Mr. Presiding Justice Taylor
delivered the opinion of the court.
Inasmuch as the defendants, the Pliemlengs, refused to pay interest on the full amount of $800, the original amount of the note as extended, on the ground that they had paid their creditor, the association, $300 of that principal and were only willing to pay interest on the sum of $500, the complainant filed her bill of complaint seeking to foreclose the trust deed given to secure that note, alleging that the defendants were in default.
The evidence shows that the Pliemlengs had all their dealings with the Building & Loan. Association; that they neither borrowed from nor paid money personally to Kelly; that their dealings with him were always in his official capacity, and also shows that throughout a long period of time they had been allowed by the association to pay amounts of principal before the maturity of the particular note upon which the payments were made; that they had done that prior to March 25, 1911, on the note which preceded the one here in question; and that, when on March 25, 1911, the note herein involved was executed and delivered to the association as the association’s property and before the complainant claims she got it from the association, it was agreed between the Pliemlengs and the association that in the future they would be allowed to make payments on the principal before its maturity. Likewise, at the time of its extension, the evidence shows that that agreement was recognized and confirmed by the association, through its Secretary and Treasurer Kelly, that they could pay from time to time parts of the principal of the note before it matured. The complainant does not criticize the conduct of the Pliemlengs in paying parts of the principal and being, credited therefor by the association on the $800 note between March, 1911, and the time of its extension, 5 years thereafter. The fact is, the evidence shows that at the time that arrangement was originally made between the Pliemleng’s- and the association in March, 1911, the complainant did not claim to have any interest in the note; she did not become interested in the note until 6, months thereafter, and so must be considered as taking it subject to that qualification. The agreement that the Pliemlengs could pay principal before maturity was part of the note when it was made, March 25, 1911, before the complainant claims any interest in it, and that agreement is still part of it, as extended.
As to the right to make the payments of $100 each, on the $800 note, after it was extended, which were made in May, June and September, 1917, they were undoubtedly made and received by the association pursuant to the agreement made on March 25, 1911, and emphasized at the time of the extension.
Further, the evidence shows that those three payments on the principal of the note were set forth in the petty cash book and on the ledger of the association and that the association charged them against itself, and credited them to the complainant on her account.
Then, too, it is the evidence of the complainant that when she undertook, as she claims, to purchase from the association the $800 note in question back in 1911, she gave a check for $514.25, some cash, and suscribed for some shares of stock in the association, all of which shows that she was a member of the association and was dealing with it and was in no way, legally at least, purchasing the note from the defendants. As a matter of law the association, according to its charter limitations, could not transfer and sell to her the $800 note.
The Pliemlengs had borrowed money from time to time from the association and according to the testimony of Miss Burgoyne had subscribed for stock; and everything that they had done in the course of their dealings with the association was legal. No complaint can be made by the association because they were allowed to pay parts of the principal of their indebtedness before the note matured. And, when the note for $800 of 'March 25, 1911, was about to mature and the Pliemlengs desired that it be extended and they were told that the association had the money and the directors sanctioned it; that they could get the $300 and have the note as an $800 note extended, that was all regular, and also in accordance with their former dealings. And when, then, the Pliemlengs went to the offices of the association to sign the papers at the request of Kelly,, the secretary and treasurer, and they were presented with the extension coupon interest notes and the extension agreement which recited the name of the complainant as the owner and holder of the note of March 25, 1911, which the complainant could not legally purchase, as against the defendants, it was only natural that N. J. Pliemleng should ask, as the evidence shows he did, about the name of Clara E. Strey; and when in answer thereto, as testified to by both the Pliemlengs, Kelly said that she was a, friend of his and that it was simply a matter of form; that the association under its charter could not make a straight loan; that it would lose its charter; that it did not matter about the name; that explanation was sufficient, and the conduct of N. J. Pliemleng showed more than ordinary care in investigating the nature of the extension agreement.
