Stein v. Kaun ( 1909 )

Mr. Justice Chttraus

delivered the opinion of the court.

That complainant, a stranger to Mrs. Kaun and her children, advanced $2,500 of his money, which prevented a foreclosure and sale of the property involved when the loan by the Foreman Brothers matured, in December, 1897, is not disputed. Mrs. Kaun, or her agent, induced the complainant to make this advance upon the security of the property. Upon the facts in this case it would be manifestly unjust and unconscionable if appellants were permitted to benefit, by complainant’s outlay of his money, without being compelled to recognize the lien of the Waide and the Foreman trust deeds.

By virtue of the existence of the post-nuptial agreement of August 10, 1895, which was of record when complainant’s trust deed of December 16, 1897, was executed, Mrs. Kaun and her children now seek to cut off complainant from relief; and they assert that he acquired no lien, by that trust deed, when he advanced his $2,500. As to the Foreman trust deed, which he also holds, they conceive he is barred by the statute of limitations. They advance this statute as an obstacle that should prevent a court of equity from decreeing what, according to the dictates of justice and a good conscience, it would here decree were there no such statute.

In point of fact the evidence justifies no conclusion other than that Mrs. Kaun promptly paid the interest upon the indebtedness to Foreman Brothers until the extension thereof expired in December, 1897. There is no dispute but what the interest thereupon was paid until they parted with it to complainant. It would be unreasonable to suppose, upon the evidence herein, that either Wolf or Weiss paid that interest. The bill of foreclosure was filed within ten years of the time Mrs. Kaun paid that interest.

' But, aside from this fact, there are other equitable considerations involved here. As, for instance, Mrs. Kaun was a party to inducing complainant to advance money and his money took up the Foreman note, so that the indebtedness now existing is in truth and equity the same debt as the Foreman note. Upon this indebtedness Mrs. Kaun has paid interest to some time in December, 1905. In controversies between the original parties to transactions or those having no greater rights, that is, where no superior equities of third persons intervene, courts of equity are not always controlled by the statute of limitations.

