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Statement of the Case.
Madison Street; and it was stated that a block of two-story and basement brick dwelling-houses was about to be erected on the property. The front piece was 60 feet deep; then came a 12-feet court; and the rear part was 44 feet deep. The entire property came afterwards to be known as "the Jefferson-Park Hotel property." This trust deed was recorded April 1, 1871.
Grow on the 9th of February, 1876, conveyed the entire property to William Scott Robertson, subject to an incumbrance of $35,000, by a warranty deed, which was recorded February 18, 1876. The loan to Grow matured on the 1st of April, 1876, and in the spring of 1877 negotiations were had between Robertson and Greene for a renewal of the loan. These negotiations were successful, and Robertson executed a trust deed dated April 2, 1877, (the 1st of April, 1877, being Sunday,) covering the same property, to Francis B. Peabody, of Chicago, to secure the payment of a promissory note for $35,000, which, the trust deed stated, was for a loan of that sum, made on the day of the date of the trust deed, by the legal holder of the note, to Robertson, the note being payable three years after date, with interest at the rate of 7 per cent per annum, payable half-yearly on the 2d of October and 2d of April, with six interest coupons for $1312.50 each. The name of David R. Greene was not mentioned in the trust deed or in the promissory note. The six interest coupons were each of them signed by Robertson, and made payable to his order, and each was endorsed by him payable to the order of David R. Greene. The note was payable to the order of Robertson and was endorsed by him payable to David R. Greene or order. It stated that it was expressly agreed that if default should be made in the payment of any instalment of interest when it should become due, and such default should continue for 30 days thereafter, the principal sum should, at the election of the legal holder of the note, at once become due and payable, such election to be made at any time after the expiration of said 30 days, without notice; and this provision of the note was recited in the trust deed. It was provided in the trust deed, that if default should be made in the payment of the
Statement of the Case.
principal sum secured by the note, whether it should have become due by election or by the regular maturity of the note, or if Robertson should fail to perform its agreements, it should be lawful for the trustee, on application of the legal holder of the note, with or without a previous entry on the premises, to sell and dispose of them and all right, title, benefit, and equity of redemption of Robertson, his heirs and assigns, therein, at public auction, to the highest bidder, for cash, having first given notice of the time and place of such sale, (such sale to be made at some place in Cook County, Illinois,) by publication once in each week for four successive weeks, the first publication to be at least 30 days before the day of sale, in some newspaper published in Cook County, authorized by law to publish legal notices, personal notice to Robertson, his heirs or assigns, or any person claiming by, through, or under him, of such sale, being expressly waived, and in the name of the trustee to execute and deliver to the purchaser at the sale a deed of conveyance of the premises in fee simple; and that all the recitals that might be contained in such deed, setting forth the fact of such default, due notice, advertisement and sale, and any and all such other facts and statements as might be proper to evidence the legality of such sale and conveyance, should be considered and taken, on all occasions and as between all persons, to be prima facie evidence of the truth of all the facts and matters set forth in such recitals, and such deed should be effectual to pass the title, and all the right and equity of redemption of Robertson, his heirs and assigns, in and to the premises sold. This trust deed was acknowledged by Robertson on the 23d of July, 1877, and was recorded on the same day.
On the 30th of July, 1877, James Taylor and John Bruce recovered a judgment against Robertson in the Circuit Court of the United States for the Northern District of Illinois, for $21,666.66 damages and $120.05 costs. Robertson took steps toward bringing a writ of error to review that judgment, and for that purpose procured one Hugh Templeton to sign a bond as surety, and, to indemnify Templeton therefor, executed to him a bond and a mortgage covering the real estate aforesaid,
Statement of the Case.
subject to the encumbrance of the trust deed to Peabody. This mortgage was acknowledged August 17, 1877, and recorded August 22, 1877. As the writ of error was never perfected, Templeton did not become liable, and the mortgage to him was no encumbrance on the premises.
Robertson, on the 1st of September, 1877, leased to John McAllister the second, third and fourth stories of the three stores fronting on West Madison Street, and known as the Jefferson-Park Hotel, for two years, at a rent of $300 a month. This rent was afterwards reduced to $30 a month from January 1, 1878.
