« ΠροηγούμενηΣυνέχεια »
money to take a journey for the improvement of his health. The money so advanced amounted on August 27, 1875, to over $11,000.
Among the other indebtedness of Flagg there was due from him to one Soper about $5,000 in notes and on open account. Walker, acting upon the advice of Flagg, sold to Soper the tools and machinery in the Empire Machine Works, and as part consideration therefor, Soper acknowledged payment of the debt due to him from Flagg, and gave his notes for the residue. Walker also leased to Soper, by the advice and with the consent of Flagg, one-half of the Empire Machine Works buildings for $1,500 per year. Walker began repairing the tenement houses so as to put them in good condition for renting. Having appointed one Du Bois as his agent to look after the property, superintend the repairs which he had begun, and collect the rents, he returned to his home in Massachusetts. When the transfer of his property was made by Flagg to Walker in February, 1875, there was a deed of trust on the 69-acre tract, known as “the pasture," to Corydon Weed, trustee, to secure $25,000 due to Hiram Sibley, bearing interest at the rate of 10 per cent. per annum, payable semi-annually, and there was a mortgage on the “homestead” for $9,000, bearing like interest. In November, 1876, the interest on the debt due to Sibley being in arrear, Weed, the trustee, by virtue of a power contained in the deed of trust, advertised “the pasture" for sale, and on the day mentioned in the notice sold it at public sale to Hiram Sibley for $10,500. The mortgage for $9,000 on the homestead was purchased by Walker on July 1, 1876, the amount paid, principal and interest, being $9,976.77. • After these events, on September 25, 1878, the original bill in this case was filed by Mrs. Flagg against Walker, Sibley, Weed, the trustee, and her husband, William F. Flagg. It alleged that since the conveyances made by her husband to Walker, in February, 1875, the former had by mesne conveyances transferred and conveyed to her "all his interest, right, and title in and to said real estate above mentioned,” referring to the real estate conveyed by Flagg to Walker, “and all personal property appertaining thereto, or that went into the hands of Samuel Walker.” The bill set out the transfer to Walker by Flagg and his wife of the real and personal estate of Flagg, and in reference thereto made the following averments: “That the said deeds were intended by said William F. Flagg and oratrix to secure the said Samuel Walker for his advances to be made by him, as above set forth, and as a further security for a reasonable compensation to be paid to him for the rendition of such services, and that he might out of the sale of a portion of said property be reimbursed for such advances and compensation. It was also agreed *
* that when the purpose for which such conveyance had been made was fully completed, the said Samuel Walker was to reconvey to William F. Flagg, or to oratrix, as they might elect, at least one-half of the property remaining unsold and undisposed of, and should keep for himself and for his compensation a portion of said lands, not exceeding one-half of the residue, after payment of all debts.” The bill also averred "that shortly after receiving the said deeds of conveyance the said Samuel Walker executed a statement in writing, in which he set forth and stated to your oratrix the use and purpose, both set forth, upon which the said Samuel Walker had received the said property in trust." The bill charged "that said deeds of conveyance made to Samuel Walker, while, in fact, warranty deeds,” were, “in equity, no more or less than mortgages, made to secure said Samuel Walker for his advances to be made by him, and said advances were to be sufficient in amount to pay all indebtedness of said William F. Flagg to other persons than said Samuel Walker; and that said Samuel Walker was to reimburse himself out, of the sales to be made by him."
* The bill alleged that Walker neglected and refused to furnish money to pay the interest on the debt to Sibley, secured by the trust deed to Weed on “the pasture,” which was well worth $80,000, and that had it not been for the
conveyance thereof by Flagg to Walker, Flagg would have been able to raise money to pay the interest on the debt as it accrued, or could have made a new loan and paid off Sibley's claim in full; but by reason of the conveyance to Walker he was unable to do so; and that Walker knowingly and willfully permitted Sibley, by Weed, bis trustee, to sell the premises at a forced sale for about $10,000, when its real value, at the time of the sale, was $80,000.
