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South Side Bank & Trust Co. v. Sherlock Homes

MAY 11, 1955.

SOUTH SIDE BANK & TRUST COMPANY, APPELLEE,

v.

SHERLOCK HOMES, INC., DEFENDANT, AND JOHN C. BACON, APPELLANT.



Appeal from the Circuit Court of Cook county; the Hon. DANIEL A. ROBERTS, Judge, presiding. Decree affirmed.

MR. JUSTICE LEWE DELIVERED THE OPINION OF THE COURT.

John C. Bacon appeals from a decree entered in a real estate foreclosure proceeding. The essential facts are uncontroverted. June 17, 1953, Sherlock Homes, Inc., being indebted to plaintiff, simultaneously executed a note in the sum of $8,450 and a mortgage to secure payment of the note. The mortgage conveyed to plaintiff the premises described as follows:

The South Half of Lot Eight and the North Three-quarters of Lot Nine in Block One, in Davis & Todd's Subdivision, Commonly known as 5318 South Kolin Avenue, in the City of Chicago.

Shortly after the mortgage and note were executed, Sherlock Homes, Inc. constructed a 4 1/2-room brick dwelling house upon the premises. At the time Sherlock Homes, Inc. executed the mortgage conveying the premises to plaintiff it had only an undivided one-half interest in the South Half of Lot Eight. A partition suit was instituted by Sherlock Homes, Inc. for the purpose of acquiring the remaining outstanding undivided one-half interest in that lot. October 23, 1953, at the partition sale, Bacon purchased title to all of Lot Eight, which included a portion of the building located on the undivided one-half of the South Half of Lot Eight.

Sherlock Homes, Inc. having defaulted in the performance of the terms and conditions of its mortgage and note, the plaintiff brought foreclosure proceedings on February 2, 1954 against Sherlock Homes, Inc. and named Bacon as a defendant. Issues were joined by both defendants and, after a hearing, a decree of foreclosure was entered. The decree found, among other things, that "The mortgage sought to be foreclosed herein is a first and valid lien upon the mortgagor's [Sherlock Homes, Inc.'s] interest in the property and improvements, which interest was in existence at the time of the execution and delivery to the plaintiff of the mortgage which is being foreclosed herein," and that the premises directed to be sold are described as follows:

"An undivided one-half interest in the South Half of Lot Eight, and all of the north three-quarters of Lot Nine in Block One, in Davis & Todd's subdivision, together with all improvements thereon and the appurtenances belonging thereto."

It is undisputed that the mortgagor, Sherlock Homes, Inc., never owned more than an undivided one-half interest in the South Half of Lot Eight.

The principal question presented is whether the plaintiff has a first and valid lien upon the interest of the mortgagor Sherlock Homes, Inc., in the premises and improvements as found in the decree.

In Oppenheimer v. Szulerecki, 297 Ill. 81, leased premises were destroyed by fire. The landlord had covenanted to make all necessary repairs. Upon the landlord's refusal to rebuild, the tenant restored the building. The court, holding that the tenant was entitled to a lien to the extent that the cost of restoration was reasonably incurred, said, at page 88:

"Illustrations of equitable liens so declared are cases where two or more persons own real estate in common and one of them has made permanent improvements on the property which have added to its value. Upon partition of the estate a court of equity will allot to the co-tenant making the improvement the portion improved without taking account of its value, but if such division cannot be made will create a lien upon the proceeds of the other shares for their proportionate amounts of the increased value caused by the improvement." (Cases cited.)

The governing principle is stated again in Noble v. Tipton, 219 Ill. 182, at page 188: ". . . where one of several tenants in common has made improvements upon the property, the court should, if possible, allot to him the portion improved without taking into account the value of the improvements. If in the partition such a division cannot be made, the court will then allow to the one making the improvements remuneration for the increased value of the premises caused thereby." To the same effect see Heppe v. Szczepanski, 209 Ill. 88.

[2-5] Although the mortgage given by Sherlock Homes, Inc. purported to grant a greater estate than it actually owned, the conveyance was void only as to the excess. (Triger v. Carter Oil Co., 372 Ill. 182.) When Bacon bought Lot Eight at the judicial sale held pursuant to the decree in the partition suit, he had constructive notice of the mortgage here involved, since it was of record. (Dorris v. Johnson, 363 Ill. 236; Gregory v. Suburban Realty Co., 292 Ill. 568.) The court sold only that portion of the undivided interest owned by Sherlock Homes, Inc. in the premises. (Berman v. Birney, 412 Ill. 240.) Under the authorities last cited the plaintiff has a first lien upon the interest of Sherlock Homes, Inc. as found in the decree.

Bacon contends that the mortgage created no lien on the rents, issues and profits as against the co-owner at the time the mortgage was executed, and that no conveyance by lease or other instrument could in any way change the relationship between the original and co-owners. These propositions are conceded by plaintiff. Moreover, an examination of the decree discloses that it contains no specific finding as to the rents, issues and profits having been pledged by the mortgage.

In the event plaintiff obtains a deed based on a certificate of sale, Bacon and plaintiff, jointly, will have an undivided one-half interest in the South Half of Lot Eight, with plaintiff being the owner of the improvement. Should this occur, the rights of ...


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