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BRANDIES and others v. COCHRANE and others.

December 1, 1884


The opinion of the court was delivered by: Matthews, J.

John S. Monk, for appellants.

Geo. W. Smith, and E. F. Bagley, for appellees.

This is a bill in equity, filed by the appellants, the object and prayer of which is to quiet their title to the real estate described, situated in Chicago, as against the adverse claims of the appellees. The question in the case is whether the appellants have the legal title to the premises in controversy. The facts necessary to its determination are as follows:

In March, 1866, the complainants below, now the appellants, recovered a judgment in the circuit court of the United States for the Northern district of Illinois against Robert Forsythe, one of the appellees, and George T. Braun, for $9,665.49 and costs, on which execution was issued during the year, and returned not levied, because no property was found on which to levy. Prior thereto, in 1861, Robert Forsythe had purchased the real estate described in the bill, with his own means, from Horatio G. Loomis, and, according to his directions, a deed was made by Loomis conveying the property to William R. Arthur, as trustee, and to his heirs and assigns, upon the following trusts therein expressed: 'To permit Mary E. Forsythe, wife of Robert Forsythe, of Chicago, to use and occupy, enjoy and receive, the rents and profits of said lands and premises, for her life and to her own use, and at any and all times, upon the order or request in writing of said Mary E. Forsythe and the said Robert Forsythe, jointly, to convey said lots, or either or any part of them, to such person or any persons as they may designate; and in case said Mary E. shall die without issue in the life-time of her said husband, then to convey said lands to said Robert Forsythe for life, immediately after the decease of said Mary E., to hold to him and his use for life, and to his child or children, if any lawfully begotten, in fee-simple and remainder, to their use and to them equally as tenants in common. But if said Robert shall die without lawful issue, then to the children of his brother, Leonard E. Forsythe, and the children of Lydia T. Warrack, who may be in being at the time of said Robert's decease, in fee-simple and remainder, to their use and to them equally as tenants in common. And in case said Robert shall die without lawful issue in the life-time of said Mary E., then to convey said lands and premises to her for life immediately after the death of said Robert, to hold to her and her own use for life, and to the children of said Leonard E. Forsythe, and the children of said Lydia T. Warrack, who may be in being at the time of said Mary's decease, in fee-simple and remainder as aforesaid, to their use and to them equally as tenants in common. But if hereafter said Robert shall have child or children born of his said wife or of any future wife, then instead of the conveyance aforesaid to the children of said Leonard E. Forsythe and Lydia T. Warrack, said trustee is to convey said lands to said Mary E. or to said Robert, (as the one may chance to survive the other,) to her or his use for life as aforesaid, and to the child or children who may be so born to them or him, in fee-simple and remainder, to their use and to the equally as tenants in common.'

Subsequently, upon proper proceedings for that purpose, this deed was reformed and corrected by a decree in chancery, whereby it was provided that the conveyance of said Arthur, the trustee, to be made on the request of the said Robert and Mary E. Forsythe, when made, should be in fee-simple absolute, and should operate to cut off the several trusts thereafter specified in said original conveyance to Arthur. This property was improved by Robert Forsythe by the erection thereon of a dwelling-house, and was occupied by himself and wife as a residence at the date of the recovery of the appellants' judgment and subsequently during the life of Mrs. Forsythe. Robert Forsythe, on March 26, 1868, was, on his own petition, adjudged a bankrupt by the district court of the United States for the Northern district of Illinois, and on July 21, 1868, obtained his discharge.

On November 3, 1869, Robert Forsythe and Mary E. Forsythe joined in a written request to Arthur, the trustee, directing him to convey the premises in controversy to Nathan Corwith, in fee-simple. Mrs. Forsythe died on January 1, 1870, leaving no issue, and on January 4, 1870, Arthur, in pursuance of the appointment previously made, conveyed the property to Corwith, as directed. This conveyance was in form absolute, but it is claimed that it was intended merely as security for an indebtedness due to Corwith from Forsythe. At any rate, Corwith conveyed the property to Robert Forsythe by a deed dated March 12, 1870, and the latter, by a deed of trust dated March 10, 1870, in anticipation of the conveyance to himself, conveyed it to George Scoville, as trustee, to secure to John Cochrane $15,000 which the latter had lent to Forsythe, and out of which Corwith had received the amount due him. On May 9, 1870, the appellants caused an alias execution to be issued on their judgment and levied on the premises as the property of Robert Forsythe; on June 7, 1870, it was sold under this execution to them, on a bid of the amount due on their judgment, and on September 9, 1871, the time for redemption having elapsed, they received a deed from the marshal conveying the title to them. Robert Forsythe being in default for non-payment of interest on the debt to Cochrane, Scoville executed the power of sale under the deed of trust to him, by a sale to James D. Wallace on April 17, 1872. The latter had, just prior thereto, on March 8, 1872, acquired whatever title to the premises, if any, had vested in the assignee in bankruptcy, by a sale and conveyance thereof from him. Thereupon Wallace reconveyed the premises, with some additional property, to George Scoville, as trustee, to secure the whole amount of principal and interest due to Cochrane, amounting, with the expenses of the transaction, to $17,000, the amount specified in the deed of trust. This arrangement was made for the better security of the debt due to Cochrane; John Forsythe having become, in consideration thereof, a guarantor of the notes given therefor.

On May 27, 1872, the complainants, having taken possession under their claim of title, filed the present bill of complaint, to which Wallace and Robert Forsythe were made defendants, praying to have their title quieted as against them.

