, or any part thereof, during the continuance hereof, and pay the same ten days before the day of sale therefor. “ Witness the hand and seal of the said grantors, this 24th day of February, 1860.” At the time of the making of this deed of trust, there was a flouring-mill on the premises embraced therein, nearly completed. The said Gardner was the owner in fee of the other half of the property, and soon after the execution of the deed of trust he went into possession, made'valuable improvements thereon, and put the mill in operation, and paid the taxes 'on the property. On the 1st day of March, 1861, the notes secured by the deed of trust remaining unpaid, Diederichs exhibited his bill in chancery in the court below, praying a foreclosure of the deed of trust, making the grantors in the deed and Gardner parties defendant. Diederichs claims that he has a priority of lien on the trust fund for the payment of his notes, by reason of their maturing prior to. those given to Gardner. Gardner, on the contrary, insists, that, by the terms of the deed of trust, properly construed, in the event of a sale of the property, all the notes should be deemed to be due, and entitled to payment out of the proceeds of the sale fro rata. Gardner also filed a cross-bill, setting up a claim for the value of the improvements he had made on the premises and the taxes paid thereon, insisting such claim was prior in point of right to the notes secured by the deed. Upon the hearing the court decreed that Gardner’s cross-bill be dismissed, and, the master having reported the amount due to Diederichs and Gardner, respectively, the court further decreed as follows: “And it appearing to said court, that there was due to said complainant, Robert Diederichs, at the date of said report, for principal and interest on the notes payable to him, mentioned in said original bill of complaint and secured as herein stated by the trust-deed in said original bill described, the sum of three thousand three hundred sixty dollars, and that there was at the date of said report due, to the defendant Gardner, for principal and interest on the notes payable to him, mentioned in said original bill and secured in like manner by said trust-deed, the sum of four thousand six hundred and eighty and dollars; and it further appearing to the court, that there is due to the said defendant Gardner the further sum of fifty-five T7„V dollars, moneys by him paid since the date of said trust-deed as taxes upon the property conveyed by the same; the respective counsel for the several parties hereto in open court agreeing and consenting that the amount paid for such taxes may be made a prior charge upon said property, and it further, appearing to the court, that the two notes and the interest thereon, mentioned in said original bill and made payable to said complainant Diederichs are entitled to a priority of payment over those also mentioned in said original bill, made payable to the defendant Gardner.” Decree provides after payment of costs, etc., for application of proceeds of sale between the parties as aforesaid. From that decree Gardner took this appeal. The questions arising on the assignment of errors, are, first, were the notes first maturing entitled to the priority in payment which was given them in the decree % second, and, if that be so, should not the annual interest upon the Gardner notes which became due on the maturity of the first of the Diederichs notes, have been placed on an equal footing therewith 1 and, third, as to the correct rule in relation to compensation to Gardner for the improvements made by him on the property conveyed by the trust-deed.