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Masters v. Smythe

OPINION FILED DECEMBER 6, 1950

KATHERINE K. MASTERS, APPELLANT,

v.

PAUL H. SMYTHE, JR. ET AL., APPELLEES. PAUL H. SMYTHE, JR., APPELLEE,

v.

OAK PARK NATIONAL BANK ET AL., DEFENDANTS.



Appeal by plaintiff from the Circuit Court of Lake county; the Hon. L. ERIC CAREY, Judge, presiding. Heard in this court at the May term, 1950. Judgment reversed and remanded with directions. Opinion filed December 6, 1950. Released for publication January 5, 1951.

MR. JUSTICE BRISTOW DELIVERED THE OPINION OF THE COURT.

The partition proceeding instituted by Katherine K. Masters against Paul H. Smythe, Jr. et al., was consolidated with a subsequent partition proceeding filed by Paul H. Smythe, Jr., against the Oak Park National Bank, as trustee for Katherine K. Smythe Masters, and the circuit court of Lake county entered a decree therein for partition and sale, subject to a lease between the Oak Park National Bank, as trustee, and Paul H. Smythe, Jr., with the proceeds thereof to be divided equally between Katherine K. Masters and Paul H. Smythe, Jr. Both Katherine K. Masters, hereinafter referred to as the plaintiff, and Paul H. Smythe, Jr., hereinafter referred to as the defendant, have appealed from this decree.

The paramount issues presented herein are whether the lease is in full force and effect, and whether the decree of sale orders a proper distribution of the proceeds in accordance with the interests of the parties in the premises.

From the record it appears that Katherine K. Smythe and Paul H. Smythe, Jr., originally owned the property in controversy in joint tenancy. On February 27, 1947, Katherine K. Smythe conveyed an undivided half interest in the premises to the Oak Park National Bank, as trustee, in an instrument whereby the bank agreed to hold the title for her, with remainder to her children, and to deal with the property only when authorized on her written direction. She had the sole power to deal with the title, and to manage and control the property. It was specifically stated that the trustee shall have no duty of management, or control, or the collection of rents, earnings, or proceeds, or the payment of taxes, insurance, or other liabilities. The only duty imposed upon the trustee was that if any property remains in the trust 20 years from the date of its creation, the property shall be sold and the proceeds divided among the persons entitled thereto.

The parties were divorced by decree entered January 13, 1948, which sets forth the terms of a lease to be executed as one of the integral parts of an agreement between the parties. Under the decree plaintiff is to lease her undivided half interest in the farm to the defendant for a period of seven years at an annual rental of $750 if she occupies a small cottage on the farm, and $900 if she does not reside there. $250 of the rent is to be payable in advance the first of the year, and from the balance may be deducted half of the interest and principal payments on the mortgage indebtedness, and half of the taxes and insurance. Plaintiff will be entitled to occupy the small cottage and be furnished with an electric stove, heater, and space heater, without charge, until the termination of the lease.

Pursuant to this decree a lease was executed by the Oak Park National Bank as trustee for Katherine K. Smythe, upon her written authority. The lease, however, referred to the entire property by metes and bounds, rather than to her undivided half interest. Other relevant portions of the lease were that any repairs shall be borne by Paul H. Smythe, Jr., who shall render an accounting to Katherine K. Smythe of the authorized deductions from the rent, and pay her the balance thereof on December 31 of each year; that the occupancy of the small cottage shall be restricted to her and any of her children; that if default shall be made in the payment of rent, or any part thereof, or in any of the covenants to be kept by defendant, "it shall be lawful for the party of the first part to re-enter with or without due process of law . . . and in order to enforce a forfeiture for non-payment of rent, it shall not be necessary to make demand on the same day the rent shall become due, but a demand and refusal or failure to pay at any time on any subsequent day, shall be sufficient, and after such default shall be made, the party of the second part . . . shall be guilty of forcible detainer of said premises. . . ."

