Freer v. Lake

Citations

• 115 Ill. 662
• 4 N.E. 512

Syllabus

<p>1. Mortgage—whether the relation of mortgagor and mortgagee exists—what will operate to extinguish the mortgage debt. A debt or obligation of some kind is an essential element in a transaction to create the relation of mortgagor and mortgagee.</p> <p>2. The purchaser of real estate gave notes for the purchase money, secured by mortgage. He subsequently conveyed the mortgaged premises by deed containing a clause obligating the grantee to pay the mortgage debt. Afterward the latter conveyed the property to the holder of the unpaid notes, under a promise of the latter to give the party so conveying to him whatever could be made out of the property in the next three years, above 'the debt, interest, taxes, insurance and repairs: Held, that the mortgage debt was thereby extinguished, and the relation of mortgagor and mortgagee no longer existed.</p> <p>3. Trust—where a conveyance creates the grantee a special trustee. The holder of notes secured by mortgage on real estate, required of the owner thereof, who had assumed payment of the mortgage debt, an absolute conveyance of the property, and sent a letter to the debtor, inclosing the deed, in which letter he promised that if anything could be made out of the property during the next three years, more than the debt, interest, taxes, insurance and repairs, to give the debtor the benefit of it. The latter, relying on this promise, executed the deed and gave possession. In a short time after, the grantee sold the property for the amount of his debt and repairs made, after which the property advanced in value, so that if it had been held the three years there would have been a net profit to the debtor of $1768: Held, that construing the deed and letter together as showing the contract of the parties, the relation of trustee and cestui que trust was created, and that the grantee took the property, not as absolute owner, but as a trustee, clothed with duties in respect thereto that a court of equity would enforce, and that h