Chicago v. Tebbetts

APPEAL from the Circuit Court of the United States for the Northern District of Illinois.

James D. Bruner, the owner of certain premises in the city of Chicago, conveyed them by two deeds of trust bearing date July 10, 1866, and June 12, 1867, respectively, to Levi D. Boone, as trustee, to secure to the Union Mutual Life Insurance Company the payment of two notes, one for $10,000 and one for $8,000. On Sept. 9, 1867, Bruner conveyed the premises to Charles A. Gregory, subject to the outstanding indebtedness. Dec. 12, 1867, $2,000 with interest was paid on the $8,000 note.

The city council having, May 25, 1868, passed an ordinance for the extension of Dearborn Street, it became necessary to take the premises for that purpose. Condemnation proceedings were had accordingly, and and the damages assessed at $36,000. The city paid Gregory, March 22, 1869, $20,000, and on the early part of the following May issued to him a voucher for $16,000, which he, on the eighteenth day of that month, assigned to Boone as trustee and general agent of the company, as collateral security for the payment of the notes.

Certain property-holders who had a large pecuniary interest in the opening of the street stipulated, in writing, that if Boone would take no steps to prevent the city from immediately occupying the land and defer enforcing the collection of the notes, they would pay the company interest semi-annually on the said sum of $16,000, or on so much thereof as should remain unpaid. It was stipulated that Boone and the company did not thereby 'waive or abandon any right they might have on said notes against the maker thereof, or any right of suit against the said city for the recovery of said money, or any right of entry or possession of said land.'

On June 1, 1869, the city, with the consent of the company, entered upon the land, and has since that date kept and used it for a public street. On June 5 the city paid Boone $6,000, which, with the $2,000 before referred to, paid the $8,000 note.

It is admitted by stipulation that the city, after the execution of the agreement, had knowledge thereof, and, but for such knowledge, would not then have taken possession of the premises; also, that it had only paid $26,000 on account of the damages awarded.

Neither the balance due on the voucher nor the $10,000 note having been paid, Boone, as trustee, pursuant to the power of sale contained in the deed of trust, sold the premises at public auction to the insurance company, and executed to it a conveyance therefor. The company conveyed, Dec. 27, 1872, to William C. Tebbetts, a citizen of Massachusetts, the premises, together with any claim which it had either against the city or Bruner. At the same time Boone, as trustee and general agent of the company, indorsed and delivered to him the voucher of the city. Failing to obtain payment thereof, Tebbetts, in November, 1873, brought ejectment against the city, but dismissed his action before judgment.

In June, 1877, Tebbetts filed his bill against the city to compel the payment of the balance due on the voucher.

The court below decreed in his favor for the $10,000 due on the voucher, together with interest at six per cent per annum from Jan. 1, 1870.

The city thereupon appealed to this court.

Mr. William C. Goudy for the appellant.

Mr. W. B. Wilson and Mr. George Payson, contra.

MR. JUSTICE BRADLEY delivered the opinion of the court.