Phares v. Barbour

Citations

• 49 Ill. 370

Syllabus

<p>1. Surety—mortgage taken by a creditor from principal debtor as a further security—enures to the benefit of the surely—as well as to the creditor. The principle is well settled, that where a mortgage is taken by a creditor from the principal debtor, as a further security for his debt, the mortgage so taken must be held in trust, not only for the benefit of such creditor, but for the surety’s indemnity.</p> <p>2. Same—creditor becomes a trustee as to the property mortgaged, and must deal with it in good faith. In such case, the creditor becomes a trustee as to the mortgaged property, and this relation imposes it as an obligation upon him to act in good faith towards his cestui que trust, in dealing with the fund, and hold it fairly and impartially, for the benefit of the surety, as well as for himself.</p> <p>3. Same—creditor violating his trust—must account for tire full value of the property. And if the creditor parts with the property so mortgaged, without the knowledge, or against the will of the surety, or does any act in violation of the trust, or omits to perforin any duty which this relation imposes, whereby the surety is injured, he must be held to account for its full value.</p> <p>4. Trustee—cannot become a purchaser at his own sale. A trustee employed to sell trust property, cannot, either directly or indirectly, become a purchaser at his own sale.</p> <p>6. Surety—extension of time to principal—when surely released When the payee of a note, gives time or forbearance to the principal debtor, by a promise binding in law, without the knowledge or consent of the surety, the latter is discharged.</p> <p>6. Evidence—in what cases—husband or wife cannot be a witness for or against each other. In an action against the sureties upon a note, the wife of one of the defendants was offered as a witness to testify to what the plaintiff had told her, at the time when he called for her husband to go and see the principal debtor, and get him to execute a mortgage as a