Appeal by plaintiffs from the Circuit Court of Cook county;
the Hons. PHILIP J. FINNEGAN and LEONARD C. REID, Judges,
presiding. Heard in the first division of this court for the
first district at the April term, 1949. Reversed and remanded
with directions. Original opinion filed December 19, 1949.
Rehearing opinion filed March 23, 1950. Released for publication
April 13, 1950.
MR. PRESIDING JUSTICE TUOHY DELIVERED THE OPINION OF THE COURT.
Rehearing opinion filed March 23, 1950
This consolidated appeal is prosecuted from certain orders of the circuit court of Cook county sustaining, on appeal from the probate court, motions to dismiss petitions filed in the probate court, and also from an order dismissing the bill of complaint filed in the circuit court of Cook county for want of equity. The bill of complaint sets forth the entire controversy and, summarized, is as follows:
Alfred M. Scheribel, plaintiff, was executor and sole devisee and legatee under the will of his mother, Josephine Scheribel, who died testate December 11, 1942. He employed as attorneys to represent him the defendants John R. Hackett and William S. Jacob, and, while the estate was pending and open, on June 24, 1943, was adjudged insane. Shortly thereafter, his cousin, the defendant Walter C. Scheribel, on his own petitions, was appointed conservator of plaintiff's estate and administrator de bonis non of the estate of plaintiff's mother. Defendants Hackett and Jacob then became defendant Walter's attorneys in both estate matters and have continued to represent him in both his representative and individual capacities. On January 26, 1944, on petition of the administrator, an order was entered in the probate court authorizing the administrator to sell to himself individually, without notice, the interest held by plaintiff in certain real estate improved with a gasoline station which had been owned by plaintiff's mother, Josephine Scheribel, and her husband, John Scheribel, who predeceased her, in fee simple as joint tenants. The parent Scheribels, being indebted to the defendant Standard Oil Company in the sum of $15,000, had in November 1937, conveyed the real estate by warranty deed to the Standard Oil Company to secure their indebtedness, receiving back an agreement dated January 5, 1938, to repurchase the property for $15,000, payable in instalments. They remained in undisturbed possession until their deaths. At the time of Josephine Scheribel's death there was an unpaid balance of $12,591.23 on the contract, and at all times thereafter the interest of her estate was worth not less than $15,000 and steadily increased in value until the end of 1945, when it was worth in excess of $40,000.
Under the order of the probate court of January 26, 1944, defendant Walter paid $940.53 to the estate for the equipment and supplies and assumed the obligations under the repurchase agreement. On August 17, 1944, defendant Walter, in his individual capacity, sold the premises to defendants Edward J. Baranski and Adolph A. Klimek for $3,000 cash. On June 4, 1945, plaintiff was restored to his legal rights and was discharged by the county court, but not until February 14, 1947, was his conservator discharged. On February 6, 1947, on motion of defendant Walter Scheribel, the order of the probate court of January 26, 1944, authorizing the sale to defendant Walter was vacated and set aside, and the sale of the premises by Walter Scheribel to defendants Baranski and Klimek for $3,000 was then ratified, confirmed, and approved by order of the probate court. On the day preceding the entry of the February 6, 1947, order, Walter, individually, and his wife executed and delivered a quitclaim deed, conveying said real estate to Baranski and Klimek, and on February 7, 1947, Walter executed and delivered an administrator's deed, conveying the same to Baranski and Klimek. On January 2, 1947, defendant Standard Oil Company purchased the premises from defendants Baranski and Klimek for $40,000, forgiveness of the balance due on the contract of January 5, 1938, a favorable 10-year lease and other consideration. On March 10, 1947, Baranski and Klimek and their wives executed and delivered their quitclaim deed, conveying this property to the Standard Oil Company. Defendants Jacob and Hackett represented Baranski and Klimek in this transaction and collected a substantial fee, according to the averments of the complaint.