So, even if the transaction be looked upon as an illegal effort on the part of the association to make a straight loan, as Kelly called it, it is also true that the complainant at the time she bought the note, as she claims she did, must be considered as having known that, under the law, the association could not sell to her that note. There is no doubt but that the transaction she had with the association, as she described it herself, was irregular, as the law does not permit a building and loan association to sell such a note for part cash and part to be paid for by a subscription to the stock of the association. There is no doubt but that the Pliemlengs as against the association are entitled to credit for the payment of the $300, and likewise there is no doubt but that the complainant as' against the association is entitled to recover $300. It may be said that the complainant and the defendants are all innocent of any wrongdoing, but, in our judgment, in view of the evidence, especially having in mind that, at the inception of the note of March 25, 1911, and as part of what it connotes, it was agreed that the Pliemlengs might at any time pay any part of the principal indebtedness, which right on the part of the Pliemlengs the extension agreement of April 1, 1916, in no way affected or purported to change, and, hearing in mind the fact that whatever title the complainant has, she obtained through irregular methods on the part of the association, which she must be assumed to have known were not sanctioned by the strict letter of the law, it cannot be reasonably contended that the complainant, as against the Pliemlengs, legally obtained title to the $800 free from all equities in the Pliemlengs as to the $300 which they had paid the association. The principle of Olds v. Cummings, 31 Ill. 188, which is the law in this State, requires us to consider and weigh the equities. Having done so, we are of the opinion that in equity the position of the defendants is superior to that of the complainant and that, therefore, the bill of complaint was rightly dismissed.
It is contended by counsel for the plaintiff that certain testimony of the defendants in regard to conversations with Kelly, who at the time of the trial was dead, was incompetent. Section 4, ch. 51, Hurd’s Rev. St. (J.
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Mr. Presiding Justice Taylor
delivered the opinion of the court.
Inasmuch as the defendants, the Pliemlengs, refused to pay interest on the full amount of $800, the original amount of the note as extended, on the ground that they had paid their creditor, the association, $300 of that principal and were only willing to pay interest on the sum of $500, the complainant filed her bill of complaint seeking to foreclose the trust deed given to secure that note, alleging that the defendants were in default.
The evidence shows that the Pliemlengs had all their dealings with the Building & Loan. Association; that they neither borrowed from nor paid money personally to Kelly; that their dealings with him were always in his official capacity, and also shows that throughout a long period of time they had been allowed by the association to pay amounts of principal before the maturity of the particular note upon which the payments were made; that they had done that prior to March 25, 1911, on the note which preceded the one here in question; and that, when on March 25, 1911, the note herein involved was executed and delivered to the association as the association’s property and before the complainant claims she got it from the association, it was agreed between the Pliemlengs and the association that in the future they would be allowed to make payments on the principal before its maturity. Likewise, at the time of its extension, the evidence shows that that agreement was recognized and confirmed by the association, through its Secretary and Treasurer Kelly, that they could pay from time to time parts of the principal of the note before it matured. The complainant does not criticize the conduct of the Pliemlengs in paying parts of the principal and being, credited therefor by the association on the $800 note between March, 1911, and the time of its extension, 5 years thereafter. The fact is, the evidence shows that at the time that arrangement was originally made between the Pliemleng’s- and the association in March, 1911, the complainant did not claim to have any interest in the note; she did not become interested in the note until 6, months thereafter, and so must be considered as taking it subject to that qualification. The agreement that the Pliemlengs could pay principal before maturity was part of the note when it was made, March 25, 1911, before the complainant claims any interest in it, and that agreement is still part of it, as extended.
As to the right to make the payments of $100 each, on the $800 note, after it was extended, which were made in May, June and September, 1917, they were undoubtedly made and received by the association pursuant to the agreement made on March 25, 1911, and emphasized at the time of the extension.
Further, the evidence shows that those three payments on the principal of the note were set forth in the petty cash book and on the ledger of the association and that the association charged them against itself, and credited them to the complainant on her account.
Then, too, it is the evidence of the complainant that when she undertook, as she claims, to purchase from the association the $800 note in question back in 1911, she gave a check for $514.25, some cash, and suscribed for some shares of stock in the association, all of which shows that she was a member of the association and was dealing with it and was in no way, legally at least, purchasing the note from the defendants. As a matter of law the association, according to its charter limitations, could not transfer and sell to her the $800 note.
The Pliemlengs had borrowed money from time to time from the association and according to the testimony of Miss Burgoyne had subscribed for stock; and everything that they had done in the course of their dealings with the association was legal. No complaint can be made by the association because they were allowed to pay parts of the principal of their indebtedness before the note matured. And, when the note for $800 of 'March 25, 1911, was about to mature and the Pliemlengs desired that it be extended and they were told that the association had the money and the directors sanctioned it; that they could get the $300 and have the note as an $800 note extended, that was all regular, and also in accordance with their former dealings. And when, then, the Pliemlengs went to the offices of the association to sign the papers at the request of Kelly,, the secretary and treasurer, and they were presented with the extension coupon interest notes and the extension agreement which recited the name of the complainant as the owner and holder of the note of March 25, 1911, which the complainant could not legally purchase, as against the defendants, it was only natural that N. J. Pliemleng should ask, as the evidence shows he did, about the name of Clara E. Strey; and when in answer thereto, as testified to by both the Pliemlengs, Kelly said that she was a, friend of his and that it was simply a matter of form; that the association under its charter could not make a straight loan; that it would lose its charter; that it did not matter about the name; that explanation was sufficient, and the conduct of N. J. Pliemleng showed more than ordinary care in investigating the nature of the extension agreement.
