Fergus v. Wilmarth

Citations

• 117 Ill. 542
• 7 N.E. 508

Syllabus

<p>1. Deed oe trust to secure a debt—insurance money coming to the hands of the trustee—of its proper application. A trustee, in pursuance of a provision in the deed of trust, received insurance money for a loss by fire of the buildings on the mortgaged premises, in a case where the trust deed required the mortgagor to keep the property insured for the further security of the debt, which had not matured and become payable: Held, that the money so received took the place of the buildings destroyed, and was in the’ trustee’s hands a part of the security for the debt.</p> <p>2. In such case, the trustee is the agent of both the mortgagor and the holder of the mortgage debt, in respect to the money, and as the principal debt wras not due, and no default had been made in the payment of the interest, the trustee could not apply the fund to the reduction of the debt without the consent of the debtor. Nor could he pay over the same to the mortgagor on his mere promise to expend the same in replacing the buildings destroyed.</p> <p>3. Same—in case of a loss of the insurance money after coming to the hands of the trustee—rights of the parties. A# mortgagor insured the buildings on the premises in the name of the trustee, as a further security for the debt. Before the mortgage debt became due, a loss by fire occurred, and the insurance company paid the insurance money to the trustee, who retained the same, the mortgagor being unwilling to have it applied in reduction of the debt, and, on the request of the mortgagor, deposited the same in a bank of good credit and standing at the time, but which afterward failed. At no time did the trustee have the note or trust deed in his possession, and he did not receive the money as the agent of the creditor: Held, on bill to foreclose the deed of trust, that the mortgagor was not entitled to have any part of the insurance money, so received by the trustee, and afterwards lost by the failure of the bank, applied as a payment on the mortga