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Schwartzentruber v. Stephens

OPINION FILED MARCH 22, 1956.

HOMER D. SCHWARTZENTRUBER, APPELLANT,

v.

WALTER C. STEPHENS ET AL., APPELLEES.



APPEAL from the Circuit Court of McLean County; the Hon. FRANK S. BEVAN, Judge, presiding.

MR. JUSTICE MAXWELL DELIVERED THE OPINION OF THE COURT:

On February 27, 1953, plaintiff brought an action in equity in the circuit court of McLean County seeking to have himself declared a mortgagor in possession of 30 acres off the south end of the east half of the northeast quarter of section 33, Danvers Township, McLean County, hereinafter referred to as tract I and a tenant in common with defendants Walter C. Stephens and Betty Stephens in the east half of the southeast quarter of section 33, Danvers Township, McLean County, hereinafter referred to as tract II.

In the complaint it is contended that conveyances of tracts I and II respectively by plaintiff and wife to defendants' predecessor in title are in fact mortgages securing indebtedness of plaintiff to Tillie Stephens. An injunction was asked from a threatened suit to evict plaintiff from said tracts I and II, and an accounting was sought of the moneys which plaintiff states he has paid to defendants and their grantor to satisfy sums due for principal, interest, taxes, insurance, expenses and maintenance of tracts I and II since dates of respective deeds. Plaintiff prayed to be decreed the equitable owner of tract I and the equitable owner in fee simple of an undivided interest in tract II.

The answer of defendants denied that the instruments were executed by plaintiff on the basis of the representations set forth in the complaint, wherein it was contended that the deeds were in fact mortgages; averred that said deeds were given in complete release of the indebtedness secured by trust deed referred to in the complaint and the adjustment of the accounts between the heirs for money due them respectively in the settlement of the Daniel R. Schwartzentruber estate; the answer likewise denied the possession of plaintiff under any agreement as alleged in the complaint but averred his entry into a lease in 1934 for said tracts I and II with Tillie Stephens and a further lease entered into by plaintiff with defendants on October 25, 1951, after the death of said Tillie Stephens, and denied on the part of both defendants any knowledge of any transactions of Tillie Stephens with plaintiff as alleged in the complaint. The answer further set up estoppel against plaintiff from claiming to be the owner of the premises or any part thereof on account of the fact he had entered into a lease for the premises. The pleadings of defendants likewise alleged that the conveyances made to Tillie Stephens were in full payment of the indebtedness secured by the trust deed in question and set up release of the trust deed and also alleged that by reason of the conveyance the debt was extinguished and Tillie Stephens then had both the full legal and equitable title to tract I.

Defendants prayed that they be declared to be the owners of tracts I and II and that title to these tracts be quieted in defendants, and also prayed for an order directing the plaintiff to turn over their share of the crop and pasture rent from March 1, 1953, as provided for in the lease. There also followed further allegations of estoppel and the defense of laches which had earlier been pleaded.

The defendants also filed a counterclaim realleging matters set up in the answer and among other things prayed for a dissolution of the injunction, the quieting of title, the decreeing of defendants to be owners of the premises free and clear of any claims of plaintiff and further praying for the plaintiff to turn over to defendants their share of crops from March 1, 1953.

A hearing was had on the application for temporary injunction. The injunction was granted with bond being furnished. The case then came to issue on the pleadings and was referred to a special master.

The special master reported, finding the warranty deed to tract I was an absolute deed of the equitable and legal title of the grantors and not a conveyance of their interest as security or additional security for any indebtedness due and owing from the grantors therein to the said Tillie Stephens; the deed conveying tract II was in fact, and intended by the grantors to be, a conveyance of the entire legal equitable title of the grantors therein, and not intended as additional security for any indebtedness due and owing from the grantors therein or any one or more of them to Tillie Stephens; the consideration for the execution and delivery of both deeds was the cancellation, satisfaction and settlement of all indebtedness then due from plaintiff and other children of Daniel R. Schwartzentruber to Tillie Stephens and other members of the Daniel R. Schwartzentruber family or their surviving spouses; that said deeds were made and delivered pursuant to and as a part of a full settlement and adjustment of all indebtedness that then existed between the members of the Daniel R. Schwartzentruber family to and from each other; that in the making of the deeds Tillie Stephens did not act falsely or fraudulently with intent to deceive plaintiff in the procurement thereof and was not acting in any fiduciary capacity; that plaintiff was guilty of laches in failure to assert any equitable interest which he has or may have had in tracts I and II and by reason thereof he is now barred by law and equity from prosecuting this suit to the ends prayed for in his complaint. The special master recommended defendants be given the relief prayed by them in their counterclaim.

Objections of plaintiff made to the report of the special master were overruled and stood as exceptions before the chancellor. The chancellor likewise overruled the exceptions and entered a decree substantially in conformance with the findings and recommendations of the special master. From that decree plaintiff has prosecuted this appeal to this court. On motion of plaintiff the injunction theretofore granted was continued in force during the pendency of this appeal, upon plaintiff filing a satisfactory bond.

The interest of the defendant Harry Lyle Mehl is not being contested in this proceeding and no appeal is taken from that portion of the decree relating to the judgment for $250 entered by the trial court in favor of Mehl and against plaintiff. The controversy in this case is confined solely to the rights of the plaintiff, Homer D. Schwartzentruber, and the defendants Walter C. Stephens and Betty S. Stephens.

Plaintiff sets forth eight errors relied upon for reversal. In his argument plaintiff states that the only question in this case is the question arising between Homer Schwartzentruber and Tillie Stephens's grantees, Walter C. Stephens and Betty S. Stephens, as to whether, as between Homer Schwartzentruber and Tillie Stephens, the deed to tract I, dated March 24, 1934, and the deed to tract II, dated September 13, 1933, constitute mortgages.

Plaintiff complains that the trial court erred in that the decree is contrary to the law and the manifest weight of the evidence. The conveyances to Tillie Stephens were by warranty deed. Section 12 of the Mortgage Act (Ill. Rev. Stat. 1953, chap. 95, par. 13,) provides that every deed conveying real estate which shall appear to have been intended only as a security in the nature of a mortgage, though it be an absolute conveyance in terms, shall be considered as a mortgage. The burden of proof rests upon the one asserting a deed absolute in form to be a mortgage to show that fact by clear, satisfactory and convincing proof. Deadman v. Yantis, 230 Ill. 243; Rankin v. Rankin, 216 Ill. 132; Novak v. Kruse, 288 Ill. 363.

As this court said in Warner v. Gosnell, ante, p. 24:

"There can be no question that a deed takes effect from its delivery and that its character at the time of such delivery becomes fixed as of that time. The question whether a deed which is absolute in form is to be taken as a mortgage depends upon the intention of the parties in that regard at the time of its execution. The intention may be found from the papers ...


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