Fitch v. Miller

65 N.E. 650, 200 Ill. 170

• Court: Illinois Supreme Court
• Decided: December 16, 1902
• Status: Published

Opinion

Mr. Chief Justice Magruder

delivered the opinion of the court:

First—The record presents the case of a deed, made by John Fitch, deceased, to William Miller, deceased, which, though absolute upon its face, was in fact intended by the parties to be á mortgage to secure a loan of $30,000.00 by Miller to Fitch. It is true, that in the first place Fitch sold the twenty acres and lot 156 to Miller for $30,000.00, and executed a deed to him dated March 5, 1874, conveying the land. Miller paid upon the purchase money $5000.00 in cash and the first note of $10,000.00, leaving a note for $15,000.00, secured by a mortgage upon the premises still unpaid. The testimony shows, however, that, in addition to the $15,000.00 so paid by Miller, he afterwards paid to Fitch the remaining $15,000.00 of the $30,000.00, and Miller’s • note for $15,000.00 was taken up atid surrendered to him, and the mortgage securing it was released. By agreement between the parties, as embodied in the contract of October 5, 1875, the transaction was changed from a sale of the twenty acres into a mortgage thereof to secure an indebtedness of $30,000.00. Whether Miller became satisfied that he had been imposed upon, and that the twenty acres were not worth $30,000.00, or not, does not appear from the evidence, but, after having paid $15,000.00 of the purchase money, he refused to pay the remainder. The deed, which was first intended as an absolute conveyance to carry out the sale, was, by agreement between the parties, made a mortgage to secure $30,000.00.

We do not deem it necessary to discuss the evidence in relation to the accounts, and in relation to the advances made by Miller to Fitch to make up the $15,000.00 which was paid, over and above the original $15,000.00. The evidence is clear to our minds that Miller advanced to Fitch the whole of the $30,000.00. The title to the property was in Miller. He executed a deed conveying the property back to Fitch, but this deed was never delivered. On the contrary, it was placed in the hands of Robert Hervey, an attorney, to be held by him in escrow, and only to be delivered to Fitch upon the payment by .Fitch to Miller of the §80,000.00 and interest.

It is clear from the statement of the facts that, after the execution of the contract of October 5, 1875, the legal title to the twenty acres was in Miller, and only the equity of redemption, or a right to redeem the same by the payment of §30,000.00, remained in Fitch. In his lifetime, Fitch never paid back to Miller any portion of the §30,000.00, nor after 1875 did he ever pay any of the taxes or assessments against the property.

Inasmuch as Fitch, upon his death on July 20, 1878, had nothing but an equity of redemption in the premises, nothing descended to his four children, the plaintiffs in error herein, except such equity of redemption. On January 7, 1897, a little more- than seven months before the filing of the present bill, plaintiffs in error John H., Timothy S., Beatrice and Mary A. Fitch conveyed, for a consideration of one dollar, an undivided five-eighths of the twenty acres to G-arrie S. French, and then this bill was filed for the partition of the equity of redemption, inherited by plaintiffs in error from their father, John Fitch. The partition is sought, subject to what is called in the bill the cloud or lien, created by the deed from Fitch to Miller, and the contract of October 5, 1875, between Miller and Fitch, and the other proceedings heretofore detailed.

It is true that an equitable title in lands may be the subject of a bill for partition. (Johnson v. Filson, 118 Ill. 219; Bissell v. Peirce, 184 id. 60). The mortgage here under consideration, being created by an absolute deed of the property made to the mortgagee, and taken in connection with the contract of defeasance executed on October 5, 1875, is what may be regarded as an equitable mortgage in contradistinction from a legal mortgage. The contract of October 5, 1875, was not under seal. “The instrument of defeasance must be of as high a nature as the deed itself; and consequently a written agreement to re-convey, not under seal, though made at the same time with the deed, does not at law constitute a mortgage. If not under seal, the agreement will constitute a mortgage only in equity.” (1 Jones on Mortgages,—4th ed.— sec. 244; Kelleran v. Brown, 4 Mass. 443. Phelan v. Fitzpatrick, 84 Wis. 249; West v. Reed, 55 Ill. 242; Green v. Capps, 142 id. 286). Inasmuch as the interest of John Fitch before his death amounted, and the interest of the present plaintiffs in error, his heirs, since his death, amounts only to a mere right of redemption, and inasmuch as the right of redemption is a purely equitable estate, a court of chancery will not protect and enforce it, unless equitable considerations require it to do so. (West v. Reed, supra; Spect v. Spect, 88 Cal. 444).