So, even if the transaction be looked upon as an illegal effort on the part of the association to make a straight loan, as Kelly called it, it is also true that the complainant at the time she bought the note, as she claims she did, must be considered as having known that, under the law, the association could not sell to her that note. There is no doubt but that the transaction she had with the association, as she described it herself, was irregular, as the law does not permit a building and loan association to sell such a note for part cash and part to be paid for by a subscription to the stock of the association. There is no doubt but that the Pliemlengs as against the association are entitled to credit for the payment of the $300, and likewise there is no doubt but that the complainant as' against the association is entitled to recover $300. It may be said that the complainant and the defendants are all innocent of any wrongdoing, but, in our judgment, in view of the evidence, especially having in mind that, at the inception of the note of March 25, 1911, and as part of what it connotes, it was agreed that the Pliemlengs might at any time pay any part of the principal indebtedness, which right on the part of the Pliemlengs the extension agreement of April 1, 1916, in no way affected or purported to change, and, hearing in mind the fact that whatever title the complainant has, she obtained through irregular methods on the part of the association, which she must be assumed to have known were not sanctioned by the strict letter of the law, it cannot be reasonably contended that the complainant, as against the Pliemlengs, legally obtained title to the $800 free from all equities in the Pliemlengs as to the $300 which they had paid the association. The principle of Olds v. Cummings, 31 Ill. 188, which is the law in this State, requires us to consider and weigh the equities. Having done so, we are of the opinion that in equity the position of the defendants is superior to that of the complainant and that, therefore, the bill of complaint was rightly dismissed.
It is contended by counsel for the plaintiff that certain testimony of the defendants in regard to conversations with Kelly, who at the time of the trial was dead, was incompetent. Section 4, ch. 51, Hurd’s Rev. St. (J. & A. ¶ 5521), provides that, “in every action, suit or proceeding a party to the same who has contracted with an agent of the adverse party—the agent having since died—shall not be a competent witness as to any admission or conversation between himself and such agent,” unless, etc.
In Grand Lodge A. O. U. W. v. Young, 123 Ill. App. 628, which was a claim by a widow on a benefit certificate against a fraternal organization, it was held, the question being as to the payment of certain assessments, that the widow, the beneficiary, was not entitled to testify to conversations with one Bundy on the ground that “Bundy, as the financier of the local lodge, was in his lifetime the agent of appellant,” etc. And in Rothstein v. Siegel, Cooper & Co., 102 Ill. App. 600, where an employee brought suit against his employer, Siegel, Cooper & Company, for certain commissions and compensation for services, the court held that a conversation between him and one Brennan, the former treasurer of. Siegel, Cooper & Company, was incompetent under section 4, supra. The facts in those cases' are quite dissimilar from those in the instant case; here, the complainant and the defendants are, as it were, suing each other as third persons, and the only claim that could reasonably be made is that each had dealings with the association, the Pliemlengs claiming to have paid certain money to the association upon a certain indebtedness and the complainant claiming to own a certain note, exclusive of any payments of principal thereon, which she bought from the association. This suit is not to foreclose property of the association. If it were, the evidence might be incompetent as to the association, as the association could claim that Kelly was its agent. But, as said before, this is a suit between third persons whose dealings were with the association." It may well be that the association acted as an agent, but the claim of counsel for the complainant is not made on that ground. The claim is that Kelly personally was an agent and of that there is insufficient evidence. All he did, a,s far as the evidence shows, was done and accomplished for the association. We are of the opinion that the evidence objected to was competent.
Further, when the testimony in question was taken an,d objections by counsel for the complainant were made, the master directed that it be admitted subject to objection and at no time thereafter by objection, exceptions or otherwise, was the matter called to the attention of the master or chancellor.
Finding no error in the record the decree is affirmed.
Affirmed.
O ’Connor, J., concurs,
Thomson, J., dissenting.