Primarily and fundamentally courts of equity exercise their function in personam. Massie v. Watts, 6 Cranch, 148, 159; Johnson v. Gibson, 116 Ill. 294; Enos v. Hunter, 4 Gil. 211; Wadhams v. Gay, 73 Ill. 415, 429. The chancellor grants relief inter partes in respect of the matter in controversy, except where the proceeding before him is a statutory one, and in doing so he is governed by the principles of equity and justice and by his conscience. The extent to which courts of equity go in refusing to lend aid or assistance to the promotion or perpetration of injustice is seen in the following cases: Wadhams v. Gay, 73 Ill. 415; Lawrence Mfg. Co. v. Janesville Mills, 138 U. S. 552, 561; Compton v. Jesup, 68 Fed. 263, 315; Nat. Fdry. & Pipe Wrks. v. Oconto City W. S. Co., 113 Fed. 793, 803-4; Lawrence v. Berney, 2 Ch. Cases. 128, 21 Eng. Rpr’nt, 636; White v. Parnther, 1 Knapp, 179, 12 Eng. Rpr’nt, 303; Union Bnk. v. Commissioners, 119 N. Car. 214, 34 L. R. A. 487; Elec. S. Co. v. Trust Co., 50 N. J. Eq. 93. In Wadhams v. Gay a court of equity refused to carry out or enforce a former decree challenged for unjustness, without first investigating into the merits of the challenge, and when the former decree was found to be unjust the court refused to enforce it. The opinion in that case quotes with approval a citation from Daniell’s Chancery Practice, which is in part as follows (p. 431): “If the first decree is unjust—then this court desires to be excused in making! t its own act, and to build upon such foundation, and charging its own conscience with promoting an apparent [obvious] injustice; and this obliges the court to examine the grounds of the first decree, before it makes the same decree again.” True, in that case unjustness was not held to be a ground of attack upon a decree, by the decree defendant, in an original proceeding, for there must be an end to litigation. But it was held that, to the tender conscience of a chancellor, unjustness is so abhorrent that it is a valid defense, even against a decree of a court of equity, when the possessor of the unjust decree opens up litigation by coining into a court of equity anew and thus seeks the aid of that court in the promotion or perpetration of an injustice. With reference to the interposition of the doctrine of res adjudicata, which naturally occurs to the legal mind as an obstacle to the reinvestigation into the justness of the former decree, our Supreme court says (p. 437): “There is no ground in moral right, equity and conscience to call upon a court of equity to interpose and assist in carrying it [such decree] into execution. The only ground is, that it stands as a decree—a technical right—and the true nature of the application is to enforce a technical estoppel. Of such estoppels, Lord Coke said: ‘they are odious.’ The one in question is eminently of the kind alluded to in Jeter v. Hewitt, 22 How. 352: ‘The res adjudicata renders white that which is black, and straight that which is crooked.’ ” And our Supreme Court held it to be proper and competent, in such case, to examine whether the original decree was unjust and if unjust to refuse enforcement thereof. The case was taken to the Supreme Court of the United States and was there affirmed. Gay v. Parpart, 106 U. S. 679. The doctrine of the ease has since been repeatedly reiterated in this state. Teall v. Dunnihoo, 230 Ill. 476, 488; Pestel v. Primm, 109 Ill. 353; Jenkins v. Bank, 111 Ill. 462; Lancaster v. Snow, 184 Ill. 534; Durham v. Field, 30 Ill. App. 121; Shepard v. Speer, 41 Ill. App. 211, 218; Little v. Chicago, 46 Ill. App. 534; Fitzpatrick v. Rutter, 58 Ill. App. 532, and 60 Ill. App. 657. The doctrine of the above cases that courts of equity, even upon the basis of a decree, will not promote obvious injustice is well settled and universally recognized. But more specifically in point, in the case at bar, is the case of Thorndike v. Thorndike, 142 Ill. 453. In that case, which was a suit in equity, our Supreme Court enunciated the established doctrine that, when equity and justice so require, courts of equity will, as between the immediate parties to a transaction, disregard the statute. The court in that case said: “The Statute of Limitations is a parely legal, as contradistinguished from an equitable, defense, and although courts of equity will ordinarily act in obedience and in analogy to the Statute of Limitations, yet they will also, in proper cases, interfere in actions at law to prevent the bar of the statute where it would be inequitable and unjust. And so it has been held, that where the obligation is clear, and its essential character has not been affected by the lapse of time, equity will enforce a claim of long standing as readily as one of recent origin, as between the immediate parties to the transaction.” In Greenman v. Greenman, 107 Ill. 404, 411, our Supreme Court said: “The Statute of Limitations does not strictly apply to cases in equity, but equity generally follows the law, and denominates the period that the statute requires to bar an action laches that renders a demand stale.” That case was followed in De Walsh v. Braman, 160 Ill. 415. In Wilson v. Eq. Trust Co., 98 Ill. App. 81, this question was considered and there it was held that in some cases a court of equity will not permit the bar of the statute of limitations to be interposed against conscience, but will administer a remedy within its jurisdiction and that it will enforce the right, for the prevention of fraud. In the case at bar it would be, substantially, a fraud upon complainant if appellants were permitted to avail themselves of his money and then turn him away without any lien upon the property he was induced to conserve. We doubt if the children of Mrs. Kaun have any standing in court whatever, by virtue of the post-nuptial agreement between Mrs. Kaun and her second husband, Weiss. They certainly have no interest in equity superior to the lien of the Foreman trust deed, which existed previous to that agreement. Furthermore, at best they would be but volunteers upon no consideration and, therefore, in no better equitable position than their mother.

We are satisfied that as part of the transaction whereby complainant advanced $2,500 it was agreed that he might take up and hold the Foreman trust deed and note as additional security; but whether that be so or not is not vitally material. The equitable doctrine of subrogation is here entirely sufficient for complainant’s purposes. That familiar doctrine, when applicable, is invoked and interposed by courts of equity whenever necessary in order that justice be done between litigating parties. In Tyrrell v. Ward, 102 Ill. 29, it was applied to cut off an intervening lien of a judgment creditor of the grantor, where the person loaning money had used a part of the money to take up a prior existing encumbrance, although he had released the encumbrance. The following cases are also of interest as instances of the application of the equitable doctrine of subrogation: Worcester Nat. Bnk. v. Cheeney, 87 Ill. 602; Young v. Morgan, 89 Ill. 200, and Darst v. Gale, 83 Ill. 136. Whether or not Mrs. Kaun agreed he should take up and retain the Foreman indebtedness, complainant, who advanced his money at her request, is not, in equity, a mere stranger or interloper in whose favor the doctrine would not be applied.

Courts of equity have failed in the purpose for which they were originated and will have degenerated and become useless institutions should the time come when they wittingly deny justice and, in the exercise of their peculiar powers, administer injustice. To let Mrs. Kaun and the other appellants retain the property here involved and require complainant to go hence without relief would be a most unconscionable act.

The decree of the chancellor is affirmed and appellee’s motion to tax against appellants the costs of the additional abstract, filed by appellee, is allowed.

Affirmed.