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Robison v. Moorefield





Appeal by plaintiff from the Circuit Court of Peoria county; the Hon. HENRY J. INGRAM, Judge, presiding. Heard in this court at the May term, 1952. Decree affirmed. Opinion filed July 3, 1952. Released for publication July 28, 1952.


Leslie F. Robison, plaintiff-appellant, filed in the circuit court of Peoria county, his suit against his sister, Elizabeth R. Cleary (formerly Moorefield), defendant-appellee. The complaint alleges in substance that while in 1942 the plaintiff made, executed, and delivered to the defendant his warranty deed, absolute in form, wherein he conveyed to the defendant his undivided one-half interest in the Bower-Buick Garage Building in Peoria, Illinois, this deed was in fact a mortgage and given as security for a debt. The complaint asks the court for an accounting to determine the amount due on the debt, and upon his payment of the same, that the defendant be required to reconvey the premises.

The answer of the defendant denies that the conveyance was in the nature of a mortgage but alleges that it was in fact an absolute sale of the premises. The cause was referred to the master in chancery who after hearing a great volume of testimony and documentary evidence filed his report recommending that the plaintiff was entitled to receive the relief sought in his complaint. Exceptions were filed to this report. No further evidence was heard by the chancellor and after hearing arguments, he sustained the exceptions and dismissed the complaint for want of equity. This appeal follows.

As the rights of the parties must be determined to a great extent from the evidence presented in the record, it becomes necessary to analyze it to determine its weight and credence. The following facts are largely undisputed: prior to March 1, 1938, L.J. Robison, father of the parties, held in trust the legal title of the garage building in question. The trust was created by the grandfather of L.J. Robison for the benefit of the two parties herein, the only children of L.J. Robison. For several years the trustee looked after the management of the garage building, the sole asset of the trust, and from accumulations of profits from the leasing of the building, purchased a 160-acre farm in Tazewell county, Illinois. The trust provided that when the appellee became twenty-five years old, the trustee should convey the garage building to the plaintiff and the defendant. This time having arrived prior to 1938, the trustee conveyed the premises and also the Tazewell farm to the plaintiff and the defendant as tenants in common. Subsequently by mutual agreement the parties divided the farm, the plaintiff taking 80 acres and the defendant 80 acres by exchange of deeds. On March 24, 1938 the plaintiff gave the defendant a quitclaim deed to the garage building. The defendant procured a mortgage loan on the building, accounted to plaintiff for his part of the proceeds of the loan, and from her share of the proceeds loaned her brother $4,000 which was evidenced by an interest-bearing note for that amount. Contemporaneous with the delivery of the deed the defendant executed an instrument admitting that the conveyance was in the nature of a mortgage and that on payment of the note she would reconvey to her brother his undivided one-half interest in the premises. From 1938 to 1942 the parties divided the rents from the garage equally between them and mutually paid the expenses. There was no question raised that the 1938 transaction was in the nature of a mortgage. Between 1938 and 1942 the parties had many discussions with relation to money, concerning the operation of the building, the division of the rentals, and possible sale of the building. In 1941-42 plaintiff was having serious financial difficulties. He owed his father $3,500, his sister the $4,000 above mentioned, and rather large sums to other creditors.

On January 16, 1942 the defendant and her husband and the plaintiff and his wife entered into a written agreement. The substance of this agreement was that the plaintiff would convey his undivided one-half interest in the garage building by warranty deed to the defendant subject to a mortgage of $22,000, which the grantee, defendant, assumed and agreed to pay; that in consideration thereof the defendant agreed to convey to the plaintiff by warranty deed her 80-acre Tazewell county farm above mentioned subject to a mortgage of $5,450 which the plaintiff agreed to pay. As further consideration for the exchange of property the $4,000 note due the defendant from the plaintiff on which there was a credit of interest of $20 was to be surrendered and cancelled. The defendant was to pay the plaintiff an additional sum of $8,000 which was to be obtained if possible by an additional mortgage loan on the premises, but if not obtained, the defendant was to have a reasonable time to pay the money. The agreement further contained provisions with reference to when possession of the farm was to be delivered. It also provided that all indebtedness with some exceptions of the plaintiff should be fully paid with the "cash money" which he received. The agreement was signed by the parties and their spouses and was witnessed by L.J. Robison, father of the parties. On the same day pursuant to this agreement the plaintiff made, executed, and delivered to the defendant, his warranty deed conveying plaintiff's interest in the garage building. The deed was in the form of an ordinary statutory warranty deed and was recorded on January 18, 1944. There was affixed to the deed $13.20 in revenue stamps which were cancelled as follows: "1/17/44 — E.R.M." At the same time the deed to the Tazewell county farm was made and delivered and plaintiff's $4,000 note was surrendered to him.

