Chillicothe Paper Co. v. Wheeler , 1896 Ill. App. LEXIS 494 ( 1896 )

Mr. Presiding Justice Harker

delivered the opinion op the Court.

This writ of error is prosecuted for the purpose of having set aside a sale made by the master in chancery under a decree of foreclosure of the real estate and manufacturing plant covered by a deed of trust executed by the Chillicothe Paper Company. Although it is urged that the decree is erroneous, the chief contention is that the court erred in refusing to set aside the sale.

The objections to the decree are rather trivial in their character, and being urged here for the first time, although plaintiffs in error have appeared before the Circuit Court twice and moved to have sales set aside because of irregularities of the manner in which they were made, would not seem worthy of very extended consideration.

There is no claim that the amount found due by the decree was not correct. Nor is it claimed that the complainants in the original bill were not entitled to a foreclosure. There was default in the payment of the interest, and for that reason and by virtue of the provisions in the deed of trust, Kingman, the trustee, had the right to declare all of the bonds due and payable. But it is insisted that as the ten bonds held by the Central National Bank were held as collateral security for the payment of other indebtedness of the Chillicothe Paper Company it was error in the court to decree payment of them on the same terms as the other bonds, and in default of payment, together with the sums due upon the other bonds, to decree a sale of the mortgaged premises without allowing a separate redemption as to the bonds so held by the bank. This contention involves an adjustment of the equities between the Chillicothe Paper Company, Waterhouse and the Central National Bank, and could be disposed of by saying that they were not brought to the attention of the court by bill, answer or otherwise. Plaintiffs in error had ample opportunity to obtain such an adjustment had they seen fit to do so. If the bonds were issued for a special purpose and no right of foreclosure attached to them, then it was their duty, for the protection of other bondholders and creditors of the corporation, to set forth that fact in some proper pleading. But that they failed to do. They suffered default, and must now be held as estopped from operating any equitable interest, prejudicial to other bondholders.

Lightner could not be presumed to know of any secret interest which they may have bad in those bonds. The bank held, and had the right to hold, the ten bonds until the debt for which they were held was paid, and there is no reason why other bondholders should be embarrassed in their rights to a foreclosure and a sale by unsettled equities between the bank, the Chillicothe Paper Company and Water-house.

To the error assigned, that the decree of foreclosure as to the ten bonds held by the bank was wrong, because there was no prayer of that kind on the part of the bank, it may be replied, that a formal prayer to that effect was not necessary. When one of the holders of the bonds made it known that there had been default in the payment of interest, and called upon the trustee to join him in a foreclosure, the trustee had the right to declare all outstanding bonds due and payable, and the decree could extend to all holders made parties, whether they formally prayed a foreclosure or not. It was not error to decree a sale of all the machinery, fixtures, tools, etc., covered by the deed of trust with the land. That question was settled by our Supreme Court in Wood v. Whelen, 93 Ill. 153.

It is contended that the sale to Gilliam, one of the bondholders, was void, and should have been set aside because the decree did not give bondholders a right to purchase and because the purchase was made for all the bondholders. This is the first time we have ever heard it urged in this State that a mortgagee can not purchase at a foreclosure sale made for his benefit. For the mortgagee to so purchase is a matter of daily occurrence. Frequently it is the only way in which a mortgagee can protect himself and obtain payment of his debt. He is not bidding at his own sale but at one made by an officer of the court and under the order of the court. Gilliam had the right to bid either for himself or for himself and other bondholders jointly.

There are other points discussed in the briefs, but we do not consider them of such importance as to merit a further extension of this opinion in a consideration of them. There was no error of the court in the decree or in the order overruling the motion to set aside the sale.

Decree and order affirmed.