The question then arises whether there are any equitable considerations, which entitle the plaintiffs in error to a partition of the premises in controversy. If equitable considerations require that plaintiffs in error should not be allowed to redeem the premises in question, then the court below decided correctly in dismissing the bill, and refusing partition of the property, because, in such case, no equity of redemption existed to be partitioned.

The evidence shows clearly that Miller advanced to Fitch in his lifetime upon the property in question the sum of $30,000.00. It is equally clear from the proofs that neither Fitch, nor his heirs, have ever paid back any part of the $30,000.00, or any interest thereon. It is also established by the testimony that, between 1875 and the filing of the present bill in 1897, Miller paid more than $22,000.00 for taxes and special assessments upon this property, and in redeeming the property from sales and forfeitures for non-payment of taxes. The property was forfeited for the non-payment of taxes during the years from 1870 to 1875. No offer is made by-the plaintiff in error, John H. Fitch, who filed the bill for partition in the court below, to re-pay to Miller any part of the money, advanced by him as a loan or for taxes. By the terms of the mortgage, as expressed in the contract of October 5,1875, the indebtedness of §80,000.00 was to be re-paid by Fitch to Miller within five years, that is, on October 5, 1880. From the latter date to the filing of the present bill for partition seventeen years passed. The plaintiff in error, Mary A. Fitch, who was born on April 6, 1859, became of age on April 6, 1877, and was of age when her father died. The petitioner, or complainant, John H. Fitch, who was born July 5, 1862, became of age on July 5,1883, fourteen years before he filed the present bill for partition. Timothy S. Fitch, who was born on November 15, 1867, became of age on November 15, 1888, nine years before the present bill for partition was filed. Beatrice Fitch, who was born on January 1,, 1871, became of age on January 1, 1889, more than eight years before the filing of the present bill for partition. It is clear that, in the present case, the mortgagor, John Fitch, and his heirs, the present plaintiffs in error, who stand in his place, have been guilty of laches in not sooner seeking to enforce their right of redemption.

Second—Counsel for plaintiffs in error seem to claim that, in some way, Fitch, in his lifetime, and his heirs since his death, have become possessed of the legal title by reason of the deed, executed by Miller to Fitch on July 3,1875, and placed in the hands of Mr. Hervey. The evidence is quite clear, however, that this deed was so placed in the hands of Mr. Hervey as a deed in escrow, only to be delivered to Fitch when he paid up the $30,-000.00 and interest. The money was never paid, and there was never any delivery of the deed. A deed never becomes effective to pass title, unless there is a delivery to the grantee, and, in the present case, there was no such delivery. Where a deed is deposited as an escrow, it is nothing more than a mere scroll, until the condition is performed, which makes its delivery obligatory. Prior to that time no title passes without the grantor’s consent, and here the grantor, Miller, never gave his consent. The grantee, Fitch, could only have acquired title by the performance of the condition, or the happening of the contingency, and, as the condition was never performed and the contingency never happened, Fitch was never vested with the legal title to the property. Where a grantor executes a deed, and delivers it to a third person to be delivered to a grantee upon some future event, it is not the grantee’s deed until the second delivery. (11 Am. & Eng. Ency of Law, p. 349; Demesmey v. Gravelin, 56 Ill. 95; Skinner v. Baker, 79 id. 496; Furness v. Williams, 11 id. 229; Stanley v. Valentine, 79 id. 544).