To summarize, the undisputed facts about the consideration involved in the transaction, be it a sale or a mortgage, were as follows: that the Tazewell farm was to be taken at a net value of $14,550; that appellant's note of $4,000 and accrued interest to his sister, executed March 23, 1938, was to be cancelled; that Leslie was to receive an additional sum of $8,000 to be paid in cash or by note. On January 16, 1942 Leslie owed his sister approximately $27,000 which he claims was a loan and was secured by the warranty deed. His sister claims that the amount was in payment on the sale of the garage building which she alleged she took and assumed to pay the first mortgage of $22,000 to the Central National Bank and the general taxes of $1,700 then due, one-half of both being the debt of the plaintiff. Part of the $8,000 balance was liquidated by her delivering to her brother her promissory note at 5% interest for $4,182. This note has been renewed from time to time and the interest paid and there is still due thereon, although the exact amount is in dispute, approximately $500. The balance of the $8,000 was liquidated by the defendant giving to her father on the same day a note for $4,233. This last note was payment of a note due by appellant to his father for $3,500.

The controverted testimony of the witnesses is in substance as follows. Leslie F. Robison testified that he lived in Peoria, Illinois, and was forty years old; that late in 1941 he owed his sister a note of $4,000 and interest and that he owed his father a note of $3,500 which he had owed him since 1938 when he and his sister had an accounting; that he owed various other creditors approximately $4,400; that in 1941-42 only his father was pressing him for payment; that in 1941 he had numerous discussions with his sister with reference to his financial affairs; that he approached his sister about borrowing $3,500 to pay off his father's note; that she told him she would think it over a few days; that later in the year at a subsequent conversation she told him that she had a plan to offer him with reference to liquidating all his obligations. She said "I'll tell you what I'll do. I'll loan you enough money to pay off all your indebtedness. I want you to give me a new deed on your one-half interest in the garage property as security for this loan." He further testified that about January 1, 1942 he and his sister talked in the bedroom of their father who was then ill and he told his father that his sister was going to deed him the Tazewell farm and loan him $8,000 in cash and that he was going to sell the farm and with the cash pay off all his indebtedness; that his father inquired whether he was making absolute sale of the garage property to his sister and that he replied, "No," that he wouldn't think of selling the garage property but "she is making me a loan and I am giving her a new deed as security for that loan."; that his sister then said, "That's not the way I understand it." The father then said in substance that he would not sanction any such arrangement for a sale. Plaintiff said that his sister then replied, "Well, if that's the way it is going to be and you want it in the form of a loan, I'll agree to that if he can pay me back with reasonable interest. Anyway, I don't think he can ever pay me back and I will be able to keep the garage." Plaintiff said that the next conversation they had was January 16, 1942 at the father's home; that his sister told him she had the necessary papers ready and that he and his father read over the agreement and the warranty deed above mentioned; that her father then said that the form of the agreement and deed constituted an outright sale of the garage property and that this was not in accordance with the agreement that she had made in the father's bedroom theretofore; that the father said that he understood that the transaction would be in the form of a loan and "Leslie would have the privilege of repaying this loan and you, Betty, would deed his one-half interest back to him upon the payment of that loan."; that his sister replied, "We did have an agreement. That agreement is still in effect, but I insist that this agreement be signed in this form because I don't want Les to be able to incur any further credit on his garage interest."; that she wanted to protect both of their interests "against execution suit" that some contractor, a party he might become indebted to, could levy on Leslie's interest. He further said that she stated, "I again state before all of you here that I am entering into this agreement, this verbal part of the agreement with a definite promise that upon repayment of this money I will deed back to Les his one-half interest in the garage."; that his father then said in substance that in a family of their kind, their word was as good as a written agreement and that it would be all right for plaintiff to sign the agreement in the present form. This was done. Leslie testified that he made a memorandum to the effect that he owed his sister $14,550 for the Tazewell farm, a $4,000 note that he had owed his sister since 1938, and an additional $8,000 in cash or by note; that his sister said, "You will owe me $11,000 more," one-half of the mortgage on the garage building as "I will probably have paid that off by the time you have repaid me the money." He testified that she then wrote on his memorandum, Plaintiff's Exhibit No. Two, admitted in evidence, "C.N. Bank, $11,000.00"; that she then said, "You were going to cancel this $4,000 note of mine and your dad's note," and then he wrote down "cancel." He further testified that some time prior to their first conversation they had talked about selling the garage building; that he told his sister that he thought they could get $125,000 for it; that she replied that she was not interested in selling at that price. He further testified that all he was interested in at the time of the last transaction was in raising the $3,500 to pay his father; that after 1942 until 1948 he discussed with his sister at various times the operation and maintenance of the garage; that at various times he talked over business matters with Mr. Bower the tenant at the garage building; that Mr. Bower asked him in 1945 if he would talk to his sister about remodeling the building; that in July 1948 he talked with his sister with reference to the money he claimed he had borrowed from her and told her he wanted an accounting as he was ready to pay back the balance due her; that she replied that if he had any such money why didn't he buy other property "instead of retaining my one-half in that property" and that she would see her lawyer about it; that at various other times she told him she had not been able to see her lawyer but she never denied to him that he had an interest in the building. He further testified that his sister was the dominant party in the dealings and that she was a strong willed person and would tell him what to do and how to do it.

