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Thomas v. Kowalewski

DECEMBER 28, 1956.




Appeal from the Superior Court of Cook county; the Hon. DONALD S. McKINLAY, Judge, presiding. Reversed.


Rehearing denied February 6, 1957.

This is a creditor's suit to establish a lien upon real estate, on the alternative theories of a resulting or a constructive trust, and for sale of the property in satisfaction of the judgment. The decree was in favor of plaintiff and defendants have appealed. Plaintiff has cross appealed with respect to costs.

The real estate is at the northeast corner of 51st and Throop Streets in Chicago. It is improved with a two-story brick office and apartment building. The property was acquired by Nellie Kowalewski from the Sherman State Bank on June 3, 1925. As part of the purchase price she and her husband Roman gave back a mortgage of $20,000. On June 30, 1925, they executed a second mortgage of $25,000 naming Sherman State Bank as trustee. On July 7, 1930, a $2500 check of the R.J. Kowalewski Real Estate Company, Inc., was applied upon the first mortgage.

On February 13, 1932, suit was filed in the Superior Court to foreclose the second mortgage, and the following August 4 the holders of the first mortgage sued to foreclose. Thereupon, the earlier foreclosure suit was abandoned. The decree in the first mortgage foreclosure suit was entered June 10, 1933, finding $19,080.88 due and the mortgage a prior lien on the property and its rents, issues and profits. The holders of the mortgage purchased the property at the sale under the decree on July 6, 1933. The sale was approved January 22, 1937, and a deficiency decree entered for $1,598.69. A master's deed passed to the purchasers and there was no appeal from the decree.

In 1935 the second mortgage trust deed and note were owned and held by B. Byer and were exchanged for a note made by Nellie and Roman Kowalewski for $15,748 payable to Byer or order. Plaintiff, legal owner and holder of this note, confessed judgment in October, 1940, for $21,556.65 and costs. The instant proceeding was begun November 22, 1940, to subject the property to the satisfaction of the judgment. At the time of suit title was in defendant Josephine Richards, wife of a son of Nellie and Roman Kowalewski, having been conveyed to her in 1936 by the purchasers at the sale under the foreclosure of the first mortgage.

Plaintiff's theory is that the conveyance to Josephine Richards created a resulting trust because it was purchased with funds of Nellie and Roman Kowalewski, or a constructive trust because it was the result of a conspiracy to hinder and defraud the creditors of Nellie and Roman Kowalewski, including plaintiff.

The record discloses that plaintiff's judgment became dormant in October, 1947, and was revived in April, 1950, by an original proceeding. At the time of revival, Nellie Kowalewski was dead.

The decree found that the conveyance to Josephine Richards was induced by her husband with funds in his hands collected as rent from the premises prior to the approval of the foreclosure sale in January, 1937; and that the conveyance resulted in a trust in favor of Nellie Kowalewski and her creditors, including plaintiff. These findings were based on a finding that the transaction was the result of an "arrangement" between Nellie Kowalewski, her son Richard, and his wife Josephine to delay and defraud the creditors and that Josephine Richards held title for the benefit of the creditors, including plaintiff. The decree ordered that plaintiff's judgment "be and is hereby declared a lien" on the property and on the legal title of Josephine Kowalewski, and that unless Richard and Josephine Kowalewski paid plaintiff $21,556.65, with interest at 5% from October 29, 1940, within thirty days, the property to be sold at public sale.

In their brief defendants pointed out that Nellie Kowalewski had died June 8, 1947, before the filing of the revival suit on February 27, 1950, that her death was not suggested nor her personal representative made a party in that suit. Her death was suggested before the master September 12, 1952, was noted in the master's report, and consequently was before the chancellor.

The question is whether Nellie Kowalewski's death prior to the revival of the judgment rendered that judgment void.

Plaintiff's original judgment was entered October, 1940. The judgment was a lien upon the real estate of Nellie Kowalewski for "seven years, and no longer." (Chap. 77, Par. 1, Ill. Rev. Stat. 1953.) The lien of the judgment expired in October, 1947, and was not revived until 1950, three years after Nellie Kowalewski's death. The revival suit was an independent proceeding in which the court had no jurisdiction of her person, neither her personal representative nor her heirs at law were made parties, and the judgment of revival is accordingly void. (Claflin v. Dunne, 129 Ill. 241, 244; State Bank of Prairie du Rocher v. Brown, 263 Ill. App. 312, 315.)

Plaintiff contends, however, that the suit to revive the judgment was superfluous because the filing of the instant creditor's suit in November of 1940 created an equitable lien at that time, and that this lien was not subject to the seven year limitation of a statutory lien and was unaffected by the death of Nellie Kowalewski. He relies upon Davidson v. Burke, 143 Ill. 139, and King v. Goodwin, 130 Ill. 102.

King v. Goodwin held that "the filing of a creditor's bill, and the service of process, creates a lien on the equitable assets of the judgment debtor" and this lien is not extinguished by the death of the defendant. The case did not determine whether a lien created by the filing of a creditor's suit is subject to the seven year limitation of statutory liens, and ...

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