Third—As we understand counsel for the plaintiffs in error, their contention is that, although the legal title was conveyed to Miller by the deed of March 5,1874, yet, in view of the terms of the contract of October 5,1875, a foreclosure would be necessary in order to divest Fitch, or his heirs, of such equity of redemption as was left in them. This contention is without force. No affirmative action was required on the part of Miller, or his executors, or devisees, to become invested with the title. Miller, as mortgagee, had the entire title, and all that remained in Fitch was merely a right to pay up the amount of the loan and redeem the premises. In West v. Reed, 55 Ill. 242, we said (p. 245): “We do not, however, assent to the position, which we understand counsel for appellee to assume, that, when the original transaction between the parties has not been in form a mortgage, but an absolute deed, with a bond to re-convey on the payment of the money at a specific time, the right of redemption cannot be extinguished, except by an instrument which will operate as a technical conveyance of the mortgagor’s estate in the land. He undoubtedly has an estate, which will pass by descent, or devise, or by deed. But it is nevertheless a purely equitable estate, that is to say, an interest in the land based upon equitable grounds, and which a court of chancery will protect and enforce when equitable considerations demand. But he has nothing more. The legal title has gone to his grantee by means of a deed absolute upon its face. If the deed, as in the present case, was made to secure a loan of money, and a bond, or contract to re-convey, is taken, the transaction, in a court of equity, is regarded only as a mortgage. But we repeat, the naked legal title has vested in the grantee, and, if such transactions subsequently occur between the parties, as would render it inequitable that the grantor should be permitted to redeem, a court of equity will, of course, refuse to aid him, as it will always refuse its aid to perpetrate a wrong. It is wholly immaterial whether he has executed a technical release of his equitable interest to the grantee or not. * * * And without having done that, he may have had such transactions with his grantee, as would render it inequitable to compel the grantee to suffer a redemption. In such an event, the equitable estate is practically gone or annihilated without a release, because the equitable considerations, upon which it rested, are destroyed by the acts of the parties, and chancery will leave the legal title where they have placed it.” To the same effect is Green v. Capps, 142 Ill. 286.

As the equitable considerations, developed by the proof in this case, are of such a character that it would be unjust to permit the present plaintiffs in error to exercise any right of redemption, a. court of equity will leave the legal title, where it exists, in the devisees or heirs of William Miller, without the execution of any further instrument by the heirs of John Pitch, or without any further proceeding to. foreclose.

Fourth—The plaintiff in error, John H. Pitch, in his bill, filed below, substantially pleads the Statute of Limitations, that is to say, alleges that the mortgage from Pitch to Miller, created by the deed and the contract, was barred by the Statute of Limitations. The loan of §30,000.00 from Miller to Fitch, which was secured by the deed and contract, matured or was due on October 5, 1880. Section 11 of the Limitation act provides that “no person shall commence an action or make a sale to foreclose any mortgage or deed of trust in the nature of a mortgage, unless within ten years after the right of action or right to make such sale accrues;” and on October 5, 1890, the period of ten years had elapsed. The representatives of Miller, however, are not seeking to foreclose the mortgage. On the contrary, in their answer they plead the Statute of Limitations against the right of the plaintiffs in error to enforce their alleged equity of redemption, that is to say, they aver that the plaintiff in error, John H. Fitch, is estopped from seeking to exercise any right to redeem by reason of laches and delay. It being true that the right to foreclose is barred, then it follows that the right to redeem from the mortgage is barred. The right to foreclose and the right to redeem are reciprocal, and when one is barred, the other is barred. In Green v. Capps, 142 Ill. 286, we said (p. 289): “Appellant concedes that the deed, regarded as a mortgage, could not have been foreclosed when this bill was filed, because the indebtedness it was given to secure was then barred by the Statute of Limitations. But if the Statute of Limitations then barred a foreclosure, it, for the .same reason, barred a redemption from the deed, regarded as a mortgage, for the right to redeem and the right to foreclose are reciprocal, and when the one is barred the other is barred.” (See also Walker v. Warner, ,179 Ill. 16; Carpenter v. Plagge, 192 id. 82). Clearly, therefore, if the right to foreclose on the part of Miller’s estate is barred, the right to redeem on the part of the heirs of Fitch is barred.

Fifth—Plaintiff in error, John H. Fitch, presented no-facts in his bill, which tended in any way to excuse the delay in commencing the proceeding to redeem. As Miller, or his representatives, set up the Statute of Limitations and laches in their answer as a defense to the right to redeem, it then devolved upon the plaintiff in error to amend his bill, and allege an excuse for his laches. (Hall v. Fullerton, 69 Ill. 448; Walker v. Ray, Ill id. 315; Harding v. Durand, 138 id. 515; Kerfoot v. Billings, 160 id. 563; Coryell v. Klehm, 157 id. 462). But no amendment was made to the bill, nor any excuse therein set up.