Leslie F. Robison further testified on cross-examination that he did not know whether he told Bower after 1942 that he was a one-half owner; that subsequently to 1942, prior to July 1948, he did not ask his sister for any accounting of the rentals from the garage building; that he did know the terms of the lease about which his sister had told him; that with respect to the January 16, 1942 transaction the understanding was with his sister that he was to repay her the amount due with reasonable interest; that his sister specifically stated a reasonable rate of interest; that there was no definite date fixed as to when he was to repay the money but it was a reasonable length of time; that he didn't sign any notes to his sister at that time; that he had paid nothing on the indebtedness after 1942. Defendant's Exhibit 8, which was prepared by the plaintiff, entitled "Factors to consider as to whether the sale of the garage is advisable" stated: Some reasons for selling the garage building are that the lease might be cancelled by the tenant owing to the war, that it was not best to own property jointly, that the money obtained from the sale could be reinvested, and that the building was saleable.

L.J. Robison, father of the parties, testified on behalf of the plaintiff as follows: that prior to January, 1942 he had many conversations with his children with reference to their financial affairs; that some time early in January 1942 he had a conversation with his children; that his son said, "Sis and I reached an agreement about our financial affairs."; that she had agreed to advance him the funds to pay off his indebtedness and he said, "I am going to convey to her my undivided one-half interest in the garage property"; that the daughter replied that was the way she understood it. The father said he would never give his approval to this transaction and she replied that "If that's the way you feel about it, I'll agree to permit him to pay back to me the sum of money that I advanced to him with reasonable interest and deed him back his one-half interest in the garage property at the time of repayment"; that she further said that he would never be able to raise the money so she wouldn't worry much about it. He testified that on January 16, 1942 the children came to his home and his daughter had with her the agreement, Plaintiff's Exhibit One, which he and his son read; that he mentioned to them that the agreement showed an absolute sale of the garage property and his son said that they had a verbal understanding in regard to that previously in his bedroom and that it wasn't an absolute sale, and he asked his daughter if that verbal agreement still stood and she said, "Definitely it does." He said that this satisfied him and his daughter and her husband and his son and his wife all signed the agreement and the deed and he signed as a witness to the agreement; that the daughter said she wanted the agreement and the deed in that form so that she would have definite control over the property and that the son could not have indebtedness accrue that would jeopardize the title of the property in the future. He further testified that in July 1948 the daughter talked to him and told him that Les, the plaintiff, had just been over to her house and offered to pay back the money she had advanced him in 1942 and wanted her to deed him his interest in the garage, and his daughter said, "I am never going to deed it back to him." He further testified with reference to the value of the building that in his opinion the garage building was worth $150,000 on January 16, 1942. He testified that there was no time fixed as to "how long my son was to have to repay the money." He further testified that his daughter was divorced from Moorefield and entered into a post-nuptial agreement settling their property rights and that he read the agreement and signed it as a witness. This agreement, defendant's Exhibit 14, dated April 14, 1948, provided among other things for the disposition of the garage building in event of sale or her death and made no reference to the fact that at that time she only owned one-half interest in the building. The father testified that he thought this agreement only affected her one-half interest in the garage. He further testified on cross-examination that his son was engaged in business at quite an early age; that he took a pre-law course at the University of Illinois and that his daughter went to a business college; that after her divorce she remarried and probably incurred some parental displeasure in her second marriage. He said, "Our relations with her since her second marriage couldn't be the same because she hasn't been here. She left Peoria and now resides at Salem, Oregon. However, we continued to correspond with her all the time."

