Martina v. Muhlke

Per Curiam: In deciding this case the Appellate Court delivered the following opinion:

“Error is assigned by the plaintiff in error in that the court denied relief prayed by the cross-bill, viz., the vacating of the judgment at law obtained by the defendant in error upon the principal and interest notes in question. And cross-error is assigned by defendant in error in that the court denied the relief prayed by the amended bill of complaint, viz., the enforcement of the lien of the trust deed given to secure these notes, and in that the court ordered the trust deed to be canceled.

“We are of opinion that the trial court was right, and that it did not err in either of these respects. It seems clear' from the evidence that the plaintiff in error dealt with Schintz as the lender of the money and the mortgagee in the conveyance which secured the loan. As between them there was no equitable claim against plaintiff in error under the trust deed, and hence under the rule, well established by many decisions of this State, defendant in error acquired no equitable rights when the mortgage notes were transferred to him. (Olds v. Cummings, 31 Ill. 188 ; Walker v. Dement, 42 id. 272 ; Sumner v. Waugh, 56 id. 531; White v. Sutherland, 64 id. 181; Haskell v. Brown, 65 id. 29; Thompson v. Shoemaker, 68 id. 256; Towner v. McClelland, 110 id. 542; Himrod v. Gilman, 147 id. 293; McAuliff v. Reuter, 166 id. 491; Buehler v. McCormick, 169 id. 269).

“But this rule has no application to the rights of defendant in error to a legal claim quite independent of anjr lien upon the premises in question, which legal claim was acquired by the defendant as purchaser of the notes for value and before maturity and without notice of plaintiff in error’s defense. It cannot be said that the execution of these notes was procured by fraud or covin, in the sense that would make the notes invalid. Plaintiff in error executed the notes with full knowledge of just what they were, and there was nothing in the execution of them which could operate to bring them within the rule, which applies only to instruments execution of which is obtained by fraud. The fraud necessary to thus invalidate must be fraud in obtaining the execution of the instrument. (Woods v. Hynes, 1 Scam. 103 ; Mulford v. Shepard, id. 583; Adams v. Wooldridge, 3 id. 255; Shipley v. Carroll, 45 Ill. 285 ; Depuy v. Schuyler, id. 306 ; Richelieu Hotel Co. v. Military Encampment Co. 140 id. 248).

“Nor can it be said, as against defendant in error, that these notes were not fully delivered. (Clarke v. Johnson, 54 Ill. 296 ). Nothing was lacking in matter of execution or delivery. Default of Schintz was in failing to deliver the old notes and release of the old trust deed. This failure operated to give plaintiff in error a complete defense to any obligation under the new notes as against ■ Schintz, and, in equity, against enforcement of-the lien of the mortgage by the purchaser from him, defendant in error, but it constituted no defense in law against the obligation of the notes themselves in the hands of a bona fide purchaser before maturity and without notice. The judgment obtained at law could not be attacked in the proceeding, simply because plaintiff in error had an equitable defense against the lien of the trust deed. No other ground is disclosed for the intervention of equity in relation to the judgment. Therefore, the defendant in error was entitled to his judgment in law, and the court properly denied the prayer of the cross-bill to vacate it.

“Argument of counsel for defendant in error, that the equities of plaintiff in error, as against the obligation of these notes, did not exist when defendant in error bought them, but arose afterwards when Schintz failed to return the old notes, and therefore the doctrine of Olds v. Cummings, supra, does not apply, we regard as untenable. If Schintz was the money lender and the real mortgagee, then there was never any time when the equities of plaintiff in error did not exist as against the notes and the conveyance securing them, so far as Schintz was concerned, for there was never a time when the notes were enforcible in his hands. It follows that there was never any time at which he could have conveyed them to defendant in error, so as to give the latter any equitable right to a lien under the mortgage.”

We concur in the foregoing views and in the conclusion above announced. Accordingly, the judgment of-

the Appellate Court is affirmed.

T 7 . „ ,7 Judgment affirmed.