The bill further charged as follows: “That Walker, as to the real estate conveyed to him by Flagg, is to be taken and deemed as mortgagee tiereof;
and that, by reason of the execution of said instrument in writing by Walker, as the purpose for which he received said conveyance,” said conveyance “is to be taken and deemed in equity as a trust deed on said lands;" and that Walker should "be charged with the value of all the real estate which, in fault of his said trust, he has permitted to be sold, and thereby alienated from said William F. Flagg or the plaintiff, and is likewise to be charged with a reasonable rental value of all said premises."
The prayer of the bill was as follows: That Walker might be charged with all the waste committed or permitted by him on the property conveyed to him by Flagg, and with “the value of property allowed by him to be alienated;" the amount of taxes and interest paid by Flagg or the plaintiff, with interest thereon; and that he might be credited with what he had paid out for Flagg or the plaintiff, with interest, “and that the difference between the said items' should be charged to said Samuel Walker by reason of his failure to act as trustee as aforesaid; that said mortgage by him now held upon the homestead of your oratrix should be canceled; that if there be any outstanding claims against the said William F. Flagg, which were liens” (or) “in. cumbrances at the time of the conveyance to him, that they should be satisfied and paid out of the decree so awarded against the said Samuel Walker, and the property above mentioned now remaining in the name of said Samuel Walker be thereby free, clear, and released from all incumbrances and liens, and that said Samuel Walker should be decreed by this court to reconvey the residue, or such portion thereof as the court shall decree your oratrix is entitled to, by proper deeds of conveyance.”
Walker filed his answer alleging that he came to Illinois at the request of Flagg and his wife, and upon examination of Flagg's affairs found that he was deeply in debt; that his real estate was heavily incumbered, and that he owed a large floating debt and was out of funds, and that all of his property was likely to be taken from him if it should be forced to sale; but that, after a full investigation, he became satisfied that Flagg's property, with good management, was worth more than his indebtedness, and that he proposed that Flagg should convey all his property to him, and let him manage his business for him; that Walker agreed that he would take the property without any future right of control, management, or ownership remaining in Flagg, and would pay off the debts of Flagg specified in a list furnished to him by Flagg. This list did not include the debt due to Sibley, and he refused to assume that debt and would not agree to pay it, but promised that he would use the rents and profits of the land towards keeping down the interest on the Sibley debt and the taxes, and if he could sell the property so as to pay the debt, he would do so, or he would convey the same to any parties to whom Flagg might sell. He denied waste or mismanagement,
and averred that the conveyance to him was absolute and not a mortgage. He alleged that he had paid out of his own means on the indebtedness of Flagg $10,000 more than he had realized out of the personal property transferred to him by Flagg, in addition to the money paid for the trust deed or mortgage on the “homestead" property. He further alleged that the whole property now held by him would not bring the money paid out by him and the accumulated interest, and that the amount was growing larger because he was deprived of the rents and profits of the property.
* On June 28, 1878, Walker filed a cross-bill, to which he made William F. Flagg, Maggie R. Flagg, and Hiram Sibley defendants, and in which he set up substantially the same facts as in his answer, and prayed for a decree that his title to the premises be confirmed, and that the claim of the defendants to any title thereto be declared null and void; and that if, upon the final hearing, his title should be held to be a mortgage, an account might be taken of the amount of money paid out by him in consideration of said conveyances, and that the amount of the same, together with the interest, should be declared a lien upon said real and personal property, and that in default of payment thereof a strict foreclosure might be granted. To this cross-bill, by ieave of court, the original bill of Maggie R. Flagg was made to stand as an answer.