Elizabeth R. Moorefield Cleary testified that her brother's financial difficulties and threats to partition the property were the reasons for obtaining the quitclaim deed from him in 1938; that he had never paid but $20 interest on the $4,000 indebtedness, evidenced by the 1938 note; that it was her brother who first introduced the subject of making a change in the arrangement existing in 1941; that late in 1941 he came to her with the idea of selling the property to an outsider; that he approached her about buying his interest in the property on many occasions; that she told him she could not buy him out because she had no money; that she had never requested her brother to take a loan to pay his debt to his father; that he made all the overtures leading up to the 1942 transaction; that in 1942 the physical condition of the Peoria garage was fair but financially it wasn't in good condition; that the war had come along and the tenant, Bower, owing to the fact that he could not sell automobiles, had asked a reduction in rent. Her testimony showed that there was no dispute as to the amount of money and property that flowed between the parties as a result of the 1942 transaction. Her testimony coincided with that of her brother as to the consideration involved. She stated that she was in her father's bedroom at the time related by her father and brother and that one of them told him they had come to an agreement that they thought was satisfactory; she stated "at that time and numerous times I told Les that he would be given first consideration to pay his interest back and exceptional consideration. No amount was arrived at nor was any interest arrived at, and no time." In reply to her suggestion that she would be willing to reconvey to her brother his interest in the property, she said that Les said then and numerous times afterward that he never wanted his interest back and that when he had that much money he would invest it for himself and no one else would have anything to say about it. She further stated: "There was no agreement between my brother and me whereby I would advance him any money. I never at any time suggested to my brother that this transaction of 1942 should be treated as a loan by me to him of any money or property." She further testified that the first time she heard he was making such a contention was August 13, 1948 when he came to her and said he wanted his one-half interest in the property back; that in 1941 the garage property was renting for about one-half of what it was in 1950. She testified that she did not agree as to how much he would have to pay if he subsequently repurchased one-half interest in the property. On cross-examination she denied that she told her brother that she would let him buy his one-half interest back later.

Joseph T. Bower who has been tenant at the garage since 1934 testified as follows: that the present lease on the building is dated in 1947, is for ten years, and provides for a monthly rental of $1,200; that the lease provides that he have the right to remodel; that he had incurred remodeling expenses of more than $102,000; that defendant has signed all the leases since 1942 and that since 1942 tenant has never had any conversation with Leslie regarding the terms of the lease and did not remember having any conversations to the effect that Leslie claimed to have any interest in the building.

Bernard J. Seiler testified in behalf of the defendant that he was a real estate broker of long experience in Peoria, Illinois, and was familiar with the values of commercial properties in the area of the garage building in question and of the garage building and that in his opinion in 1942 the building was worth $99,500. He further testified that in 1942 the building was adapted to automobile use and that automobiles were not procurable for sale, that the tenant of the garage building had given notice that he wished to cancel his lease because of war conditions, and that these factors entered into the opinion of the witness concerning the value of the building.

The above constitutes a large portion of the material parts of the testimony as disclosed by the abstract of the record.

Here it is necessary to determine if the deed, absolute in form, executed on January 16, 1942, was intended to be in the nature of a mortgage or an absolute sale of the premises. The statute provides that every deed conveying real estate which shall appear to have been intended only as security and in the nature of a mortgage, although the deed is absolute in form, shall be considered as a mortgage. (Ill. Rev. Stat., 1951, ch. 95, par. 13.) [Jones Ill. Stats. Ann. 83.13.] There appears to be little variance in the testimony with reference to the actual money consideration passing between the parties. The net value of the Tazewell farm was $14,550. The amount of the plaintiff's note and interest made in 1938 was $4,893.33. The cash to be paid by the defendant was $8,000. The total of these sums amounted to $27,443.33. The amount of the first mortgage on the garage building to the Central National Bank was $22,000. The amount of the 1941 taxes was $1,700; so if the transaction was a mortgage, the mortgage money or equivalent consideration going to the plaintiff was $27,443.33. The fact that the plaintiff accepted it in the above form is immaterial insofar as the actual consideration involved is concerned. The nature of the transaction, how and when the considerations were to be paid, are all important matters to be ...

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