Darst v. Bates

Citations

• 95 Ill. 493
• 1880 Ill. LEXIS 205

Syllabus

<p>1. Release—as to second mortgage. Where the holder of a mortgage on real estate executed an instrument to a third person, taking a junior mortgage or trust deed for $10,000, in which he released his prior lien in favor of the second, but no further, and in favor of no other person, it being understood by the prior mortgagee that the money raised on the second incumbrance was to be expended in improving the mortgaged premises, it was held that whether the second mortgagee, whose mortgage was made a prior lieu, should remain entitled to such lien, or some one else should occupy his place and succeed to his rights, could make no difference with the prior mortgagee, and that a party raising the money on the faith of such junior mortgage, or equitably entitled to stand in the shoes of the second mortgagee, had the right to foreclose the same as the prior lien.</p> <p>2. AVhere a party holding a mortgage on real estate, used as hotel property, for the purpose of enabling the mortgagor to raise $10,000, with which to improve the premises, releases his mortgage in favor of another to that amount, who takes a mortgage or deed of trust for that sum to secure the mortgagor’s notes, amounting to the same sum, it being understood at the time of the release and the giving of the new notes and mortgage, that the second mortgagee was not to make the loan to the mortgagor directly, but was to procure the same by guaranteeing and discounting other notes of the mortgagor, it was held that the first mortgagee could not afterwards be heard to urge the objection that the money was not raised on the faith of the trust deed or second mortgage, but by discounts of other paper of the mortgagor guaranteed by the second mortgagee, or party for whose benefit the trust deed was given to protect him on his guaranty; and that the mortgagor failed to expend the money as he had agreed, could make no difference where the party holding the second mortgage or trust deed was no party to such agreemen