On May 1, 1876, Scoville executed the power of sale under the deed of trust to him, and sold the property embraced therein, including the premises in controversy, to Cochrane, who, on July 13, 1876, was admitted as a party defendant, and filed his answer and cross-bill, claiming title in himself, and praying for a decree for relief. On final hearing, the original bill was dismissed and a decree rendered upon the cross-bill of Cochrane as prayed for. To review that decree is the object of the present appeal.

[Argument of Counsel from pages 347-349 intentionally omitted]

It is manifest that it is vital to the appellants' case that they should maintain and establish a judgment lien upon the estate of Robert Forsythe, in the premises in controversy, at the date of the recovery of the judgment in 1866; because the discharge in bankruptcy of Forsythe, in 1868, released him from all personal liability on account of the judgment, so that the subsequent levy of an execution in 1870 could have no effect except to enforce a lien subsisting at the time of the adjudication in bankruptcy. It is accordingly contended, on behalf of the complainants, that their judgment took effect at its rendition as a lien upon an equitable estate for life, reserved to Robert Forsythe by the terms of the deed of trust to Arthur, which was not and could not be displaced by the appointment by virtue of which the conveyance was made by Arthur, the trustee, to Corwith; that the power of appointment secured to Forsythe and wife operated to subject the entire estate, which could be disposed of under that power, and which was the fee-simple, to the claims of creditors reduced to judgment; and that Robert Forsythe had an equitable reversion in fee in the trust estate by reason of the failure of the ultimate limitations alleged to be void for remoteness, as they were to take effect, according to the terms of the trust, only after an indefinite failure of issue, which reversion in fee was subject to the lien of judgments against him.

The statute of Illinois in force at the time and governing the case was section 1, c. 57, Rev. St. 1845, which, after providing that judgments should be a lien on the real estate of the judgment debtor, provided as follows: 'The term 'real estate' in this section shall be construed to include all interest of the defendant or any person to his use, held or claimed by virtue of any deed, bond, covenant, or otherwise, for a conveyance, or as mortgagee or mortgagor of lands in fee, for life or for years.' Except so far as modified by this act the common law on the same subject was in force in Illinois by express adoption. Rev. St. 1845, p. 337, § 1.

In Spindle v. Shreve, 111 U. S. 542-547, S. C. 4 SUP. CT. REP. 522, it was stated to be the law in Illinois that where the legal title to lands is in trustees, for the purpose of serving the requirements of an active trust, the judgment creditor had no lien and could acquire none at law, but could obtain one only by filing a bill in equity for that purpose, according to the provisions of section 49 of the chancery practice act of that state. Rev. St. 1845, p. 97. It was otherwise if the trust was merely passive, such as those described in the section defining real estate as subject to the lien of judgments, already quoted. Miller v. Davidson, 3 Gilman, 518; Baker v. Copenbarger, 15 Ill. 103; Thomas v. Eckard, 88 Ill. 593. The rule at common law and the corresponding jurisdiction of chancery as to equitable estates are fully explained in Morsell v. First Nat. Bank, 91 U. S. 357; Lessee of Smith v. McCann, 24 How. 398; Freedman's Savings & Trust Co. v. Earle, 110 U. S. 710; S. C. 4. SUP. CT. REP. 226.

In the present instance the trust was an active one, not merely passive. At no time during the life-time of his wife could Robert Forsythe call for, or compel from the trustee, a conveyance of the legal title. On the contrary, the trustee was required by the terms of the trust, subject to the power of appointment, to retain the legal title in himself, and to permit Mrs. Forsythe to use and occupy the property, and to enjoy and receive the rents and profits thereof during her life and to her own use; language which, if it cannot be properly construed to devote it to her separate use, all the more required the protection secured to her actual right by the legal title being vested in a trustee. The estate of Robert Forsythe, therefore, under the trust, whether for life or in fee, whether vested or contingent, was equitable merely, and of that nature which could not be subject to sale for payment of his debts except by the aid of a court of equity. In such cases no lien arises by operation of law from the judgment, but only on the filing of the bill.

On the contrary supposition, that the estate of Robert Forsythe, under the deed of trust to Arthur, was subject at law to the lien of the appellant's judgment, their title still must fail. Prior to the enactment of 1 & 2 Vict. c. 110, it was settled in England that at law a judgment against the party having a power of appointment, with the estate vested in him until and in default of appointment, was defeated by the subsequent execution of the power in favor of a mortgagee. Doe v. Jones, 10 Barn & C. 459; Tunstall v. Trappes, 3 Sim. 300. And it was held to be immaterial that the purchaser had notice of the judgment, (Eaton v. Sanxter, 6 Sim. 517;) or that a portion of the purchase money was set aside as an indemnity against it. Skeeles v. Shearly, 8 Sim. 153; S. C. on appeal, 3 Mylne & C. 112. In this case Sir JOHN LEACH, the vice-chancellor, decided that the effect of the transmission of the estate by appointment was that the appointee takes it in the same manner as if it had been limited to him by the deed under which the appointer takes in default of appointment, and consequently free and disconnected from any interest that the appointer had in the tenements in default of appointment; that as the appointee is in no sense the assignee of the appointer, he cannot be affected by judgments which affect only the estate and interest of the appointer, and, that being so, the circumstance of his having notice of such judgments is immaterial. The statute of 1 & 2 Vict. c. 110, altered the law in this respect by making judgments an actual charge on the debtor's property, ...

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