On February 14, 1947, the first and final account of defendant Walter, as administrator, approved by plaintiff, was filed and was approved by the probate court. Subsequently, plaintiff filed a petition in the probate court seeking to set aside and vacate the orders of the probate court of January 26, 1944 (authorizing administrator to purchase at his own sale), February 6, 1947 (setting aside the order of January 26, 1944, but ratifying and confirming the sale by defendant Walter to defendants Baranski and Klimek), and February 14, 1947 (approving the first and final account of defendant Walter), and also moved to set aside the quitclaim deed of February 5, 1947, from defendant Walter Scheribel and his wife to defendants Baranski and Klimek and their wives, the administrator's deed dated February 7, 1947, and the quitclaim deed from defendants Baranski and Klimek and their wives to the Standard Oil Company dated March 10, 1947. Plaintiff also filed a petition in the conservatorship estate, seeking to set aside the order approving the final account of the conservator and to compel the defendant Walter, as conservator, to account. The probate court sustained the motions to dismiss these petitions, and on appeal to the circuit court the same result was reached, and a judgment order in each of said estates was entered striking said petitions.
On January 12, 1948, the complaint, alleging the foregoing facts, was filed in the circuit court seeking to set aside the sale of the gasoline station, to set aside the deeds referred to, to set aside the orders of the probate court and the circuit court on appeal striking the petitions of plaintiff in each of said estates, and seeking an accounting and general relief. From an order dismissing this complaint, the case was originally appealed to the Supreme Court on the ground that a freehold was involved but was transferred to this court by the Supreme Court without any opinion.
Plaintiff's theory of the case is (1) that the sale by the administrator to himself was void; (2) that the probate court orders of January 26, 1944, February 6, 1947 and February 14, 1947, are void and may be attacked collaterally, and also that the deeds of February 5, 1947, February 7, 1947, and March 10, 1947, above described, are void; and (3) that the circuit court had jurisdiction of the subject matter of the complaint.
Defendants maintain (1) that the proceeding fails because it is a collateral attack on the orders of the probate court and that, so far as the defendant Standard Oil Company is concerned, it makes no allegation of fraud or conspiracy entitling plaintiff to any relief against such defendant; (2) that the interest of the plaintiff was in personal property which the administrator could have sold without any order of the probate court, so that it was immaterial that the approval was made after the actual sale; (3) that the plaintiff is guilty of laches and that the doctrine of estoppel in pais applies to plaintiff; and (4) that the decision on appeal from the order of the probate court is res judicata.
Plaintiff's rights rest primarily on his contention that the warranty deed conveying the gasoline station to the Standard Oil Company and the repurchase agreement were in fact a mortgage of the premises to secure the indebtedness of the grantors to the grantee. The complaint alleges that the Scheribels, being indebted to the Standard Oil Company in the sum of $15,000, on November 16, 1937, conveyed the station by warranty deed to the Standard Oil Company to secure the indebtedness and as a part of the same transaction received back the agreement of January 5, 1938, by which they as joint tenants agreed to repurchase the gasoline station for $15,000, payable in instalments, and the Standard Oil Company agreed to convey title; that the grantors remained in continuous, undisturbed possession until their deaths and paid on the contract $2,408.77; that in equity and under section 12 of the Mortgage Act (Ill. Rev. Stat. 1949, ch. 95, par. 13 [Jones Ill. Stats. Ann. 83.13]) the warranty deed constituted an equitable or constructive mortgage.
[1-6] The facts alleged make the warranty deed and the contract to repurchase a mortgage. Keithley v. Wood, 151 Ill. 566. On this appeal the allegations of the complaint must be taken as true and the transaction between the Scheribels and the Standard Oil Company will be treated as a mortgage to secure the indebtedness of $15,000 owing to the Standard Oil Company. In considering a mortgage in the usual form the court in Lightcap v. Bradley, 186 Ill. 510, 520, said:
"The mortgagor's interest in the land may be sold upon execution; his widow is entitled to dower in it; it passes as real estate by devise; it descends to his heirs, by his death, as real estate; . . . The mortgagee has no such estate as can be sold on execution; his widow has no right to dower in it; upon his death the mortgage passes to his personal representatives as personal estate, and it passes by his will as personal property."
In speaking of the rights of a mortgagor who has executed an absolute deed and received from the grantee a bond or contract to reconvey, the court in West v. Reed, 55 Ill. 242, said (p. 245):
"He undoubtedly has an estate, which will pass by descent, or devise, or by deed. But it is nevertheless a purely equitable estate, that is to say, an interest in the land based upon equitable grounds, and which a court of chancery will protect and enforce when equitable considerations demand. But he has nothing more. The legal title has gone to his grantee by means of a deed absolute upon its face. If the deed, as in the present case, was made to secure a loan of money, and a bond, or contract to re-convey, is taken, the ...