A large mass of evidence having been taken, the court, on August 5, 1879, made an interlocutory decree, in which it was found that Walker held said real and personal property, conveyed and transferred to him by Flagg in trust for the purposes expressed in the declaration of trust made by Walker on April 12, 1875, and for the purpose of security to himself for all moneys paid out by him for Flagg, or for or on behalf of the property of Flagg; that Walker had expended large sums of money in paying off the indebtedness of Flagg, and in taking care of and repairing the property, and in necessary expenses in the execution of the trust, in paying off and discharging liens and incumbrances upon the property, for all of which he was entitled to a first lien upon said real estate and upon all the personal property conveyed to him; that Walker assumed no portion of the debt due and owing by Flagg to Sibley, beyond what the land covered by the mortgage to secure it might be sold for; and that Walker was not liable for any damages growing out of said indebtedness on said mortgage. The decree declared that the acts of Walker were approved, and referred the case to a master, to state an account between Walker and William F. Flagg and Maggie R. Flagg; and directed that the master, in stating the account, should not charge anything for any failure on the part of Walker to sell any of the real estate, or on account of any depreciation of the value thereof. On the fifth of September, 1879, the master filed his report, in which he credited Walker with the sum of $28,996.63, and charged him with the sum of $3,789.50, leaving a balance due to Walker of $25,207.13. On the fourth of October, 1880, the court entered a final decree in the cause, in which it was found that there was due to Walker the sum of $25,207.13, and that said sum was a first lien upon the property conveyed by Flagg to Walker and remaining unsold; that said property was scant security for said indebtedness; that said William F. Flagg was insolvent; and that a large part of said property was unoccupied and deteriorating in value. It was therefore decreed that Flagg should pay to Walker the sum of $25,207.13, with 6 per cent. interest, and also the costs of suit, on or before the first day of April, 1881; that such payment being made, Walker should reconvey all said real estate and personal property by quitclaim deed, and cancel and discharge theindebtness of record; and that in default of such payment on or before the first of April, 1881, the title of Walker to all of the real estate and personal property conveyed to him by Flagg, and not already disposed of, should become absolute, and the title of William F. Flagg and Maggie R. Flagg be forever barred and foreclosed. From this decree Maggie R. Flagg and William F. Flagg have brought this appeal.
The appellants make no objection to that part of the decree-which finds the balance due to Walker. It must, therefore, be accepted as a fact in the case, that the sum so due, over and above all moneys received by Walker from the property conveyed to him by Flagg, was, on October 4, 1880, $25,207.13. Nos upon this appeal is there any charge of waste or other mismanagement by Walker of Flagg's property, except in his failure to furnish money to pay the accruing interest on the Sibley debt, and in allowing the property mortgaged to secure it, to be sold at a sacrifice, as is alleged, under the trust deed.
It is, therefore, virtually conceded by the appellants that, in all other respects, Walker's administration of the trust was honest and faithful.
But the appellants complain of the decree upon the following grounds. First. Because it does not hold Walker liable for his breach of trust in not providing for the payment of the interest on the Sibley debt, secured by trust deed upon the “pasture," and in allowing it to be brought to sale without competition or any personal attention from himself, and to be sold for $10,500, when it ought to have brought from $60,000 to $100,000. Second. Because it orders a strict foreclosure, as the appellants call it, of the premises to Walker. Third. Because it consolidates the advances made and expenses incurred by Walker in the management of the estate with the amount of the mortgage or trust deed upon the homestead, and decrees a strict foreclosure for the whole sum upon all the property.
We do not think either of these grounds for reversal well founded. The evidence makes it perfectly clear that the terms upon which Walker took the conveyance, as set out in the writing executed by him on April 12, 1875, were assented to by Flagg and his wife. Neither of them ever objected to the writing, or after its execution expressed the slightest dissent from its provisions. On the contrary, although both Mr. and Mrs. Flagg were examined as witnesses, neither of them says that the writing was not satisfactory to them, or that they did not accept it as showing the terms upon which the transfer of Flagg's property was made to Walker. In fact, the execution*of this paper is referred to in the original bill, and made, in part, the basis of the relief therein prayed for by Mrs. Flagg; and her counsel, in their brief, quote it at length, and insist that it shows the trust character in which Walker accepted the conveyance, and the consideration thereof. Of course, Walker is bound by his written admission of the terms upon which the property was transferred to him. By this writing Walker agreed to pay off all the ascertained indebtedness of Flagg, except the Sibley debt; and as to that, he was only to pay so much of it as could be made out of a sale of the lands mortgaged to secure it. Walker did in fact pay off all the other indebtedness of Flagg. The complaint made against him is that he did not furnish money to pay the Sibley debt, or sutficient to keep down the interest, but made default in the payment of interest, and thus allowed the property to be sacrificed at a forced sale.
It must be conceded that in accepting the conveyance of the property Walker became a trustee to manage the property and pay off the debts of Flagg according to the terms of the trust, and should be held liable for a faithful discharge of his trust. But this liability was imposed upon him on the condition, and with the understanding, that he was to be allowed the undisturbed possession and management of the property transferred to him, and reception of the rents and profits, which, the testimony shows, exceeded $3,000 per annum. It was to give him this undisturbed possession and control that the transfer of the property was made to him.
