Appeal from the Circuit Court of Cook County; the Hon. THOS.
J. COURTNEY, Judge, presiding. Decree affirmed in part and
reversed in part and cause remanded with directions.
MR. JUSTICE SCHWARTZ DELIVERED THE OPINION OF THE COURT.
March 28, 1962. Supplemental Opinion,
Defendant Avondale Savings and Loan Association, hereinafter called Avondale, appeals from a decree holding that a mortgage securing a loan made by it was not a lien upon the interest of plaintiff Marlene Schroeder in certain property registered under the Torrens Act, and that Avondale is not entitled to indemnification out of an indemnity fund created pursuant to that act.
The case involves the rights of a mortgagee who accepted a mortgage signed by two persons, one who procured registration of his title by forgery, and the other an impostor who impersonated one of the true owners.
Although the Torrens System has been in effect more than sixty years, it is little known except to those who specialize in the field. We will therefore state in a subjoined note the character of the act and its purpose. *fn1 A registered owner or one who takes from a registered owner holds his interest in assurance that his title will not be defeated by prior defects in his chain of title or that if it is, he will be indemnified, subject only to certain taxes, assessments and charges noted on the last certificate of title.
The property in question was originally registered in the names of plaintiffs Marlene Schroeder and her mother Carrie Hoffman as joint tenants. Pursuant to the act, they gave the Registrar a signature card signed by them as a receipt for their duplicate certificate of title.
In 1955, Charles Schroeder, Marlene's husband, conceived a scheme by which he could obtain a registered interest in the property and then, with the connivance of a woman accomplice, mortgage the property and receive the benefits thereof. He had Carrie Hoffman, who was an elderly woman, sign an affidavit that the owner's certificate of title had been lost, although actually it had not been. He then had her sign a warranty deed to his aunt Mathilda Glon. The forged signature of Marlene Schroeder was added to the warranty deed and affidavit and then Charles Schroeder, as a notary public, acknowledged the deed himself. Mathilda Glon, evidently being a conduit for the purpose, promptly executed a quitclaim deed conveying the property to Charles and Marlene Schroeder in joint tenancy.
Charles Schroeder then negotiated with Avondale for a $12,000 mortgage on the property. He signed the mortgage and an assignment of rents, to which documents he also forged or procured the forgery of his wife's name. Then Charles Schroeder and a woman impersonating his wife were taken before a notary public, one Alyce M. Pociask, who was an assistant secretary of Avondale. She took their acknowledgment although she had never seen them before. The affidavit, quitclaim deed, warranty deed, mortgage and assignment of rents were all tendered by Avondale's representative to the Registrar's office which accepted them, issued a new certificate of title to Mathilda Glon, immediately cancelled it and issued one to Charles and Marlene Schroeder, bearing memorials of the mortgage and note, and gave Avondale a "Mortgagee's Duplicate Certificate."
Five months later a new mortgage was executed increasing the loan to $17,000 and the foregoing procedure was repeated in all its essentials, the former mortgage and assignment of rents cancelled, and new ones registered. The Registrar before tendering new mortgagee's and the owner's duplicate certificates discovered the forgery and did not deliver the certificates. The checks Avondale gave to Charles and Marlene Schroeder were cashed by Charles, Marlene's endorsement thereon being forged. Neither Carrie Hoffman nor Marlene Schroeder received any of the proceeds of the loan. Of all these proceedings concerning her property, Marlene Schroeder was completely ignorant and innocent.
The cause was referred to a master in chancery who heard the evidence and made his report, finding in substance the facts we have hereinbefore stated, and concluded that Avondale paid over the money on the mortgage in good faith and reliance upon the certificate and obtained a valid mortgage lien on the undivided one-half interest of Charles Schroeder, which he derived through the deed from Carrie Hoffman. The master further found that there was no evidence that the signatures on the lost certificate affidavit and the warranty deed to Mathilda Glon (on both of which Marlene Schroeder's signature was forged) were compared with the signatures on the signature cards received by the Registrar when he delivered the owner's duplicate certificate at the time Carrie Hoffman and Marlene Schroeder were certified to be owners in joint tenancy, although the affidavit and deed did bear notations that the signatures were checked.
The chancellor heard the exceptions to the report and found that the signature of Marlene Schroeder was a forgery; that the acceptance of the mortgage for registration did not create a lien upon or interest in the property and did not create any liability on the part of the Registrar for any loss sustained by Avondale. The court declared void the warranty deed, the quitclaim deed, the lost certificate affidavit and any memorials in the office of the Registrar which purported to affect [sic] the interest of Charles Schroeder in the real estate involved.
The decree further held that so far as Carrie Hoffman was concerned, Avondale had a lien on her interest, but that she was entitled to be indemnified by Cook County. The basis for this was that the Registrar had accepted a deed, the acknowledgment of which had been taken by Charles Schroeder, an interested party, and was in that respect at fault. There has been no appeal from this provision of the decree, and we need not concern ourselves further with it.
As to Marlene Schroeder's interest, the decree held that the warranty deed was a nullity and the forgery of her signature on the mortgage and notes and their acceptance for registration created no lien on behalf of Avondale and that there was no liability on the Registrar or Cook County for the loss Avondale thereby suffered. It is from these provisions of the decree that Avondale appeals.
Essentially, Avondale's points are that the Registrar must refuse registration unless he is satisfied that the instrument is a proper one for registration; that the Registrar's acceptance constituted a determination that Charles and Marlene Schroeder had title; that the Registrar was negligent; and that Avondale should be indemnified for any loss it thereby suffered. The Registrar's reply to this is in substance that it is true the Registrar had registered Charles and Marlene Schroeder as the owners, but that Avondale did not acquire its mortgage lien by a conveyance from Marlene, a necessary party; that, on the contrary, it was the victim of one who forged or procured the forgery of her name and of one who impersonated her when the notary public took the acknowledgments. The Registrar goes somewhat farther and argues that it is the duty of one who takes and has a conveyance acknowledged to be certain he is dealing with the persons who are the registered owners. To this, Avondale replies that it was the Registrar who should have discovered the fraud when it received the documents for registration; that it had on hand instruments with which it could have made a ...