Beach v. Shaw

Mr. Chief Justice Lawrence

delivered the opinion of the Court:

On the 15th day of April, 1855, Thomas B. Bryan, being then the owner of the north half of lot 4, block 15, Fort Dearborn addition to Chicago, mortgaged the premises to one Wylie, to secure four notes, executed by Bryan to him, amounting to $5,600.00.

On the 25th of March, 1856, Bryan sold and conveyed the property to Feed and Watkins, subject to said mortgage, and, by an express provision of the deed, which was executed as well by the grantees as by Bryan, they undertook the payment of the mortgage. In September, 1856, Feed conveyed his interest in the lot to Watkins. In February, 1857, Prince recovered a judgment in the Cook county court of common pleas. against Reed and Watkins, for $1,522.72, and execution issued in May, 1857. In July, 1857, Watkins executed a mortgage on the premises to Beach, the appellant, to secure two notes, one for $4,000 and the other for $2,500, given for borrowed money. The order of the respective liens was, first, the mortgage to Wylie ; second, the judgment against Reed and Watkins, and third, the mortgage to Beach. On the 6th of August, 1857, Watkins made a general assignment of his property, including this lot, to Daniels, for the benefit of certain of his creditors, not including Beach, and on the 28th of the same month, the sheriff sold under an execution, issued on the Prince judgment, the premises in controversy, and also three other lots in the city of Chicago. All the property was struck off in the name of Shaw, the appellee herein and complainant below, but he was only a nominal purchaser. The money was paid by the assignee, Daniels, out of the trust funds. Shaw was acting at the time as Daniels’ clerk. The payment was entered at the date in the account kept by Daniels as assignee, upon his books. The return of the sheriff upon the execution does not show a sale of each lot separately, but merely that all the lots sold for $1,653.78, which satisfied the execution. Neither does the sheriff’s deed, which was not made until June 29, 1868, and was then made to Shaw, show what was bid upon this lot.

One of the notes secured by the mortgage from Bryan to Wylie, fell due on the 15th of April, 1858, and was not paid by Reed and Watkins, who had undertaken its payment. Wylie lived in the city of Washington and had assigned the note to Withers, a banker of the same city. Bryan, being the maker of the note, in order to preserve his credit, and not, as he testifies, to discharge the note, sent on the necessary funds to Wylie to redeem it from Withers, and had Wylie send it back to Mather & Taft, attorneys in Chicago, for the purpose of enforcing payment through the mortgage.

Bryan had an undoubted right to cause this to be done, and did not, by advancing the money to Wylie for the redemption of the note, discharge the lien of the mortgage, as between himself and Watkins or Watkins’ assignee, since, by the express terms of the deed from Bryan to Reed and Watkins, the lot was made the primary fund for the payment of the debt, and its payment was expressly assumed by Reed and Watkins. The mortgage contained a power of sale, and Mather, acting under a power of attorney from Wylie, proceeded, after due advertisement, to make the sale on the 19th of July, 1858, to pay the note which was past due, and also that which would mature the next year. This was in accordance with the terms of the mortgage in case of default and sale. The amount estimated to be due on the mortgage was §4,640, and the- premises were bought at the sale by Beach, who held the junior mortgage, at that price. He paid the §4,640, received a deed from Wylie, and at once entered into possession of the premises and has remained in possession to the present time.

On the 6th of June, 1868, Shaw, claiming to be the owner of the mortgaged premises as purchaser under the Prince judgment and execution, filed a bill against Beach to redeem, and on the final hearing a decree was pronounced authorizing a redemption, charging Beach with rents and profits towards the payment of his bid, allowing him nothing upon the mortgage from Watkins to him, and requiring him to convey to Shaw his title acquired under the Wylie sale, on the receipt of the balance found to be his due. From this decree Beach prosecuted an appeal.

The chief, and indeed, upon the evidence, the only ground for attacking the sale to Beach, is, that it was made by an attorney, and in the absence of the donee of the power, which this court held in Taylor v. Hopkins, 40 Ill. 442, could not be legally done. Admitting the sale could have been avoided by a proceeding instituted in due time, and by the proper parties, the question is, whether the complainant in this record occupies a position entitling him to call it in question.

