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City of Chicago v. Carpenter

APRIL 18, 1968.




Appeal from the Circuit Court of Cook County; the Hon. CHARLES S. DOUGHERTY, Judge, presiding. Affirmed.


This is an appeal from an order distributing a condemnation award. Plaintiffs Richard B. and Julian R. Hansen are owners of a one-half interest in the subject property, the other half of which is owned by defendant Robert Brunton.

Brunton originally purchased the subject property for $6,000, in August, 1961, with funds from a first mortgage loan of $6,500 which he received from a friend. The property was held in trust by the South Chicago Savings Bank with Brunton as beneficiary. In October, 1961, he discussed the investment with George W. Hansen, Sr., a friend and past business associate, who said he would be interested in getting in on the deal. The discussion took place in Wisconsin, at or near Brunton's home. Another friend of Brunton's, Robert Pierce, was present during a part of the discussion. At one point Hansen, Sr. typed additional terms onto and signed a standard promissory note. The note was in the amount of $3,000, payable on demand and provided in part:

"Consideration for one half interest in property 253 West 69th Street. Payable when property is sold. This note is binding on my beneficiaries, heirs, executors administrators and assigns. Assignment of one half interest in Trust 11-864 by Brunton to follow."

Hansen, Sr. originally provided that, in the event of his death, his interest in the trust was to go to his wife. Later he changed that provision to have the interest pass at his death to Richard B. and Julian R. Hansen, his sons. Hansen, Sr. died in March, 1964.

In September, 1964, the property was condemned by the City of Chicago and an award of $10,750 was deposited with the Cook County Treasurer.

A petition to distribute the award was filed by the Hansen brothers and Brunton filed an answer thereto. The petition was dismissed in May, 1966, when the Hansen brothers failed to appear for a hearing on the matter. May 25th Brunton filed his petition to distribute. On July 13th a hearing was held on the matter, at which time Brunton produced his income tax returns for the relevant years (for an accounting regarding the operation of the property) and the original note signed by Hansen, Sr. (A photocopy of the note had been mailed to the Hansen brothers on April 27th.) The Hansen brothers had a handwriting expert with them in court on July 13th and some two hours were spent in a room adjoining the courtroom while the plaintiffs were allowed to examine the items produced by the defendant. Testimony was heard later that day. Robert Pierce testified that he saw Hansen, Sr. type out and sign the note. He also read the note when Hansen, Sr. gave it to Brunton. Brunton also testified on the 13th, as did a man from the South Chicago Savings Bank. The hearing was then continued until the 15th so that Mr. Doud, the handwriting expert, could complete his examination and tests and be ready to testify.

On July 15th the Hansen brothers moved for a continuance because Mr. Doud would be unable to finish his examination of the note for two to three weeks. The judge pointed out that on the 13th he had made it clear that he was going away after the 15th and wanted to finish the case that date. At that time Mr. Doud had told the court that by the 15th he would have ample time for his examination and could do it "very handy." The court, on the 15th, stated that since there was testimony by a disinterested third party witness that Hansen, Sr. had signed the note, the testimony of a handwriting expert witness would not overcome Pierce's testimony. The court also refused to admit 12 documents tendered by the Hansen brothers on the ground that they were self-serving. These were letters by the brothers to Brunton or his attorney.

The court entered an order which provided that the note for $3,000 was due and payable, binding on the Hansen brothers and should be paid from their share of the proceeds of the condemnation award.

Plaintiffs contend on appeal that the promissory note did not create a security lien upon the beneficial interest of the land trust as a matter of law; the trial court denied the plaintiffs a fair day in court by refusing to hear their expert's testimony and deciding the case prior to hearing all offered testimony, and the court erred in failing to read offered exhibits before refusing their admission into evidence.

Plaintiffs first contend that the note did not create a security interest in their beneficial interest. It should be here noted that the plaintiffs also argue that there was no agreement to pay the debt out of the proceeds of the sale of the property. Under the authority of Hibernian Banking Ass'n v. Davis, 295 Ill. 537, 129 N.E. 540, we agree that the promise to pay a debt out of the proceeds of a sale of property does not create an equitable mortgage lien on the property. However, that is not to say that the debt need not be paid out of the proceeds, if indeed that was the intention of the parties.

It is plaintiffs' position that the term "payable when property is sold" merely sets the due date and does not indicate that the sum is payable out of the proceeds of the sale. Following from that position is the argument that the brothers who took the property at the death of their father are not liable on the note, but rather that the note should have been presented as a claim against the estate of Hansen, Sr. Plaintiffs rely on Floor v. Schaffhausen Corp., 49 Ill. App.2d 97, 199 N.E.2d 434, and Illinois State Toll Highway Commission v. M.J. Boyle & Co., 38 Ill. App.2d 38, 186 N.E.2d 390. The Floor case merely held that the contract involved was in no way ambiguous, and, therefore, the rules of construction of contracts need not be employed. In Illinois State Toll Highway Commission, supra, the court was considering a public contract and determined that there was no ambiguity in the language of the contract.

It is the position of defendant that the language of the contract or note was ambiguous and must therefore be construed with the intention of the parties in mind. In Robinson v. Stow, 39 Ill. 568, the court construed the phrase "as soon as practicable and thought proper by the parties." The court said on page 572:

"While it is not the province of the courts to interpolate new terms into contracts, against the evident intention of the parties, with the view of making such contracts more reasonable, yet, on the other hand, even a strained construction of the language will be adopted for the purpose of preventing obvious injustice. The intention of the parties, it is true, must govern; but the experience of human affairs teaches courts that this intention is not to be sought merely in the apparent meaning of the language used, but this ...

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