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Swanson v. Randall

OPINION FILED JANUARY 22, 1964.

FLOYD A. SWANSON, APPELLEE,

v.

GEORGE W. RANDALL ET AL. — (ROCK RIVER SAVINGS AND LOAN ASSOCIATION, APPELLANT.)



APPEAL from the Circuit Court of Winnebago County; the Hon. WILLIAM R. DUSHER, Judge, presiding.

MR. JUSTICE SOLFISBURG DELIVERED THE OPINION OF THE COURT:

The plaintiff, Floyd A. Swanson, brought this action against George W. and Dolores D. Randall, the Rock River Savings and Loan Association, and other defendants seeking to impress a constructive trust upon certain real estate; to set aside a first mortgage to Rock River Savings and Loan Association and a second mortgage to H. Shore & Associates, Inc., and praying for a reconveyance of the property from the Randalls to plaintiff. A petition for change of venue filed by Rock River Savings and Loan Association was denied, and, after hearing, the trial court ordered the real estate reconveyed to plaintiff, set aside the second mortgage of H. Shore & Associates, Inc., and set aside the mortgage of Rock River Savings and Loan Association as to any amount in excess of $5,936.63. Rock River Savings and Loan Association alone appeals from the denial of its petition for a change of venue and from the decree.

Prior to 1949 the plaintiff, Swanson, owned the real estate in question, which was mortgaged to First Federal Savings and Loan Association of Rockford. First Federal foreclosed its mortgage and the period of redemption was about to expire in October, 1950, when Swanson discussed his predicament with his neighbor Randall. Apparently Swanson's credit was insufficient to enable him to borrow the amount necessary to redeem the premises, and Randall offered his assistance. On October 13, 1950, as a result of their conversations, Swanson conveyed the real estate to the Randalls who immediately mortgaged the property for $6,000 and thereafter used the funds for the purposes of redemption from the foreclosure sale.

At the time of the conveyance Swanson and the Randalls executed a written agreement, whereby it was agreed that the Randalls would first obtain a $6,000 mortgage for the purpose of redemption, and then refinance the property by a $9,600 F.H.A. loan. Out of the proceeds of the final loan, the initial loan, interest, costs and expenses were to be first paid. Then Randall was to receive $1,250 for his services, repairs were to be made, a deposit for monthly payments retained, and the surplus was to be paid to Swanson. The agreement further provided as follows:

"6. First parties [Randall] further agree that while they hold the title to said real estate, they are merely holding the same to protect themselves from personal liability under the note and mortgage executed by them as aforesaid, and that their retention of title is for the ultimate use and benefit of second party.

"7. Second party [Swanson] agrees that first party shall have the full right and authority to deal with said real estate in every manner as if it were their own absolutely, and in no case shall any person dealing with first party, or dealing with any grantees, mortgagee or lessee of first party with reference to said premises, be obliged to see to the application of the purchase, mortgage, or rent money, or to see that the terms of this agreement have been complied with, or to inquire into the necessity or expediency of any act of first party, and the execution of any deed, mortgage, trust deed, leases or other instruments by first party shall be conclusive evidence in favor of the grantee, mortgagee, lessee, or other party thereto that first parties are duly authorized and empowered to execute every such instrument, and the interest of the second party hereunder and of any and all persons claiming by, through, or under him, is hereby declared to be personal property and to be in the avails, earnings and proceeds arising from the disposition of the premises, the intention being to vest in first parties the entire legal and equitable title in fee in and to all of the premises above described; and that second party hereunder shall not have any title or interest, legal or equitable, in and to said real estate as such, but only an interest in the earnings, avails, and proceeds thereof as aforesaid.

"8. The first parties agree that they will at any time hereafter convey said premises by a special warranty deed warranting as to their own acts only, to any person or corporation upon direction in writing to do so by second party, provided, however, that the mortgage and note to be executed by first parties as aforesaid shall have been paid in full and cancelled; and provided further that said real estate shall have not been previously sold by first parties in accordance with the terms hereof.

"9. Second party further agrees that first party shall have the full right and authority to sell said real estate at a price to be determined by first party in the event they deem themselves insecure, or in the event that premises are not kept in good repair, or in the event the taxes or insurance on said premises are not paid promptly when due, or on the default or failure of second party to keep any of the covenants or make any of the payments provided to be kept or made in accordance with the terms of this agreement, or of the mortgage to be executed by first parties as is herein provided"

Thereafter, with Swanson's knowledge, the Randalls conveyed to the Hammersmiths, who obtained a $9600 loan from Carrico & Wilgus. The proceeds of this loan were distributed pursuant to the agreement and on January 9, 1951, the Hammersmiths reconveyed to Randall. For several years Swanson made monthly payments to Randall, and Randall, in turn, made the payments to Carrico & Wilgus. The payments made by Swanson would have reduced the $9600 loan to a balance of $5,936.63, the amount allowed Rock River as a lien on the premises.

In 1958 Randall began another series of transactions relating to this property. He obtained $1050 on a junior mortgage in October, 1958, which mortgage was later released. In March, 1959, he obtained $4,017.62 from Aire Flow Heating Co. by use of a junior mortgage. On January 10, 1961, Randall conveyed to Richard and Carmen Dapper, who mortgaged the premises to Rock River Savings and Loan Association. The proceeds of this loan were used to pay off the balance of $5,936.63 due on the Carrico & Wilgus mortgage and the balance of the Aire Flow junior mortgage. The balance was paid to Randall. The Dappers then reconveyed to Randall in April, 1961, and Randall executed another junior mortgage to H. Shore & Associates. At all times during these transactions Swanson was in possession of the premises.

The sole appellant, Rock River Savings and Loan, argues first that the trial court erred in denying its petition for change of venue. It further argues that plaintiff failed to prove a constructive trust; that Rock River did not violate the express trust agreement; and that plaintiff is estopped to assert a hostile title.

Plaintiff insists that the petition for change of venue was not filed in apt time; that the mortgage to Rock River is void either because of a breach of a confidential agreement, or because the mortgage was in excess of Randall's authority, and Swanson's possession gave Rock River notice of his rights.

We agree that the trial court did not err in denying Rock River's petition for change of venue. Although the petition was in proper form, it was not filed until after the trial court had denied Rock River's motion to strike the complaint and ordered Rock River to answer. It is well settled that a petition for change of venue comes too late when it is presented after the judge has ruled on a substantive issue in the cause. (City of Chicago v. Hamlin, 24 Ill.2d 148; People v. Chambers, 9 Ill.2d 83.) The denial of Rock River's motion to strike was such a substantive ruling, and the petition for change of venue was properly denied.

The complaint herein sets forth the express agreement governing the transfer of title from plaintiff to Randall, but seeks to impose a constructive trust upon the real estate. The record before us indicates some uncertainty of both the parties and the court as to whether the case was being ...


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