Straus v. Bracken

242 Ill. App. 122, 1926 Ill. App. LEXIS 86
CourtAppellate Court of Illinois
DecidedJuly 1, 1926
DocketGen. No. 7,978
StatusPublished
Cited by8 cases

This text of 242 Ill. App. 122 (Straus v. Bracken) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Straus v. Bracken, 242 Ill. App. 122, 1926 Ill. App. LEXIS 86 (Ill. Ct. App. 1926).

Opinion

Mr. Justice Shurtleff

delivered the opinion of the court.

The question is raised in this case as to the right of the mortgagee or the owner of the equity of redemption in lands, not liable personally for the mortgage debt, to the rents, issues and profits from the lands during the redemption period. William T. Bracken and Lillie Bracken, his wife, executed their notes and two mortgages upon the lands in question on March 1, 1918. On August 8, 1919, William T. Bracken, then a widower, conveyed the lands to Judson W. Byers, who assumed and agreed to pay the mortgage debts as a part of the purchase price. William T. Bracken and Judson W. Byers, at the time of foreclosure, were nonresidents of the State of Illinois and could not be made parties to the deficiency judgment. On February 11, 1922, Judson W. Byers and his wife conveyed the lands to Walter Lung and his wife, who assumed and agreed to pay the mortgage debts, by the terms of the deed, as a part of the purchase price. On May 22, 1923, Walter Lung and his wife conveyed the lands to appellant, John E. McCarty, subject to the mortgages, but appellant did not assume the payment of the mortgages and appellant is now the owner of record of the equity of redemption in said lands. There being a default in the payment of said mortgage indebtedness, appellee filed his bill to foreclose on September 12, 1923. Answers were filed by said Walter Lung and Marie Lung, his wife, and by appellant McCarty. There was a decree of foreclosure entered in said cause on October 23, 1923, finding the amount of the indebtedness; that the land was scant security for the amount of the indebtedness and decreeing foreclosure.

Appellant McCarty had leased the lands to Walter Lung, the former owner, on shares and there was corn growing upon the lands at the time of foreclosure. The decree provided for the appointment of a receiver to collect the rents, issues and profits and the disposition of all moneys received by the receiver was reserved by the court for a hearing under the terms of the mortgages on the coming in of the receiver’s report. Certificates were issued and the lands not having been redeemed a sale was had, in accordance with the terms of the decree, on February 14, 1925, which was approved and a deficiency judgment entered against the defendant, said Walter Lung, on the 18th day of March, 1925, for the sum of $1,279.39, the complainant, appellee, having become the purchaser of said lands at the sale. On October 15, 1925, the receiver filed his report in court showing the receipt of $602.80 for one-half of the crop of com growing upon said lands in September and October, 1923, at the time the bill was filed and decree entered, and further sums for rent of the lands during 1924 under a lease he had made with the defendant Lung. The receiver had paid the taxes and insurance, leaving a balance in his hands of $1,212.89, out of which it was stipulated that the receiver should pay certain hills for repairs, amounting to $192.01, and his commissions, $100, leaving a balance of $920.88 in controversy in this case.

It was further stipulated that the defendant Walter Lung, against whom the deficiency judgment was entered, was at the time and had continued to be insolvent. Neither of said mortgages in so many words pledged the rents, issues and profits as security, but each mortgage contained the following provision: “That if the mortgagors shall violate any of the agreements herein contained, or if any representation made by the mortgagors is untrue, then, or in either event, all of the indebtedness herein secured shall thereupon, or at any time thereafter, become due and payable at the option of the mortgagee or his assigns, and this mortgage may be foreclosed accordingly; and the mortgagee or his assigns shall, from the date of any such default, have the right to take possession of said premises and collect the rents and profits thereof and apply the same to the indebtedness hereby secured until the same is fully paid, without prejudice to its or their right to foreclose this mortgage; and the court awarding the decree of foreclosure is authorized and empowered to appoint a receiver to take charge of said real estate, and to receive and collect the rents and profits thereof, and if said real estate be not redeemed, then such rents and profits shall be paid to the holder of the certificate of purchase on the sale made under the decree of foreclosure of this mortgage.”

Appellee moved the court to distribute the fund in the receiver’s hands to apply upon appellee’s deficiency judgment. Appellant, upon the theory that the latter part of said clause in the mortgages providing that the rents and profits shall be paid to “the holder of the certificate of purchase on the sale made under the decree of foreclosure” is inoperative, moved the court to distribute said fund to appellant as the owner of the equity of redemption, entitled to the rents, issues and profits during the period of redemption. The court ordered the fund distributed to appellee and appellant has appealed.

It is insisted by appellee that in the decree, the master’s report, which contained a finding that a lien was created on the rents, issues and profits by the terms of the mortgages was approved, and that there has been no appeal from the decree and for that reason it is too late for appellant to raise the question as to his rights under the decree. The answer to that contention is that the decree specially provided that the receiver should hold the funds acquired by him after the payment of taxes and any ordinary repairs until the further order of the court, and that the disposition of such moneys, under the terms of said mortgages, was reserved for further determination. Appellant contends that the provision in the mortgages does not amount to a pledge or mortgage of the rents, issues and profits of the land, and we shall discuss that question in the opinion. Appellant further contends that when there is no deficiency judgment against the owner of the equity of redemption and the mortgage does not pledge or mortgage the rents, issues and profits for the payment of the indebtedness, the owner of the equity of redemption is entitled to the possession of the lands and rents, issues and profits thereof during the period of redemption. Appellant cites a case, Cram v. Waddell, 167 Ill. App. 44, where upon a sale there was a surplus and not a deficiency, and two parties were claiming to be the .owner of the equity of redemption, and the court held: “That the owner of the equity of redemption is entitled to the rents and profits of the premises, until the expiration of the time of redemption, admits of no doubt. Davis v. Dale, 150 Ill. 239; Stevens v. Hadfield, 178 Ill. 532; Standish v. Musgrove, 223 Ill. 500; Ruprecht v. Muhlke, 225 Ill. 188.”

Of course, that is the general rule unless there is a deficiency in the judgment of the mortgage debt and the mortgagee is entitled to and takes steps to subject the rents to the payment of his indebtedness.

In Standish v. Musgrove, supra, and also in Schaeppi v. Bartholomae, 217 Ill. 105, the court had before it the disposition of the funds in a receiver’s hands from rents, issues and profits where the contention was between the purchaser at the foreclosure sale and the owner of the equity of redemption, and in both cases the court held that the provisions of the mortgage that the rents, issues and profits during the period of redemption should be turned over to the holder of the certificate, or purchaser, at the sale was inoperative and void. In Schaeppi v.

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Bluebook (online)
242 Ill. App. 122, 1926 Ill. App. LEXIS 86, Counsel Stack Legal Research, https://law.counselstack.com/opinion/straus-v-bracken-illappct-1926.