The evidence shows that Walker, after the conveyance to him, did furnish money sufficient to pay off the interest for six months due on the Sibley debt. It also shows that Flagg, having been absent from home for five or six weeks in the spring of 1875, returned with greatly improved health, in the latter part of April. He at once claimed as his own all the property which he had conveyed or transferred to Walker. He stopped the repairs which Walker had begun on the tenement houses, drove off the workmen, refused to recognize Du Bois, the agent appointed by Walker to take care of the property and collect the rents, and before the first of August he had resumed possession of all the property he had conveyed and delivered to Walker, both real and personal, and from that time on until the filing of the original bill, on September 25, 1878, had collected and enjoyed all the rents and profits of the real estate except of such part as Flagg and wife had undertaken to sell and dis
pose of, or such as had been sold under mortgage or other incumbrances. In short, within less than five months after Flagg had transferred his property to Walker and put him in possession thereof, and after Walker had paid a large sum upon Flagg's indebtedness, the latter repudiated, as far as he could, the transfer of the property, and resumed possession of it as if no conveyance thereof had been made. Since that time he had, with Walker's consent, sold and disposed of a large part of the property conveyed to Walker and appropriated the proceeds, and, until the date of the final decree, he had enjoyed and managed the residue without interference from Walker or his agents. By the tacit consent of Walker the management of the property was recommitted to Flagg; he was allowed the undisturbed control of it; he was permitted to contract for the sale of a large part of the trust property, and Walker made deeds therefor whenever requested by Flagg, until only sufficient was left to afford what the circuit court found to be but a scant security for Walker's advances. It was after Flagg had himself in this manner interfered with the execution of his trust by Walker, and, in effect, had released Walker from all duty as trustee, that he called upon the latter to provide money to pay another installment of interest on the Sibley debt. This Walker declined to do; but, at Flagg's request, he executed a conveyance of a lot, part of the property transferred to him, and out of the proceeds Flagg paid one installment of the interest due on the Sibley debt.
It was in November, 1876, about 16 months after Flagg had resumed possession of his property and undertaken its management, and was in receipt of its rents and profits, that the “pasture” was sold by Weed, the trustee, at public sale, for default in the payment of interest due on the Sibley debt. It is clear that under the declaration of trust of April 12, 1875, Walker was not bound to advance, out of his own means, money to pay the principal or interest on the Sibley debt. He was only bound to apply the rents and profits to the satisfaction of interest. Upon what ground, therefore, any just complaint can be made against him for not keeping down the interest, or paying the principal of the debt, after Flagg had resumed the possession and management of his property, and was receiving its rents and profits, it is not easy to
But if Walker had agreed to advance money out of his own means to keep down the interest, the conduct of Flagg in disregarding his conveyance to Walker, and in resuming possession of the property, would have released Walker from his engagement. We do not, therefore, find it necessary to examine the question whether the property was sold at a sacrifice or not. There is great contlict in the testimony on this subject; but as Walker, under the circumstances which we have stated, was under no obligation to carry out an agreement which Flagg had repudiated and made impossible of performance, that question is immaterial. Walker was not liable for any loss, if there was a loss, resulting from the sale of the property covered by the trust deed to secure the Sibley debt. The proceeds of the property by which the debt was secured have been applied to its payment, and that is all that Walker agreed, in any event, should be done.
The next ground upon which the decree of the circuit court is complained of, is that the court decreed “a strict foreclosure of the property to Walker, thus cutting off the statutory right of redemption, and also cutting off the benefits of a public sale." The contention of appellants' counsel is that if Walker is to be considered as a mortgagee, and entitled to the rights of a mortgagee, the court should have decreed a sale, and not a strict foreclosure. The provisions of the statute law of Illinois, on which this assignment of error is based, are as follows: Rev. St. c. 77, § 16: “When any real estate is sold by virtue of an execution, judgment, or decree of foreclosure of mortgage, or enforcement of mechanic's lien, or vendor's lien, or for the payment of money, it shall be the duty of the sheriff, master in chancery, or other officer, instead of executing a deed for the premises sold, to give the pur