It is claimed, however, on the part of the plaintiffs in error, in the testimony introduced by them, that they had no information in regard to the existence of the contract of October 5,1875, until about the time of the filing, of this bill in August, 1897. It is not claimed, nor can it be under the evidence, that the failure to have such knowledge was caused by any fraudulent conduct on the part of Miller, or his devisees or heirs. (Cilley v. Huse, 40 N. H. 362). The contract of October 5, 1875, was placed on record a day or two after its execution, and the plaintiffs in error had constructive, if not actual, notice of its existence. Their father, John Fitch, was aware of the existencé of the contract, because he signed it as one of the parties thereto,and the plaintiffs in error, as his heirs, are chargeable with the notice which their ancestor had. Independently of this consideration, however, the evidence shows no diligence on the part of plaintiffs in error to ascertain what rights they might have in this property.

The record shows that, on December 31, 1890, seven years before the filing of the present bill for partition, the four plaintiffs in error, children of John Fitch, filed in the superior court of Cook county a bill, signed by all of themselves, against one John Gray, in which they state that they were then residents of Cook county, and that their father died seized of said lot 156 above described, which was conveyed by the deed from Fitch to Miller, and which is mentioned in the agreement of October 5,1875. Any examination of the record as to lot 156 would have revealed the fact, that it was mentioned in the agreement of 1875, and would also have shown that the tract of twenty acres here in question was mentioned in the contract. In other words, any search or inquiry as to lot 156 would have led to information in regard to the twenty-acre tract here in controversy, and the contract of October 5, 1875, in relation thereto. It is also shown that, in 1882, the plaintiffs in error were making efforts to recover other property in said south shore subdivision in which lot 156, part of the purchase by Miller, was located. No effort seems to have been made by any of the plaintiffs in error to ascertain whether they had any rights or not in the twenty acres. When plaintiff in error, John H. Pitch, filed the present bill, he had been of age fourteen years. During all the period of time from 1875 to 1897 Miller paid in his own name all the taxes and special assessments accruing upon the property from year to year. In May, 1882, he paid for redemption and forfeitures, $7283.16, and subsequently paid $15,580.68 of taxes in his own name as owner. In 1892 Miller took possession of the twenty acres, and fenced it, and put a tenant by the name of VanArkle in possession. Condemnation proceedings were also instituted against Miller, as owner of the property, by the city of Chicago, and by a railroad company, and the condemnation money was paid to Miller as owner of the premises.

In McDearmon v. Burnham, 158 Ill. 55, we said ,(p. 62): "When a court of equity is asked to lend its aid in the ■enforcement of a demand that has become stale, there must be some cogent and weighty reasons presented why it has been permitted to become so. Good faith, conscience and reasonable diligence of the party seeking its •relief are the elements that call a court of equity into activity. In the absence of these elements the court remains passive, and declines to extend its relief or aid. It has always been the policy to discountenance laches and neglect.” (See also Kerfoot v. Billings, supra; Eastman v. Littlefield, 164 Ill. 124; Carpenter v. Carpenter, 70 id. 457; Brown v. Brown; 142 id. 409; Williams v. Rhodes, 81 id. 571; Connely v. Rue, 148 id. 207; Bush v. Sherman, 80 id. 160; Miller v. Shaw, 103 id. 277; Hoyt v. Pawtucket Inst. for Savings, 110 id. 390; Fitch v. Willard, 73 id. 92). Where a party, seeking to exercise the right of redemption, fails to pay taxes, or make any payment upon the mortgage, such failure indicates an abandonment of the property, and, under such circumstances, it would be inequitable to-allow a redemption. In determining whether there has been laches in exercising the right of redemption, a court of equity is not necessarily controlled by the period of limitation, as fixed in actions at law; a delay for a much less period than that prescribed by the Statute of Limitations will, according to the circumstances of the case, be held to be laches, and a bar to the right of redemption. (Walker v. Warner, 179 Ill. 16).

A court of equity will not decree partition among the-holders of an alleged equitable title, unless such title is. a meritorious and subsisting one. Partition will not be decreed of such a title, when it can be no longer asserted in a court of equity as against the holders of the legal title. Such a state of facts exists in the case at bar.

The decree of the circuit court, dismissing the bill for want of equity, is affirmed. Decree affirmed.