The error running through the argument of counsel for appellee, consists in the assumption that the complainant, Shaw, was really a purchaser at the sheriff’s sale. He was not a purchaser in any just sense, not in such a sense as to give him the slightest equitable right or interest in the property. He was a purchaser only in name. Although this and the other lots Avere struck off in his name, and the sum of $1,653.78 was. paid upon the bid, not a dollar of it was paid by him. That sum, it is conceded, was paid by Daniels as assignee of Watkins, the judgment debtor, with money received from the property assigned to him by Watkins. 'As already stated, ShaAV was Daniels’ clerk. Why Daniels, through Shaw, bid in the property and paid the money does not appear, but the presumption is, that he regarded the property levied upon as worth more than the amount of the judgment, and that he supposed he Avould, in the end, be increasing the funds in his hands by bidding in the property and paying the judgment from the trust funds. Whatever may have been his motive, that is what he actually did, and as he testifies that he subsequently closed up the assignment, the presumption is that his course was satisfactory both to Watkins and to the creditors. What finally became of the other three lots sold by the sheriff, this record does not disclose, but we suppose, when these premises were subsequently sold under the Wylie mortgage, to pay a debt amounting to $4,640.00, which Avas the oldest lien, and which AA7as not proApded for in the deed of assignment, the assignee gave himself no further uneasiness in relation to this property. This also explains why no deed Avas ever taken out upon the sheriff’s certificate of purchase until about ten years after it might have been demanded, and no claim was made against Beach, for the property. Shaw then appears, files his bill to redeem, procures a deed from the sheriff, asks that the rents of the property be applied - towards the extinguishment of Beach’s claim as a purchaser under the Wylie sale, that the title derived under that sale be conveyed to him, that Beach be cut off from all benefit of his own mortgage for a large amount of money loaned Watkins, and that Shaw himself be decreed to be the owner of the property in his own right, though he has never paid one dollar upon it, and is really, in equity, no more entitled to set aside the sale to Beach as irregular, and claim the title for himself, than would be any other person who might regard the property as a desirable possession.

What the effect of the payment by Daniels of the Prince execution, out of the funds in his hands as assignee, would have been, as between Beach and the creditors provided for in Watkins’ deed of assignment, it is unnecessary to consider. The assignment has long since been closed up, and the assignee, as he swears, has been released. But as between Beach and Watkins, it is clear the payment by Daniels was simply an ex-tinguishment of the lien of the judgment, and let in the mortgage to Beach as the incumbrance next in rank to that made by Bryan to Wylie. If Watkins were seeking to redeem for his own benefit, he would be required to pay, not only the amount of Beach’s bid at the Wylie sale, but the amount of the mortgage to Beach.

If, then, Shaw were entitled to redeem at all, he would have to redeem as the naked assignee of Watkins’ title, having paid no valuable consideration, but standing in his shoes, and he could claim no better terms of redemption than the court would give to Watkins. But in this proceeding, as it now stands, he has no right to. redeem. He files the bill, not as one holding a legal title for the use of Watkins, and asking to redeem for his benefit, but he claims the property in his own right, for his own use, and on the utterly untenable ground of purchase. An appeal to the equity side of the court, upon a claim more thoroughly unsubstantial, is rarely made. The case is singularly bald. We have sought in vain a solitary element of equity in the complainant’s demand. He claims as a purchaser, but is not one. He asks to be decreed the ownership of property for which he never paid a single dollar, and not only that it may be given to him without a particle of consideration, but that it be taken from one who has paid for, it and advanced upon it its then full value, amounting to some ten thousand dollars. He asks that, through a transaction which, so far as he was concerned, amounted merely to a payment by a judgment debtor, with his own money, of the judgment debt, he should, by some legal legerdemain, be clothed with the equitable rights of a purchaser for a valuable consideration.

A court of equity gives or witholds its remedies according to the equity of the case made by the complainant. A suitor must not only come to the court with clean hands, but he must come as well with rights in the subject matter of his bill entitled to protection, and resting upon equitable grounds. It is immaterial how irregular may have been the sale under which Beach acquired the title and possession of the property, unless the court is asked to investigate that question by some person who has an equity of his own entitled to protection. Nixon v. Cobleigh, 52 Ill. 387. When Watkins, or Daniels as assignee for the benefit of creditors, if there are any yet unpaid, shall file a bill, we will consider their equities, if not lost by laches, but as to the case now before us, brought by Shaw for his own benefit, and not as trustee for Watkins or the creditors, we simply say he shows no equity in the property which demands the protection of the court.

When asked to administer equitable relief, the court looks through the forms of transactions to the substance. In the circumstances under which it was given, the mere certificate of purchase issued by the sheriff to Shaw, amounted to nothing. Of itself, it would have been prima facie evidence that he had acquired certain rights. But when the facts are disclosed, we see he acquired none as against Watkins, his grantees or creditors. The certificate was a mere sham. It rested upon a falsehood. The name of Shaw was used as a mere matter of form, and that he himself attached to it no importance, is shown by the fact that for ten years he made no claim, and did not even take out a sheriff•’s deed.

The decree is reversed and the cause remanded.

Decree reversed.

The foregoing opinion was filed of the September term, 1870, and at the September term, 1871, a petition for a rehearing was presented and allowed, and afterwards the following additional opinion was filed as of the latter term.