From the testimony of the parties it appears that Katherine Smythe occupied the cottage from August 1, 1948, and on or about April 1, 1949, she married Alfred Masters, who resided on the premises with her for a short period. Defendant Smythe cut off the electrical service to the cottage about May 1, 1949, and refused to restore it despite a cease and desist notice from plaintiff. Moreover, he made no payment of rent on January 1, 1949, as provided in the lease, but in April 1949, his attorney presented an accounting alleging that $145 was due her, and charging her with the 1947 tax payment and certain decorating charges, which deductions have been objected to by plaintiff. No rent, however, was paid until August 1949, when defendant sent her a check for $145 in payment of the rent due on January 1, 1949. Plaintiff did not cash the check, but turned it over to her attorney.

In the interval, on April 28, 1949, plaintiff filed her suit for partition, alleging the trust deed to the bank, the divorce proceedings, the interest of the parties in the real estate, the fact that it was subject to two mortgages, and may be subject to a lease, and praying for a partition of the premises, and a determination of the interests of the parties.

Defendant Paul H. Smythe, Jr. filed a motion to dismiss plaintiff's complaint on the ground that she had insufficient title to institute a partition proceeding, inasmuch as title to the property was in the Oak Park National Bank as trustee. Defendant also filed his own complaint for partition, setting up the lease from the bank, as trustee, and praying that the shares of Smythe and the bank be ascertained, and that any sale ordered shall be subject to the lease. The court denied Smythe's motion to dismiss plaintiff's complaint, and granted plaintiff's motion to consolidate the two causes, and appointed a guardian ad litem for the minor children.

On August 12, 1949, a decree for partition was entered, which provided, in substance, that Paul H. Smythe, Jr. is entitled to half of the premises, and Oak Park National Bank, as trustee, is entitled to the other half, subject to the right, title and interest of Katherine K. Masters and her three children; that commissioners shall make partition between Paul H. Smythe, Jr. and the bank, as trustee, assigning each half, or if division is impossible, appraise the property for its full value, and its value subject to the lease; and that the entry of the decree shall be without prejudice to the parties' right to question the validity of the lease, or raise any other issue.

The commissioners reported that the property could not be divided without manifest prejudice, that the full value of the property was $35,500, and its value subject to the lease was $28,000. The cause was transferred on a motion for change of venue, and after a hearing at which the facts hereinbefore noted were adduced, a decree of sale was entered on December 8, 1949.

The court found therein that the lease between the bank, as trustee, and Paul H. Smythe, Jr., was in full force and effect, and included within its terms all of the premises, rather than an undivided part thereof. The decree further recited that since Katherine K. Masters had the sole right to direct the trustee to act, by filing her suit for partition she exercised her right to direct the trustee, and thereby became the owner of an equitable half interest in the premises and, therefore, was entitled to receive half of the proceeds of any sale of the property, with Paul H. Smythe, Jr. to receive the other half. The sale was ordered, subject to the lease, on the basis of the $28,000 valuation, with the usual provisions for minimum sale price, and the decree allowed plaintiff and defendant to bid at the sale, with their half interest to be computed as part of the purchase price.

On December 23, 1949, plaintiff substituted attorneys, and the court ordered that such attorney fees as may be allowed shall be divided equally between plaintiff's original attorneys and defendant's attorney. The court denied plaintiff's motion to vacate the order of sale which, she contended, failed to fully adjudicate the rights of the parties in the property; erroneously found the lease binding, despite material breaches of its covenants by defendant; and failed to properly determine the rights of the parties to the proceeds of the sale, and to the rentals under the lease. On this appeal, plaintiff has urged substantially these same grounds for reversal of the decree.

Defendant filed a cross appeal, alleging as error the denial of his motion to dismiss plaintiff's complaint; the consolidation of the complaints; the order providing for a division of attorney fees; the findings of the court that the lease was in full force and effect as far as plaintiff's rights were concerned, and that by filing her suit she became owner of an equitable one-half interest. Defendant urges that a proper decree of sale be ordered, subject to the lease, and finding that ...


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