On the 15th of October, 1877, Taylor and Bruce issued to the marshal an execution on their judgment. This was returned wholly unsatisfied on the 12th of January, 1878; and, on the 24th of January, 1878, they, being aliens, filed a bill in equity, in the form of a creditors' bill, in the Circuit Court of the United States for the Northern District of Illinois, against Robertson, Templeton, McAllister, Gallup and Peabody. The bill was founded on their judgment and the issuing of their execution and its return unsatisfied. It set forth that Robertson was interested in a large quantity of real estate, including the before-mentioned property, 73 feet by 116 feet, at the corner of West Madison Street and Sheldon Street, which, it stated, brought in a large rental monthly. It contained the allegations usual in creditors' bills, and alleged that Robertson had property which ought to be applied to the payment of the plaintiffs' judgment, and prayed that he might discover on oath what assignments or transfers he had made of his property. It averred that the defendants other than Robertson held the title to real estate belonging to Robertson, for the purpose of defrauding the plaintiffs, and prayed for a discovery on oath by such defendants of all such real estate. It did not mention the trust deed to Gallup, or the trust deed to Peabody, or the mortgage to Templeton, or the lease to McAllister.
The plaintiffs, on the 29th of January, 1878, issued to the marshal a second execution on their judgment, which, on the 15th of February, 1878, was levied on real estate of Robertson, not including the premises at the corner of West Madison and Sheldon streets.
Statement of the Case.
On the 2d of March, 1878, the five defendants to the bill filed a general demurrer to it, for want of equity. On the 25th of March, 1878, the court entered an order sustaining the demurrer.
Robertson failed to pay to Greene any of his interest due October 2, 1877, and April 2, 1878, being two instalments, amounting to $2625, and was pressed for payment by Greene, through Peabody, in April and May, 1878. This pressure continued through the summer of 1878, and Greene complained directly to Robertson that the latter was receiving the rents of the property and paying him no interest. This pressure took the shape of a request by Greene to Robertson that the latter should turn over to the former the rents of the property, and a statement that otherwise the trust deed would be foreclosed.
Greene, on the 27th of August, 1878, notified Peabody in writing that, by reason of the default, continued for more than 30 days, in the payment of the instalments of interest due October 2, 1877, and April 2, 1878, on the note secured by the trust deed of April 2, 1877, Greene had elected to make the principal note at once due and payable; and that, default having been made in its payment, he requested Peabody to proceed at once, under the powers contained in the trust deed, to advertise and sell the premises.
Robertson, on the 29th of August, 1878, notified Peabody and Greene that he intended to file a petition in bankruptcy; and that he proposed to go to Scotland (which was his native country) to see what arrangement could be made of his affairs, and to turn over to Greene, from the 1st of September, 1878, the rents of the property monthly.
On the 30th of August, 1878, Robertson signed a paper, addressed and delivered to Peabody as trustee, which stated that the note secured by the deed of trust was held by Greene; that Peabody had that day demanded of Robertson the possession of the premises covered by the deed of trust, on account of a breach of the covenants contained therein; that Robertson consented to Peabody's taking possession of the premises; that he thereby delivered such possession to Peabody, and requested the tenants of the premises severally to attorn to Peabody; and
Statement of the Case.
that it was understood that Peabody should respect the leases granted by Robertson and his reservation of certain rooms mentioned in the lease to McAllister. On this On this paper Peabody, as trustee, wrote an order addressed to Edmund A. Cummings, directing him, for Peabody and as his agent, to receive from Robertson possession of the premises and the attornment of the tenants. Six of the tenants, including McAllister, on the same day signed a paper by which they recognized the transfer of the possession of the premises from Robertson to Peabody as trustee, and respectively attorned to Peabody as to the premises occupied by them.
Robertson, on the 31st of August, 1878, filed in the District Court of the United States for the Northern District of Illinois his voluntary petition in bankruptcy, with schedules. In the schedule of "Bankrupt creditors holding securities," there appeared, under the heading "names of creditors," "David R. Greene; " under the heading "residence and occupation," "New Bedford, Mass. ;" under the heading "when and where contracted," "April 2, 1877, at Chicago, Illinois;" under the heading, "value of securities," "unknown;" under the heading, "amount of debt," "$35,000 and interest at 7 per cent since April 2, 1877;" and under the heading, "particulars,” “note for money borrowed to take up old mortgage upon property when bought, and secured by trust deed to F. B. Peabody upon lot 26 (except the east two feet thereof) and lots 27 & 28, all in block 6, in McNeill's subdivision, in Wright's addition to Chicago, with improvements and appurtenances; property known as 487 & 489 and 491 West Madison Street, Chicago, and 52 and 54 Sheldon Street;" being the premises in question.
Peabody, on the 2d of September, 1878, notified Greene that he would forthwith proceed to advertise the foreclosure sale. On the same day, Peabody, as successor in trust to Gallup under the trust deed of April 1, 1871, made to Gallup by Grow, executed and acknowledged a paper releasing to Grow all the interest acquired under the trust deed, the paper stating that the indebtedness secured by that deed had been cancelled.